Plumbers' Pension Fund, Local 130 v. Niedrich

• Decision Date: 19 December 1989
• Docket Number: No. 89-1015,89-1015
• Citation: 891 F.2d 1297
• Parties: , 11 Employee Benefits Cas. 2571 PLUMBERS' PENSION FUND, LOCAL 130, U.A., Plumbers' Welfare Fund, Local 130, U.A., the Trust Fund for Apprentice and Journeyman Education and Training, Local 130, U.A., Plaintiffs-Appellants, The Plumbing Council of Chicagoland, Plumbing Contractors Association of Chicago and Cook County, Plaintiffs, v. Robert NIEDRICH and Denise Niedrich, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1297

891 F.2d 1297

58 USLW 2447, 11 Employee Benefits Cas. 2571

PLUMBERS' PENSION FUND, LOCAL 130, U.A., Plumbers' Welfare Fund, Local 130, U.A., the Trust Fund for Apprentice and Journeyman Education and Training, Local 130, U.A. Plaintiffs-Appellants The Plumbing Council of Chicagoland, Plumbing Contractors Association of Chicago and Cook County, Plaintiffs, v. Robert NIEDRICH and Denise Niedrich, Defendants-Appellees.

No. 89-1015.

United States Court of Appeals Seventh Circuit.

Argued Sept. 26, 1989.

Decided Dec. 19, 1989.

Paul V. Esposito (argued), Douglas A. Lindsay, Thomas E. Brabec, Peter J. Crowley, Lewis, Overbeck & Furman, Chicago, Ill., for plaintiffs-appellants.

Kenneth T. Lopatka, John J. Dunbar (argued), Jenner & Block, Chicago, Ill., for defendants-appellees.

Before COFFEY and EASTERBROOK, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

COFFEY, Circuit Judge.

Plaintiffs-appellants, Plumbers' Pension Fund, Local 130, U.A., Plumbers' Welfare Fund, Local 130, U.A., and the Trust Fund for Apprentice and Journeyman Education and Training, Local 130, U.A. (hereinafter "Funds") appeal from the district court's dismissal of their complaint that sought to obtain from the defendants-appellees, Robert Niedrich and Denise Niedrich, president and secretary, respectively, of Rob Roy Plumbing, Inc. ("Rob Roy") delinquent contributions owed to the Funds under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. ¹ We affirm.

I.

Because this case arises on a motion to dismiss, our review is confined to the limited facts set forth in the Funds' complaint. The Funds' complaint alleges that Rob Roy Plumbing, Inc., ("Rob Roy") and the Chicago Journeyman Plumbers' Local Union 130, U.A. ("Union") entered into a collective bargaining agreement effective January 1, 1976 and terminating on December 31, 1983. Under the terms of this agreement the plumbing firm (Rob Roy) was obligated to make periodic contributions to the plaintiff Funds. The complaint alleges that Robert Niedrich and Denise Niedrich, respectively the former president and secretary of Rob Roy, "exercised control over and acted on behalf of Rob Roy in matters pertaining to employee relations, including employee benefits." The complaint further alleges that when Rob Roy failed to make contributions to the plaintiff Funds, the Union and the Funds requested and were granted arbitration pursuant to the agreement.

A joint arbitration board established under the agreement awarded the plaintiff Funds, the Plumbing Council of Chicagoland and the Plumbing Contractors Association of Chicago and Cook County $25,066.78. ² Rob Roy failed to pay the amount designated in the arbitration award and the plaintiff Funds, together with the Plumbing Council of Chicagoland and the Plumbing Contractors Association of Chicago and Cook County filed a complaint against Rob Roy requesting enforcement of the arbitration award. ³ On August 12, 1985, judgment was entered, pursuant to the complaint, against Rob Roy Plumbing, Inc. in the amount of $23,020.90. ⁴ Rob Roy failed to satisfy the judgment and the Illinois Secretary of State dissolved the plumbing firm on May 1, 1986.

On August 12, 1988, the plaintiff Funds, the Plumbing Council and the Plumbing Contractors Association filed this action individually against Robert and Denise Niedrich, respectively the former president and secretary of Rob Roy. The complaint alleged that the Niedrichs were personally liable for the delinquent contributions to the plaintiffs under ERISA and sought from each defendant $23,020.92 together with interest and attorneys' fees. The complaint alleged that the Niedrichs had violated 29 U.S.C. § 1145 ⁵ because their exercise of control over and actions on behalf of Rob Roy "in matters pertaining to employee relations, including employee benefits" meant that they were "employers" within the meaning of 29 U.S.C. § 1002(5) ⁶ and, thus, personally liable for Rob Roy's delinquent contributions. The district court held that the complaint did not allege facts sufficient to establish that Rob Roy's corporate veil should be pierced. ⁷ In their brief before this court, plaintiffs-appellants concede that neither of these factors is present.

The Niedrichs moved to dismiss the complaint for failure to state a claim upon which relief can be granted on the grounds that under ERISA they could neither be classified as "employers" nor as parties who had unilaterally and contractually agreed to make contributions to the plaintiffs. In view of the fact that the defendants were parties to neither the plan nor the collective bargaining agreement, the district court held that "unless there are grounds to pierce the corporate veil or the corporation is the alter ego of the controlling individual, that individual is not liable under § 1145 unless he or she is a party to the plan or collective bargaining agreement." Plumbers' Pension Fund, Local 130, U.A. v. Niedrich, 701 F.Supp. 651, 655 (N.D.Ill.1988). Because the plaintiffs had not alleged that the Niedrichs were parties to the plan or to the collective bargaining agreement, that Rob Roy's corporate veil warranted piercing or that Rob Roy was the Niedrichs' alter ego, the district court dismissed the complaint. The plaintiff Funds appeal from the district court's ERISA decision. ⁸

II.

The Funds' action against the Niedrichs under ERISA was dismissed for failure to state a claim upon which relief may be granted.

"We review such a dismissal de novo. The well-pleaded factual allegations of the complaint and all reasonable inferences which follow from the allegations must be taken as true. A complaint should not be dismissed 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' "

Corcoran v. Chicago Park District, 875 F.2d 609, 611 (7th Cir.1989) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)) (citation omitted).

On numerous occasions in similar factual situations courts of appeals have had the opportunity to address the question of whether individuals acting as corporate officers or shareholders can be held personally liable for a corporation's ERISA obligations. These courts have unanimously held, as the court held in this case, that unless the corporation is acting for and an alter ego of the individual or there exist facts that warrant piercing the corporate veil, the individual will not be held liable for the corporation's obligations under ERISA. See Rockney v. Blohorn, 877 F.2d 637, 639-43 (8th Cir.1989) ("[C]orporate officers cannot be held personally liable under ERISA where there is no basis for piercing the corporate veil"); Scarbrough v. Perez, 870 F.2d 1079, 1082-85 (6th Cir.1989) (Unless facts warrant piercing the corporate veil separating the corporate employer from its owner-chief executive, the owner-executive will not be held liable for the corporation's delinquent pension contributions); International Brotherhood of Painters v. George A. Kracher, Inc., 856 F.2d 1546, 1547-50 (D.C.Cir.1988) (Corporation's chief officer and principal shareholder is not liable for corporation's delinquent contributions in the absence of allegations that he personally was a party to the plan or collective bargaining agreement and where there are no allegations that the corporation was an alter ego or of conduct that would require piercing the corporate veil); Massachusetts Laborers' Health and Welfare Fund v. Starrett Paving Corp., 845 F.2d 23, 24-26 (1st Cir.1988) (Corporation's president and sole shareholder is not liable for corporation's delinquent pension contributions unless it can be established that he was acting other than as a company officer and had, thus, personally contractually obligated himself to guarantee pension contributions); Solomon v. Klein, 770 F.2d 352, 353-55 (3rd Cir.1985) (In the absence of allegations of alter ego status or that warrant piercing the corporate veil, or of a contractual obligation, president of corporation who was also fifty percent stockholder was not personally liable for delinquent contributions to a retirement fund); Operating Engineers Pension Trust v. Reed, 726 F.2d 513, 515 (9th Cir.1984) (Kennedy, J.) ("An owner of a corporation will be held personally liable for trust fund contributions if (1) there is little or no respect shown to the separate identity of the corporation; (2) recognition of the corporation as a separate entity would result in injustice to the litigants; and (3) there was a fraudulent intent behind the incorporation").

In Levit v. Ingersoll Rand Financial Corp., 874 F.2d 1186, 1192-94 (7th Cir.1989); we noted our general agreement with the rationale of these cases. Levit was a bankruptcy case that did not approach the issue of a corporate officer's liability for pension contributions in the usual context of a pension fund's attempt to recover delinquent contributions from a corporate officer. ⁹ Nonetheless, we were required to determine whether a corporate officer could be held personally liable for a corporation's pension contributions in the absence of a contract personally binding him to these obligations. In resolving this question we turned to Section 515 of ERISA, 29 U.S.C. § 1145 that requires "[e]very employer who is obligated to make contributions to a multi-employer plan under the terms of the plan or under the terms of a collectively bargained agreement [to] make such contributions in accordance with the terms and conditions of such plan or such agreement." We stated that under Section 515:

"Only 'an employer who is obligated to make contributions to' a plan under an agreement need do so. Such an employer must make contributions 'in accordance with the terms and conditions of such plan or such agreement.' Even if a manager or other officer is an 'employer' under § 3(5) [of ERISA], the plan or other agreement still...