Massachusetts Carpenters Cent. Collection Agency v. Belmont Concrete Corp.

• Decision Date: 02 March 1998
• Docket Number: No. 97-2285,97-2285
• Citation: 139 F.3d 304
• Parties: 21 Employee Benefits Cas. 2935, Pens. Plan Guide (CCH) P 23942C MASSACHUSETTS CARPENTERS CENTRAL COLLECTION AGENCY, Plaintiff, Appellee, v. BELMONT CONCRETE CORPORATION and Algar Construction Corporation, Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 304

139 F.3d 304

21 Employee Benefits Cas. 2935,

Pens. Plan Guide (CCH) P 23942C

MASSACHUSETTS CARPENTERS CENTRAL COLLECTION AGENCY Plaintiff, Appellee, v. BELMONT CONCRETE CORPORATION and Algar Construction Corporation, Defendants, Appellants.

No. 97-2285.

United States Court of Appeals First Circuit.

Heard March 2, 1998.

Decided March 27, 1998.

George A. Fairbanks, III, Taunton,, MA, with whom Fairbanks & Koczera, New Bedford, MA, John F. Creedon, and Creedon & Murphy, Brockton, MA, were on brief, for appellants.

Aaron D. Krakow, with whom Krakow & Souris, Boston, MA, was on brief, for appellee.

Before LYNCH, Circuit Judge, COFFIN and BOWNES, Senior Circuit Judges.

LYNCH, Circuit Judge.

Within a year of signing a collective bargaining agreement with the Massachusetts Carpenters Union, the Belmont Concrete Corporation went out of business. Under that agreement, Belmont was obligated to pay into Union employee benefit funds for the benefit of its workers. ¹ Another concrete company, Algar Construction Corporation (owned and managed from the same location by members of the same families as Belmont) employed many of Belmont's employees, used some of Belmont's equipment, and worked on contracts for the same company with which Belmont had worked. When Belmont stopped making the payments it was obligated to make to the fund, the Massachusetts Carpenters Central Collection Agency (MCCCA) sued, alleging violations of Section 515 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1145. It sued Belmont on the agreement and Algar on the theory that Algar was an alter ego of Belmont, and so liable for its obligations to the benefit funds. The defendants protested that the person who signed the agreement for Belmont had no authority to do so, that there was never an enforceable agreement, and that Algar, which had never signed the agreement, could not be liable for Belmont's debts.

On summary judgment, the district court ruled for the plaintiff in a carefully reasoned opinion. ² It ordered Belmont, now defunct and assetless, and Algar to pay MCCCA $121,339.97 in unpaid contributions and penalties. We affirm largely on the basis of the district court opinion, and further discuss the alter ego issue. We do so because this issue frequently arises in suits to hold one company liable for benefit plan contributions another company has contracted to make under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), Pub.L. 96-364, 94 Stat. 1208 (1980), which amends ERISA, 29 U.S.C. §§ 1001-1461. ³ We also do so to emphasize that the alter ego jurisprudence developed in cases brought under the National Labor Relations Act, 29 U.S.C. §§ 141-197, is applicable in cases brought under ERISA where the basis for imposition of liability is also the alter ego doctrine.

I

As summary judgment has been granted, we review the facts in the light most favorable to the defendants and will draw all reasonable inferences in their favor. See Champagne v. Servistar Corp., 138 F.3d 7, 8-9 (1st Cir.1998). The district court's opinion thoroughly recounts the facts of the case, and we focus on the facts relevant to the alter ego issue.

A. The Companies

Belmont and Algar both perform concrete work in the construction industry in Massachusetts. Algar was formed in 1990 and remains active today. Belmont was formed in 1992 and was active until the end of 1993. Each company had its principal place of business at 37 Belmont Street in Brockton, Massachusetts. Belmont occupied offices on the fourth floor; Algar occupied offices in the basement.

Belmont and Algar are family businesses owned and operated by members of the Bota, Diaz, and Guerreiro families. Belmont was formally owned by Lionel Diaz ("Diaz") and Anita Bota (Diaz' wife's cousin). Although an "owner," Anita Bota only performed occasional secretarial work for Belmont; Belmont was actually controlled by Diaz, Victor Guerreiro ("Guerreiro"), and Horacio Bota ("Bota"), Anita Bota's father. These men negotiated the contracts, supervised the construction sites, and generally managed the business. Algar was formally owned by Margaret Bota (Bota's daughter) and Sarita Diaz (Diaz' wife, Guerreiro's daughter and Bota's niece). Like Anita Bota, the two "owners" performed primarily secretarial work, and Algar was actually controlled by Bota, Guerreiro and Diaz.

Although Bota, Diaz, and Guerreiro took the position that they did no work for Algar until all Belmont work had been completed, specific facts from their own depositions establish some overlap in responsibilities. Guerreiro stated in his deposition that he was involved in the preparation of bids and negotiation of contracts for Algar in 1993. Bota stated that he signed a contract for construction work on behalf of Algar in 1993. And Diaz acknowledged that his stamp was used to sign a contract with Middlesex Construction Corporation on behalf of Algar in 1993.

Belmont and Algar were intertwined in other ways. They shared employees. Maurice Law and Paul Merhey acted as supervisors and estimators for Belmont, and then for Algar after Belmont ceased conducting business. Other Algar employees who previously worked for Belmont included Mario Rosa, Antonio Gomes, Joao DaSilva, George Raposa, Jeff Bassett, Paulo Costa, Manual Pina, and Joao Viveiros. Belmont and Algar also shared business. Belmont was a subcontractor for Middlesex Construction for two of the five construction projects it performed after April 1, 1993 (until it ceased conducting business near the end of 1993); Algar was a subcontractor for Middlesex Construction for eight of the twelve projects it performed after April 1, 1993. Belmont also made use of Algar's trucks and equipment through an informal "leasing" arrangement for which there is no documentation.

Finally, there is also evidence that employees were working on both Algar and Belmont projects at the same time. On May 1, 1993, a Union representative saw Algar employees leave a job at a West Springfield site and travel to a worksite where there was a truck belonging to Belmont. The construction supervisor at the second site informed the Union representative that he worked for Belmont and that Belmont was the contractor at that location.

B. The Agreement

On April 23, 1993, Bota, on Belmont's behalf, signed the State-Wide Agreement ("Agreement") with the Carpenters Union. The Agreement binds each signatory contractor to the terms and conditions of the collective bargaining agreements of the various Massachusetts Carpenters Local Unions, ^{4 4} which in turn require that the contractor make employee contributions to the MCCCA for each hour of carpentry work performed by its employees. ⁵ In addition, the collective bargaining agreements incorporate by reference the trust agreements of the Carpenters Union affiliated employee benefit funds.

After signing, Belmont complied in part with its obligations under the Agreement to make employee benefit contributions to the MCCCA. Belmont's carpenters performed 3,925 hours of work between April 1993 and November 1993. Belmont made contributions to the MCCCA for 2,144 hours of that work.

Algar never signed the Agreement. Between April 23, 1993, and September 1996, Algar's carpenters performed approximately 8,070 hours of carpentry work. Algar made no contributions to MCCCA for this work.

On March 9, 1995, MCCCA filed this action against Belmont and Algar, alleging violations of Section 515 of ERISA, 29 U.S.C. § 1145. ⁶ MCCCA sought $3,271.37 in unpaid contributions from Belmont and $69,351.97 in unpaid contributions from Algar. MCCCA argued that Belmont was a signatory to the Agreement and bound by its terms, and that nonsignatory Algar was also bound by the Agreement by virtue of being Belmont's alter ego. Defendants responded that Bota did not have authority to sign the Agreement on Belmont's behalf, and that, regardless, Algar was not Belmont's alter ego. The district court granted summary judgment in MCCCA's favor, granting MCCCA the full amount of damages sought plus penalties as defined in the governing collective bargaining agreement--a total of $121,339.97. Defendants appeal.

II

The alter ego doctrine is meant to prevent employers from evading their obligations under labor laws and collective bargaining agreements through the device of making " 'a mere technical change in the structure or identity of the employing entity ... without any substantial change in its ownership or management.' " NLRB v. Hospital San Rafael, Inc., 42 F.3d 45, 51 (1st Cir.1994) (quoting Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 259-61 n. 5, 94 S.Ct. 2236, 2242, 41 L.Ed.2d 46 (1974)). Although the alter ego doctrine is primarily applied in situations involving successor companies, "where the successor is merely a disguised continuance of the old employer," C.E.K. Indus. Mechanical Contractors, Inc. v. NLRB, 921 F.2d 350, 354 (1st Cir.1990) (citing Southport Petroleum Co. v. NLRB, 315 U.S. 100, 106, 62 S.Ct. 452, 455-56, 86 L.Ed. 718 (1992)), it also applies to situations where the companies are parallel companies. See Union Builders, Inc. v. NLRB, 68 F.3d 520, 524 (1st Cir.1995). In this case, Algar was both parallel to Belmont and successive to Belmont. A finding that two employers are alter egos will bind the nonsignatory to a collective bargaining agreement between the union and the nonsignatory's alter ego. See Hospital San Rafael, 42 F.3d at 52-53; Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir.1983).

Although developed in the labor law context, alter ego or successor liability analysis has been applied to claims involving employee benefit funds brought under ERISA and the LMRA. See Langone v. C. Walsh, Inc., 864 F.Supp. 233 (D.Mass.1994), aff'd, 1996 WL 672277 (1st Cir.1996); Upholsterers' Int'l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323 (7th Cir.1990); Central States, Southeast and Southwest Areas Pension Fund v....