Pension Trust Fund for Operating Eng'rs v. Dalecon, Inc., C 11-02851 LB

• Decision Date: 12 March 2014
• Docket Number: No. C 11-02851 LB,C 11-02851 LB
• Court: U.S. District Court — Northern District of California
• Parties: PENSION TRUST FUND FOR OPERATING ENGINEERS, et al., Plaintiffs, v. DALECON, INC., et al., Defendants.

PENSION TRUST FUND FOR OPERATING ENGINEERS, et al., Plaintiffs, v. DALECON, INC., et al., Defendants.

No. C 11-02851 LB

UNITED STATES DISTRICT COURT Northern District of California San Francisco Division

Dated: March 12, 2014

ORDER GRANTING PLAINTIFFS'

MOTION FOR SUMMARY

JUDGMENT AGAINST DALECON,

INC.

[Re: ECF No. 127]

INTRODUCTION

In this action, plaintiffs Pension Trust Fund for Operating Engineer (the "Trust"), F.G. Crosthwaite, and Russell E. Burns (collectively, "Plaintiffs") sued Dalecon, Inc. ("Dalecon"), Aleut Sons Construction, Inc. ("Aleut Sons Construction"), Dale Stickney Construction, Inc. ("Dale Stickney Construction"), Dale Homes, Inc. ("Dale Homes"), Dale Properties, Inc. ("Dale Properties"), Point West Properties, LLC ("Point West"), RHS Norcal Investments, LLC ("RHS"), Plus Housing & Development, Inc. ("Plus Housing"), DSCI Group, Inc. ("DSCI"), and individuals Ronald Stickney ("Mr. Stickney") and James Underwood ("Mr. Underwood") (collectively, "Defendants"), for Dalecon's failure to pay withdrawal liability in violation of the parties' collective bargaining agreements, the trust agreement, and federal law. See Complaint, ECF No. 1.¹ Mr.Stickney, Mr. Underwood, and Dale Stickney Construction were dismissed from this action. Voluntary Dismissal, ECF No. 108; Stipulation of Dismissal, ECF No. 121. The Clerk of the Court entered default against Aleut Sons Construction, Dale Homes, Dale Properties, Point West, RHS, Plus Housing, and DSCI (the "Defaulting Defendants"). Entry of Default, ECF No. 14. Plaintiffs now move for summary judgment against Dalecon.² The court held a hearing on the motion on February 20, 2014. 2/20/2014 Minute Order, ECF No. 140. Upon consideration of the papers submitted, the arguments of counsel at the hearing, and the applicable authority, the court GRANTS Plaintiff's motion and finds that Plaintiffs should be awarded $423,389.77, which includes $242,614 in assessed withdrawal liability, $77,171.67 in interest, $48,522.80 in liquidated damages, $53,367.50 in attorney's fees, and $1,713.80 in costs.³

STATEMENT

I. FACTS

This action arises under Employment Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1001-1461 (1982).

The Trust is: (a) an employee benefit plan as defined in the ERISA § 3(3) (29 U.S.C. § 1002(3)); (b) an "employee benefit pension plan" as defined in ERISA § 3(2) (29 U.S.C. § 1002(2)); and (c) a "multiemployer plan" as defined in ERISA §§ 3(37) and 4001(a)(3) (29 U.S.C. §§ 1002(37) and 1301(a)(3)). Complaint, ECF No. 1 ¶ 6; Joint Statement, ECF No. 128 ¶ 2; Trento Declaration, ECF No. 113 ¶ 2. The Trust primarily covers employers in the building and construction industry. Trento Declaration, ECF No. 113 ¶ 2. The Trust is maintained pursuant to the Labor ManagementRelations Act § 302(c) (29 U.S.C. §186(c)) and is jointly administered. Complaint, ECF No. 1 ¶ 6; Trento Declaration, ECF No. 113 ¶ 2. At all relevant time periods, Associated Third Party Administrators ("ATPA") was the third party administrator for the Trust. Joint Statement, ECF No. 128 ¶ 3; Trento Declaration, ECF No. 113 ¶ 1.

Plaintiffs F.G. Crosthwaite and Russell E. Burns are members of the Board of Trustees of the Trust ("Trustees"). Complaint, ECF No. 1 ¶ 7; Trento Declaration, ECF No. 113 ¶ 3. The Trustees are "fiduciaries" with respect to the Trust as defined in ERISA § 3(21)(A) (29 U.S.C. § 1002(21)(A)) and are collectively the "plan sponsor" of the Board of Trustees within the meaning of ERISA §§ 3(16)(B)(iii) and 4001(a)(10)(A) (29 U.S.C. §§ 1002(16)(B)(iii) and 1301(a)(10)(A)). Complaint, ECF No. 1 ¶ 7. As Trustees of the Trust, they are empowered to bring this action on behalf of the Trust pursuant to ERISA §§ 4301(a)(1) & (b) and 502(a)(3) (29 U.S.C. §§ 1132(a)(3) and 1451(a)(1) & (b)). Complaint, ECF No. 1 ¶ 7.

Defendant Dalecon is a dissolved California corporation with its principal place of business located at 2727 Churn Creek Road, Suite A, Redding, California at all relevant time periods. Complaint, ECF No. 1 ¶ 8; Joint Statement, ECF No. 128 ¶ 4; Richardson Declaration, ECF No. 112 ¶ 4 & Ex. A. Dalecon was an employer within the meaning of ERISA § 3(5) (29 U.S.C. § 1002(5)) and the National Labor Relations Act ("NLRA") § 2(2) (29 U.S.C. §152(2)) and was engaged in an industry affecting commerce within the meaning of ERISA § 3(11) and (12) (29 U.S.C. § 1002(11) and (12)). Complaint, ECF No. 1 ¶¶ 8, 15; Joint Statement, ECF No. 128 ¶ 5. Dalecon was a participating employer in the Trust pursuant to collective bargaining agreements ("CBAs") with the Operating Engineers Local Union No. 3 ("Union") which required it to make fringe benefit contributions for all covered work performed by its employees. Complaint, ECF No. 1 ¶ 15; Joint Statement, ECF No. 128 ¶¶ 6 (listing six collective bargaining agreements), 7; Trento Declaration, ECF No. 113 ¶ 5 & Ex. A (attaching those agreements). Dalecon was owned, operated, and controlled by Defendants James Underwood and Ronald Stickney. Complaint, ECF No. 1 ¶ 9. Plaintiffs allege that Mr. Underwood and Mr. Stickney also controlled the Defaulting Defendants, making Dalecon and the Defaulting Defendants (collectively, the "Entity Defendants") part of thesame controlled group. Complaint, ECF No. 1 ¶ 9; Joint Statement, ECF No. 128 ¶ 26. This means that the Entity Defendants are treated as a single employer pursuant to ERISA § 4001(b)(1) (29 U.S.C. §1301(b)) and therefore are jointly and severally liable for the withdrawal liability at issue here. Complaint, ECF No. 1 ¶ 9.

On or about May 2007, Dalecon became delinquent under the CBAs. Complaint, ECF No. 1 ¶ 16. An audit revealed further delinquent amounts for the period from June 2004 through June 2007. Id. Thus, on October 10, 2007, Plaintiffs filed the action entitled Gil Crosthwaite, et al. v. Dalecon, Inc., et al., Case No. C07-5192 WHA (the "Delinquency Action"), seeking those delinquent contributions pursuant to 29 U.S.C. § 1945.⁴ Id.; see Delinquency Action, ECF No. 1 (Oct. 10, 2007).

Plaintiffs voluntarily dismissed the Delinquency Action on October 17, 2008, after the parties entered into a stipulated settlement agreement on October 10, 2008. Joint Statement, ECF No. 128 ¶¶ 9, 24-29 & Ex. 1 (the "Stipulation"⁵). Pursuant to the Stipulation, Dalecon and Mr. Stickney agreed to pay Plaintiff's $136,000 in settlement of their claims for delinquent contributions. Id., ECF No. 128, Ex. A, ¶ 2(a). The Stipulation included the following relevant terms:

1. Under the terms of their Collective Bargaining Agreement and Trust Agreements, Plaintiffs contend that Defendant[s have] become indebted to the Plaintiffs for contributions, liquidated damages, interest, [and] attorneys fees and costs, including those amounts found due on an audit of Defendants' records. Plaintiffs filed this action to seek to collect the amounts they claim are due from Defendant[s]. The parties acknowledge and agree that by this Agreement and Stipulation they are compromising disputed claims[.]

2. The parties to this action have agreed to resolve this matter as follows:

(a) Defendant shall pay the amount of $136,000 (the "Settlement Amount") as follows:

Within thirty (30) days of Defendant's execution of this Stipulation, defendant will make an initial payment in the amount of $20,000.00. Within thirty (30) days after the date of the initial payment, defendant will make a second payment in the amount of $20,000.00.

Thereafter, defendant will continue with monthly payments of $10,000.00 to be received by plaintiffs on or before the 15th of each month beginning with December 15, 2008, and continuing through August 15, 2009, and one final monthly payment of $6,000.00, plus all accrued interest, by September 15, 2009. Defendant shall have the right to increase said monthly payments at any time and shall incur no prepayment penalties.

(b) Interest will continue to accrue on the unpaid balance at the rate of 1% per month (12% per annum) as provided for in the Bargaining Agreement and Trust Agreements.

(c) Each payment shall be applied first to unpaid interest and then to the reduction of the principal balance.

(d) All payments made pursuant to this Stipulation shall be made payable to the "Operating Engineers Trust Funds," and timely delivered to Michele R. Stafford, Saltzman & Johnson Law Corporation, 44 Montgomery Street, Suite 2110, San Francisco, CA 94104, or to such other address as may be specified by Plaintiffs.

(e) Upon execution of this Stipulation, Plaintiffs will file a Dismissal without Prejudice of the instant action. This Stipulation is in complete satisfaction of all claims made by Plaintiffs in this action. Accordingly, the parties release each other and their respective agents, employees, officers, shareholders, directors, successors, assigns, and attorneys from all injuries, damages, claims[,] and causes of action whatsoever, of whatever kind of nature, whether known or unknown, suspected or unsuspected, including any claims which the parties made or could have made.

The parties acknowledge and agree that there is a risk that after execution of this Stipulation they will incur or discover losses, damages, or injuries which are in some way caused by the events which were the subject of this release, but which are unknown and unanticipated at the time this Stipulation is signed. The parties hereby assume the above-mentioned risks and understand that this Stipulation shall apply to all unknown or unanticipated results of the events which were the subject of this release, as well as those known and anticipated, and upon advice of counsel, waive and all rights under California Civil Code section 1542[,] which section has been explained and reads as follows:

A general release does not extend to claims which the creditor does not known or suspect to exist in his or her favor at the time of executing the release, which if known by him or her

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