Carpenters' Dist. Council of Greater St. Louis v. F.G. Lancia Custom Woodworking, LLC

Decision Date21 December 2015
Docket NumberNo. 4:06-CV-1673 CAS,4:06-CV-1673 CAS
Citation155 F.Supp.3d 951
Parties Carpenters' District Council of Greater St. Louis and Vicinity, et al., Plaintiffs, v. F.G. Lancia Custom Woodworking, LLC, et. al., Defendants.
CourtU.S. District Court — Eastern District of Missouri

Greg A. Campbell, Michael A. Evans, Hammond and Shinners, P.C., St. Louis, MO, for Plaintiffs.

Gregory D. O'Shea, O'Shea Law Firm, St. Louis, MO, for Defendant, Frank G. Lancia.

MEMORANDUM AND ORDER

CHARLES A. SHAW

, UNITED STATES DISTRICT JUDGE

This closed matter under the Employee Retirement Income Security Act of 1974 (ERISA or the Act), 29 U.S.C. §§ 1001, et seq. ,

is before the Court on plaintiffs' Motion For a Creditor's Bill in Equity and to Pierce the Corporate Veil. Plaintiff Carpenters' District Council of Greater St. Louis and Vicinity is an unincorporated association comprised of and representing persons engaged in carpentry, joining and related activities and is a labor organization within the meaning of the National Labor Relations Act, and an employee organization within the meaning of ERISA. The other plaintiffs are various related trust funds which are employee benefit plans under ERISA, and the trustees and fiduciaries of those plans. Plaintiffs obtained a default judgment in this action against defendant F.G. Lancia Custom Woodworking, LLC (Lancia Custom Woodworking) for unpaid contributions to the plans, and against Lancia Custom Woodworking and Frank Lancia for money due on a promissory note.

Plaintiffs seek to satisfy the remainder of their uncollected judgment against the defendants from assets of their alleged alter ego, Lancia's Fine Furniture and Cabinetry, LLC (“Lancia's Fine Furniture”). No response has been filed to the motion and the time to do so has passed. For the following reasons, plaintiffs' motion for a creditor's bill in equity and to pierce the corporate veil will be granted.

I. Procedural History

On November 17, 2006, plaintiffs filed suit against defendant Lancia Custom Woodworking in order to collect delinquent contributions, liquidated damages, interest, attorneys' fees, and costs owed pursuant to collective bargaining agreements and under the terms of ERISA, 29 U.S.C. § 1132

. On January 18, 2007, plaintiffs filed an amended complaint which added Frank Lancia as a defendant and asserted a claim against Lancia Custom Woodworking and Mr. Lancia for sums due under a promissory note. On June 5, 2007, this Court entered a default judgment against defendant Lancia Custom Woodworking for unpaid contributions in the amount of $46,842.17, and a default judgment against Lancia Custom Woodworking and Frank Lancia, jointly and severally, on the promissory note in the amount of $87,105.14, together with attorney's fees and costs of $1,051.55 (Doc. 16).

In September 2009, the Court granted plaintiffs' Motion for a Creditor's Bill in Equity and to Pierce the Corporate Veil of a new corporation F.G.L. Custom Woodworking and Audio/Video, Inc. (Lancia Audio/Video), as the alter ego of Lancia Custom Woodworking and Frank Lancia.1 See Mem. and Order of Sept. 29, 2009 (Doc. 77), Carpenters' Dist. Council of Greater St. Louis and Vicinity v. F.G. Lancia Custom Woodworking, LLC, 2009 WL 3160576 (E.D.Mo. Sept. 29, 2009)

.

Plaintiffs have only been able to collect $58,837.89, leaving $76,160.97 of the judgment amount unpaid. Plaintiffs issued execution against Lancia Custom Woodworking and Lancia Audio/Video in August 2014, but the garnishment was returned with the response that no funds were available. Plaintiffs now seek a creditor's bill against Lancia Fine Furniture.

II. Findings of Fact

Defendant Frank Lancia was the sole owner and officer of defendant F.G. Lancia Custom Woodworking, LLC (Lancia Custom Woodworking). Lancia Custom Woodworking was in the business of making custom furniture and cabinetry. Lancia Custom Woodworking was bound to a collective bargaining agreement with the Carpenters District Council of Greater St. Louis which required it to submit monthly reports showing all hours worked by each covered employee and to make contributions to the Carpenters Pension and Health & Welfare Funds. Lancia Custom Woodworking failed to make the required contributions for the period of September 2006 through March 2007 and plaintiffs determined it owed contributions, liquidated damages and interest. In addition, Lancia Custom Woodworking and Frank Lancia as an individual executed a promissory note with plaintiffs for a $100,000 loan with 4% interest.

Lancia Custom Woodworking and Frank Lancia defaulted on the promissory note. Defendant Lancia Custom Woodworking stopped doing business in May 2008. On March 27, 2008, defendant Frank Lancia incorporated F.G.L. Woodworking and Audio/Video, Inc. (“Lancia Audio/Video”), which was in the business of making custom furniture and cabinetry and also cabinetry for audio and video equipment. Defendant Frank Lancia owned 75% of Lancia Audio/Video, Inc., served as the corporation's president, and performed all the hiring and firing of employees. The other owners were Cheryl Lancia, Frank Lancia's wife, and Chris and Lisa Hetley. Frank Lancia's sister Cecelia Lancia was the Secretary of Lancia Audio/Video and performed bookkeeping work for it. Plaintiffs obtained a creditor's bill in equity against Lancia Audio/Video in September 2009. See Mem. and Order of Sept. 29, 2009. However, plaintiffs' efforts to collect the entire judgment amounts from defendants Lancia Custom Woodworking, Frank Lancia and Lancia Audio/Video have not been successful.

In January 2014, Lancia Audio/Video, Inc. stopped doing business. (Deposition of Cecilia Lancia 21:19-22:2, Nov. 6, 2014) (“Lancia Dep.”). Cecelia Lancia testified that Lancia Audio/Video ceased operations because it owed money to the Internal Revenue Service, which “told [Frank Lancia] he had to shut down.” (Id. 71:14-72:2.) In January 2014, Lancia Fine Furniture was created. (Id. 7:2-3.) Lancia Fine Furniture is in the business of making custom furniture and cabinetry, but is trying to focus more on residential business rather than residential and commercial. (Id. 10:4-19.) Lancia Fine Furniture is wholly owned by Frank Lancia's sister, Cecilia Lancia. (Id. 6:24-7:1) As part of Cecilia Lancia's duties with Lancia's Fine Furniture, she performs the same bookkeeping duties as she did at Lancia Audio/Video. (Id. 15:19-24, 27:1:7.) Lancia's Fine Furniture conducts business out of the same location as did both Lancia's Custom Woodworking and Lancia Audio/Video. (Id. 11:8-12:2.) Frank Lancia works for Lancia's Fine Furniture in much the same supervisory role he performed with Lancia's Custom Woodworking and Lancia Audio/Video. (Id. 16:4-22, 33:19-34:2.)

All of Lancia's Fine Furniture's current or previous employees, which include Frank Lancia, Cecilia Lancia, Roger Friedman, Lisa Hetley, Mark Carroll, and Bill Chamberlain, were previously employed by Lancia's Custom Woodworking and/or Lancia Audio/Video. (Lancia Dep. 17:3-19:9.) A majority of Lancia's Fine Furniture's equipment is owned and or was used by Lancia's Custom Woodworking and Lancia Audio/Video. (Id. 20:8-21:9.) Lancia's Fine Furniture uses the same vehicles—Frank Lancia's truck and utility van—that were used by both Lancia's Custom Woodworking and Lancia Audio/Video. (Id. 28:14-29:14.). Lancia's Fine Furniture shares the use of common suppliers—McIntyre, Compi Distributors, St. Charles Hardwoods, Lowe's and Home Depot—with Lancia Audio/Video. (Id. 30:7-31:23.) Lancia's Fine Furniture utilizes the same bank, First National, and the same accountant, Steve Shorely, as did Lancia Audio/Video. (Id. 25:21-26:24.)

III. Discussion
A. Legal Standard

This matter is governed by ERISA, 29 U.S.C. §§ 1132(a)(3)(ii)

and 1145, and the LMRA, 29 U.S.C. § 185(a). Jurisdiction and venue are proper in this Court.

Plaintiffs assert that Lancia Fine Furniture is an alter ego of Lancia Custom Woodworking and Lancia Audio/Video. If this is correct, then plaintiffs can pierce Lancia Fine Furniture's corporate veil and attempt to collect from it the judgment they hold against Lancia Custom Woodworking and Frank Lancia. The alter ego doctrine developed under the National Labor Relations Act, 29 U.S.C. §§ 151 et seq. ,

focuses “on the existence of a disguised continuance of a former business entity or an attempt to avoid the obligations of a collective bargaining agreement.” Greater Kansas City Laborers Pension Fund v. Superior General Contractors, Inc. , 104 F.3d 1050, 1055 (8th Cir.1997) (quoted case omitted); see also Trustees of the Graphic Commc'ns Int'l Union Upper Midwest v. Bjorkedal , 516 F.3d 719, 727 n. 2 (8th Cir.2008) (citing cases). “The essential inquiry under the alter ego analysis is [w]hether there was a bona fide discontinuance and a true change of ownership ... or merely a disguised continuance of the old employer.’ Iowa Express Distr., Inc. v. N.L.R.B. , 739 F.2d 1305, 1310 (8th Cir.1984) (quoting Southport Petroleum Co. v. N.L.R.B. , 315 U.S. 100, 106, 62 S.Ct. 452, 86 L.Ed. 718 (1942) ).

“In determining whether two business entities are alter egos, ... courts consider a variety of factors, including whether the two entities have substantially identical management, business purpose, operation, equipment, customers, supervision, and ownership.” Midwest Precision Heating and Cooling, Inc. v. N.L.R.B. , 408 F.3d 450, 458 (8th Cir.2005)

(cited case omitted). In the alter ego analysis, “one of the most important [factors] is the existence of continued control or ownership by the owner of the discontinued company. Iowa Express Distr. , 739 F.2d at 1310 (cited case omitted). Another key factor is “whether a motive for the new entity's taking over of the operations of the old entity was to evade responsibilities under the Act and whether dealings between the two entities were at arm's length.” Midwest Precision Heating , 408 F.3d at 458–59 (cited case omitted). This test is flexible, so the lack of any...

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