Trustees of B.A.C. Local 32 Ins. Fund v. Silveri

• Decision Date: 13 January 2000
• Docket Number: No. 97-CV-72656-DT.,97-CV-72656-DT.
• Citation: 78 F.Supp.2d 670
• Court: U.S. District Court — Eastern District of Michigan
• Parties: TRUSTEES OF THE B.A.C. LOCAL 32 INSURANCE FUND; Tile, Terrazzo and Marble Industry Pension Fund; Tile, Marble & Terrazzo Industry Join Industry Training Fund; Great Lakes Ceramic Tile Council Fund; Tile, Terrazzo and Marble Industry Supplemental, Unemployment Benefit Fund; and the Tile, Terrazzo and Marble Industry Vacation and Holiday Fund, Plaintiffs, v. Robert SILVERI d/b/a Silveri Tile Company, and Silveri Tile Company, L.C., Defendants.

78 F.Supp.2d 670

TRUSTEES OF THE B.A.C. LOCAL 32 INSURANCE FUND; Tile, Terrazzo and Marble Industry Pension Fund; Tile, Marble & Terrazzo Industry Join Industry Training Fund; Great Lakes Ceramic Tile Council Fund; Tile, Terrazzo and Marble Industry Supplemental, Unemployment Benefit Fund; and the Tile, Terrazzo and Marble Industry Vacation and Holiday Fund, Plaintiffs, v. Robert SILVERI d/b/a Silveri Tile Company, and Silveri Tile Company, L.C., Defendants.

No. 97-CV-72656-DT.

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

January 13, 2000.

COPYRIGHT MATERIAL OMITTED

William Z. Kolobaric, Southfield, MI, for plaintiff.

Albert B. Addis, Royal Oak, MI, John S. Regan, Detroit, MI, Francis J. Newton, Detroit, MI, for defendant.

OPINION AND ORDER REGARDING PLAINTIFFS' AND DEFENDANTS' CROSS-MOTIONS FOR SUMMARY JUDGMENT

ROSEN, District Judge.

I. INTRODUCTION

This ERISA fringe benefits contribution action is presently before the Court on the parties' cross-motions for summary judgment which were filed while this case was pending before the Honorable Robert DeMascio. Each of the parties has responded and replied to the opposing party's motion. The Court heard oral argument on these motions on October 21, 1999, and at the close of the hearing, ordered the filing of supplemental briefs. The parties have complied with the Court's directive. Having reviewed and considered Plaintiffs' and Defendants' briefs and supporting documents and the oral arguments of counsel, the Court is now prepared to rule on this matter. This Opinion and Order sets forth the Court's ruling.

II. FACTUAL BACKGROUND

Robert Silveri, doing business as "Silveri Tile Company," was engaged in the business of tile installation from 1980 through March 1994. In 1985, Silveri, as an independent contractor, became a signatory to a collective bargaining agreement entered into by the Detroit Ceramic Tile Contractors Association and Local Union No. 40 of the Tile, Marble, Terrazzo Finishers and Shopmen International Union, AFL — CIO ("Local 40"). See Defendants' Ex. B; Plaintiffs' Ex. 3. Two years later, in 1987, Silveri signed on to the new Tile Contractors — Local 40 Agreement. See Defendants' Ex. B; Plaintiffs' Ex. 4. Both Local 40 contracts executed by Silveri contained "Evergreen" clauses, which automatically extended the contracts from year to year after their stated expiration dates, unless written notice to terminate or modify the Agreement was submitted by any of the parties at least 90 days prior to the expiration date. In accordance with the Local 40 Agreements, Silveri made contributions to Local 40's Fringe Benefit Funds through December 31, 1987 See Plaintiffs' Ex. 6.

In early 1988, the International Union with which Local 40 was affiliated dissolved. The members of Local 40 then elected to transfer their membership to Bricklayers and Allied Craftsmen International Union ("B.A.C.") Local 44. See Deposition of John Mason, Defendants' Ex. D, pp. 25; Affidavit of Carl Volpe, former Business Manager of Local 40 and Local 44, Plaintiffs' Response Ex. 4.¹ Local 44 took over responsibility for administering Local 40's contracts. Id. Following Local 44's assumption of Local 40's contracts, Defendant Silveri made the required fringe benefit contributions to Local 44's Fringe Benefit Funds. See Plaintiffs' Ex. 7.

The Plaintiffs also allege that, in addition to signing onto the Local 40 CBAs, on June 26, 1988, Silveri also entered into a collective bargaining agreement with B.A.C. Local 32 ("Local 32"). See Defendants' Ex. F.² (John Mason, Local 32's Business Manager, testified that the only difference between B.A.C. Local 32 and B.A.C. Local 44 was that Local 32 covered tile layers and Local 44 covered tile finishers. See Mason Dep. p. 24.³)

In 1990, the Bricklayers merged Local 32 and Local 44 and created a successor Local 32 ("new Local 32") covering both tile layers and tile finishers. New Local 32 assumed responsibility for the administration of the pension and benefit funds of both old Local 32 and former Locals 40/44. It is the pension and benefit funds of the reconstituted Local 32 formed by the merger of old Local 32 and Local 44 that are the Plaintiff Funds in this action.

Despite denying ever having entered into any agreement with Local 32 (either the pre-1990 Local 32 or the new Local 32 formed after the merger with Local 44 [see note 2, supra]), Silveri made contributions to new Local 32's Fringe Benefit Funds until January 1992. See Plaintiffs' Ex. No. 5. See also, Plaintiffs' Second Supplemental Brief, Ex. 3. All of the fund contributions paid by Silveri throughout this period were paid at the rate provided in the CBA in effect at the time payment was made. See Plaintiffs' Ex. 5 and Plaintiffs' Second Supplemental Brief Ex. 3.

After January 1992, however, Silveri ceased making any contributions to the Plaintiff Funds. Consequently, in November 1992, the Funds instituted a lawsuit against the company. See B.A.C. Local Insurance Fund et al. v. Robert Silveri d/b/a Silveri Tile Company, No. 92-76746 (assigned to Judge Cohn). Silveri defended the 1992 action claiming as he does in this matter that he never entered into any Agreement with Local 32. Nonetheless, without admitting liability, in January 1994, Silveri settled the 1992 action and paid the Funds $95,961.00.

After settling the 1992 case, Silveri told Local 32's Business Manager, John Mason, that he was getting out of the tile business. See Silveri Dep., Plaintiffs' Ex. 8, p. 8. Based upon that representation, Local 32 did not further pursue Silveri for Fund contributions.

In late 1996, however, John Mason became aware that Silveri Tile Company was performing covered tile work within the Local 32 jurisdiction. An audit of Silveri was subsequently performed in April and May 1998.

That audit revealed that the "d/b/a" Silveri Tile Company had become a corporation, Silveri Tile Company, L.C., in March 1994, shortly after Robert Silveri settled the 1992 lawsuit. The managers of the Silveri Tile corporation are Jean C. Silveri, Robert Silveri's wife, and Mary Lynn Silveri, Silveri's sister-in-law. See Plaintiffs' Ex. 9. Although he holds no formal corporate office, Robert Silveri remains the only person authorized to, and who in fact, makes all principal business decisions for the company, including supervising work, and hiring, firing, suspending, laying off, recalling, promoting, discharging, assigning, rewarding and disciplining other employees. See Plaintiffs' Ex. 14.

Further, the Silveri corporation continues to perform the same work with the same employees that the d/b/a employed. The audit revealed that in 1994, the corporation had as its employees 10 of the 17 employees who had been employed by the d/b/a Silveri Tile Company in 1992, and 12 of the d/b/a's employees from 1993. Moreover, the corporation operates from the same office that the d/b/a operated out of, and the d/b/a ceased keeping books and records when the corporation's books and records began. See Plaintiffs' Ex. 10.

The Silveri Tile corporation also continued to use the same suppliers under the same client numbers as the d/b/a. See Plaintiffs' Ex. 11, 12, and 13. The corporation further holds itself out as a continuation of the d/b/a. See 1998 advertisement of "Silveri Tile Company" as doing business "since 1946." Plaintiffs' Reply Brief Ex. 9.

Although Defendants maintain that they repudiated any agreement they may have had with the Unions "on numerous occasions" since 1985, no letter of termination of any CBA was received by either of the Unions prior to February 3, 1998. See Plaintiffs' Ex. 15. Furthermore, as indicated above, documentary evidence of record establishes that Defendants continued to make contributions to the Plaintiff Funds at the rates called for by the CBAs in effect at the time the payments were made throughout the 1985-1992 period. See Plaintiffs' Ex. 5 and Plaintiffs' Second Supplemental Ex. 3. Therefore, their claim of having repudiated the contract totally lacks factual support.⁴

Based upon the audit conducted on its behalf, Plaintiffs contend that Silveri owes contributions for covered work done by tile setters amounting to $682,492.00 and for covered work done by tile helpers amounting to $592,420.29, totaling $1,274,912.29, plus the cost of the audit and the cost and fees incurred in connection with this action.⁵

Silveri's defense in this action is simply that he never signed on to any contract with Local 32 or Local 44 subsequent to December 1991. And, to the extent that Plaintiffs rely upon Silveri's execution of Agreements prior to 1991, Silveri maintains that since he and his company have acted "in open and notorious ways as non-union contractors" and that Local 32 was fully aware of such conduct, he has effectively repudiated any pre-1991 Agreement, and, therefore, is not liable for any contributions to any of the Funds thereunder.

Silveri also argues that since he was never notified by Local 32 or Local 44 that either Union was the successor entity of Local 40 (i.e., the one Union with which Silveri admits having entered into a contract), he cannot be required to make contributions to the successor funds. Additionally, he argues that the Silveri Tile Company corporation formed in 1994 is an entity entirely separate and distinct from his d/b/a on whose behalf he executed the Local 40 Agreement in 1985 and 1987, and because the corporate entity is an entirely separate entity from the d/b/a, it cannot be bound by the d/b/a's execution of the 1985 and 1987 Agreements.

At oral argument, although Defendants did not entirely abandon the foregoing arguments, they retreated somewhat from their original "no-liability-whatsoever" position and argued that assuming that they are liable for the fund contributions sought by Plaintiffs, they should be found to be liable for payment only at the rates provided in Local 40 Agreement signed by Robert Silveri in 198...