Flynn v. R.C. Tile
| Decision Date | 09 January 2004 |
| Docket Number | No. 02-7091.,02-7091. |
| Citation | 353 F.3d 953 |
| Parties | John FLYNN, John T. Joyce, Louis Weir, Frank Stupar, James Boland, George Harbison, Dominic Spano, Paul Songer, Charles Velardo, Eugene George, John Wallner, Walter Kardy, Dan Schiffer, and Joseph Speranza, Jr., as Trustees of, and on behalf of the Bricklayers and Trowel Trades International Pension Fund, Appellees, v. R.C. TILE, R.C. Construction, Richard C. Flores, and Priscilla Jean Flores, Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (No. 99cv02044 (EGS)).
Ira R. Mitzner filed a brief for appellees.
Richard C. Flores, individually and doing business as R.C. Construction, and Priscilla Jean Flores, individually and doing business as R.C. Tile, filed a brief for appellants pro se.
Before: GINSBURG, Chief Judge, and SENTELLE and HENDERSON, Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
Richard Flores, individually and doing business as R.C. Construction, and Priscilla Flores, individually and doing business as R.C. Tile, appeal the judgment of the district court in favor of the Trustees of the Bricklayers and Trowel Trades International Pension Fund upon the Trustees' claim under the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., for delinquent pension contributions. The appellants contend the district court overlooked genuine issues of material fact and applied incorrect legal standards in concluding R.C. Tile was the alter ego of R.C. Construction and liable for its delinquent pension contributions. We affirm the judgment.*
The three Flores brothers — Joseph, Richard, and Jesse — do tile work on public projects in southern California. Joseph Flores manages all operations of the family's tile installation businesses; his wife, Priscilla Flores, oversees the finances and acts as office manager for the family's businesses. Richard and Jesse Flores set tile and do not have management responsibilities.
Over the past thirty years the Flores family has owned and operated several tile businesses in southern California. Joseph Flores owned and operated Majestic Tile from 1970 to 1995; Richard Flores worked for him. Majestic Tile closed in 1995 after Joseph Flores encountered problems with the IRS owing to Majestic's failure to remit payroll taxes. This case concerns three of the family's businesses that began operations after Majestic was closed.
In 1995 Richard started a business known as R.C. Construction. Although nominally the owner, Richard had little knowledge about or involvement with the management and finances of R.C. Construction. Richard received wages for his work as a tile setter but received no share of the profits. Joseph Flores, who referred to himself as the "operations manager" of R.C. Construction, estimated, bid, and negotiated R.C. Construction's tile setting contracts as he had Majestic's before. Priscilla was in charge of R.C. Construction's finances, as she had been of Majestic's.
In 1996 R.C. Construction entered into a collective bargaining agreement (CBA) with the local affiliate of the International Union of Bricklayers and Allied Craftsmen. R.C. Construction thereby agreed to make contributions to the Bricklayers and Trowel Trades International Pension Fund "for each hour worked by all workmen covered by this agreement" — defined to include all tile setters employed by R.C. Construction — until such time as the company gave effective notice of its withdrawal from the CBA. Although R.C. Construction ceased making payments to the Fund in December 1997, and ceased operating in January 1998, it did not then provide the Fund with a notice of withdrawal from the CBA.
Shortly after R.C. Construction ceased operations, Jesse Flores started R.C. Tile. Although Jesse was listed as the owner, he did not have any involvement in the management of the firm; he worked solely as a tile setter. Joseph, who again styled himself the "operations manager," stated in his deposition that "R.C. Tile was my company." Priscilla served R.C. Tile, as she had R.C. Construction, as the office manager and bookkeeper. Although there was no written contract between the two companies, R.C. Tile assumed R.C. Construction's tile setting sub-contracts and completed jobs R.C. Construction had begun. R.C. Tile did not, however, become a signatory to the CBA or contribute to the Fund.
In 1998 Jesse Flores transferred the assets of R.C. Tile to Priscilla Flores; there was no written contract of sale and apparently no consideration. Priscilla continued to do business under the R.C. Tile name and each member of the Flores family continued to perform his or her job at R.C. Tile.
When R.C. Construction had not made any payments to the Fund for more than a year, the Trustees of the Fund made unavailing demands upon both R.C. Construction and R.C. Tile. Richard and Priscilla Flores respectively notified the Trustees that R.C. Construction and R.C. Tile (although not a signatory) were withdrawing from the CBA.** The Trustees then sued R.C. Construction, R.C. Tile, and Richard and Priscilla Flores under 29 U.S.C. §§ 1132(g)(2) and 1145 to recover the delinquent pension fund payments.
The district court granted the Trustees' motion for summary judgment. The court concluded from the undisputed material facts that "R.C. Construction and the two R.C. Tile companies are alter egos" and that "it is in the interest of justice to hold that these three successive companies are alter egos." The appellants moved for reconsideration, which the district court denied, and they now appeal to this court.
We review the district court's grant of summary judgment de novo. See Workman v. United Methodist Comm. on Relief of the Gen. Bd. of Global Ministries, 320 F.3d 259, 262 (D.C.Cir.2003). Summary judgment is appropriate only if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." FED. R.CIV.P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).
The appellants present three arguments for reversing the judgment of the district court: First, the court failed to consider the Declaration of Joseph Flores, which contained material facts in dispute. Second, the court both ignored other facts material to whether R.C. Construction and R.C. Tile were alter egos and applied incorrect legal standards for determining whether an entity is an alter ego under the ERISA. Third, the Trustees are barred by equitable considerations from recovering the delinquent pension contributions.
In its initial decision the district court refused to consider the Declaration of Joseph Flores because it "contradicts Mr. Flores' deposition testimony at several relevant points." The court would not allow the Flores to "create a ... factual dispute through the submission of a self-serving declaration that contradicts prior deposition testimony."
Upon the Flores' motion for reconsideration, however, the district court did consider the Declaration and found it did not contradict any fact material to whether R.C. Tile was the alter ego of R.C. Construction. Rather, the court stated, the Declaration disputed only "minor and immaterial issues of fact" and did not alter the district court's conclusion that the Trustees were entitled to summary judgment.
On review, therefore, this court need not consider the merits of the district court's initial conclusion that the Declaration was a "sham affidavit." The appellants' protestation notwithstanding, at the end of the day the district court simply did not ignore Joseph's Declaration in granting summary judgment to the Trustees.
The Trustees' claim arises under § 515 of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). 29 U.S.C. § 1145. That provision makes a federal obligation of an employer's contractual commitment to contribute to a multiemployer pension fund:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plans or such agreement.
Section 515 was a response to the problem created when an employer defaults upon its obligation to fund a multiemployer defined-benefit pension plan: If one employer does not make its contributions to such a plan, then the other participating employers must make larger contributions to cover the shortfall. See, e.g., H.R. REP. No. 96-869 (II) at 15 (1980). The funding burden may be shifted beyond other participating employers to taxpayers via the Pension Benefit Guaranty Corporation, and to beneficiaries in the form of reduced pension benefits. See Upholsterers' Int'l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1328-29 (7th Cir.1990).
Section 515 "evinces a strong congressional desire to minimize contribution losses and the resulting burden such losses impose upon other plan participants." Id. at 1328. The statute "puts multiemployer plans in a stronger position than they otherwise occupy under common law contract principles," Bakery & Confectionery Union & Indus. Int'l Pension Fund v. Ralph's Grocery Co., 118 F.3d 1018, 1021 (4th Cir.1997); it facilitates recovery of contributions from delinquent employers by limiting the defenses available to an employer in an action brought to enforce the obligation created by § 515.
Alter ego liability under § 515 further protects the federal interest in the solvency of multiemployer pension plans by enabling ERISA trustees to recover delinquent contributions from a sham entity used to circumvent the...
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