Board of Trustees of Aircondition. v. J.R.D. Mech.
| Decision Date | 09 December 1999 |
| Docket Number | No. 97-3924 RAP (BQRx).,97-3924 RAP (BQRx). |
| Citation | 99 F.Supp.2d 1115 |
| Court | U.S. District Court — Central District of California |
| Parties | BOARD OF TRUSTEES OF THE AIRCONDITIONING AND REFRIGERATION INDUSTRY HEALTH AND WELFARE TRUST FUND; Board of Trustees of the Airconditioning and Refrigeration Industry Retirement Trust Fund; and Board of Trustees of the Airconditioning and Refrigeration Industry Defined Contribution Retirement Plan, Plaintiffs, v. J.R.D. MECHANICAL SERVICES, INC., and James R. Divers, Defendants. |
Kenneth J. Sackman, Steven M. Rehaut, Gilbert & Sackman, Los Angeles, CA, for Plaintiffs.
John T. Bachmayer, Torrance, CA, for Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Board of Trustees of the Airconditioning and Refrigeration Industry Health and Welfare Trust Fund ("Health Fund"), the Board of Trustees of the Airconditioning and Refrigeration Industry Retirement Trust Fund ("Retirement Fund"), and the Board of Trustees of the Airconditioning and Refrigeration Industry Defined Contribution Retirement Plan ("401(k) Plan") (collectively, the "Trust Funds") brought this action against J.R.D. Mechanical Services, Inc. ("J.R.D.") for violations of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001 et seq., and the Labor Management Relations Act, 1947, as amended ("LMRA"), 29 U.S.C. § 141 et seq. The parties stipulated to J.R.D.'s liability for failure to pay required employer contributions, including deductions from employee wages, into the Trust Funds.
Plaintiffs also named James R. Divers ("Divers"), who started J.R.D., as a defendant.1 Divers was J.R.D.'s President, sole officer and director, and sole owner from December 1996 through at least April 1997. Plaintiffs sought to hold Divers personally liable for J.R.D.'s ERISA violations not under an alter ego theory but rather under the theory that Divers was a fiduciary under ERISA.
This matter was tried before the Court without a jury. The parties stipulated to numerous material facts. At trial, the parties only presented evidence on the extent to which Divers exercised control or authority over the delinquent plan contributions.
Having considered all of the evidence, the parties' proposed Findings of Fact and Conclusions of Law, and the parties' arguments, the Court now makes the following Findings of Fact and Conclusions of Law. The Court finds in favor of the plaintiff for the sum of $31,426.92 against defendant J.R.D. and $14,306.00 against defendant Divers.
1. Defendant J.R.D. is a California corporation and at all material times was an employer within the meaning of section 3(5) of ERISA, 29 U.S.C. § 1002(5), and within the meaning of section 501(3) of the LMRA, 29 U.S.C. § 142(3), and was engaged in an industry affecting commerce within the meaning of section 3(11) and (12) of ERISA, 29 U.S.C. § 1002(11) and (12), and within the meaning of section 501(1) of the LMRA, 29 U.S.C. § 142(1).
2. Along with other employers and employer associations in Southern California's air conditioning and refrigeration industry, J.R.D. entered into a written collective bargaining agreement (the "Bargaining Agreement") with the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local No. 250 (AFL-CIO) ("Local 250"). The Bargaining Agreement covers employees who perform work in the air conditioning and refrigeration industry.
3. The Bargaining Agreement establishes and renews separate agreements and declarations of trust ("Trust Agreements").
4. Plaintiffs are third-party beneficiaries of the Bargaining Agreement.
5. Under the Bargaining Agreement and the Trust Agreements, J.R.D. is required to forward a single combined monthly remittance report to the Trust Funds2 and to make contributions to the Trust Funds. The Trust Funds consist of the Retirement Fund and the 401(k) Plan, which are employee pension benefit plans as defined in section 3(2) of ERISA, 29 U.S.C. § 1002(2), and the Health Fund, which is an employee welfare benefit plan as defined in section 3(1) of ERISA, 29 U.S.C. § 1002(1). The Health Fund also administers a separate account to provide employee vacation and holiday benefits (the "Vacation Account"). The Trust Funds are multiemployer plans as defined in section 3(37)(A) of ERISA, 29 U.S.C. § 1002(37)(A).
6. The Trust Funds are jointly trusteed labor-management trust funds created and maintained pursuant to section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5).
7. The Trust Funds are administered by plaintiffs, who compose the Boards of Trustees and who are fiduciaries with respect to the Trust Funds within the meaning of section 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A).
8. Under the Bargaining Agreement and the Trust Agreements, an employer's monthly contributions to the Retirement Fund, the 401(k) Plan, the Health Fund, and the Vacation Account are calculated separately by determining the total number of hours worked, including overtime, by each employee in that particular month plus specified numbers of hours for holiday and vacation periods for which the employees did not work but for which they were paid, and multiplying these total hours by the hourly contribution rates set forth in the Bargaining Agreement. The monthly contributions to the Vacation Account and 401(k) Plan are established as a deduction from employee wages.
9. The Bargaining Agreement and the Trust Agreements obligate an employer to pay the reported contributions to the Trust Funds by the tenth day of the month following the month in which responsibility for such contributions is incurred. Contributions are delinquent if they are not received by the twentieth day of that month.
10. Defendants were aware of J.R.D.'s responsibility to pay timely contributions.
11. The Bargaining Agreement and the Trust Agreements provide that if contributions to the Trust Funds are delinquent, the employer shall pay liquidated damages in the amount of $100 or ten percent of the delinquent contributions, whichever sum is greater.
12. J.R.D. did not timely report or pay certain contributions to the Trust Funds for the months of March 1996 through June 1996 and August 1996 through October 1996, in the total amount of $59,445.81, broken down as follows:
Month Contributions Paid Untimely
March 1996 $ 7,817.80
April 1996 $ 7,604.34
May 1996 $ 8,415.07
June 1996 $ 7,650.16
August 1996 $ 8,206.85
September 1996 $11,196.03
October 1996 $ 8,555.56
These contributions were eventually paid, but they were untimely.
13. For the month of December 1996, J.R.D. neither reported nor paid contributions to the Trust Funds in the amount of $4,887.63 (excluding Vacation Account and voluntary 401(k) contributions), $1,370.12 in Vacation Account contributions, and $442.25 in voluntary 401(k) contributions.
14. For the month of January 1997, J.R.D. neither reported nor paid contributions to the Trust Funds in the amount of $3,295.75 (excluding Vacation Account and voluntary 401(k) contributions), $923.32 in Vacation Account contributions, and $401.50 in voluntary 401(k) contributions.
15. For the month of February 1997, J.R.D. neither reported nor paid contributions to the Trust Funds in the amount of $3,211.85 (excluding Vacation Account and voluntary 401(k) contributions), $895.46 in Vacation Account contributions, and $410.00 in voluntary 401(k) contributions.
16. For the month of March 1997, J.R.D. neither reported nor paid contributions to the Trust Funds in the amount of $610.10 (excluding Vacation Account and voluntary 401(k) contributions), $175.80 in Vacation Account contributions, and $82.00 in voluntary 401(k) contributions.
17. The parties stipulated that the $4,700.45 owed to plaintiffs for Vacation and 401(k) contributions for the months of December 1996 through March 1997 has been paid and is not at issue in this case.
18. J.R.D.'s nonpayment of the above contributions to the Trust Funds on the dates on which such contributions were due violated the Bargaining Agreement and the Trust Agreements.
19. Divers knew that J.R.D. was obligated to but did not submit employee benefit plan contributions to the Trust Funds for the months of December 1996 through March 1997.
20. Divers knew that J.R.D. had the financial resources to pay the required employee benefit plan contributions for the months of December 1996 through March 1997.
21. Divers had both formal and practical authority within J.R.D. to direct that the December 1996 through March 1997 contributions be paid to the Trust Funds.
22. Divers decided not to transmit the December 1996 through March 1997 contributions to the Trust Funds. Rather, he chose to pay creditors.
23. To verify the accuracy of the remittance reports submitted to the Trust Funds, the Trust Funds maintain an employer audit program pursuant to the Trust Agreements. As part of this audit program, the Trust Funds' auditors perform closing audits on the books and records of employers who cease to be contributing employers or who cease to conduct business.
24. In August 1998, the Trust Funds completed a closing audit of J.R.D. for the period of November 1995 through March 1997. The audit disclosed that J.R.D. owes to the Trust Funds an additional $7,562.82 in plan contributions.
Based on the forgoing findings of fact, the Court makes the following conclusions of law:
A. Jurisdiction and Venue
Jurisdiction is proper pursuant to section 502(e)(1) of ERISA, 29 U.S.C. § 1132(e)(1), and pursuant to section 301(a) of the LMRA, 29 U.S.C. § 185(a). Venue is proper pursuant to section 502(e)(2) of ERISA, 29 U.S.C. § 1132(e)(2), and section 301(a) of the LMRA, 29 U.S.C. § 185(a).
B. J.R.D.'s Liability
ERISA requires an employer to pay multiemployer trust fund contributions in accordance with the...
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