Wis. Masons Health Care Fund v. Sid's Sealants, LLC
| Decision Date | 31 August 2017 |
| Docket Number | 17-cv-28-jdp |
| Parties | WISCONSIN MASONS HEALTH CARE FUND, WISCONSIN MASONS APPRENTICESHIP & TRAINING FUND, GARY BURNS, BRICKLAYERS & TROWEL TRADES INTERNATIONAL PENSION FUND, INTERNATIONAL MASONRY INSTITUTE, BRICKLAYERS & ALLIED CRAFTWORKERS DISTRICT COUNCIL OF WISCONSIN, WISCONSIN LABORERS HEALTH FUND, BUILDING & PUBLIC WORKS LABORERS VACATION FUND, WISCONSIN LABORERS APPRENTICESHIP & TRAINING FUND, JOHN J. SCHMITT, WISCONSIN LABORERS-EMPLOYERS COOPERATION AND EDUCATION TRUST FUND, WISCONSIN LABORERS DISTRICT COUNCIL, BUILDING TRADES UNITED PENSION TRUST FUND, SCOTT J. REDMAN, and INDUSTRY ADVANCEMENT PROGRAM/CONTRACT ADMINISTRATION, Plaintiffs, v. SID'S SEALANTS, LLC, and SIDNEY N. ARTHUR, Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
Plaintiffs, various labor organizations (unions) and employee benefit plans (funds) and their trustees and fiduciaries, bring claims against defendants Sid's Sealants, LLC, and Sidney N. Arthur for violations of the Employee Retirement Income Security Act of 1974 (ERISA) and the Labor Management Relations Act of 1947 (LMRA). Dkt. 14. Plaintiffs allege that Sid's Sealants, LLC, failed to make contributions to the plaintiff funds, in violation of collective bargaining agreements, trust plans, and trust agreements. Sid's Sealants, LLC, deducted and withheld working dues from their employees but failed to submit those dues to the plaintiff unions. Plaintiffs allege that Arthur kept the unremitted union dues for himself, in violation of Wis. Stat. §§ 895.446 and 943.20 (civil theft). Defendants answered and asserted five counterclaims against plaintiffs. Dkt. 16.
Now plaintiffs move to dismiss defendants' counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 6. Because defendants have failed to plead any actionable counterclaims, the court will grant plaintiffs' motion in full.
The court draws the following facts from defendants' pleading, Dkt. 16, and construes the allegations "in the light most favorable to the [defendants], accepting as true all well-pleaded facts alleged, and drawing all possible inferences in [their] favor." Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
In answering plaintiffs' first amended complaint, defendants deny that they have violated any collective bargaining agreements, trust plans, or trust agreements, that they have refused to submit contributions, and that they have violated any federal or state law. Dkt. 16, ¶ 1. Then defendants repaint the landscape: contrary to plaintiffs' allegations, at no point was Sid's Sealants, LLC, party to a collective bargaining agreement with the Wisconsin Bricklayers District Council, and at no point did the LLC assume rights and obligations under a collective bargaining agreement with the Wisconsin Bricklayers District Council. Id. ¶ 17. The Bricklayers unions never requested that its collective bargaining agreement with Arthur's sole proprietorship—an entity that preceded the LLC but that no longer exists—be assigned to theLLC named here. Defendants admit that Sid's Sealants, LLC, signed a collective bargaining agreement with the Wisconsin Laborers District Council and that the LLC agreed to and did make timely payments to those unions.
In the absence of a binding collective bargaining agreement, defendants made voluntary payments to the "various funds," including the Bricklayers unions. Id. ¶ 22. Defendants made "voluntary payments" to plaintiffs "for past due voluntary contributions." Id. Defendants have paid plaintiffs $561,122.60 since March 2012. That "amount exceed[ed] the amount that would have been due" had defendants been legally obligated to make contributions to the Bricklayers unions, and it "exceed[ed] the amount due the Laborer Unions Plaintiffs' [sic]." Id.
Between April 2012 and November 2016, defendants repeatedly requested an accounting of the voluntary payments that they have made, "to determine whether there is in fact any obligation for additional payments, whether voluntary or otherwise." Id. ¶ 42. Neither plaintiffs nor plaintiffs' counsel responded. Defendants suspect that plaintiffs did not properly credit the payments, or credited them "in such a manner as to generate late fees, penalties, and interest obligations." Id. ¶ 43. Defendants demand an accounting and bring counterclaims for conspiracy to injure business reputation, breach of fiduciary duty, conversion and civil theft, and tortious interference with contract.
A motion to dismiss pursuant to Rule 12(b)(6) tests the complaint's legal sufficiency. To state a claim upon which relief can be granted, a complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 8 "does not require 'detailed factual allegations,' but it demands more than an unadorned,the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A complaint must offer Twombly, 550 U.S. at 555 (citations omitted).
Plaintiffs attack all five of defendants' counterclaims. The court will address each in turn.
Defendants allege that plaintiffs intentionally misapplied defendants' payments and, as a result, committed common law conversion and civil theft in violation of Wis. Stat. §§ 895.446 and 943.20. Had plaintiffs applied defendants' payments "to the appropriate funds," "there would be no amounts due and owing" and plaintiffs would not be entitled to recover unpaid interest, late fees, or other penalties. Dkt. 16, ¶ 59.
The subsection targets "those who are entrusted with the property of another and who retain or use that property in a way that does not comport with the owner's wishes." Aslanukov v. Am. Express Travel Related Servs. Co., 426 F. Supp. 2d 888, 893 (W.D. Wis. 2006). So to state aclaim under § 943.20(1)(b), defendants must allege that plaintiffs had "possession or custody of" defendants' money.
Plaintiffs contend that they owned the money after defendants transferred it, so defendants cannot state a claim under § 943.20(1)(b). When one party transfers money to a second party to complete a transaction or purchase, the first party does not "entrust" its money to the second; the second party "obtain[s] ownership" of the money. Id. ). By its plain terms, subsection (1)(b) contemplates a trustee-like perpetrator: an individual entrusts his money to another, but the "trustee" converts the money for his own use. See, e.g., Brutyn, N.V. v. Anthony Gagliano Co., No. 04-cv-527, 2005 WL 3811423, at *13 (E.D. Wis. Nov. 29, 2005) (); In re Disciplinary Proceedings Against Evans, 121 Wis. 2d 42, 357 N.W.2d 547, 548 (1984) (). The subsection does not apply any time money changes hands and someone walks away unsatisfied.
Here, defendants allege that they transferred money to plaintiffs' counsel to contribute to the plaintiff funds; defendants do not allege that they retained an ownership interest in the money or otherwise "entrusted" the money to plaintiffs. True, defendants allege that they were not legally obligated to pay certain sums to plaintiffs—they deny that they entered into a collective bargaining agreement with the Bricklayers unions. But that does not change the factthat defendants transferred money to plaintiffs' counsel for plaintiffs. Defendants paid plaintiffs more than they had to. But they do not allege that they did not intend to give the entire sum to plaintiffs. According to defendants, plaintiffs did not apply defendants' payments "to the appropriate funds" and, in so doing, wrongfully retained defendants' property. Dkt. 16, ¶¶ 59-60. But defendants do not allege any facts that suggest that the property was defendants'. So they do not state a claim under § 943.20(1)(b).
Defendants cite Hartland Lakeside Joint No. 3 School District v. WEA Insurance Corporation, No. 12-cv-154, 2012 WL 12929551 (E.D. Wis. July 27, 2012), but that case does not help them. There, the defendants took custody of funds that belonged to the plaintiffs when they applied for the funds on the plaintiffs' behalf. The defendants precluded the plaintiffs from applying for the funds themselves. And when the plaintiffs demanded that the defendants turn over the funds, the defendants refused. Id. at *3-5. The allegations were sufficient to state a claim under § 943.20(1)(b). Id. at *5. But here, plaintiffs did no such thing. They did not apply for funds that belonged to defend...
To continue reading
Request your trial