Federal Rules of Civil Procedure, service of the complaint is void.
Although Virginia law generally precludes service on Sunday,
section 8.01-288 of the Virginia Code validates process that reaches a party even if there are technical defects in service. As the Virginia Code provides, "Except for process commencing actions for divorce or annulment of marriage or other actions wherein service of process is specifically prescribed by statute, process which has reached the person to whom it is directed within the time prescribed by law, if any, shall be sufficient although not served or accepted as provided in this chapter." Va. Code Ann. § 8.01-288. Defendants nowhere advance the argument that they never received actual notice of the suit.
Moreover, courts are generally reluctant to adopt technical interpretations of rules concerning service. As the Court of Appeals for the Fourth Circuit noted, "To the extent that there is any rule or guide to be followed by the federal courts in such a case it is that where actual notice of the commencement of the action and the duty to defend has been received by the one served, the provisions of Rule 4(d)(1) should be liberally construed to effectuate service and uphold the jurisdiction of the court, thus insuring the opportunity for trial on the merits." Karlsson v. Rabinowitz, 318 F.2d 666, 668 (4th Cir. 1963). And as Wright & Miller suggest, "The general attitude of the federal courts is that the provisions of Rule 4 should be liberally construed in the interest of doing substantial justice and that the propriety of service in each case should turn on its own facts within the limits of the flexibility provided by the rule itself. This is consistent with the modern conception of service of process as primarily a notice-giving device." 4A C. Wright & A. Miller, Federal Practice and Procedure § 1083, p. 10 (1987) (footnotes omitted). There is no doubt that while defendant Shannon may not have been served in his state of residence, he was apprised of the commencement of the instant action.
In any event, under Rule 4(h) of the Federal Rules of Civil Procedure, the Court has substantial discretion to allow amendment of service "unless it clearly appears that material prejudice would result to the substantial rights of the party against whom the process issued." Service in this action was, by no means, exemplary. Nonetheless, because defendants had actual notice of the suit, because the Court would have allowed amendment of service finding no material prejudice to defendants, and in the interests of justice and expediency, the Court will not dismiss the action against defendants on the basis of ineffective service.
Section 4001(b)(1) of ERISA, 29 U.S.C. § 1301(b)(1), provides that, for purposes of withdrawal liability, "all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer and all such trades and businesses as a single employer."
Each trade or business that is a member of a controlled group is then jointly and severally liable for the withdrawal of any other member of the group.
Defendants do not argue that they are not members of a "controlled group" responsible for the withdrawal liability of Mining and Fuel. Rather, they contend, Russell is not a "trade or business" and therefore, cannot be held liable under ERISA. Specifically, defendants argue that Russell merely "held" equipment and did not lease equipment, Russell had no income, Russell did not have an office, and Russell had no employees.
The factors that defendants cite are not determinative in deciding whether an entity is a trade or business within the meaning of ERISA. For example, it has been held that a company that does no more than hold and lease equipment may be a trade or business. See Central States, Southeast & Southwest Areas Pension Fund v. Skyland Leasing Co., 691 F. Supp. 6, 11 (W.D.Mich. 1987), aff'd, 892 F.2d 1043 (6th Cir. 1990). And it is well settled that entities without employees may still constitute a trade or business. See, e.g., Board of Trustees v. Lafrenz, 837 F.2d 892, 894 (9th Cir. 1988).
Moreover, Russell's unsigned tax returns for 1984, 1985, and 1986, provided in response to plaintiffs' discovery requests, flatly contradict defendants' contentions. Despite defendants' statements to the contrary, Russell reported earned income in both 1984 and 1985 and indicated that its principal business activity is equipment leasing. In addition, Russell filed an IRS form entitled "Gains and Losses from Sales or Exchanges of Assets Used in a Trade or Business and Involuntary Conversions." Moreover, Russell claimed deductions for property depreciation, and in order to deduct depreciation, the property must either be used in a trade or business or held for the production of income. In either event, Russell must either admit its status as a trade or business or assert that it held equipment for the production of income. Consequently, the Court finds that plaintiffs have sufficiently demonstrated that Russell is a trade or business subject to withdrawal liability as a member of the controlled group.
Finally, defendants argue that plaintiffs' claims must be dismissed since the 1950 Plan for which funds are sought are already fully funded.
In support of their argument, defendants point to 29 U.S.C. § 1381, which provides: "If an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability. . . . For purposes of subsection (a) of this section -- . . . The withdrawal liability of an employer to a plan is the amount determined under section 1391 of this title to be the allocable amount of unfunded vested benefits . . . ." Defendants contend that the fact that the Plan has no "unfunded vested benefits" ("UVB") as of the year preceding the employer's decision immunizes the withdrawing employer from such liability under 29 U.S.C. § 1381.
Defendants' contention is unavailing. Section 1391 provides several complex formulas for computing withdrawal liability and nowhere indicates that "allocable amount" is to be based only on the UVBs as of the year preceding withdrawal when those UVBs have a value of zero. Accepting defendants' arguments would require this Court to ignore and disregard clear statutory language. As the Court of Appeals for the Fourth Circuit explained, "Because we construe the Employers' argument as an attempt to have us rewrite plain congressional language, we are compelled to reject their argument. . . . The language and logic of [the Multi-Employer Pension Plan Amendments Act ("MPPAA")] as a whole and MPPAA's legislative history . . . support, rather than contravene, our decision to give effect to the statute's plain language. . . . Although we rest our decision most securely on MPPAA's plain language, logic, and legislative history, we derive additional assurance from the reasonableness, from the perspective of economic history, of consideration of plan health over a range of years, rather than at one discrete point in time." Wise v. Ruffin, 914 F.2d 570, 575, 580 (4th Cir. 1990). cert. denied sub nom., Almont Shippng Co., Inc. v. Ruffin, 112 L. Ed. 2d 1194, 111 S. Ct. 1090 (1991).
For the reasons expressed above, it is hereby
ORDERED that defendants' motion for leave to file an amended answer is granted; it is
FURTHER ORDERED that plaintiffs' motion for leave to file a supplemental memorandum in support of plaintiffs' motion for summary judgment is granted; it is
FURTHER ORDERED that defendants' motion for summary judgment is granted in part; it is
FURTHER ORDERED that defendants' motion for summary judgment as to defendant Hi-Heat is granted; it is
FURTHER ORDERED that plaintiffs' motion for summary judgment is granted in part; it is
FURTHER ORDERED that plaintiffs' motion for summary judgment is granted as to defendants Dennis Coleman and Shannon Coleman, doing business as partners of Russell Equipment Company.
IT IS SO ORDERED.
JUDGMENT - May 24, 1991, Filed
In accordance with the Memorandum Opinion issued this date, judgment is entered in favor of defendant Hi-Heat Coal Company, Inc. and against plaintiffs Joseph P. Connors, Sr., Donald E. Pierce, Jr., William Miller, Thomas H. Saggau, and Paul R. Dean, as trustees of the United Mine Workers of America 1950 Pension Plan and the United Mine Workers of America 1974 Pension Plan.
IT IS SO ORDERED.
JUDGMENT - May 24, 1991, Filed
In accordance with the Memorandum Opinion issued this date, judgment is entered in favor of plaintiffs Joseph P. Connors, Sr., Donald E. Pierce, Jr., William Miller, Thomas H. Saggau, and Paul R. Dean, as trustees of the United Mine Workers of America 1950 Pension Plan and the United Mine Workers of America 1974 Pension Plan, and against defendants Shannon Coleman and Dennis Coleman, as partners of Russell Equipment Company.
IT IS SO ORDERED.