United States District Court for the District of Columbia
March 30, 2004.
JOHN FLYNN et al, Plaintiffs,
THIBODEAUX MASONRY, INC., THIBODEAUX MASONRY, and, THOMAS THIBODEAUX, Defendants
The opinion of the court was delivered by: RICARDO URBINA, District Judge
GRANTING THE PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT
AGAINST DEFENDANT THIBODEAUX MASONRY, INC. AND GRANTING
THE PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AGAINST
DEFENDANTS THIBODEAUX MASONRY AND THOMAS THIBODEAUX
This matter comes before the court on the plaintiffs' motions for
default judgment and for summary judgment. The plaintiffs, fiduciaries
and trustees of the Bricklayers & Trowel Trades International Pension
Fund (the "IPF"),*fn1
bring suit under the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., against the
pro se defendants, Thomas Thibodeaux ("Thibodeaux"), Thibodeaux Masonry,
and Thibodeaux Masonry, Inc. ("TMI") (collectively "the defendants") for
delinquent pension contributions. Because TMI has not retained counsel,
the court enters default judgment against TMI. Because the plaintiffs
have identified an absence of evidence proffered by Thibodeaux and
Thibodeaux Masonry regarding
their delinquent contributions, the court grants summary judgment
to the plaintiffs with regard to those defendants.
A. Factual Background
Thomas Thibodeaux and his wife Lura have run a masonry business in
Louisiana since January of 1998. Pls.' Statement of Undisputed Material
Facts ("SUF") ¶ 11.*fn2 Initially, the Thibodeauxs operated their
masonry business through "Thibodeaux Masonry," a sole proprietorship.
Id. On May 1, 1998, Thomas Thibodeaux, acting as president of Thibodeaux
Masonry, signed a collective bargaining agreement ("CBA") with the
International Union of Bricklayers & Allied Craftworkers ("the
Union").*fn3 Id. ¶ 12. The CBA required Thibodeaux and Thibodeaux
Masonry to make payments on behalf of his employees to the IPF, the
Bricklayers and Allied Craftworkers ("BAC"), the International Health
Fund ("IHF"), and the International Masonry Institute ("IMI). Id. ¶¶
13-14.*fn4 On May 4, 1999, Thibodeaux merged Thibodeaux Masonry into
TMI. Id. ¶ 16. On May 1, 2000, Thibodeaux, acting as president of
TMI, signed a second CBA on behalf of TMI that imposed the same payment
requirements on TMI as the first CBA imposed on Thibodeaux Masonry. Id.
¶ 17. At some point after Thibodeaux had
incorporated TMI, the plaintiffs requested an audit of Thibodeaux Masonry
and TMI, which the payroll auditing firm of Guenther, Guenther &
Gillane performed. Id. UK 34-35. The plaintiffs' allege that the audit
and subsequent calculations revealed an outstanding delinquency of
$68,945.18. Pls.' Mot. at 9; Stupar Supplemental Decl. ¶ 3.
B. Procedural Background
The plaintiffs filed their complaint on April 15, 2002. The defendants
filed a motion to transfer venue on May 28, 2002. On October 28, 2002,
the court denied the defendants' motion to transfer venue. Order dated
October 28, 2002. Because it appeared that corporate defendants were
proceeding pro se, on May 13, 2003, the court ordered the Pro se corporate
defendants to retain counsel, specifically warning that failure to comply
could result in the court imposing default judgment as a sanction for
non-compliance. Order dated May 13, 2003. On June 9, 2003, Thibodeaux
responded to the court's order stating that TMI would not retain
counsel. Defs.' Resp. to Order. On June 18, 2003, the plaintiffs filed a
motion for default judgment against Thibodeaux Masonry and TMI. In the
defendants' opposition to the motion for default judgment, the defendants
clarified that only TMI was a corporation, but reiterated that TMI would
not retain counsel. Defs.' Opp'n to Pls.' Mot. For Default J. ("Defs.'
Default J. Opp'n") at 1. On July 11, 2003, the plaintiffs filed a motion
for summary judgment against the defendants, recognizing that the motion
would be moot if the court granted default judgement against either
Thibodeaux Masonry or TMI. Pls.' Mot. For Summ. J. ("Pls.' Mot.") at 2
n.1. Given the defendants' pro se status, the court issued an order
directing the defendants to respond to the plaintiffs' motion for summary
judgment and providing notice of the consequences of a failure to file an
opposition. Order dated Dec. 17, 2003.
Thus, the two motions currently before the court are: 1) the
plaintiffs' motion for default judgment against Thibodeaux Masonry and TMI
and 2) the plaintiffs' motion for summary judgment against Thibodeaux
Masonry, TMI, and Thomas Thibodeaux. The court now turns to those
A. Legal Standard for Entry of Default Judgment For
Failure to Comply With a Court
Order Pursuant to Rules 37(b)(2)(C) and 16(f)
Under the Federal Rules of Civil Procedure, a court may impose
sanctions for failure to comply with various court orders. Under Rule
37(b)(2)(C), if a party "fails to obey an order to provide or permit
discovery," the court may render judgment by default against the
disobedient party. FED. R. CIV. P. 37(b)(2)(C). Under Rule 16(f), if a
party "fails to obey a scheduling or pretrial order, or if no appearance
is made on behalf of a party at a scheduling or pretrial conference," the
court may, in its discretion, levy various sanctions against the
disobedient party, including a Rule 37 judgment by default. FED. R. CIV.
P. 16(f). Sanctions are integral to the operation of the judicial
system. Bristol Petroleum Corp. v. Harris, 901 F.2d 165, 167 (D.C. Cir.
1990). As the D.C. Circuit has stated, sanctions "have been entrusted to
the district courts to enable district judges to discharge efficiently
their front-line responsibility for operating the judicial system." Id.
(citing Rules 37 and 11 in upholding dismissal for a plaintiff's failure
to appear at a status conference). The most severe sanctions "must be
available to the district court in appropriate cases, not merely to
penalize those whose conduct may be deemed to warrant such a sanction, but
to deter those who might be tempted to such conduct in the absence of
such a deterrent." Nat'l Hockey League v. Metro. Hockey Club, 427 U.S. 639
643 (1976) (upholding
the trial court's dismissal under Rule 37 for violations of pretrial
That said, a default judgment is a drastic sanction. Generally, the
imposition of less severe sanctions, such as the award of attorney's
fees, may be "sufficiently effective in alerting an irresponsible
litigant to the seriousness of his or her neglect, protecting the
interests of the other litigants in the case, and vindicating the
integrity of the court." C.K.S. Eng'rs, Inc. v. White Mountain Gypsum
Co., 726 F.2d 1202, 1209 (7th Cir. 1984). In those cases where a court
orders a dismissal or enters a default judgment, the disobedient party
typically has engaged in a pattern of noncompliance with court orders so
that no lesser sanction is warranted. Secs. & Exch. Comm'n v.
Hollywood Trenz, Inc., 202 F.R.D. 3, 7 (D.D.C. 2001) (citing 6A FED.
PRAC. & PROC., § 1531). Accordingly, courts have granted default
judgment when parties have not complied with court orders or have missed
hearings. Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1310 (2d
Cir. 1991) (upholding entry of default judgment where a defendant
partnership ignored a court order directing that it retain counsel).
B. Legal Standard for a Motion for Summary
Summary judgment is appropriate when "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, 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." FED. R. CIV. P. 56(c); see also Celotex Corp. v.
Catrett, 477 U.S. 317
, 322 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540
(D.C. Cir. 1995). To determine which facts are "material," a court must
look to the substantive law on which each claim rests. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242
, 248 (1986). A "genuine issue" is one
whose resolution could establish an element of a claim or defense and,
therefore, affect the outcome of the action.
Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248.
In ruling on a motion for summary judgment, the court must draw all
justifiable inferences in the nonmoving party's favor and accept the
nonmoving party's evidence as true. Anderson, 477 U.S. at 255. A
nonmoving party, however, must establish more than "the mere existence of
a scintilla of evidence" in support of its position. Id. at 252. To
prevail on a motion for summary judgment, the moving party must show that
the nonmoving party "fail[ed] to make a showing sufficient to establish
the existence of an element essential to that party's case, and on which
that party will bear the burden of proof at trial." Celotex, 477 U.S. at
322. By pointing to the absence of evidence proffered by the nonmoving
party, a moving party may succeed on summary judgment. Id.
In addition, the nonmoving party may not rely solely on allegations or
conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir.
1999); Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir. 1993). Rather, the
nonmoving party must present specific facts that would enable a
reasonable jury to find in its favor. Greene, 164 F.3d at 675. If the
evidence "is merely colorable, or is not significantly probative, summary
judgment may be granted." Anderson, 477 U.S. at 249-50 (internal
C. The Court Grants the Plaintiffs' Motion for Default
Judgment Against TMI*fn5
As noted, the court ordered TMI to retain counsel by June 7, 2003,
specifically warning that the court could impose default judgment as a
sanction for non-compliance. Order dated May
13, 2003. "It has been the law for the better part of two centuries . .
. that a corporation may appear in the federal courts only through
licensed counsel." Rowland v. Calif. Dept. of Corrections, 506 U.S. 194,
202 (1993); accord Harris, 901 F.2d at 166 n.1 (noting that corporations
may not appear pro se). The defendants state that TMI cannot retain
counsel "due to lack of resources," and that a default judgment would
therefore prejudice it. Defs.' Default J. Opp'n at 1. This reasoning,
however, does not persuade the court to deviate from the long line of
precedent requiring corporate defendants to have representation by counsel
in federal courts. Indeed, the defendants cite no case law in support of
their argument. See generally Defs.' Response to Ct. Order. Because TMI
has deliberately refused to retain counsel despite this court's
unambiguous warning and order, the court grants the plaintiffs' motion
for default judgment against TMI pursuant to Rules 37(b)(2)(C) and
16(f). Eagle, 926 F.2d at 1310; Hoxworth v. Blinder, Robinson & Co.,
Inc., 980 F.2d 912, 918 (3d Cir. 1992) (noting that default judgment is
proper when a party fails to comply with an unambiguous order to obtain
counsel); Steigerwald v. Bradley, 2001 WL 357306, at *l-2 (D. Md. Apr.
10, 2001) (granting default judgment after the defendant corporation
defied a court order to obtain counsel on the grounds that it could not
D. The Court Grants the Plaintiffs' Motion for Summary
Judgment Against Thibodeaux and Thibodeaux Masonry
The plaintiffs bring suit under section 515 of ERISA, which obligates
employers to make contributions required under a collective bargaining
agreement "in accordance with the terms and conditions of such plan[.]"
29 U.S.C. § 1145. Under section 502(g)(2) of ERISA, if the court
enters a judgment in favor of the plaintiffs, the court must award the
plaintiffs the unpaid contributions, interest, attorney's fees and costs,
and any other appropriate awards. 29 U.S.C. § 1132(g)(2).
1. The Defendants Are Delinquent in Their Payments
The plaintiffs assert that the defendants' obligations under the two
CBAs that Thibodeaux signed and their performance of covered work, the
defendants failed to fully report hours and make the required
contributions to the IPF, BAC, IHF, and IMI. Pls.'Mot. at 5. In support
of these assertions, the plaintiffs proffer the declarations the
executive director of the IPF who stated that the independent audit
revealed that the defendants are delinquent in their payments in the
amount of $38,672.54. Stupar Supplemental Decl. ¶ 6. The plaintiffs
assert that in addition to the delinquent payments, the defendants owe
interest, statutory interest, audit fees, court costs and process
server's fees for a total amount of $68,945.18 plus attorney's fees and
costs. Id. The plaintiffs' also provide detailed documentary evidence
consisting of the independent audit report, the plaintiffs' recap,*fn6
the CBAs and various employment records. See, Pls.' Mot. Exs. 1-6, A-F;
Supplemental Exs. 1-2.
In response, the defendants assert that "[a]ll arrearages as to the
Defendant, Thomas Thibodeaux or Thomas Thibodeaux d/b/a/ Thibodeaux
Masonry have been paid and satisfied." Defs.' Opp'n to Summ. J. ("Defs.'
Opp'n") at 2. With regard to TMI, the defendants state that the total
amount that TMI owes "could only aggregate $10,630.63." Id. at 2. In
addition, the defendants assert that the second CBA that TMI entered into
superseded the first CBA. Id. at 1. Thus, the defendants argue, only TMI
would be responsible for any liability that the defendants incurred after
entry of the second CBA. Id. at 2. As evidence to support its
defendants' submit the affidavits of Thomas and Lura Thibodeaux,
TMI's articles of incorporation, the signatory page of the second CBA,
three charts of unknown origin that list unreported hours and check
amounts and a photocopy of the front of a check. Defs.' Opp'n Attachs.
1-2, Exs. 1-2; Defs.' Supplemental Attach. 1-4.
To begin, the court notes that the defendants have not put into
context, or otherwise explained several of their key exhibits. For
instance, the defendants provide three charts that purport to show
Thibodeaux's (1) payment history, (2) unreported hours according to the
independent audit, and (3) "corrected" unreported hours.
Defs.'Supplemental Attach. 1-3. The defendants have given no indication
as to the charts' origin or source. For all the court knows, the charts
may contain inaccurate or speculative information regarding the
defendants' payments and unreported hours. Accordingly, the court
concludes that the defendants' unsupported documentary evidence is not
reliably probative of the total outstanding delinquency. Anderson, 477
U.S. at 249-50.
If, out of an abundance of caution, the court accepted the defendants'
exhibits as reliably probative evidence, the exhibits seem only to
confirm the facts not in dispute. The plaintiffs' concede that the
defendants paid $11,931.34 to the plaintiffs pursuant to the settlement
of a previous lawsuit and the total amount that the plaintiffs allege is
due reflects that payment.*fn7 Stupar Supplemental Decl. ¶¶ 5, 6. The
defendants' supplemental attachment 1 appears to be a chart reflecting
settlement payments in the amount of $11,458.89. Defs.' Supplemental
Attach. 1. Thus, it appears that both the plaintiffs and defendants agree
that the defendants have already
paid a settlement of over $11,456.89 and that the plaintiffs have
applied that payment to the alleged current outstanding balance. Stupar
Supplemental Decl. ¶ 5. The court reiterates, however, that the lack
of any context or explanation of what the defendants' attachments
represent makes the task of discerning what proposition the attachments
are offered to support difficult, if not impossible.
Putting to one side the conceded payment, the plaintiffs assert that
the defendants still owe them $68,945.18. Stupar Supplemental Decl. ¶
6. As noted, in support of this proposition, the plaintiffs offer the
declaration of the IPF's executive director, as well as the documentary
evidence of the independent audit report. To rebut the plaintiffs'
allegations, the defendants merely assert that Thibodeaux and Thibodeaux
Masonry have paid all sums due to the plaintiffs and that TMI only owes
the plaintiffs $10,603.63. Defs.' Opp'n at 2. The defendants also restate
this assertion in affidavits from Thomas and Lura Thibodeaux Defs.' Opp'n
Attach 1-2. Finally, the defendants assert that the second CBA that
Thibodeaux signed on behalf of TMI requires the plaintiffs to look only
to TMI for payment. Defs.' Opp'n. at 3.
Essentially, the defendants support all of their arguments against
summary judgment exclusively by self-serving, conclusory statements from
Thomas and Lura Thibodeaux. As to the plaintiffs assertion, that the
second CBA provides that TMI is the only party that could be liable for
delinquent payments, the court's review of the second CBA does not reveal
any such intent. In fact, the CBAs appear to be identical, except for the
persons who signed them. Compare Stupar Decl. Ex. 1 with Ex. 3. Further,
the defendants produce only the signatory page of the second CBA. Defs.'
Opp'n Ex. 2. This signatory page, however, does not demonstrate anything
regarding the intent of the parties to supersede the first CBA. The court
required to, nor does it for any other reason, accept these conclusory
statements as true. Greene, 164 F.3d at 675. In sum, because of the
complete absence of any reliably probative evidence or proof proffered by
the defendants, there exists no genuine issue of material fact and the
court grants summary judgment to the plaintiffs. Celotex, 477 U.S. at
322; Anderson, 477 U.S. at 248.
2. The Court Concludes that Thibodeaux Masonry and
TMI Are Alter-Egos
Now that the court has established liability, the court must determine
which party is liable for damages. The defendants argue that because
Thibodeaux incorporated his business on May 4, 1999, the plaintiffs
cannot recover damages from him or Thibodeaux Masonry for any delinquent
payments after that date. Defs.' Mot. at 1-3. In response, the plaintiffs
assert that the defendants are merely alter-egos of each other and that
the court should hold each of them jointly and severally liable for all
damages. Pls.' Mot. at 10-11. Because Thibodeaux Masonry and TMI have the
same ownership, management, business purpose and operations, the court
concludes that Thibodeaux Masonry and TMI are, for the purposes of this
suit, alter egos and that both are liable for damages.
a. Legal Standard for Determining Alter-Egos in the
In the ERISA context, alter-ego liability enables ERISA trustees to
"recover delinquent contributions from a sham entity used to circumvent
the participating employer's pension obligations." Flynn v. R.C.
Tile, 353 F.3d 953
, 958 (D.C. Cir. 2004). Stated differently, the
purpose of alter-ego liability is "to prevent employers from evading
their obligations under labor laws and collective bargaining agreements
through the device of making a mere technical change in the structure or
identity of the employing entity . . . without making any substantial
its ownership or management." Mass. Carpenters Central
Collection Agency v. Belmont Concrete Corp., 139 F.3d 304
, 307 (1st
Cir. 1998) (internal citations omitted).
In order to determine whether two businesses are alter egos, the court
"evaluate[s] the similarities between the two enterprises in their
ownership, management, business purpose, operations, equipment, and
customers." R.C. Tile, 353 F.3d at 958. In this analysis, "[n]o single
factor is controlling and all need not be present to support a finding of
alter ego status." Belmont Concrete, 139 F.3d at 308.
b. Thibodeaux Masonry and TMI Have the Same
Ownership, Management, Business Purpose, Address and
The question before the court is whether TMI is the alter ego of
Thibodeaux Masonry. If so, TMI is bound by both of the CBAs relevant to
this case. R.C. Tile, 353 F.3d at 959; Belmont Concrete, 139 F.3d at
309; Cent. States, S.E. & S.W. Areas Pension Fund v. Shan,
902 F.2d 593
, 596 (7th Cir. 1990) (holding that an alter ego of signatory
employer is "obligated to honor the pension contribution terms of the
[CBA]"). As an initial matter, the court notes that the defendants do not
advance any argument or contradict any of the plaintiffs' assertions
regarding alter ego liability or status. Accordingly, the court may treat
the plaintiffs' assertions as conceded. Buggs v. Powell,
293 F. Supp.2d 135, 141 (D.D.C 2003); Stephenson v. Cox,
223 F. Supp.2d 119, 121 (D.D.C. 2002). Out of an abundance of caution,
however, the court goes on to analyze the merits of the plaintiffs'
The uncontroverted evidence is overwhelming that Thibodeaux Masonry and
TMI are alter egos. Thibodeaux was the president of both companies. Pls.'
SUF ¶ 27; Answer ¶ 8; Pls.' Mot. Ex. C. Lura Thibodeaux was the
secretary and treasurer of both companies. Pls.' SUF 28; Pls.' Mot. Exs.
C, D. Thibodeaux Masonry and TMI were in the same line of business and
shared the same address and phone number. Pls.' SUF ¶¶ 23, 33; Stupar
Decl. Exs. 1, 3. Thibodeaux Masonry and TMI shared the same employees.
Pls.' SUF ¶ 32; Stupar Decl. Exs. 4-6. Finally, Thibodeaux himself
admitted that subsequent to May 4, 1999, "Thomas Thibodeaux and
Thibodeaux Masonry no longer functioned as individual entities, but were
merged into and became Thibodeaux Masonry, Inc." Answer ¶ 6. Thus,
the court concludes that it is clear that Thibodeaux Masonry and TMI are
alter egos. R.C. Tile, 353 F.3d at 959 (holding that companies that had
essentially the same ownership, management, business purpose, operations
and customers were alter egos). Therefore each is liable for the other's
delinquent contributions. Id.
3. Thibodeaux Is Personally Liable For the Debts
of Thibodeaux Masonry and TMI
Finally, the plaintiffs ask the court to hold that Thomas Thibodeaux
himself personally liable for any damages that the court awards. Pls.'
Mot. at 16. In support of this argument, the plaintiffs contend that
"[t]o allow defendants such as these to hide behind mere changes in the
formal name of their family business would `defeat ERISA's purposes and
work a clear injustice.'" Id. at 17 (quoting Alman v. Danin, 801 F.2d 1
4 (1st Cir. 1986). The defendants stand silent on the issue of
Thibodeaux's individual liability. Because there is a unity of interest
and ownership such that separate personalities of Thibodeaux and TMI do
not exist, and an inequitable result would follow if TMI's actions were
treated as those of the corporation alone, the court pierces TMI's
corporate veil and concludes that Thibodeaux is personally liable for all
a. Legal Standard for Piercing the Corporate Veil
The D.C. Circuit instructs that "[w]hen particular circumstances
merit. . . courts may look past a corporation's formal existence to hold
shareholders or other controlling individuals
liable for `corporate' obligations." Labadie Coal Co., v. Black,
672 F.2d 92, 96 (D.C. Cir. 1982); see also United States v. Pena,
731 F.2d 8, 12 (D.C. Cir. 1984) (holding that courts should apply federal
common law when a federal interest is implicated by the decision of
whether to pierce the corporate veil). When a court looks beyond the
corporate form to attach liability to an individual shareholder, the
court is said to have "pierced the corporate veil." Id. To determine if
piercing the corporate veil is warranted, the court applies a two-prong
test, asking: (1) whether there is such a unity of interest and ownership
that the separate personalities of the corporation and the individual no
longer exist; and (2) whether, if the acts are treated as those of the
corporation alone, an inequitable result will follow. Id.
b. There is a Unity of Interest and Ownership Such
That Separate Personalities of Thibodeaux and TMI Do
To assess the first prong, the court looks to several factors. These
are (1) the nature of the corporate ownership and control; (2) whether
the corporation has maintained minutes or adequate corporate records; (3)
whether the corporation has maintained corporate formalities necessary
for issuance or subscription to stock, such as an independent board of
directors' formal approval of the stock issue; (4) whether there is a
commingling of funds and other assets of the corporation; (5) whether
there is a diversion of the corporation's funds or assets to
non-corporate uses such as the personal uses of the corporation's
shareholders; and (6) whether the corporation and its individual
shareholders use the same office or business location. Id. at 97-99.
"[I]t is clearly not necessary that all of these factors be present in a
given case to justify piercing the veil." Id. at 97. In the instant
case, all of the present factors weigh in favor of piercing the corporate
i. Thomas Thibodeaux Controlled and Dominated TMI
With regard to the first factor, the D.C. Circuit has stated that "a
corporate form may be
ignored whenever an individual so dominates his organizations `as in
reality to dominate its separate personality.'" Id. at 97 (quoting Quinn
v. Butz, 510 F.2d 743, 758 (D.C. Cir. 1975)). In the instant case,
Thibodeaux was the president and one of the only two shareholders of
TMI. Pls.' SUF 127; Answer ¶ 8; Pls.' Mot. Ex. C.; Defs.' Opp'n to
Default. J. at 2. According to TMFs minutes, Thibodeaux was authorized,
in his sole and absolute discretion to, inter alia, buy and sell all
classes of property, resolve any dispute that arose between TMI and any
other party, borrow sums of money upon such terms, conditions and,
interest rates as he deemed advisable, secure indebtedness of TMI by any
type of security device he deemed advisable and to manage the affairs of
the corporation generally and without limitation. Pls.' Mot. Ex. C. Under
these facts, it is clear that Thibodeaux controlled TMI "as in reality to
dominate its separate personality." Labadie Coal, 672 F.2d at 97.
Accordingly, the nature of the corporate ownership and control weighs in
favor of piercing the corporate veil. Id.
ii. TMI Failed to Maintain Adequate Corporate
"The failure of [a] defendant to produce any corporate records, such as
minutes, bylaws, articles of incorporation, lists of directors and so
on, creates a strong inference that these records do not exist." Id. at
97. The defendants produced the articles of incorporation for TMI, and
the plaintiffs produced as one of their exhibits the minutes of one
meeting that took place several days prior to the filing of the articles
of incorporation. Defs.' Opp'n Ex. 1; Pls.' Mot. Ex. C. The record,
however, does not indicate any further corporate documentation. If TMI
was, in fact, a separate and distinct entity, one would expect
appropriate records to be kept. Labadie Coal, 672 F.2d at 97. On the other
hand, if TMI was merely a shell for Thibodeaux's own family business, "in
all practicality, such records would not be as important and therefore
might not be
carefully maintained." Id. Thus, the absence of minutes subsequent to
incorporation, bylaws, and lists of directors suggests that TMI was not a
separate, distinct entity from Thibodeaux himself. Id. In addition,
"there is no evidence that directors, whoever they are, have ever played
a meaningful role in [the corporation's] activities." Id. It appears from
the minutes of the meeting held prior to incorporation that Thibodeaux
alone controlled TMI and made all corporate decisions. Pls.' Mot. Ex. C.
Thus, the court concludes that the failure to maintain adequate corporate
records weighs in favor of piercing the corporate veil.
iii. TMI Failed to Maintain Corporate
Formalities Necessary for Issuance or Subscription to
The record does not indicate that TMI maintained corporate formalities
necessary for issuance of or subscription to stock. For instance, there
is no evidence of a formal approval of a stock issue by an independent
board of directors. The only information in the record relating to the
stock of TMI is that Thomas and Lura Thibodeaux are the sole shareholders
of TMI. Defs.' Default. J. Opp'n at 2. This type of behavior regarding
issuance or subscription to stock weighs in favor of piercing the
corporate veil. Labadie Coal, 672 F.2d at 98.
iv. Thomas Thibodeaux and TMI Utilized the
Same Business Location
Another factor that bears on the relationship between Thibodeaux and
TMI is the business location of the corporation and its individual
shareholders. Id. at 99. In the instant case, the plaintiffs produced a
check from Thomas Thibodeaux dated April 8, 1999, which was prior to the
incorporation of TMI, listing his address as 525 Jean Lafitte Drive in
Baton Rouge, Louisiana. Pls.' Mot. Ex. E. The plaintiffs have also
produced a check from TMI dated July 22, 1999, which lists TMI's address
to be the same. Id. Accordingly, it appears that Thibodeaux and TMI
shared the same location. The use of the same business location by the
corporation and its
individual shareholder militates in favor of piercing the corporate
veil. Labadie Coal, 672 F.2d at 99.
c. An Inequitable Result Would Follow if the Court
Does Not Pierce TMI's Corporate Veil
Under the second prong, the court must determine if an inequitable
result would follow from treating the corporation's actions as those of
the corporation alone. Labadie Coal, 672 F.2d at 96. In the instant
case, allowing Thibodeaux to escape TMI's incurred liability would
undermine "basic fairness to parties dealing with the corporation." Id.
at 96. As another member of this court has explained, "ERISA was
enacted, in part, to prevent employers from avoiding financial
obligations to their employee benefit plans. To permit the corporate form
to be raised selectively to shield an individual from this liability
would run directly counter to the underlying policy of ERISA[.]" LAM.
Nat'l Pension Fund v. Wakefield Indus., Inc., 1991 WL 511071, at *5
(D.D.C. Oct. 18, 1991).
TMI has ceased business operations and no longer exists. Pls.' Mot. Ex.
B. Further, the court has already concluded that TMI owes the fund for
delinquent contributions. Therefore, the court concludes that an
inequitable result would follow if the court does not pierce the
corporate form of TMI in order to place liability on Thibodeaux.
Labadie Coal, 672 F.2d at 99.
4. The Court Concludes That Breach of
Contract Is Not an Applicable Defense
As a final matter, the defendants allude to a breach of contract by an
alleged failure of the Union to provide "competent and qualified
employees." Defs.' Opp. at 1. Although it is unclear from the defendants'
opposition whether they are relying on this fact to defeat summary
judgment, giving them every benefit of the doubt, the court will construe
this allegation as PGPage 18 asserting a defense to the plaintiffs' claim
for damages. This asserted defense, however, provides no escape for the
defendants. The Supreme Court has held that a union's breach of a CBA
does not void an employer's duty to make contributions to a union welfare
fund. Lewis v. Benedict Coal Corp., 361 U.S. 459
, 470-71 (1960).
Furthermore, "the Funds are not identical to the unions; Congress
intended to protect the Funds' financial stability by limiting the scope
of issues litigable when they seek to recover employers' contributions."
La. Bricklayers & Trowel Trades Pension Fund & Welfare Fund v.
Alfred Miller Gen. Masonry Contracting Co., 157 F.3d 404
, 408 (5th Cir.
1998). Courts, however, have recognized three possible defenses an
employer may raise to delinquent-contribution suits brought against it.
See, e.g., Agathos v. Starlite Motel, 977 F.2d 1500
, 1505 (3d Cir.
1992). Those defenses are:
(1) the pension contributions themselves are illegal;
(2) the collective bargaining agreement is void ab
initio, as where there is fraud in the execution, and
not merely voidable, as in the case of fraudulent
inducement; and (3) the employees have voted to
decertify the union as its bargaining representative,
thus prospectively voiding the union's collective
Id. at 1505 (internal citations omitted); accord Int'l Painters &
Allied Trades Union & Indus. Pension Fund v. H. W. Ellis Painting
Co., Inc., 228 F. Supp.2d 22, 30 n.5 (D.D.C. 2003) (same). The defendants
fail to assert any of the three contract defenses. Therefore, the court
concludes that the plaintiffs' summary judgment motion withstands the
defendants' allusion to a contract breach by the plaintiff.
The plaintiffs have calculated total amount of delinquent contributions
as $38,672.54. Stupar Supplemental Decl. ¶ 6. According to the
plaintiffs, in addition to the delinquent contributions, the defendants
owe interest, audit fees, court costs and process server fees. Id.
Thus, the plaintiffs calculate the total amount the defendants owe at
$68,945.18. Id. Finally, pursuant to ERISA section 502(g)(2)(D), the
plaintiffs ask for reasonable attorney's fees and costs. Id.
The court notes that one issue regarding damages remains unclear. The
plaintiffs state that the defendants signed the first CBA on May 1, 1998.
Pls.' SUF ¶ 12. In explaining the dates covered by its audit,
however, the plaintiffs state that the audit revealed delinquent
contributions due for January 1998 through July 2000 and January 2001
through September 2001. Pls.' Mot. at 5. It is not apparent to the court
why the defendants began to incur liability for delinquent payments in
January 1998 when the defendants did not sign the first CBA until May
1998. Accordingly, the plaintiffs must file a motion for entry of final
judgment specifying the basis for, and itemizing all requests for
damages, including attorney's fees and costs.
For the foregoing reasons, the court grants the plaintiffs' motions for
default judgment and for summary judgment. An order consistent with this
Memorandum Opinion is separately and contemporaneously issued this 30th
day of March, 2004.