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CONNORS v. INCOAL INC.

January 15, 1992

JOSEPH P. CONNORS, SR., et al., Plaintiffs,
v.
INCOAL INC. a/k/a INCOAL COAL CO., et al., Defendants.



The opinion of the court was delivered by: JOHN H. PRATT

 Before the Court are cross motions for summary judgment. Because there is no genuine issue of material fact and some of the moving parties are entitled to judgment as a matter of law, summary judgment is appropriate. For the reasons that follow, plaintiffs' motion is granted in part and denied in part, defendant Kite Coal Sales, Inc.'s motion is denied, and defendant Double A Farms' motion is granted.

 Background

 This is an action to collect withdrawal liability under the Employment Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1001, et seq. Plaintiffs seek withdrawal liability in the principal amount of $ 840,929.05, plus interest, liquidated damages, attorneys' fees, and costs against the defendants jointly and severally.

 Plaintiffs are the Trustees of the United Mine Workers of America 1950 Pension Plan ("1950 Plan") and the United Mine Workers of America 1974 Pension Plan ("1974 Plan") (collectively, the "Plans"), which are multiemployer pension plans under §§ 3(37) and 4001(a) (3) of ERISA, 29 U.S.C. §§ 1002(37), 1301(a)(3).

 Defendant Incoal Inc., a/k/a Incoal Coal Company ("Incoal"), is a Kentucky corporation that was engaged in the business of acquiring, producing, processing, and/or cleaning coal and maintaining mine sites. Incoal was owned 25% each by Orville Adkins, his wife Dixie, their son Adam, and Adam's wife Sally. Incoal was a signatory to the National Bituminous Coal Wage Agreements of 1978 and 1981 (collectively, the "Agreements"). Pursuant to the Agreements, Incoal participated in the Plans and was obligated to and made contributions to the plans on behalf of its employees covered by the Agreements.

 Approximately seven years ago, *fn1" Incoal ceased to operate and ceased making contributions to the Plans. Pursuant to § 4202(2) of ERISA, 29 U.S.C. § 1382(2), by letters dated July 5, 1985, the 1950 Plan assessed Incoal $ 562,006.75 in withdrawal liability, and the 1974 Plan assessed Incoal $ 248,603.66. *fn2" Affidavit of Diane Duffin, Exhibit ("Duffin Ex.") A; Duffin Ex. B. The letters advised Incoal of the amount of its liability, established a schedule of payments, and offered, in the alternative, the option of paying its withdrawal liability in a lump sum. The letters also explained, in detail, Incoal's right to request review of its withdrawal liability under § 4219(b)(2)(A) of ERISA, 29 U.S.C. § 1399(b)(2)(A), and to initiate arbitration under § 4221 of ERISA, 29 U.S.C. 1401. The letters highlighted the fact that Incoal's right to arbitrate any determination by the Plans concerning liability would be lost unless timely action was taken by Incoal.

 By letter dated July 16, 1985, Incoal informed the Plans that it had depleted its assets and was financially unable to pay the withdrawal liability. Duffin Ex. C. Thereafter, Incoal failed to make any withdrawal liability payments to the 1950 or 1974 Plans. Additionally, it did not request review of any matter relating to the Plans' determination of withdrawal liability, nor did it demand arbitration.

 Consequently, by letter dated January 14, 1986, the Plans declared Incoal in default within the meaning of § 4219(c)(5) of ERISA, 29 U.S.C. 1399 (c)(5), and demanded immediate payment of the entire withdrawal liability plus interest. Duffin Ex. D. Furthermore, this letter advised Incoal that the demand was being made against Incoal, any trade or business under common control with it, and any person receiving assets from it in a transaction to evade or avoid withdrawal liability. Again, no payments were made.

 Accordingly, on November 17, 1986, the Plans filed suit against Incoal and S&H Manufacturing, Inc. ("S&H"), as a trade or business under common control, to collect the withdrawal liability, liquidated damages, accrued interest, attorney's fees and costs, and for declaratory relief.

 S&H is a Kentucky corporation engaged in the business of manufacturing, repairing, and selling mining equipment. At all times relevant to this suit, defendants Orville Adkins, Dixie Adkins, Adam Adkins, and Sally Adkins each owned 25% of the outstanding stock of S&H.

 Through the discovery process, plaintiffs learned of the existence of additional entities which they alleged were controlled group members. On July 9, 1987, plaintiffs filed an amended complaint naming Kite Coal Sales, Inc. ("Kite Coal"), Double A Farms, and Adkins Coal Co. ("Adkins Coal") as additional defendants. On September 6, 1989, plaintiffs filed a second amended complaint naming Sly Branch Coal Co. ("Sly Branch") as an additional defendant. Both Adkins Coal and Sly Branch, however, have been previously dismissed from this case, Adkins Coal having been dismissed pursuant to Fed R. Civ. P. 12(b) on October 27, 1988, Connors v. Incoal Inc., 699 F. Supp. 3 (D.D.C. 1988), aff'd, 285 App. D.C. 221, 907 F.2d 1227 (D.C. Cir. 1990), *fn3" and Sly Branch having been dismissed pursuant to a stipulated dismissal on September 13, 1991.

 Double A Farms is a partnership which acquired real estate in and around Harrison County, Kentucky and used such land for recreation and investment purposes, and also to grow tobacco and raise cattle. Defendants Orville, Dixie, Adam, and Sally Adkins -- who also owned Incoal -- each owned a 25% partnership interest in Double A Farms.

 Kite Coal is a Kentucky corporation which engaged in the business of selling coal. At all times relevant to this suit, defendants Orville and Adam Adkins were the sole shareholders of Kite Coal, each owning 50% of its outstanding voting stock.

 Neither Double A Farms nor Kite Coal were parties to the Agreements, nor were they participating employers in the Plans.

 Incoal and S&H have not opposed plaintiffs' motion for summary judgment, thereby conceding liability. Judgment will therefore be entered in plaintiffs' favor as to these defendants. Only two defendants, Double A Farms and Kite Coal, remain. The issue, thus, is whether either one or both of them is a trade or business under common control with Incoal under § 4001(b)(1) of ERISA, 29 U.S.C. § 1301(b)(1), and ...


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