The opinion of the court was delivered by: PRATT
The court has before it plaintiffs' motion to amend the complaint to add additional counts under both federal and state law which seek recovery from Kenneth Moore and Joby Fields. Moore and Fields have appeared and opposed the proposed amendments on the grounds that this court lacks personal and subject matter jurisdiction over the state law counts, that the state law counts are preempted by ERISA, and that the proposed amendment fails to state a claim under ERISA. In evaluating whether amendment would be futile, we treat Moore's and Fields' opposition as a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1),(2),(6).
This action was originally brought in three counts by plaintiffs, trustees of the United Mine Workers of America 1950 Pension Plan and the United Mine Workers of America 1974 Pension Plan (Plans), to assess and collect withdrawal liability allegedly due and owing the Plans because of the alleged withdrawal of Marontha Coal Co. from participation. In addition to bringing suit against Marontha, suit was also originally brought against Kenneth Moore and Joby Fields on the theory that these individuals were "employers" within the meaning of Section 3(5) of ERISA, 29 U.S.C. § 1002(5). Following the decision of the Court of Appeals in Connors v. P & M Coal Co., 255 U.S. App. D.C. 334, 801 F.2d 1373 (D.C. Cir. 1986), we granted defendants' motion to dismiss the claims against Moore and Fields. Order of October 24, 1986. Plaintiffs now seek to assert claims against Moore and Fields based on alleged transactions to evade and avoid withdrawal liability, fraudulent asset transfers, unpaid stock subscriptions, illegal dividend payments, and conduct disregarding the separateness of the corporate entity.
With respect to plaintiffs claim against Moore and Fields for recovery based on alleged transactions to evade or avoid withdrawal liability, ERISA § 4212(c), 29 U.S.C. § 1392(c), this court clearly has both subject matter and personal jurisdiction. Subject matter jurisdiction is proper since the claim arises under a federal statute. Personal jurisdiction is proper since ERISA § 4301(d), 29 U.S.C. § 1451(d), allows nationwide service of process. The only remaining question is whether ERISA § 4212(c) allows an action to be brought against parties not the employer, if those parties were the transferee of property transferred in a transaction designed to evade or avoid withdrawal liability.
If a principal purpose of any transaction is to evade or avoid liability under this part, this part shall be applied (and liability shall be determined and collected) without regard to such transaction.
Whenever a transaction has removed assets from the formal structure of the corporation being assessed for withdrawal liability, liability can only be "collected" if there is a right of action against the transferee, whether or not it fits the definition of "employer." If, for example, a defendant company divided itself into two corporations for the purpose of evading the collection of withdrawal liability, liability would undoubtedly be collectible from both new corporations.
The question remains as to who can or must be sued to recover withdrawal liability from the transferee of property in a transaction to evade or avoid withdrawal liability. Because ERISA provides no guidance on this point, we look to the common law for analogous actions. Plaintiffs point to the law of fraudulent conveyances, as most recently reflected in the Uniform Fraudulent Transfers Act (UFTA). We agree that this is an appropriate and helpful analog.
Following the general outline of the UFTA, however, plaintiffs' allegations under Count IV are not sufficiently limited. The UFTA allows a creditor to sue the transferee of fraudulently transferred property to have the transfer declared voidable and to recover the transferred property. In Count IV, plaintiffs not only allege that Fields and Moore transferred property to themselves, but also that they caused property to be transferred to companies which they control. The other companies are not named as defendants, and the complaint contains no allegations that Moore and Fields abused the corporate forms of the transferee corporations in such a manner as to justify piercing the corporate veils of those corporations. By analogy to the UFTA, Count IV can properly only seek recovery of assets actually transferred to Moore and Fields personally, with the intent to evade or avoid withdrawal liability.
Plaintiffs seek to assert all three of these counts under Kentucky state law. These counts seek to set aside allegedly fraudulent conveyances (Count III), to recover unpaid stock subscriptions (Count VI), and to recover dividends allegedly illegally paid (Count VII). While these counts at least arguably fall within the pendent jurisdiction of this court, all are barred by this court's lack of personal jurisdiction as to these claims. As such, plaintiff cannot amend the complaint to add these counts.
It is axiomatic that before a court can hear the merits of a claim, the court must have both jurisdiction over the subject matter of the claim and jurisdiction over the person against whom the claim is asserted. Although federal courts can exercise pendent subject matter jurisdiction to bring a claim ordinarily outside the court's limited jurisdiction within the subject matter jurisdiction of the court, United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966), there is no analogous concept ...