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FLYNN v. OHIO BUILDING RESTORATION INC.

May 7, 2004.

JOHN FLYNN, et al., Plaintiffs,
v.
OHIO BUILDING RESTORATION, INC., et al., Defendants



The opinion of the court was delivered by: REGGIE B. WALTON, District Judge

AMENDED MEMORANDUM OPINION

This matter is before the Court on Plaintiffs' Motion for Summary Judgment ("Pls.' Mot."). Plaintiffs are the fiduciaries of the Bricklayers and Trowel Trades International Pension Fund ("IPF" or the "Fund"), and have brought this action to enforce the terms of a collective bargaining agreement entered into with defendant Ohio Building Restoration Inc. ("OBR"). Compl.*fn1 ¶¶ 1, 8, 11. Plaintiffs allege that Exact Construction Services Inc. ("Exact") is the alter ego of OBR, and that Exact has failed to make contributions to the Fund as required by section 515 of the Employee Retirement Income Security Act ("ERISA"), § 29 U.S.C. § 1145. Comp. ¶¶ 1, 9-10. After careful consideration of the record and the applicable legal authority, and for the reasons set forth below, the Court concludes that summary judgment must be entered for the plaintiffs.

I. Factual Background

  The IPF "is an `employee benefit plan' within the meaning of [the ERISA,] Section 3(3) of 29 U.S.C. § 1002(3), and is a `multi-employer plan' within the meaning of Section 3(37) of the ERISA, 29 U.S.C. § 1002(37)." Compl. ¶ 3. The Fund "is administered in the District of Columbia." Id. ¶ 2. Defendant OBR is a company that "maintain[s] offices and conduct[s] business in the state[s] of Ohio," Michigan, and Indiana and "employs or ha[s] employed members of the International Union of Bricklayers and Allied Craftworkers and its affiliated local unions ("unions")." Id. ¶¶ 5, 7; Defs. Opp'n at 10.*fn2 Defendant Exact, based upon plaintiffs' information and belief, is "an alter ego of OBR, [because, among other things, the two entities allegedly have] interlocking directors, common control, [perform] common type[s] of work and [employ] the same or similar employees." Id. ¶ 9.

  Plaintiffs brought this action on behalf of the IPF in their role as trustees. Id. ¶¶ 1, 3. Pursuant to the "Collection Procedures of the Central Collection Unit of the Bricklayers and Allied Craftworkers ("CCU"), the IPF is authorized to effect [employer] collections on behalf of the International Masonry Institute ("IMI") and the Bricklayers and Allied Craftworkers International Union ("BAC") [and is] authorized to file suit on behalf of the BAC Local 1 Michigan Joint Delinquency Committee. . . ." Id. ¶ 4. Plaintiffs allege that the defendants have failed to make contributions to the Fund as required by the Collective Bargaining Agreement ("CBA") that defendant OBR executed with the unions. Id. ¶¶ 8, 11. Specifically, plaintiffs allege that defendant Exact, as OBR's alter ego, "was obligated to make certain payments to the IFF, IMI, BAC and Local Funds on behalf of employees covered by the Agreement" and has failed to do so. Id. ¶¶ 9-10. Based on the allegation that Exact is the alter ego of defendant OBR, plaintiffs seek an order declaring that both OBR and Exact "are jointly and severally liable for all amounts owed to the IPF, IMI, BAC and Local Funds." Id. ¶ 1, at 5.

  A. Plaintiff's Arguments in Support of Summary Judgment

  Plaintiffs have filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56, in which they argue that they are entitled to judgment in their favor as a matter of law on the grounds that there is no genuine issue of material fact remaining to be resolved in this matter. Fed.R.Civ.P. 56. Plaintiffs assert that in reviewing this matter the Court need only focus on whether OBR and Exact "share [common] ownership, management, business purpose, operation, equipment, supervision, and work force." Pls.' Mem.*fn3 at 7-8 (citing Greater Kansas City Laborers Pension Fund v. Thummel, 738 F.2d 926, 929 (8th Cir. 1984)). Plaintiffs argue that the evidence in the record related to all of these factors supports a finding that Exact is the alter ego of OBR. As an example offered in support of its position, plaintiffs note that, according to the defendants' answers to interrogatories, "Ohio Building . . . was owned by Duane Haas while Exact was owned by Duane Haas' wife, Debra, and the Vice President of Ohio Building, John Hall." Id at 9; Exhibit ("Ex.") H (Defendants' Objections and Answers to Plaintiffs' First Interrogatories and Requests for the Production of Documents) ("Defs.'Ans.") No. 9. Moreover, plaintiff points out that by her own admission, Ms. Haas acknowledges that she was designated by her husband to be a fifty percent owner of Exact "to be . . . his person[]" at Exact. Id. at 19; Pls.' Mot., Ex. E (deposition of Debra Haas, dated May 12, 2003) ("Debra Haas Dep.") at 19-20. According to plaintiffs, it is undisputed that John Hall had the "authority to hire and fire employees at both Ohio Building and Exact." Id. at 10; Ex. H, Ans. No. 9. Plaintiffs further note that both companies have performed restoration contractor services in the same geographic regions at the same times. Pls.' Reply*fn4 at 4-5; but see Defs.' Opp'n*fn5 at 11. OBR leases adjoining properties located in Toledo, Ohio, at 830 Mill Street and 726 Stanton Street, from an entity known as the Debra Haas Trust, and in turn subleases the 726 Stanton Street property to Exact. Pls.' Mem. at 14. Similarly, OBR leases its Detroit office from the same trust and leases storage space to Exact at that location. Id. Furthermore, OBR and Exact utilized the same controller, accountant, attorney, insurance company, and bank, Pls.' Mem. at 12, 15; Pls.' Mot., Ex. C (deposition of David E. Shultz, dated April 12, 2003) ("Shultz Dep.") at 50, 71, 72, 73; Pls.' Mot., Ex. B (deposition testimony of John Hall, dated April 9, 2003) ("Hall Dep.") at 89-90, the corporate business records for both corporations were maintained at the same location, Pls.' Mem. at 15; see also Defs.' Opp'n at 14-15, and many employees have performed work for both OBR and Exact during the same year and several painters have done so within the same pay period, Pls.' Mem. at 11; Pls.' Mot., Ex. C (Shultz Dep.) at 53-55. Moreover, plaintiffs state that "[m]ost damning to Defendants' efforts to avoid liability are the Defendants' own admissions that Exact was formed for the specific purpose of creating an anti-union business and that Duane Haas could not be as involved in the business because his company, Ohio Building, was bound by the collective bargaining agreement." Pls.' Mem. at 18; Pls.' Mot., Ex. D (deposition of Duane Haas, dated May 12, 2003) ("Duane Haas Dep.") at 45-46 (emphasis in original). B. Arguments Opposing Summary Judgment

  Not surprisingly, defendants characterize their relationship in a much different light than their adversaries. First, defendants assert that the relevant factors to be considered in making an alter ego determination in this Circuit are whether the corporations in question enjoy "interrelated operations, common management, centralized control over labor relations, and common ownership." Defs.' Opp'n at 6 (citing Sheet Metal Workers Union 102 v. Gibson Brothers. No. Civ. A. 82-0329, 1982 WL 2079, at *3 (D.D.C. Oct. 27, 1982). Defendants assert that although they maintain a close working relationship due to their principle officers' long standing friendships, their respective corporations do not have interrelated operations. Defs.' Opp'n at 9. Defendants emphasize that OBR has and continues to focus its resources on masonry projects, while Exact was formed with the purpose of competing for jobs installing traffic bearing membranes, and other commercial flooring and waterproofing systems, id. at 10; Defs' Opp'n, Ex. 1 (Duane Haas Dep.) at 48; Defs' Opp'n, Ex. 3 (Hall Dep.) at 107-108, and have maintained arms-length distance on each of the transactions into which their two corporations have entered. Def.'s Opp'n at 9. Defendants contend that "OBR works primarily in northeast Ohio, southeast Michigan, and northeast Indiana, while Exact does almost all of its work in Columbus, Ohio." Defs.' Opp'n at 10; but see id at 11 (chart showing that the two organizations have performed work in the same regions during the same times). Defendants emphasize that contrary to plaintiffs' assertions, "Exact's lease of a small space in OBR's [main office] does not constitute `maintaining common offices.'" Id. at 14. Defendants state that although the two corporations have established a substantial amount of goodwill between themselves, they have always maintained the proper economic distance between each other and held steadfast to the requisite formalities for maintaining separate corporate entities. Id. at 16-17. Defendants concede that John Hall is a common figure to the management of both corporations, but maintain that all other members of their respective management teams have never been in a position to exercise control over the labor and resources of both corporations at the same time. Id. at 18.

  Defendants further argue that even if this Court were to find that they did in fact constitute a "single employer or alter ego," the Court would still need to decide whether or not Exact's employees are a part of the appropriate bargaining unit for the purpose of applying the CBA. Id. at 34-35. Stated differently, defendants assert that the Court must determine whether their respective labor forces have a common "community of interests" which could be fairly represented by the plaintiffs, id., which defendants contend is not the case.

 II. Analysis

  A. Standard of Review

  As previously indicated, this matter is currently before the Court on plaintiffs' motion for summary judgment. Federal Rule of Civil Procedure 56 provides that summary judgment "shall be rendered forthwith if 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). A genuine issue of material fact exists if "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). The entry of summary judgment is appropriate after there has been an "adequate time for discovery . . . [and the] party [against whom the motion has been filed] fails 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 Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. . . ." Id. at 255. When reviewing the evidence, the Court must draw "all inferences . . . in favor of the nonmoving party[.]" Coward v. ADT Security Systems, Inc., 194 F.3d 155, 158 (D.C. Cir. 1999); Aka v. Washington Hosp. Center, 156 F.3d 1284, 1295 (D.C. Cir. 1998).

  B. Alter Ego Analysis

  (1.) Applicable Standard in Determining Defendants' ...


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