Trustees of Nat. Elevator Pension Funds v. Lutyk

• Decision Date: 13 April 2001
• Docket Number: No. CIV.A.00-2301.,CIV.A.00-2301.
• Parties: TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY PENSION, Health Benefit and Educational Funds, Plaintiff, v. Andrew LUTYK, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

Page 407

140 F.Supp.2d 407

TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY PENSION, Health Benefit and Educational Funds, Plaintiff, v. Andrew LUTYK, Defendant.

No. CIV.A.00-2301.

United States District Court, E.D. Pennsylvania.

April 13, 2001.

Robert Patrick Curley, O'Donoghue and O'Donoghue, David D. Capuano, O'Donoghue & O'Donoghue, Philadelphia, PA, for Trustees of the National Elevator Industry Pension, Health Benefit and Educational Funds, Plaintiffs.

Louis Rosner, Law Offices of Louis Rosner, Philadelphia, PA, for Andrew Lutyk, Defendants.

MEMORANDAM AND ORDER

KATZ, Senior District Judge.

This case addresses whether a corporate officer may be personally liable for a company's unpaid contributions to employee benefits funds established under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The issue comes before the court by virtue of cross motions for summary judgment by plaintiff, Trustees of the National Elevator Industry (NEI) Pension, Health Benefit and Educational Funds, and defendant, Andrew Lutyk. For the following reasons, the court a) denies plaintiff's motion for summary judgment in full, and b) denies defendant's motion in part and grants it in part. In short, genuine issues of material fact exist with respect to 1) whether unpaid contributions qualify under the terms of the parties' agreements as plan assets, as is required to impose liability on defendant Lutyk as a fiduciary pursuant to 29 U.S.C. §§ 1109(a) and 1002(21)(A)(i), and 2) whether piercing of the corporate veil, which is required to impose personal liability on the defendant, is appropriate in this case. The defendant's motion for summary judgment is granted with respect only to i) the claim brought under 18 U.S.C. § 664, as a civil cause of action does not arise under that statute, and ii) the extent that plaintiff's claims are barred by the three-year statute of limitations.

I. Background

At all relevant times, defendant Lutyk has been the 100% shareholder, president, and sole officer and director of American Elevator Company, Inc. ("American"). See Pl.'s Mot. for Summ. J. Ex. ("Pl.'s Ex.") 4 (jointly executed Uncontested Facts); Pl.'s Ex. 7 (Articles of Incorporation, stockholder certificate). At all relevant times, American has been party to a collective bargaining agreement requiring American to make certain monthly contributions to three funds established pursuant to ERISA, namely, the NEI Pension Fund, the NEI Health Benefit Fund and the NEI Educational Fund (collectively, the "Funds"). See Pl.'s Ex. 4 (Uncontested Facts, stipulating to the establishment of the Funds under ERISA, and to American's obligations to the Funds by virtue of the collective bargaining agreements). In 1998, plaintiff sued American for contribution delinquencies to these Funds, and secured a settlement agreement against the company through a consent judgment in this district. See Pl.'s Ex. 1 (Consent Judgment in Civ. Act. No. 98-6544, dated June 15, 1999). Plaintiff claims that pursuant to that settlement agreement, American still owes a total of $240,284.60 in delinquent contributions, interest, attorneys' fees and liquidated damages, and that it also owes an additional $24,666.75 plus interest with respect to further unpaid, post-judgment contributions. See Pl.'s Mot. for Summ. J. at 15; Compl. Count I. According to plaintiff, Lutyk used money owed to the Funds for other purposes, draining American of assets. American then ceased operations in November of 1999. See Def.'s Ex. 1 ¶ 9 (aff.A.Lutyk). Plaintiff, being unable to procure these funds from the company, therefore brings this separate action against defendant Lutyk, seeking to hold him personally liable under ERISA for the company's unpaid contributions. Plaintiff also seeks an injunction requiring defendant Lutyk to submit timely contributions and reports to the Funds as required under the collective bargaining agreement. See Compl. Count II.

II. Summary Judgment: Legal Standards

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See FED. R. CIV. P. 56(c). At the summary judgment stage, the court does not weigh the evidence and determine the truth of the matter; rather, it determines whether or not there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In making this determination, all of the facts must be viewed in the light most favorable to, and all reasonable inferences must be drawn in favor of, the nonmoving party. Id. at 255, 106 S.Ct. 2505.

The moving party has the burden of showing there are no genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Mathews v. Lancaster General Hosp., 87 F.3d 624, 639 (3d Cir. 1996). In response, the non-moving party must adduce more than a mere scintilla of evidence in its favor, and cannot simply reassert factually unsupported allegations contained in its pleadings. See Anderson, 477 U.S. at 248, 250, 106 S.Ct. 2505; Celotex, 477 U.S. at 325, 106 S.Ct. 2548; Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir.1989).

III. Discussion

A. Personal Liability Under 29 U.S.C. § 1109(a)

Section 409 of ERISA, 29 U.S.C. § 1109(a), imposes personal liability on "[a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries." Plaintiff claims that Lutyk is a fiduciary specifically under 29 U.S.C. § 1002(21)(A)(i), which states that "a person is a fiduciary with respect to a plan to the extent (i) he ... exercises any authority or control respecting management or disposition of its assets." Plaintiff's theory is that as American's sole shareholder and sole director and officer, Lutyk directed monies owed to the Funds for other purposes, making him liable as a plan fiduciary.

In the Third Circuit, there is no general rule conferring fiduciary status merely on the basis of delinquent employer contributions.¹ See Galgay v. Gangloff, 677 F.Supp. 295, 301 (M.D.Pa.1987) ("[T]he court by no means holds as a general rule that employers may be liable under ERISA as fiduciaries merely because of delinquent contributions."), aff'd without opinion, 932 F.2d 959 (3d Cir.1991) (Table). Rather, because a fiduciary is one who exercises authority over the management or disposition of plan "assets," 29 U.S.C. § 1002(21)(A)(i), a defendant's fiduciary status in cases concerning delinquent contributions often turns on whether the term "assets" includes such delinquent contributions. To answer this question, courts in the Third Circuit look to the terms of the agreement under which the obligation to pay the contributions arise. See Galgay, 677 F.Supp. at 301-02 (delinquent contributions held to be assets pursuant to the terms of the wage agreement); Young v. West Coast Industrial Relations Assoc., Inc., 763 F.Supp. 64, 75 (D.Del.1991) (in case involving 18 U.S.C. § 664, an analogous criminal statute, delinquent contributions held to be debt, not vested assets, where agreement stated that employer was liable for "all arrears in payment" of ERISA plan contributions), aff'd without opinion, 961 F.2d 1570 (3rd Cir.1992) (Table); PMTA-ILA Containerization Fund v. Rose, No. 94-5635, 1995 WL 461269, at *4 (E.D.Pa. Aug.2, 1995) (delinquent contributions held to be assets where agreement stated that monies "accrued to" fund were "vested" in the fund trustees).²

In Galgay, the court found that delinquent employer contributions were "assets" based upon the wage agreement's provision that "all the monies paid into and/or due and owing said fund shall be vested in and remain exclusively in the trustees of the fund." Galgay, 677 F.Supp. at 300-01 (emphasis added). This is in accord with holdings in other Circuits addressing agreements containing the same or extremely similar language. See Hanley v. Giordano's Restaurant, No. 94-4696, 1995 WL 442143, at *4 (S.D.N.Y. Jul. 26, 1995); Connors v. Paybra Mining Co., 807 F.Supp. 1242, 1246 (S.D.W.Va.1992). Another court in this district held that unpaid contributions were "assets" based on the agreement's provision that "[t]itle to all of the money, property, and income ... accrued to the fund shall be vested in and remain exclusively in the board of trustees of the fund," where "accrued to" was synonymous with "due and owing." See PMTA-ILA, 1995 WL 461269, at *4.

In this case, the court looks to the Restated Agreement and Declaration of Trust ("Restated Agreement") and the relevant amendment thereto for each of the Funds in order to determine whether unpaid contributions are considered to be "assets." See Pl.'s Exs. 5A (Restated Agreement pertaining to the NEI Pension Fund, and Eighth Amendment thereto adopted Sept. 19, 1990), 5B (Restated Agreement pertaining to NEI Health Benefit Fund, and Seventh Amendment thereto adopted Sept. 19, 1990), and 5C (Restated Agreement pertaining to NEI Educational Fund, and Seventh Amendment thereto³).⁴ The relevant documents relating to each of the Funds have identical provisions with respect to this issue. See id.

A key inquiry is whether unpaid contributions are considered part of the "Trust Fund," as the amended Restated Agreements state that "[n]either ... the Union, Employers, Employees ... shall have any right, title or interest in or to the Trust Fund." Pl.'s Exs. 5A Art. VI Par. 1, 5B Art. VI Par. 1, and 5C Art. VI Par. 1. See United States v. Panepinto, 818 F.Supp. 48, 51 (E.D.N.Y.1993) (agreement stating that monies in which "the employer shall [not] have any legal or equitable right, title or interest" were plan assets). The meaning of "contributions" is also significant, as each of the Restated Agreements...