Gilbert Imported Hardwoods, Inc. v. Holland

• Decision Date: 21 September 2001
• Docket Number: No. 2:00-0030.,2:00-0030.
• Citation: 176 F.Supp.2d 569
• Parties: GILBERT IMPORTED HARDWOODS, INC., Plaintiff, v. Michael H. HOLLAND, Marty D. Hudson, Elliot A. Segal, Thomas O.S. Rand, William P. Hobgood, Carl Van Horn, and Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund, Defendants.
• Court: U.S. District Court — Southern District of West Virginia

176 F.Supp.2d 569

GILBERT IMPORTED HARDWOODS, INC., Plaintiff, v. Michael H. HOLLAND, Marty D. Hudson, Elliot A. Segal, Thomas O.S. Rand, William P. Hobgood, Carl Van Horn, and Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund, Defendants.

No. 2:00-0030.

United States District Court, S.D. West Virginia, at Charleston.

September 21, 2001.

COPYRIGHT MATERIAL OMITTED

Forrest H. Roles, Esquire, Anna M. Dailey, Esquire, Heenan, Althen & Roles, Charleston, WV, John R. Woodrum, Meikka A. Cutlip, W. Gregory Mott, Heenan, Althen & Roles, Washington, DC, for Gilbert Imported Hardwoods, plaintiff.

David W. Allen, Larry D. Newsome, Jonathan Sokolow, UMWA Health & Retirement Funds, Office of General Counsel, Washington, DC, Gary A. Collias, McIntyre & Collias, Charleston, WV, for Michael H. Holland, Marty D. Hudson, Elliot A. Segal, Thomas O.S. Rand, William P. Hobgood, Carl Van Horn, and Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund, defendants.

MEMORANDUM ORDER

COPENHAVER, District Judge.

This matter is before the court on the following motions: plaintiff's motion for summary judgment, filed April 3, 2000; plaintiff's motion to dismiss defendants' counterclaim, filed April 7, 2000; plaintiff's renewed motion for summary judgment, filed October 23, 2000; plaintiff's renewed motion to dismiss defendants' counterclaim, filed October 23, 2000; and defendants' motion for summary judgment, filed November 3, 2000.¹

I. Procedural Background

Beginning in 1993, the Commissioner of the Social Security Administration ("SSA") assigned to Gilbert Imported Hardwoods Inc. ("Gilbert") twenty retired mine workers who had been employed by Jumacris Mining Company ("Jumacris") and their dependents, accounting for a total of 41 beneficiaries, on the theory that Gilbert was a "related person" to Jumacris as that term is defined by the Coal Industry Retiree Health Benefit Act of 1992,² 26 U.S.C. §§ 9701-9722 (1994 ed. and Supp. II) ("Coal Act"). (Plaintiff's Proposed Stipulated Fact No. 2, Accepted by defendants in Amendment to Pretrial Order; Attachment 1, Pl.'s Compl.). Although it disagreed with the assignment, Gilbert paid into the United Mine Workers of America Combined Fund ("Combined Fund"),³ as required by the Coal Act,⁴ the assessed premiums while it challenged the assignment. (Aff. of John B. Earles, Human Resources Manager Gilbert, p. 2, attached as Exhibit 1, Plaintiff's Mot. Sum. Judge.) Between the years 1993 through 1999, Gilbert paid the Combined Fund approximately $800,000 in premiums for these twenty retirees and their beneficiaries. (Id.)

Gilbert filed suit against the Commissioner of the SSA in the United States District Court for the Southern District of West Virginia at Huntington, on May 14, 1998, challenging the Commissioner's assertion that Gilbert was a "related person" to Jumacris within the meaning of the Coal Act. (Plaintiff's Proposed Stipulated Fact No. 3, Accepted by defendants in Amendment to Pretrial Order). The SSA agreed to withdraw its assignment of the Jumacris beneficiaries to Gilbert, and the case was dismissed by order entered May 3, 1999, based upon an April 29, 1999, "Stipulation and Settlement Agreement" ("Settlement Agreement") submitted jointly by the parties. (Plaintiff's Proposed Stipulated Fact No. 4, Accepted by defendants in Amendment to Pretrial Order). The Settlement Agreement provides that "Defendant agrees that the beneficiaries listed in Appendix A [the 41 Jumacris beneficiaries] will not be assigned now, or at any time in the future, to Plaintiff." (Settlement Agreement, attached as Exhibit 2, Counterclaim.) The SSA, by correspondence dated May 25, 1999, notified counsel for Gilbert that "pursuant to the April 29, 1999[sic], United States District Court Order approving the `Stipulation and Settlement Agreement' in Gilbert Imported Hardwood, Inc., v. Apfel, the assignments made to Gilbert, based upon a purported related-party status with Jumacris Mining, Inc., are withdrawn." (May 25, 1999, Correspondence from O'Connel, Attachment 1, Pl.'s Complaint.)

After the SSA withdrew its assignment of the 41 Jumacris beneficiaries, Gilbert retained responsibility under the Coal Act for the premiums of another twenty-seven beneficiaries, later reduced to twenty-five. (Aff. of John B. Earles, Human Resources Manager Gilbert, p. 2, attached as Exhibit 1, Plaintiff's Mot. Sum. Judge.). Gilbert's health and death premiums for these twenty-five beneficiaries for the 1999-2000 plan year was $72,205.98. (Id. at p. 3.)⁵

When Gilbert sought a refund of the approximately $800,000 in premiums it had paid on behalf of the formerly assigned Jumacris retirees, the Combined Fund refused to refund the payment, maintaining that it was permitted statutorily to apply the $800,000 as an offset to Gilbert's future payments to the Combined Fund. (Plaintiff's Proposed Stipulated Facts Nos. 6-7, Accepted by defendants in Amendment to Pretrial Order). Gilbert estimates that it will take more than ten years to utilize the $800,000 as a credit for future premiums. (Attachment A to Complaint, Correspondence to the Administrators of Combined Fund at 1). According to the defendants, as of the end of the 2001 plan year, Gilbert's credit with the Combined Fund will be $550,201.19. (Proposed Pretrial Order, p. 13.)

Gilbert filed this civil action on January 11, 2000, asserting that both the plain language of the Coal Act and the common law doctrine of restitution require the Combined Fund to return all premiums paid on behalf of the Jumacris retirees, plus prejudgment interest, costs and attorney fees. (Pl. Compl. at ¶ 7.)

The Combined Fund filed a counterclaim on March 16, 2000, asserting that Gilbert wilfully withheld material information from the SSA, leading the SSA to withdraw its assignment of the Jumacris retirees and enter into the April 29, 1999, settlement agreement with Gilbert. (Counterclaim at ¶ 24) The Combined Fund alleges that it is entitled to the issuance of "[a] preliminary injunction directing Gilbert to provide the Commissioner of Social Security with a complete accounting of the business activities or any other activities of Jumacris Mining, including an unedited set of its consolidated federal income tax returns ... and further directing Gilbert to provide SSA with all documentation that reasonably relates to such activity and such other information as SSA reasonably requests." (Id. at Prayer for Relief.) The Trustees further seek a stay of proceedings in the plaintiff's action pending the Commissioner's review of the documents and information provided by Gilbert.

Gilbert filed a motion to dismiss the Trustees' counterclaim on April 7, 2000, arguing that the Trustees lack standing to bring the counterclaim and that the counterclaim fails to state a claim upon which relief can be granted. Plaintiff and defendants filed cross-motions for summary judgment, with each side asserting that resolution of the case in its favor is appropriate. Plaintiff later filed a supplement to its motion to dismiss and its motion for summary judgment.

II. Plaintiff's Motion to Dismiss Counterclaim

The defendants⁶ assert in their counterclaim that the SSA's decision to withdraw the assignment of beneficiaries to Gilbert was made in error, based upon Gilbert's failure to provide SSA with certain pertinent documents within its control. (Counterclaim at ¶ 21-23.) According to defendants, Gilbert failed to produce "most of the consolidated federal income tax returns of the [sic] Gilbert and its subsidiaries," which tax returns "documented the fact that the Gilbert Companies claimed business expenses attributable to Jumacris in 1983 and 1984." (Id. at ¶ 20.) The defendants claim that this "wrongful and willful withholding of factual information and documentary evidence from SSA wrongfully caused SSA to void the assignments of the Jumacris Retirees." (Id. at ¶ 24.) The defendants seek a preliminary injunction "directing Gilbert to provide the Commissioner of the Social Security Administration with a complete accounting of the business activities or any other activities of Jumacris Mining, Inc. from 1982 to 1985, including an unedited set of its consolidated federal income tax returns for 1983, 1984, and 1985," and, as noted above, further directing Gilbert to provide SSA with all documentation that reasonably relates to such activity and such other information as SSA reasonably requests. (Id. at Prayer for Relief.)

In its motion to dismiss, the plaintiff seeks dismissal of the counterclaim under Federal Rule of Civil Procedure 12(b)(1), for lack of subject matter jurisdiction, and 12(b)(6), for failure to state a claim upon which relief can be granted.

1. Rule 12(b)(1)

The plaintiff contends that defendants lack the authority to review the SSA's decision to withdraw an assignment of beneficiaries to Gilbert and therefore have no legal standing to seek an order compelling Gilbert to produce documents to SSA, depriving the court of subject matter jurisdiction over the counterclaim and rendering the counterclaim incognizable. (Pl.'s Mem. In Suppt. Mot. Dismiss at 3-5.) It is the plaintiff's contention that only the SSA would have standing to seek the type of injunctive relief described in the defendants' counterclaim. (Id.)

In response, defendants maintain that they suffered harm when "Gilbert procured the voiding of the Jumacris assignments by withholding factual information and documents." (Defs.' Resp. at 5.) They contend that the relief they seek from their counterclaim is not a reversal of the SSA's decision to withdraw its assignment of beneficiaries, but merely an order that "Gilbert ... provide the information to SSA that it should have provided at an earlier date." (Id.) The defendants assert that they have standing to seek this relief which is "narrowly tailored to remedy the wrong alleged in the counterclaim." (Id.)

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