LOCAL 478 v. Jayne

Decision Date27 November 1991
Docket NumberCiv.A. No. 91-1901(AJL).
PartiesLOCAL 478 TRUCKING and ALLIED INDUSTRIES PENSION FUND, Francis Prainito, Donald Paolella, Daniel McFall, Robert Kortenhaus, Andy Threatt and Louis Salz, as Trustees of Local 478 Trucking and Allied Industries Pension Fund, Plaintiffs, v. Willard D. JAYNE, Douglas W. Jayne, Gary J. Jayne, Elizabethport Realty Co., A Partnership and any and all members of trades or businesses under common control (excluding Jayne's Motor Freight, Inc.), Defendants.
CourtU.S. District Court — District of New Jersey

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John E. Krampf, Michael L. Banks, Catherine Reid, Morgan, Lewis & Bockius, Philadelphia, Pa., Victor Parsonnet, Reitman, Parsonnet & Duggan, Newark, N.J., for plaintiffs.

George A. Spadoro, Bruce D. Ettman, Spadoro & Hilson, Woodbridge, N.J., for defendants.

CORRECTED OPINION

LECHNER, District Judge.

This is an action brought by plaintiffs Local 478 Trucking and Allied Industries Pension Fund ("Fund"), and Francis Prainito, Donald Paolella, Daniel McFall, Robert Kortenhaus, Andy Threatt and Louis Salz as trustees (the "Trustees") of the Fund (collectively, the "Plaintiffs") against defendants Willard D. Jayne ("Willard Jayne"), Douglas W. Jayne ("Douglas Jayne"), Gary J. Jayne ("Gary Jayne") (collectively, the "Individual Defendants"), Elizabethport Realty Company ("Elizabethport") and Bro-Jen1 ("Bro-Jen") (collectively, the "Partnership Defendants," with the Individual Defendants, collectively, the "Defendants"). Because Douglas Jayne is undergoing personal bankruptcy proceedings, Plaintiffs have specifically excluded Douglas Jayne individually from this motion for summary judgment. Pls.' Br. at 19 n. 10; see also Defs.' Br. at 2 n. 1.

Plaintiffs commenced this action to compel Defendants to make payments to the Fund for the withdrawal liability of Jayne's Motor Freight ("Jayne's Motor Freight") under a retirement welfare benefit plan (the "Plan") established pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiffs seek the amount of withdrawal liability and other relief authorized by ERISA, including interest, liquidated damages, attorneys' fees and costs.

Plaintiffs' complaint (the "Complaint") was originally filed 27 June 1990 in the United States District Court for the Eastern District of Pennsylvania. On 26 March 1991, this case was transferred to the District of New Jersey pursuant to the order of Herbert J. Hutton, United States District Judge. Jurisdiction is alleged pursuant to 29 U.S.C. §§ 1132(a)(3)(B), (d)(1), (e) and (f) and 1451(a)(1), (b) and (c) and 28 U.S.C. § 1331 and appears to be appropriate.

Currently before the court are a motion and cross-motion for summary judgment pursuant to Fed.R.Civ.P. 56.2 These motions were filed and pending before Judge Hutton for some time before transfer to this District. Also before this court is a cross-motion to stay this litigation pending resolution of bankruptcy proceedings for Jayne's Motor Freight. For the reasons set forth below, summary judgment against Willard Jayne, Gary Jayne, Elizabethport and Bro-Jen is granted in favor of Plaintiffs. Defendants' cross-motions for summary judgment and stay of litigation are denied.

Facts

Jayne's Motor Freight was a trucking company incorporated in the State of New Jersey. W. Jayne Aff., ¶ 6. Willard Jayne, Douglas Jayne and Gary Jayne are shareholders of Jayne's Motor Freight and copartners of other family businesses including two partnerships, Elizabethport and Bro-Jen.

Elizabethport is a New Jersey real estate partnership formed in June 1986. Id., ¶ 3; D. Jayne First Aff., ¶ 6; G. Jayne Aff., ¶ 3. Elizabethport owns and leases property located at 860 North Avenue, Elizabeth, New Jersey (the "Elizabeth Property"), where Jayne's Motor Freight was a tenant.3 W. Jayne Aff., ¶ 3; D. Jayne First Aff., ¶¶ 5, 6; G. Jayne Aff., ¶ 3. Bro-Jen is another New Jersey real estate partnership also formed in June 1986. W. Jayne Aff., ¶ 4; D. Jayne First Aff., ¶ 7; G. Jayne Aff., ¶ 4. Bro-Jen does not engage in any other business except owning and leasing one parcel of real property located in Southampton Township, New Jersey (the "Southampton Property"). W. Jayne Aff., ¶ 5; D. Jayne First Aff., ¶ 7; G. Jayne Aff., ¶ 4.4

Between 1957 and October 1988, Jayne's Motor Freight maintained the Plan which provides retirement income to qualified employees. The Fund had collected and held contributions from Jayne's Motor Freight in trust for the employees of Jayne's Motor Freight (the "Employees") and had been disbursing the contributions in monthly pension benefits to the Employees upon their attaining a specified retirement age.5 Vaccaro Aff., ¶¶ 4, 8. The Fund is managed by the Trustees who were appointed in equal numbers by Jayne's Motor Freight and Local 478, the union representing the Employees (the "Union"). The Union is the certified and exclusive bargaining representative of the Employees who are participants in the Fund. Id., ¶ 6.

Jayne's Motor Freight suffered financial problems and on or about October 1987, Willard Jayne and Douglas Jayne retained Robert Wasserman, Esq. ("Wasserman"), to represent Jayne's Motor Freight in bankruptcy proceedings. W. Jayne Aff., ¶ 15; D. Jayne First Aff., ¶ 8. Gary Jayne, the other shareholder of Jayne's Motor Freight, had, by the time of the bankruptcy filing, resigned any office or directorship in Jayne's Motor Freight and did not participate in the management of Jayne's Motor Freight, including the decision to file for bankruptcy. G. Jayne Aff., ¶¶ 5, 6. On 14 October 1987, Wasserman filed a voluntary bankruptcy petition under 11 U.S.C. § 301 for Jayne's Motor Freight in the U.S. Bankruptcy Court for the District of New Jersey ("Chapter 11 Bankruptcy"). Wasserman Aff., ¶ 4; W. Jayne Aff., ¶ 16.

Wasserman was retained solely to represent Jayne's Motor Freight in the bankruptcy proceedings and was not retained to represent Elizabethport or Bro-Jen in any matter. G. Jayne Aff., ¶¶ 6, 8-9. Wasserman also did not represent Gary Jayne, Douglas Jayne or Willard Jayne in any other proceeding or matter. Id.; D. Jayne First Aff., ¶ 10; W. Jayne Aff., ¶ 18.

The Fund owned a security interest in assets belonging to Jayne's Motor Freight. At the time of the Chapter 11 Bankruptcy, the assets of Jayne's Motor Freight consisted primarily of tractors and trailers (the "Assets"). G. Jayne Aff., ¶ 12. Pursuant to an Order of United States Bankruptcy Judge Daniel Moore, dated 30 December 1987, the Fund enforced the security interest it had against the Assets. Wasserman Aff., ¶ 6. The Fund, however, delayed in removing the Assets, apparently depriving Elizabethport rentable space at the Elizabeth Property. G. Jayne Aff., ¶ 12.

On 29 January 1988, the Chapter 11 Bankruptcy was converted into a Chapter 7 liquidation proceeding ("Chapter 7 Bankruptcy"). 11 U.S.C. § 1112. Wasserman Aff., ¶ 4; W. Jayne Aff., ¶ 16. Robert Levitt, Esq. ("Levitt"), was appointed Trustee in Bankruptcy. Wasserman Aff., ¶ 7. After the conversion, Wasserman's role was limited to reviewing and evaluating Levitt's requests with respect to the Chapter 7 Bankruptcy. Id., ¶ 5.

According to the submissions, on 17 October 1988, Jayne's Motor Freight ceased contributing to the Fund, ceased "covered operations" under the Fund and completely withdrew from the Fund. Vaccaro Aff., ¶ 8. According to the Fund, the withdrawal of Jayne's Motor Freight from the Plan subjected it to withdrawal liability under 29 U.S.C. § 1381(a). Id., ¶ 7.

Proceeding under the ERISA scheme pertaining to employers who cease contributions to pension plans, the Fund calculated the amount of withdrawal liability owed by Jayne's Motor Freight. Id., ¶ 9. The Fund's actuaries calculated the initial amount to be $1,483,628.00.6 Id., This represented the proportionate share of unfunded vested liabilities owed by Jayne's Motor Freight. Id. After applying the de minimis reduction provisions of ERISA, 29 U.S.C. § 1389, the amount was later recalculated by the actuaries to be $1,390,077.00. Id.

The Fund's contract administrator, Frank M. Vaccaro ("Vaccaro"), sent a letter (the "Demand Letter") to Jayne's Motor Freight via registered mail on 17 November 1988 to inform Jayne's Motor Freight of the withdrawal liability. The Demand Letter stated the Fund had assessed a withdrawal liability of $1,483,628.00 against Jayne's Motor Freight, subject to de minimis reductions. Demand Letter, ¶ 2. In the Demand Letter, quarterly payments of $73,559.00 were demanded beginning 17 January 1989.7Id. To date, no withdrawal liability payments have been made. Vaccaro Aff., ¶ 7.

Although addressed to Jayne's Motor Freight at its business address at the Elizabeth Property, the Demand Letter was rerouted and received by Levitt. D. Jayne Second Aff., ¶ 2. The parties disagree over how the letter was rerouted. Id. Plaintiffs contend they sent the Demand Letter to Jayne's Motor Freight at the Elizabeth Property. Pls.' Reply Br. at 4. According to Plaintiffs, sometime after Vaccaro had placed the Demand Letter in the mail, a sticker was placed over the Elizabeth Property address, redirecting the Demand Letter to Levitt. Id. Plaintiffs surmise that either the Post Office or Douglas Jayne may have redirected the Demand Letter. Id. at 4-5.

Douglas Jayne "strenuously and categorically" denied having redirected the letter. D. Jayne Second Aff., ¶¶ 2, 3. Douglas Jayne leases an office at the Elizabeth Property. D. Jayne First Aff., ¶ 22. In the past, Douglas Jayne received mail on behalf of Jayne's Motor Freight at the Elizabeth Property and currently continues to do so. Id., ¶¶ 22, 24. According to Douglas Jayne, he has been at the Elizabeth Property daily, except for weekends, holidays and vacations, since 1978. Id., ¶ 22. Douglas Jayne contends he would...

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