Central States Pension Fund v. Rogers

Citation843 F. Supp. 1135
Decision Date10 July 1992
Docket NumberNo. 90-CV-73271-DT.,90-CV-73271-DT.
PartiesCENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, a pension trust, et al., Plaintiffs, v. George W. ROGERS, Defendant.
CourtU.S. District Court — Western District of Michigan

COPYRIGHT MATERIAL OMITTED

David A. Sawyer, Bloomfield Hills, MI, for plaintiffs.

W. Gregory Shanaberger, Birmingham, MI, for defendant.

OPINION

DUGGAN, District Judge.

Plaintiffs, Central States, Southeast and Southwest Areas Pension Fund (the "Fund"), and its trustees (the "Plan Sponsors") (collectively referred to as "Central States"), brought this action to recover an assessment of withdrawal liability from defendant, George W. Rogers, under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 U.S.C. §§ 1381-1461. It is Central States' contention that Rogers is jointly and severally liable for withdrawal liability under the MPPAA's common control group provision in the principal sum of $541,543.94. See 29 U.S.C. § 1301(b)(1). Central States claims that the withdrawal liability should be imputed to Rogers as the owner of an unincorporated sole proprietorship, (which the Court shall hereafter refer to as "Rogers' Leasing"), which in turn, is or was during the relevant time, a member of a common control group with Genesee Cartage Company (Genesee), D & S Leasing, Inc. (D & S) and Michiana Trucking, Inc. a/k/a Michiana Leasing (Michiana). In July of 1990, the United States District Court for the Eastern District of Michigan entered a consent judgment against Genesee, D & S and Michiana. See Central States v. Genesee Cartage Co., No. 89-72835, slip op. (E.D.Mich. June 14, 1990) (Gilmore, J.). None of the corporations have paid the judgment in that action.

I.

The Court conducted the trial of this action without a jury. Based upon the testimony presented and the exhibits introduced, the Court makes the following findings of fact and conclusions of law:

A. Findings of Fact

1. Plaintiff, the Central States, Southeast and Southwest Areas Pension Fund, is a multiemployer pension fund within the meaning of 29 U.S.C. §§ 1002(37)(A), 1301(a)(3).
2. Defendant, George W. Rogers, resides and/or does business in this district.

3. Since its incorporation in June of 1981, Rogers has been the sole shareholder of D & S Leasing; on July 24, 1981, Rogers became the sole shareholder of Michiana Trucking, a/k/a Michiana Leasing; on August 16, 1984, Rogers became the sole shareholder of Genesee Cartage Company. D & S, Michiana, and Genesee are now or have been Michigan corporations doing business within the State of Michigan.

4. On December 31, 1984, Rogers, whose address at that time was 218 South Main Street, Milford, Michigan, (218 S. Main), purchased property located at 218 S. Main. Rogers was personally leasing property located at 218 S. Main to Genesee in 1985 and 1986, and receiving rent from Genesee; and Rogers was personally leasing property located at 218 S. Main to D & S in 1986, and receiving rent from D & S. Rogers' leasing activity in 1985 and 1986 constituted a sole proprietorship operation of which Rogers owned and controlled (Rogers' Leasing).

5. In 1985 Rogers' Leasing, Genesee, D & S and Michiana were owned and controlled by Rogers.

6. Withdrawal liability owed to Central States in the amount of $295,811.70 was assessed against Genesee by notice and demand letter dated March 21, 1986, (mailed to Genesee at 218 S. Main, and received by Genesee on March 24, 1986), 29 U.S.C. § 1399(b)(1); in a May 21, 1986, letter (mailed to Genesee at 218 S. Main, and received by Genesee on May 30, 1986), Central States advised Genesee that the account was past due, 29 U.S.C. § 1399(c)(5); between May 21, 1986, and August 25, 1989, Central States obtained information which led it to conclude that D & S had withdrawn from the Fund and that Genesee, D & S and Michiana were commonly controlled; by letter dated August 25, 1989, (received by Genesee September 5, 1989, at P.O. Box 196, Lake, Michigan), Central States notified Genesee that its withdrawal liability was revised to a total of $541,543.94.

7. Rogers had constructive knowledge of the withdrawal liability as the owner of Rogers' Leasing.

8. Neither Rogers, Genesee, D & S or Michiana requested review of the withdrawal liability under 29 U.S.C. § 1399(b)(2)(A); initiated arbitration under 29 U.S.C. § 1401(a); or made payment towards the withdrawal liability. Prior to Central States filing of the instant action, the statutorily-mandated time to arbitrate had expired, 29 U.S.C. § 1401(a)(1); the amount of the withdrawal liability assessed against the "employer" responsible for the assessment had become fixed, 29 U.S.C. § 1401(b)(1); and the "employer" was in default. 29 U.S.C. § 1399(c)(5).

9. On September 25, 1989, Central States filed Civil Case No. 89-72835 against Genesee, D & S and Michiana to collect the withdrawal liability. 29 U.S.C. § 1401(b)(1). Based upon the stipulation of the parties, in June of 1990, Judge Gilmore entered a Consent Judgment against Genesee, D & S, and Michiana in Central States' favor. At the time of entry of the Consent Judgment, Central States was unaware of the fact that George Rogers owned Rogers' Leasing.

10. The facts surrounding the defenses Rogers raises to this action are in dispute. The defenses Rogers has raised are governed by the arbitral provisions of the MPPAA, 29 U.S.C. §§ 1381-1399. Such defenses were available to Rogers before the statutorily-mandated time to arbitrate had expired. The facts in this case made a prior resort to arbitration appropriate.

B. Conclusions of Law

1. This Court has subject matter jurisdiction over this matter as conferred by 29 U.S.C. § 1451(c). The Court has personal jurisdiction over Rogers and venue is proper in this Court. 29 U.S.C. § 1451(d).

2. The Consent Judgment entered in Civil Action No. 89-72835 has no preclusive effect on the instant case.

3. Rogers' sole proprietorship operation, Rogers' Leasing, is now or has been an unincorporated trade or business within the meaning of 29 U.S.C. § 1301(b)(1); and Genesee, D & S and Michiana are now or have been incorporated trades or businesses within the meaning of 29 U.S.C. § 1301(b)(1).

4. In 1985 Rogers' Leasing, Genesee, D & S and Michiana were a "brother-sister group of trades or businesses under common control," e.g., a "common control group," under the applicable ERISA/MPPAA statutory and regulatory scheme, and as such, were a "single employer" within the meaning of 29 U.S.C. § 1301(b)(1).

5. Rogers' Leasing, as a member of a common control group with Genesee, D & S, and Michiana is jointly and severally liable to the Fund for the withdrawal liability. The liability of Rogers' Leasing is imputed to Rogers as the owner of Rogers' Leasing.

6. Rogers cannot raise any defenses that would otherwise have been subject to arbitration. Rogers' failure to seek arbitration within the statutorily-mandated time constitutes a waiver of his right to his asserted defenses. Rogers is now barred by the exhaustion of administrative remedies doctrine from raising such defenses in this action.

II.

Plan sponsors must determine whether a withdrawal has occurred and "notify the employer of the amount of the liability, prepare a schedule for liability payments, and demand payment...." Mason & Dixon Tank Lines v. Central States, 852 F.2d 156, 159 (6th Cir.1988) (citing 29 U.S.C. §§ 1382, 1399(b)(1)). In a March 21, 1986, notice and demand letter Genesee was advised that "as a result of a permanent cessation of contributions to Central States," it had incurred $295,811.70 in withdrawal liability; that the "demand ... applies equally to all members of any controlled group of trades or businesses ... of which Genesee is a member"; and that dispute resolution procedures were available (an enclosure set forth such procedures). (Pl.s' Ex. 1, Letter from Central States to Genesee of 3/21/86.)1 When Genesee failed to make payment, by letter dated May 21, 1986, Central States advised Genesee that the account was past due; that failure to make a payment within 60 days from receipt of the notice would constitute a default under ERISA; and that the entire amount would be due and referred to Fund counsel for collection. (Pl.s' Ex. 2, Letter from Central States to Genesee of 5/21/86.)

Shortly thereafter, Central States began to question whether D & S had withdrawn from the Fund. By letter dated August 7, 1986, Central States requested that D & S furnish information on a "Statement of Business Affairs" so that a determination of liability could be made. (Pl.s' Ex. 4, Letter from Central States to D & S of 8/7/86.) D & S responded that it had not triggered a withdrawal penalty. (Pl.s' Ex. 6, Letter from D & S to Central States of 8/17/86.) Rogers signed the response in his capacity as President of D & S, and returned a completed Statement of Business Affairs. The Statement specifically requested disclosure of Rogers' ownership interest in any other entity, identifying a sole proprietorship as one such entity. In response to that question "N/A" was written. (Pl.s' Ex. 6, Statement of Business Affairs at 10.) In a second letter to D & S, Central States again requested information pertaining to its belief that D & S had withdrawn from the Fund. (Pl.s' Ex. 5, Letter from Central States to D & S of 10/6/86). Rogers again responded, on behalf of D & S, reiterating that D & S had not triggered a withdrawal penalty. (Pl.s' Ex. 7, Letter from D & S to Central States of 2/23/87.)

Central States nevertheless concluded that D & S had withdrawn from the Fund. And based upon information gathered from other sources, Central States also concluded that Genesee, D & S and Michiana were members of a common control group. Subsequently, Central States reviewed the March, 1986 assessment, and Genesee was notified that its withdrawal...

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