3. Identical Business Operations
The relevant considerations in analyzing this factor are whether one company is financially dependent upon the other, whether they share the same facilities and whether they function jointly on a daily basis. Central States Pension Fund v. Sloan, 902 F.2d 593, 597-598 (7th Cir. 1990). It is undisputed that VCI is not VMI's only customer. While, from 1990-1993, approximately 50% of VMI's work was the result of subcontract work done under lease to VCI, it is also uncontested that the remaining 50% was work done for other contractors. In 1994, VMI completed four jobs worth approximately $ 680,000, only three of which were jobs where VCI was the general contractor. Through October 31, 1995, VMI had completed eighteen jobs totalling approximately $ 524,000, with VCI the general contractor on only seven of the eighteen jobs.
In response, Plaintiffs point out that twelve out of the twelve jobs in progress as of October 31, 1995 were jobs were VCI was the general contractor. From October 1, 1993 until September 30, 1995, VCI paid VMI $ 758,915.09. During this same period, VCI paid VMI $ 19,957 for leased non-supervisory employees and $ 68,645 for leased carpentry employees. Furthermore, Plaintiffs assert that VMI also received monetary advances from VCI, which was the only company to give VMI this type of advance. Other general contractors only paid VMI after the general contractor itself was paid. However, any advances VCI made to VMI were always repaid.
As a second indication of Defendants' identical business operations, Plaintiffs contend that VCI and VMI shared the same office space based on the fact that VMI listed VCI's address and phone number on some documents. However, the Plaintiffs admitted in their response to the Defendants' 12(M) Statement that, for most of its existence, VMI was run out of Chuck Vacala's home and in fact, did not share office space with VCI. (Defendants' 12(M) Statement, PP 31, 58, 61; Funds' Response, PP 31, 58, 61). When VCI did share office space with VCI, it had its own set of offices, for which it paid rent to Pat Vacala. (Defendants' 12(M) Statement, P 61; Funds' Response, P 61).
Finally, Plaintiffs contend that VMI and VCI function jointly on a daily basis. In support of this contention, Plaintiffs argue that the majority of the carpentry jobs performed by VMI are those performed under the leasing agreement with VCI.
Review of the evidence related to this factor indicates that VMI did not share identical business operations with VCI. The evidence regarding VMI's sharing of office space establishes that, for the bulk of VMI's existence, the two companies were run out of separate locations. The evidence related to the joint daily functioning of the two companies indicates nothing more than the normal relationship that exists between a general contractor and a subcontractor. Finally, with respect to the evidence on the issue of financial dependency, there is no evidence that VMI would have gone out of business without VCI, or that VMI was dependent upon VCI for its financial well being. There is no dispute that VMI obtained very significant amounts of work from other general contractors. Furthermore, there is nothing sinister about two family owned companies contracting with each other on a regular basis and Plaintiff has presented no evidence that requires this Court to read such a motive into this relationship. Consequently, the Plaintiffs have failed to present a genuine issue of material fact on the issue of identical business operations.
4. Shared Equipment and Materials
While Defendants admit that VMI employees who were leased to VCI would sometimes use VCI equipment if necessary, Defendants allege that this is a common industry practice. Plaintiffs, on the other hand, contend that this sharing of equipment, in addition to VMI's sharing of VCI's phone and fax lines and some of VCI's office equipment, is sufficient to establish the sharing of equipment for alter-ego purposes.
Despite the Plaintiffs' allegations, the evidence presented falls far short of establishing that VMI was effectively dependent on VCI for the materials it needed to stay in business. As the Duguid court pointed out, this type of sharing of equipment is not indicative of alter ego status. 761 F. Supp. at 1354-55. Rather, as VMI's uncontested evidence establishes, this type of occasional borrowing is typical in the industry. Further, VMI's use of VCI's phone and fax line and occasional use of office equipment was nothing more than a convenience for Nan Hoste and the other VCI staff who assisted VMI with its paper work. Such evidence can hardly establish that VMI was relying on VCI's equipment to operate its business. Therefore, Plaintiffs have presented no evidence that raises a genuine issue of material fact with respect to the issue of shared equipment.
5. Common Ownership
Both parties agree that this factor is satisfied. Pat is the sole share holder of VCI, however, Pat, Chuck, and Vince all own stock in VMI (49%, 49%, 2%, respectively).
The Plaintiffs have failed to present sufficient evidence to raise a genuine issue of material fact as to the Defendants' intent, and on this basis alone, the Court finds that VCI was not the alter ego of VMI, and therefore grants the Defendants' motion for summary judgment as to the alter ego claims in the Plaintiffs' complaint. Additionally, the Court finds that, because only one
of the remaining five alter ego factors is present, there is insufficient evidence to raise a genuine issue of material fact as to VCI's alter ego status based on these factors. Therefore, summary judgment on the alter ego claim is also appropriate on this basis as well. To restate this Court's ruling, the Defendants' motion for summary judgment is granted as to Plaintiffs' claims against VCI predicated on the alter ego theory and denied as to any claims Plaintiffs have against VMI directly for under-reporting hours.
MARTIN C. ASHMAN
United States Magistrate Judge
Dated: December 3, 1996.