United States District Court, N.D. Illinois
April 5, 2004.
TRUSTEES OF THE CEMENT MASONS FUND, LOCAL 502; TRUSTEES OF THE CEMENT MASONS INSTITUTE OF CHICAGO, ILLINOIS; TRUSTEES OF THE CEMENT MASONS SAVINGS FUND, LOCAL 502; and TRUSTEES OF THE CEMENT MASONS APPRENTICE EDUCATION AND TRAINING FUND, LOCAL 502, Plaintiffs;
F&V CEMENT CONTRACTORS, INC., an Illinois corporation, and FRANK PARTTPILO, individually; and BERNARDINA BARBENETE, individually; and MARIA PARTIPILO, individually, Defendants
The opinion of the court was delivered by: SIDNEY SCHENKIER, Magistrate Judge
MEMORANDUM OPINION AND ORDER*fn1
This matter comes before the Court on a motion by individual
defendant Maria Partipilo pursuant to Fed.R.Civ.P. 12(b)(6). The
plaintiffs (collectively the "Funds") have brought this action under the
Employment Retirement Income Security Act ("ERISA"),
29 U.S.C. § 1132, 1145, and the Tail Hartley Act, 29 U.S.C. § 185, against
corporate defendant F&V Cement Contractors, Inc. ("F&V") and
individual defendants Frank Partipilo, Bernardina Barbenete, and Maria
Partipilo. In their three-count amended complaint, the Funds seek an
order requiring the corporate and individual defendants to submit an audit of their books and to pay
all unpaid contributions (as well as attorneys' fees and costs). Count
III of the amended complaint alleges that all three individual defendants
engaged in a "fraud to avoid payment of contributions to the funds" (Am.
Compl., at 5).
Ms. Partipilo has moved to dismiss Count III of the Funds' amended
complaint, which is the only count that pertains to her (doc. # 32). For
the reasons set forth below, Ms. Partipilo's motion to dismiss is
The purpose of a motion to dismiss under Fed.R.Civ.P. 12(b)(6) is to
test the sufficiency of the complaint, not to decide its merits.
Gibson v. Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). When
ruling on a motion to dismiss, a court assumes that alt well-pled
allegations arc true and draws all reasonable inferences in the light
most favorable to the moving party. Henderson v. Sheahan, 196
F.3d 839, 845 (7th Cir. 1999), cert. denied, 530 U.S. 1244
Although it is often said that a claim may be dismissed only if, as a
matter of law, "it is clear that no relief could be granted under any set
of facts that could be proved consistent with the allegations,"
Neitzke v. Williams, 490 U.S. 319, 327, 104 L.Ed.2d 338,
109 S.Ct. 1827 (1989) (quoting Hishon v. King & Spalding,
467 U.S. 69, 73, 81 L.Ed.2d 59, 104 S.Ct. 2229 (1984)), the Seventh Circuit
has observed that this maxim "has never been taken literally." Kyle
v. Morton High School, 144 F.3d 448, 455 (7th Cir. 1998) (quoting
Sutliff, Inc. v. Donovan Companies, Inc., 727 F.2d 648, 654 (7th
Cir. 1984)). Rather, the complaint must state either direct or
inferential allegations concerning all of the material elements necessary
for recovery under the relevant legal theory. Chawla v. Klapper,
743 F. Supp. 1284, 1285 (N.D. Ill. 1990). II.
The relevant allegations set forth in the Funds' amended complaint,
which we will lake as true for purposes of ruling on this motion, are as
follows. Since June 30, 1975, F & V has been required to make
periodic contributions to the Cement Masons Pension Funds on behalf of
its employees pursuant to collective bargaining agreements (Am. Compl.,
at 3). Beginning on January 1, 1998 and continuing through the filing
date of the amended complaint (November 18, 2003), F & V has failed
to make some of the contributions required by the collective bargaining
agreement (Id.). Maria Partipilo, along with the other two
individual defendants, allegedly "controlled the actions of F & V and
were at all times aware of the wrongful conduct of the company"
(Id. at 5). These individual defendants allegedly engaged "in a
scheme and or conspiracy to deprive the funds of required contributions
and or their conscious and knowing involvement in submitting false
contribution reports to the funds." (Id. at 5).
Specifically, the Funds allege that Ms. Partipilo, and the other two
individual defendants, made false statements of material facts to the
Funds by: (1) concealing the existence of "side jobs"; (2) concealing
wage payments to employees; (3) falsely reporting employees as laid off
to collect unemployment benefits; and (4) knowingly under-reporting
fringe benefit reports (Id. at 5-6). Accordingly, the Funds
claim that "[b]y reason of the aforesaid the Individually Named
Defendants are also alter egos of the Company and liable in their
individual capacities for all the actions of the company" (Id,
at 6), III.
Under Count 111 of the amended complaint, a basis of liability for the
individual defendants could only arise under 29 U.S.C. § 1145.*fn2
Under Section 1145, only an "employer who is obligated to make
contributions to a multiemployer plan under the terms of the plan or
under terms of a collectively bargained agreement" faces liability.
Therefore, we must first determine whether Ms. Partipilo is an
"employer" under 29 U.S.C. § 1145. "The term `employer' means any
person acting directly as an employer, or indirectly in the interest of
an employer, in relation to an employee benefit plan." 29 U.S.C. § 1002(5).
In their amended complaint, the Funds have alleged not that Ms.
Partipilo is an employer, but rather that "Maria Partipilo is an
employee, officer and owner of F & V" (Am. Compl., at 5). "Congress
did not intend through Section 1145 to upset the general rule that
individuals arc not liable for corporate debt." Sullivan v. Cox,
78 F.3d 322, 325 (7th Cir. 1996). In fact, "[c]ourts routinely rebuff
efforts to collect pension debts from managers unless the officer or
investor would be liable under state law in other words, unless
courts would `pierce the corporate veil.'" Levit v. Ingersoll Rand
Financial Corp., 874 F.2d 1186, 1194 (7th Cir. 1996).
Consequently, for Ms. Partipilo to face individual liability under
Section 1145, she must face some liability under state law.
Under Illinois law, it is a well-established
principle that a corporation is separate and
distinct us a legal entity from its shareholders,
directors, and officers . . . Under the Illinois
alter ego doctrine, courts will pierce the
corporate veil only when plaintiff shows that: (1)
"the corporation was so controlled and manipulated
that it had become a mere instrumentality of another" and (2) "recognition of a separate
corporate identity would sanction a fraud or
Classic Fire & Marine Insurance Co. v. Illinois Insurance
Exchange, 1997 U.S. Dist. LEXIS 19524, at *15 (N.D. Ill. December 2,
1997). Factors to be considered in determining the first element include
"(1) inadequate capitalization; (2) failure to issue stock; (3) failure
to observe corporate formalities; (4) nonpayment of dividends; (5)
insolvency of the debtor corporation at the relevant time; (6)
non-functioning of other officers or directors; (7) absence of corporate
records; and (8) whether the corporation is an insignificant veneer for
the operation of dominate shareholders." NPF WL, Inc. v. Sotka,
No. 99 C 7966, 2000 WL 574527, at *7 (N.D. Ill. May 10, 2000).
The Funds' amended complaint fails to plead any allegations which
satisfy the two elements required to pierce the corporate veil. The last
paragraph of Count Ill simply states "[b]y reason of the aforesaid the
Individually Named Defendants are also alter egos of the Company and
liable in their individual capacities for all the actions of the Company
(Am. Compl., at 6), The "aforesaid" allegations almost exclusively
pertain to alleged conduct by Ms. Partipilo (and others) directed at the
Funds (Id., ¶¶ 8, 13-18), While plaintiffs also allege that
Ms. Partipilo "controlled the actions of F & V and [was] at all times
aware of the wrongful conduct of the company" (Id., 12), that is
the kind of barcbones, conclusory allegation that has been found
insufficient to stale an alter ego claim even under the liberal notice
pleading requirements of Federal Rule of Civil Procedure 8(a). See
NPF WL, 2000 WL 574527, at *7-8; see also Northwestern Corp. v.
Gabriel Mfr. Co, Inc., No. 95 C 2004, 1996 WL 732519, at *10-11
(N.D. Ill. Dec, 18, 1996). A fortiori, this allegation falls far
short of the kind of specificity required by Federal Rule of Civil
Procedure 9(b), which at least one court in this district has applied to
alter ego claims. See Typographies Plus, Inc. v. I.M. Estrada
& Co., Inc., No. 98 C 886, 2000 U.S. Dist. LEXIS 10351, at *13
(N.D. Ill. July 14, 2000 (D. J. Williams).
For the foregoing reasons, defendant Maria Partipilo's motion to
dismiss without prejudice Count 111 of the amended complaint (doc, # 32)
against her is granted.