Trs. the Detroit Carpenters Fringe Benefit Funds v. Nordstrom

• Decision Date: 27 September 2012
• Docket Number: No. 10–cv–14160.,10–cv–14160.
• Citation: 901 F.Supp.2d 934
• Parties: TRUSTEES OF THE DETROIT CARPENTERS FRINGE BENEFIT FUNDS, Plaintiffs, v. Michael A. NORDSTROM, an individual, d/b/a Eagle Construction Service, Inc., jointly and severally, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

901 F.Supp.2d 934

TRUSTEES OF THE DETROIT CARPENTERS FRINGE BENEFIT FUNDS, Plaintiffs,

v.Michael A. NORDSTROM, an individual, d/b/a Eagle Construction Service, Inc., jointly and severally, Defendants.

No. 10–cv–14160.

United States District Court,

E.D. Michigan,

Southern Division.

Sept. 27, 2012.

Walter B. Fisher, Fildew Hinks, Royal Oak, MI, for Plaintiffs.

Kyle R. Riem, Grand Blanc, MI, for Defendants.

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT, AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

This ERISA contribution action is presently before the Court on the parties' cross-motions for summary judgment. The parties have stipulated to the pertinent facts and exhibits and response briefs have been filed. Having reviewed and considered the parties' motions and responses 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

Michael A. Nordstrom was the sole owner and officer of the now defunct Eagle Construction Services, Inc. (“Eagle”). While the company was still operating, Nordstrom made the day-to-day decisions relating to which bills and creditors were to be paid and when they were paid.

From April through August 2010, Eagle was engaged by Donald Borg Construction Co., Inc. (“Borg”) to perform construction work on two “Forever 21” stores in Southeast Michigan—one in Novi and the second at the Great Lakes Crossing mall in Auburn Hills. These two jobs were the only jobs Eagle was engaged in from February 2010 until Eagle ceased all operations in August 2010. Eagle received $467,481.00 from Borg for work on these two construction projects and all of the funds received were deposited in Eagle's checking account.

Eagle used the monies it received from Borg for the work performed on the Forever 21 projects for the payment of labor, payroll taxes, union dues, materials, bonds, equipment rental, workers compensation insurance, general liability insurance, taxes, professional fees, rent and utilities. However, Eagle did not make any fringe benefit contributions on behalf of employees covered by the Agreement entered into by the Michigan Council of Carpenters (the “Union”) and Signatory Independent Contractors (the “CBA”) for the months of May and June 2010.

At the conclusion of the Borg projects, there was a balance of $19,733.43 in Eagle's checking account.

The Detroit Carpenter Fringe Benefit Funds subsequently audited Eagle's books and records for the period October 1, 2007 through December 31, 2010. The audit revealed unpaid fringe benefit contributions totaling $87,861.71. Nordstrom agrees that Eagle was bound by the CBA and that all of the individuals listed in the audit performed work covered by the CBA. He does not contest the accuracy of the audit.

The Plaintiff Funds now seek entry of summary judgment in its favor for the total amount of contributions owed by Eagle, plus interest, liquidated damages, attorneys' fees and costs—an amount totaling $161,368,38. Further, inasmuch as Eagle has been dissolved, the Funds also seek an order holding Nordstrom personally liable for this amount because of his breach of his fiduciary duties under ERISA and the Michigan Builder's Trust Fund Act, M.C.L. § 570.151 et seq.

Defendants do not contest Eagle's liability for the amounts due as reflected in the audit. However, Defendant Nordstrom argues that he cannot be held personally liable for the delinquent contributions because he claims he is not a fiduciary under ERISA. He further claims that he cannot be held personally liable under the Michigan Builder's Trust Fund Act, either, because he used the Borg project funds solely for construction expenses. Accordingly, he seeks a summary judgment finding no personal liability on his part for the Eagle indebtedness.

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. AMOUNT OWED TO THE PLAINTIFF FUNDS

As indicated, Defendants do not dispute that no contributions were made to the Plaintiff Funds in May or June 2010 and do not contest the accuracy of the Funds' audit of Eagle books and records which revealed unpaid fringe benefit contributions totaling $87,861.71.

Section 502 of ERISA, 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 ¹ 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].

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.1991).

As indicated the uncontested amount of unpaid contributions owed to the Plaintiff Funds is $87,861.71. § 1132(g)(2) provides that at the time a judgment in favor of a plan is entered, the court shall also award interest on the unpaid contributions, an amount equal to the greater of interest on unpaid contributions or liquidated damages provided for in the plan not to exceed 20%, of the amount of unpaid contributions plus attorneys' fees and costs.

The current liquidated damages schedule as established by the Trustees of the Funds, states: “The Employer shall pay liquidated damages equal to .055% of the outstanding delinquent amount for each day it is late, up to a total of 20% of such delinquency.” See Second Amendment to the Detroit Carpenters Fringe Benefit Funds Delinquent Employer Collection Policies and Procedures, Stipulated Ex. C. The fringe benefit contributions have been delinquent since July 1, 2010. There are 809 days between July 1, 2010 and September 24, 2012. $87,861.71 x .00055 x 809 equals $39,094.06. This is more than 20% of $87,861.71. Therefore, the liquidated damages are capped at 20% of the outstanding delinquency, i.e., $17,572.34.

Courts in this district have also held that a fringe benefit fund is entitled to prejudgment interest on the unpaid contributions at the rate set by the collective bargaining agreement or, if none, the adjusted prime rate set forth in 26 U.S.C. § 6621. See e.g., Laborers' Pension Trust Fund–Detroit v. Family Cement Co., 677 F.Supp. 896 (E.D.Mich.1987) (citing Bricklayers' Pension Trust Fund v. Taiariol, 671 F.2d 988 (6th Cir.1982)). In this case, the CBA incorporates by reference, the Detroit Carpenters Fringe Benefit Funds Delinquent Employer Collection Policies and Procedures (the “Collection Policy”). See CBA, Stipulated Ex. A, § 10.15. The Collection Policy sets forth a prejudgment interest rate of .049% of the outstanding delinquent amount for each day of the delinquency. See Stipulated Ex. C. $87,861.71 x .00049 x 809 totals $34,829.25.

The Funds also have incurred attorneys fees in the amount of $20,294.50 and costs in the amount of $810.58. The amount of fees and costs sought ($21,105.08) is substantiated by the documented affidavit of Walter B. Fisher, Jr. of Fildew Hinks, PLLC. Defendant has...