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CENTRAL STATES v. MARS LEASING COMPANY

August 13, 2003

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND AND HOWARD MCDOUGALL, TRUSTEE, PLAINTIFFS,
v.
MARS LEASING COMPANY, A WISCONSIN CORPORATION, DEFENDANT



The opinion of the court was delivered by: John W. Darrah, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs, Central States, Southeast and Southwest Areas Pension Fund ("Central States") and Howard McDougall, filed suit against Defendant, Mars Leasing Company ("Mars"), pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), seeking collection of interim withdrawal liability payments. Presently before the Court are Plaintiffs' Motion for Summary Judgment and Mars' Motion for Summary Judgment or Partial Summary Judgment and a Stay of Certain Proceedings.

Central States is a multi-employer pension plan within the meaning of Sections 3(37) and 4001(a)(3) of ERISA, 29 U.S.C. § 1002(37) and 1301(a)(3). Howard McDougall is a trustee and fiduciary of Central States. (Def.'s 56.1(a)(3) Statement ¶ 1). Mars is a Wisconsin corporation. (Id., ¶ 4). Harvey Service, Inc. ("Harvey") is also a Wisconsin corporation. (Id., ¶ 7).

Harvey was subject to a series of collective bargaining agreements, executed with various local unions affiliated with the International Brotherhood of Teamsters, under which it was required to make contributions to Central States on behalf of certain employees. (Def.'s 56. 1(a)(3) Statement [ Page 2]

¶ 8). Plaintiffs determined that as a result of a decline in Harvey's contributions to Central States, Harvey effected a "partial withdrawal" from Central States on December 31, 1996. (Plaint.'s 56.1 (a)(3) Statement ¶ 9). Plaintiffs determined that, as a result of this partial withdrawal, Harvey incurred withdrawal liability in the amount of $498,642.70, as determined under Section 4201(b) of ERISA. (Id. ¶ 10).

On or about May 28, 1997, Harvey received a notice and demand for payment of withdrawal liability issued by Central States in accordance with Sections 4202(2) and 4219(b)(1) of ERISA. The notice and attached invoice notified Harvey that it was required to discharge its liability in monthly payments of $23,505.12. (Plaint's 56.1(a)(3) Statement ¶ 11). On or about August 23, 1997, Harvey received notice from Central States that its withdrawal liability payments were past due. (Id., ¶ 12). Harvey did not timely initiate arbitration pursuant to Section 4221(1) of ERISA; and consequently, the amounts demanded by Central States are due and owing. (Id., ¶ 13).

Later that year, Plaintiffs filed suit against Harvey to collect the withdrawal liability, Central States, Southeast and Southwest Areas Pension Fund, et al. v. Harvey Service, Inc., No. 97 7960 (N.D.Ill.) ("Harvey lawsuit"). (Plaint's 56. 1(a)(3) Statement ¶ 15). On February 11, 1998, Plaintiffs obtained a default judgment against Harvey in the total amount of $688,331.74. (Id., ¶ 16).

During post-judgment discovery, Plaintiffs learned that prior to December 15, 1995, Mary Tidmarsh ("Tidmarsh") was the sole shareholder of both Harvey and Mars and that she was also president of both Harvey and Mars. (Plaint.'s 56.1(a)(3) Statement ¶ 18). The post-judgment citation of Tidmarsh, taken in August 2, 1998, disclosed that, in 1995, Tidmarsh sold the stock of Mars to her son, Greg Tidmarsh ("Greg"). Tidmarsh could not recall the exact purchase price of the stock. [ Page 3]

(Id., ¶ 17). Plaintiffs also learned that, in 1993, Mars was formed for the explicit purpose of making asset purchases and managing property. At that time, Mars purchased property on South Curtis Road for a purchase price of $475,000, with $100,000 down payment and the remaining financed by a loan. (Id., ¶ 19; Def.'s Response to ¶ 19). Plaintiffs also learned that the South Curtis Road property was sold in 1997; however, Tidmarsh could not recall the exact name of the purchaser nor the purchase price on August 2, 1998. (Id., ¶ 20).

On July 11, 2000, Plaintiffs served their first set of interrogatories and first request for production of documents on Harvey. (Plaint.'s 56.1(a)(3) Statement ¶¶ 21-22). In Harvey's answer to Plaintiffs' first request for production of documents forwarded by Harvey in its answer to the request for production of documents, received on September 22, 2000, it was revealed that Tidmarsh received $213,650 in compensation for the sale of Mars to her son. (Id., ¶ 23).

On March 12, 2001, Plaintiffs served their second set of interrogatories and second request for production of documents on Harvey. (Plaint's 56.1(a)(3) Statement ¶¶ 24-25), Plaintiffs received the responses to the second set of discovery requests on April 26, 2001. (Id., ¶ 26).

On October 24, 2001, Plaintiffs served their third set of interrogatories and third request for production of documents on Harvey. (Plaint.'s 56.1(a)(3) Statement ¶¶ 27-28). In this set of discovery requests, Plaintiffs inquired as to the circumstances surrounding the 1997 sale by Greg of the property held by Mars. (Id., ¶ 29). By letter dated January 9, 2002, Harvey's counsel informed Plaintiffs that the third set of discovery requests were beyond the area of relevant inquiry and were, therefore, unanswered. Harvey also indicated that the period for discovery was complete and that Plaintiffs would need leave of court prior to forwarding any additional requests. (Id., ¶ 30). Based [ Page 4]

on Plaintiffs' search of county records, Plaintiffs learned that, on June 2, 1997, Greg sold the South Curtis Road property to the Accetta Family Limited Partnership for $792,500. (Id., ¶ 31).

Tidmarsh requested an estimate of Harvey's withdrawal liability from Central States for the years 1993 through 1996. (Plaint's 56.1(a)(3) Statement ΒΆ 32). A review of Harvey's financial records showed that, in the years 1992 and 1993, Harvey experienced ...


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