Holland v. High-Tech Collieries, Inc.

Decision Date12 January 1996
Docket NumberCiv. A. No. 1:93-CV-158.
Citation911 F. Supp. 1021
CourtU.S. District Court — Northern District of West Virginia
PartiesMichael H. HOLLAND, Marty D. Hudson, Thomas F. Connors, and Robert T. Wallace, as Trustees of the United Mine Workers of America 1992 Benefit Plan, Plaintiffs, v. HIGH-TECH COLLIERIES, INC., a corporation, Dynamic Recovery, Inc., a corporation, Hayhurst & Hill, Inc., a corporation, Canon Coal Corporation, a corporation, and Jampac, Inc., a corporation, Defendants and Third-Party Plaintiffs, v. VESTA MINING COMPANY, a corporation, Third-Party Defendant.

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COPYRIGHT MATERIAL OMITTED

Gary A. Collias, McIntyre & Collias, Charleston, WV, Kenneth M. Johnson, UMWA Health & Retirement Funds, Washington, DC, David W. Allen, Stacey M. Blumer, UMWA 1992 Benefit Plan, Office of the General Counsel, Washington, DC, Christopher F. Clarke, UMWA Health & Retirement Funds, Senior Associate Counsel, Washington, DC, for Plaintiffs and Counter-Defendant Michael H. Holland, Marty D. Holland, Thomas F. Connors, Robert T. Wallace, as Trustees of the United Mine Workers of America 1992 Benefit Plan.

Philip C. Petty, Rose, Padden & Petty, LC, Fairmont, WV, for Defendants and Third-Party Plaintiffs, and Counter-Defendants, High-Tech Collieries, and Dynamic Recovery, Incorporated, and Defendants and Third-Party Plaintiffs, Hayhurst & Hill, Incorporated, Canon Coal Corporation, Jampac, Incorporated.

Jacqueline A. Wilson, Steptoe & Johnson, Clarksburg, WV, for third-Party Defendant and Counter-Claimant, Vesta Mining Company.

MEMORANDUM OPINION

KEELEY, District Judge.

In 1992, Congress passed the National Coal Industry Retiree Health Benefit Act ("Coal Act") to "remedy problems with the provision and funding of health care benefits ... to retirees in the coal industry; (2) to allow for sufficient operating assets for multi-employer benefit plans; and (3) to provide for the continuation of a privately financed self-sufficient program for the delivery of health care benefits to the beneficiaries of such plans." Findings and Declaration of Policy, Pub.L. No. 102-486, § 19142. The Act, 26 U.S.C. § 9701 et seq., created two funds to accomplish these purposes, the UMWA Combined Benefit Fund and the 1992 Plan, and provided for the elimination of the two existing industry-wide plans, the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan. It imposed ongoing financing obligations upon employers who, presently and in the past, have employed qualified retirees in the coal industry, and upon "related persons" to those employers. The Act further required that former employers maintaining health plans as of February 1, 1993, pursuant to a current or past National Bituminous Coal Wage Agreement ("NBCWA"), continue to maintain those plans.

The newly established Combined Benefit Fund is required to provide benefits to all coal industry retirees and their dependents who "on July 20, 1992 were eligible to receive, and receiving, benefits from the UMWA 1950 Benefit Fund or the UMWA 1974 Benefit Fund...." 26 U.S.C. § 9703(f).

The 1992 Plan is required to provide benefits to any individual who:

but for the enactment of the Coal Act would be eligible to receive benefits from the 1950 or 1974 Benefit Plans, based upon age and service earned as of February 1, 1993; or with respect to whom coverage is required to be provided under section 9711 directly by an individual employer, but who does not receive such coverage....

26 U.S.C. § 9712(b)(2). Excluded from coverage by the 1992 Plan are individuals who retire after September 30, 1994, and their dependents, and anyone receiving benefits from the Combined Fund. 26 U.S.C. § 9712(b).

These benefits are financed primarily by premiums charged to current and former employers. 26 U.S.C. §§ 9704 and 9712(d). All of these liabilities are owed, not only by the specific employer charged with the liability, but also jointly and severally by all "related persons" to the employer. 26 U.S.C. §§ 9704(a) and 9712(d)(4); see 26 U.S.C. § 9701(c)(2).

The Trustees of the 1992 Benefit Plan have sued High-Tech Collieries, Inc. (hereinafter "High-Tech") to recover several hundred thousand dollars in premiums to cover retirees for whom it is the "last signatory operator," that is, a person who signed a coal wage agreement who, "with respect to a coal industry retiree, ... was the most recent coal industry employer of such retiree." 26 U.S.C. §§ 9701(c)(1) and (2). The Trustees have brought in the other defendants, Dynamic Recovery, Inc. ("Dynamic"), Hayhurst & Hill, Inc., ("Hayhurst"), Canon Coal Corporation ("Canon"), and Jampac, Inc. ("Jampac"), as related persons to High Tech. The defendants filed a third-party complaint against Vesta Mining Company ("Vesta") seeking to enforce a Memorandum of Agreement which, they stated, required Vesta to reimburse High-Tech for all labor related costs, including retiree benefits. Vesta has counterclaimed for monies it advanced to High-Tech and Dynamic to assist them in covering health care costs of their workers and retirees. The Trustees and Vesta have filed for summary judgment and the issues have been fully briefed and argued. After careful consideration of the briefs, including the supplements, the Court concludes that both motions should be granted.

I. STANDARD FOR SUMMARY JUDGMENT

Summary judgment is appropriate only if there are no genuine issues of material fact. Charbonnages de France v. Smith, 597 F.2d 406 (4th Cir.1979). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The party seeking summary judgment has the initial burden to show absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). This burden does not require the moving party to show evidence that proves absence of a genuine issue of material fact, but only to point out its absence. Id.

The burden then shifts to the party opposing the motion. The adverse party may not rest upon mere allegations or denials, Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, and summary judgment is appropriate if the adverse party fails to show, under Rule 56, the existence of an element essential to that party's case. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. A mere scintilla of evidence supporting the case is insufficient. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. With regard to the burden on the adverse party, Rule 56(e) provides in part that

when a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.
II. UNDISPUTED FACTS

The Trustees have presented, and the defendants concede the following facts:

1. Plaintiffs are the Trustees of the United Mine Workers of America ("UMWA") 1992 Benefit Plan, which is an irrevocable trust fund created pursuant to § 9712 of the Coal Industry Retiree Benefit Act of 1992 ("the Coal Act"), 26 U.S.C. § 9712.

2. Defendant High-Tech is a West Virginia corporation, which was signatory to the National Bituminous Coal Wage Agreement ("NBCWA") of 1984.

3. High-Tech ceased to be in business for purposes of imposing liability on related persons under the Coal Act on March 31, 1992.

4. High-Tech has been owned 100 percent by Jane Hayhurst since February 18, 1987.

5. Jampac was owned by James Hayhurst and Jane Hayhurst in equal shares from October, 1987 until November, 1991. Jampac has been owned 100 percent by Jane Hayhurst since November, 1991.

6. Dynamic has been owned in equal shares by James Hayhurst and Jane Hayhurst since April 15, 1987.

7. Canon has been a wholly owned subsidiary of Dynamic since 1987.

8. James Hayhurst has owned 100 percent of Hayhurst & Hill since December, 1982.

9. Dynamic is a related person to High-Tech pursuant to 26 U.S.C. § 9701(c)(2)(A).

10. Hayhurst & Hill is a related person to High-Tech pursuant to 26 U.S.C. § 9701(c)(2)(A).

11. High-Tech has been assessed liability to the 1992 Plan for eligible beneficiaries, although the number of such beneficiaries is a subject of dispute.

12. To date, no payments have been made to the 1992 Plan on behalf of High-Tech's assigned beneficiaries.

13. Jampac's 1991 federal income tax return indicates that the following companies were members of its controlled group of corporations consenting to the apportionment of low-bracket income under 26 U.S.C. § 1561: High-Tech Collieries, Inc., Dynamic Recovery, Inc., Hayhurst & Hill, Inc. and Canon Coal Corporation.

III. TRUSTEES MOTION FOR SUMMARY JUDGMENT

Based on these undisputed facts, the Trustees argue that, as a signatory operator to the 1984 NBCWA, High-Tech is a signatory operator for purposes of the Act and a last signatory operator for 51 retired beneficiaries.1 High-Tech would therefore be liable for the payment of monthly per-beneficiary premiums for each eligible beneficiary attributed to it who is receiving benefits under the 1992 Plan. The premiums through November 1, 1994 total $298,801.47. The Trustees seek joint and several liability from the other defendants as "related persons," and the defendants concede that, if High-Tech is liable, Dynamic and Hayhurst are also liable, although the related person status of the other defendants is an issue.

In opposition, High-Tech argues first that it never employed the assigned retirees, that it was a shell or alter ego of Vesta, who told it who to hire, when to start up, when to close down, where and when to work and who paid...

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