Trs. Detroit Carpenters Fringe Benefit Funds v. Patrie Constr. Co., Case No. 13-2484
| Decision Date | 03 March 2015 |
| Docket Number | Case No. 14-1047,Case No. 13-2484 |
| Parties | TRUSTEES OF DETROIT CARPENTERS FRINGE BENEFIT FUNDS, Plaintiff-Appellant, v. PATRIE CONSTRUCTION CO., FRANCESCO WOODWORK, INC., and ANDREA M. BERCICH, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
BERNICE BOUIE DONALD, Circuit Judge. Plaintiffs—the Trustees of the Detroit Carpenters Fringe Benefit Funds (the "Trustees")—appeal from the district court's dismissal of their claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461, and the Michigan Building Contract Fund Act ("MBCFA"), Mich. Comp. Laws §§ 570.151-570.153. The Trustees contend that the district court erred: (1) in determining that the Trustees' amended complaint lacked sufficient factual content setting forth an alter-ego operation to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6); (2) in dismissing claims unrelated to alter-ego status; and (3) in failing to consider additional record evidence beyond the Trustees' amended complaint. Defendants Patrie Construction Co.("Patrie"), Francesco Woodwork, Inc. ("Francesco"), and Andrea M. Bercich ("Bercich") cross-appeal from the district court's denial of their requests for attorney fees and/or sanctions.
Because the Trustees' complaint does not plausibly allege an alter-ego operation, we AFFIRM the district court's Rule 12(b)(6) dismissal of all claims against Francesco and Bercich. However, because the complaint states viable claims against Patrie that do not depend on alter-ego status, we REVERSE the district court's dismissal of those claims and REMAND them for further determination. Moreover, because the Trustees did not assert their claims in bad faith and did not unreasonably or vexatiously multiply the instant litigation, we AFFIRM the district court's denial of attorney fees and/or sanctions.
Plaintiffs are a voluntary association of several trust funds in Michigan, each of which was established under the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. §§ 141-197, and ERISA. Patrie incorporated in Michigan on November 27, 1968, "[t]o carry on and conduct a general building supply and building business . . . ."1 Francesco—incorporated in Michigan on April 21, 1992—manufactures and supplies millwork. Following her husband's death in 2007, Bercich became the sole owner of Patrie and Francesco. During the instant litigation, Bercich was in the process of winding down the operations of these companies for economic reasons.
On October 28, 1992, Patrie entered into a collective bargaining agreement ("CBA") with the Michigan Regional Council of Carpenters.2 During the relevant dates alleged in this case, the active CBA was the 2009-2012 State of Michigan Carpenters Independent ContractorsAgreement. The CBA required signatories to pay fringe-benefit rates—categorized by job title and by county—for work "consisting of the milling, fashioning, joining, assembling, erecting, fastening or dismantling of all materials of wood, plastic, metal, fiber, cork, or composition, and all other substitute materials." The CBA also prohibited signatory independent contractors from subcontracting any covered work to any party not bound by the CBA.
On March 5, 2012, the Trustees filed a complaint against Defendants under the LMRA, ERISA, and the MBCFA. The complaint alleged that Patrie and Francesco "are one and the same, constituting a single employer, with each being the alter ego of the other." The complaint further alleged that Defendants: (1) failed to cooperate with audits as required under the CBA and ERISA; (2) used or appropriated funds that should have gone toward fringe-benefit contributions, in violation of the MBCFA and ERISA; and (3) failed to pay outstanding fringe-benefit contributions, in violation of the CBA and ERISA.
On January 22, 2013, Defendants moved to dismiss the Trustees' complaint as time-barred3 and for failure to state a claim, or, in the alternative, for summary judgment. The Trustees objected to Defendants' summary-judgment claim as premature because of ongoing discovery, and Defendants withdrew their summary-judgment claim on February 25, 2013. That same day, the Trustees responded to the motion to dismiss, attaching to their response an extensive list of exhibits, including numerous business records of Patrie and Francesco. The Trustees cited these documents in support of their assertion that the companies were alter egos of one another. Defendants replied on March 20, 2013.
On April 30, 2013, the district court granted in part and denied in part Defendants' motion to dismiss. Specifically, the court found that the Trustees failed to allege sufficient facts demonstrating when their ERISA claims accrued. The court, however, denied Defendants' request for dismissal of the Trustees' MBCFA claim. The court dismissed the Trustees' ERISA claims without prejudice and ordered the Trustees to submit an amended complaint detailing when the ERISA claims accrued.
The Trustees filed an amended complaint on May 30, 2013. The amended complaint alleged that the Trustees became aware of Patrie's and Francesco's alter-ego operation in December 2011, when Patrie allegedly subcontracted covered carpentry work to Francesco on a project at the White Lake Rehab Center. On July 23, 2013, Defendants again moved to dismiss the Trustees' claims on statute-of-limitations grounds and for failure to state a claim, or, in the alternative, for summary judgment.4 The Trustees responded on August 26, 2013, and Defendants replied on September 5, 2013.
On October 3, 2013, the district court granted Defendants' motion to dismiss. Although the court recognized that the Trustees "are not required to provide overly detailed allegations," it nevertheless found that the Trustees' alter-ego "allegations merely recite the bare elements of the ERISA claims." Specifically, the court stated:
The Complaint contains five paragraphs that essentially reiterate the same legal conclusion: that Patrie and Francesco operate . . . as alter egos to avoid their obligations under the CBA. The Court is not required to accept these legal conclusions and declines to do so. . . . Plaintiffs fail to allege any facts regarding what information Plaintiffs obtained to alert them that Patrie was avoiding financial obligations through the operation of Francesco. There are no allegations regarding specific employees who worked for both companies, dates, times, covered work performed by Francesco employees, or any factual allegations relating to the alleged illegal operation of Francesco. A reading [of] the entirety of the allegations fails to raise any inference that Patrie and Francesco operated as alter ego companies in violation of the CBA.
The court also dismissed the Trustees' remaining MBCFA claim, finding that it "necessarily depend[ed]" on the vitality of the ERISA claims. The court entered judgment in favor of Defendants, and the Trustees timely filed a notice of appeal.
On October 30, 2013, Defendants moved for costs and attorney fees totaling $42,385.25. The Trustees responded in opposition on November 18, 2013, and Defendants replied on December 3, 2013. The district court held a hearing on December 12, 2013. At the hearing, the court stated:
[I]n terms of the attorney fees, under the King5 test and looking at those factors, I think that this case . . . gave me pause, and when I have pause about a case then right away I'm in a mind frame that tells me it is not frivolous because I have to really take time to consider it. I thought that the complaint was not well pled. . . . [B]ut I do . . . believe that there was a reasonable basis for you to file this complaint. . . . [T]he Court finds that this matter was not brought in bad faith. . . . [C]learly the plaintiff can satisfy the award of attorney fees. . . . I don't think that this is going to prevent plaintiff from filing another lawsuit if it felt it had a basis nor would it discourage it from filing a lawsuit. The fourth factor . . . [does not] really . . . appl[y] here. And the fifth factor . . . neither favors one side or the other. It appears to me that the first factor, truly the degree of the opposing party's culpability . . . is the factor that stands out, and it stands I believe in the plaintiff's favor, and the Court therefore is not going to award attorney fees.
Following the hearing, the district court granted Defendants' request for $199.50 in costs and denied their request for attorney fees and/or sanctions. Defendants timely filed a notice of appeal.
We first address the district court's Rule 12(b)(6) dismissals. We then address the district court's denial of attorney fees and/or sanctions.
We review de novo a district court's decision to grant a motion to dismiss for failure to state a claim under Rule 12(b)(6). Laborers' Local 265 Pension Fund v. iShares Trust, 769 F.3d 399, 402-03 (6th Cir. 2014). The Court construes the complaint in the light most favorable to the plaintiff and accepts all factual allegations as true. Id. at 403. However, the Court "need not accept as true legal conclusions or unwarranted factual inferences, and conclusory allegations or legal conclusions masquerading as factual allegations will not suffice." D'Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014) (quoting Terry v. Tyson Farms, Inc., 604 F.3d 272, 275-76 (6th Cir. 2010)) (internal quotation marks omitted). A plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim...
To continue reading
Request your trial