Trs. of the Operating Engineers' Local 324 Pension & Fringe Benefit Funds v. Glencorp, Inc.

• Decision Date: 11 April 2016
• Docket Number: No. 14-cv-14766,14-cv-14766
• Parties: Trustees of the Operating Engineers' Local 324 Pension and Fringe Benefit Funds, Plaintiffs, v. Glencorp, Inc., a Michigan corporation, and Ronald A. Marino, individually, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

178 F.Supp.3d 600

Trustees of the Operating Engineers' Local 324 Pension and Fringe Benefit Funds, Plaintiffs,

v.Glencorp, Inc., a Michigan corporation, and Ronald A. Marino, individually, Defendants.

No. 14-cv-14766

United States District Court, E.D. Michigan, Southern Division.

Signed April 11, 2016

Lyndsey Kitson, David J. Selwocki, Sullivan, Ward, Southfield, MI, for Plaintiffs.

Christopher E. Levasseur, Sara G. Rajan, Stark, Reagan, Troy, MI, for Defendants.

OPINION AND ORDER REGARDING CROSS-MOTIONS FOR SUMMARY JUDGMENT

PRESENT: Honorable Gerald E. Rosen, United States District Judge

I. INTRODUCTION

This is an ERISA contribution action. In their two-count Complaint for breach of contract and breach of fiduciary duty, the Trustees of the Operating Engineers' Local 324 Pension and Benefit Funds seek to recover from Defendants Glencorp, Inc. and Ronald Marino delinquent contributions for pension and fringe benefits owing to the funds on behalf of Glencorp's covered employees. After auditing the Defendant corporation's books and records, Plaintiffs determined that the delinquency totals in excess of $680,000.00.

The action is presently before the Court on the parties' cross-motions for summary judgment. Responses and reply briefs have been filed. Having reviewed and considered the parties' motions and briefs, and the entire record of this matter, the Court has concluded that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), this matter will be decided on the briefs. This Opinion and Order sets forth the Court's ruling.

II. PERTINENT FACTS

Defendant Glencorp, Inc., a Michigan corporation, is an earth-moving contractor engaged in the business of moving dirt and heavy cuts, digging retention ponds, and digging roads for developers in subdivisions. Glencorp operates out of offices located on Ryan Road in Shelby Township, Michigan. Defendant Ronald Marino is the sole owner and sole officer of Glencorp. [Marino Dep., p. 6-7, 13]. Marino also owns Ryan Holding Company which owns the property on which Glencorp's offices are situated. Id ., p. 8.

Marino testified in his deposition that he is “the boss” at Glencorp, and he makes all final decisions for the company, including deciding which bills are going to be paid and which bills are not going to be paid, when that decision has to be made. Id . at p. 13.

Glencorp is party to a Short Form Agreement with the International Union of Operating Engineers, Local 324. [See Plaintiff's Ex. A]. Ronald Marino signed the Agreement as president of Glencorp. Id. Pursuant to the Short Form Agreement, Glencorp agreed “to abide by the Wages, Rates, Fringes, Fringe Benefits, and all other terms, conditions and provisions in the most current Collective Bargaining Agreements” between the Union and a number of entities and associations, including “The Labor Relations Division of the Michigan Infrastructure and Transportation Association (MITA) Road Agreement” (the “Road Agreement”) and “The Michigan Infrastructure and Transportation (MITA) Underground Agreement” (the “Underground Agreement”). Id. Although Ronald Marino testified that Glencorp performs work covered under both the Road and the Underground Agreements, its contributions to the Plaintiff Funds have always been pursuant to the Underground Agreement. [Marino Dep., pp. 31-32.]

In pertinent part, the MITA Underground Agreement provides:

ARTICLE II

* * *

Section 3. COVERAGE OF AGREEMENT

This Agreement shall govern all underground construction work which any Contractor performs in the State of Michigan and which comes under the jurisdiction of the Union.

Underground construction work shall be construed to mean any work which requires the excavation of earth, including industrial, commercial and residential building site excavation and preparation, land balancing, grading, paving, sewers, utilities and improvements, and also including but not limited, to tunnel, underground piping, retention, oxidation and flocculation facilities, conduits, general excavation, landfills and steel sheeting for underground construction....

[Plaintiff's Ex. B, Pg ID 554.]

The Plaintiff Funds are ERISA pension and fringe benefit funds established pursuant to the Operating Engineers' Collective Bargaining Agreements with the various entities and associations, including the Michigan Infrastructure and Transportation Association Underground Agreement. Pursuant to its obligations under the Agreement, in addition to paying employee wages, Glencorp was required to pay to the Plaintiff Funds amounts for certain fringe benefits, including pension and health care benefits, on behalf of each of its employees doing work covered by the CBA. See id., Art. IV, § 9; Art. V, Art. VI.

Plaintiffs assert that Glencorp has failed to comply with its contractual obligations. Based on an audit for the period of September 2007 through September 2014, Plaintiffs seek contributions from Glencorp for delinquent pension and benefit contributions totaling $689,272.42.¹ In addition, based on the self-reporting system in place, Plaintiffs claim that Defendants also owe them $125,834.31 in fringe benefit contributions for November 2014 through January 2015.² Plaintiffs further seek $13,997.91 in late payment liquidated damages.

Defendants do not dispute that Glencorp is delinquent in its payments to the Plaintiff Funds; they do, however, dispute the amount of that delinquency. [See Marino Dep., pp. 22, 33.] Defendants further dispute Defendant Marino's liability on Count II of Plaintiff's Complaint for breach of fiduciary duty.

III. DISCUSSION

A. APPLICABLE STANDARDS

Summary judgment is proper if the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). As the Supreme Court has explained, “the plain language of Rule 56 [ ] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In addition, where a moving party seeks an award of summary judgment in its favor on a claim or issue as to which it bears the burden of proof at trial, this party's “showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) (internal quotation marks, citation, and emphasis omitted).

In deciding a motion brought under Rule 56, the Court must view the evidence in a light most favorable to the nonmoving party. Pack v. Damon Corp., 434 F.3d 810, 813 (6th Cir.2006). Yet, the nonmoving party may not rely on mere allegations or denials, but must “cit[e] to particular parts of materials in the record” as establishing that one or more material facts are “genuinely disputed.” Fed. R. Civ. P. 56(c)(1). Moreover, any supporting or opposing affidavits or declarations “must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). Finally, “the mere existence of a scintilla of evidence that supports the nonmoving party's claims is insufficient to defeat summary judgment.” Pack, 434 F.3d at 814 (alteration, internal quotation marks, and citation omitted). The Court will apply the foregoing standards in deciding the parties' cross-motions for summary judgment in this case.

B. GLENCORP IS LIABLE FOR THE UNPAID FUND CONTRIBUTIONS

As indicated above, Plaintiffs seek payment of $815,106.73 in delinquent Fund contributions for the periods of September 2007 through September 2014, and November 2014 through January 2015, plus $13,997.91 in late payment liquidated damages.

Section 515 of ERISA, 29 U.S.C. § 1145 states:

Every employer who is obligated to make contributions to a multi-employer plan under the terms of the plan or under the terms of a collective bargaining agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or agreement.

29 U.S.C. § 1145.

There is no dispute that the CBA here requires employer contributions.

29 U.S.C. § 1132(g)(2), provides:

In any action under this subchapter by a fiduciary, for or on behalf of a plan, to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan—

(A) the unpaid contributions;

(B) interest on the unpaid contributions;

(C) an amount equal to the greater of—

(i) unpaid contributions

or

(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A);

(D) reasonable attorneys' fees and costs of the action to be paid by the defendant, and

(E) such other legal or equitable relief as the court deems appropriate.

For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26 [Internal Revenue Code section 6621 ].

29 U.S.C. § 1132(g)(2).

The Sixth Circuit has held that the language of Section 1132(g)(2) is mandatory upon a judgment in favor of the plan. Michigan Carpenters Council Health and Welfare Fund v. C.J. Rogers, Inc. , 933 F.2d 376, 388 (6th Cir.), cert. denied , 502 U.S. 982, 112 S.Ct. 585, 116 L.Ed.2d 610 (1991).

As indicated above, Defendants do not dispute that Glencorp is delinquent in its contributions to the Funds. They do, however, dispute the amount of the delinquency claimed by Plaintiffs. Specifically, Defendants dispute their liability for...