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Central Illinois Carpenters Health and Welfare Trust Fund v. Olsen

June 1, 2006

CENTRAL ILLINOIS CARPENTERS HEALTH AND WELFARE TRUST FUND AND CARPENTERS WELFARE, PENSION AND RETIREMENT SAVINGS FUNDS OF ILLINOIS, PLAINTIFFS,
v.
JAY J. OLSEN D/B/A J & L BUILDERS AND J & L CONSTRUCTION, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter is before the Court on cross-motions for summary judgment. See Plaintiffs' Motion for Summary Judgment (d/e 31); Defendants Jay J. Olsen d/b/a J & L Builders and J & L Construction's Joint Motion for Summary Judgment (d/e 33) (Defendants' Motion for Summary Judgment). Plaintiffs' Second Amended Complaint (d/e 12) alleges that Defendants have violated the Employee Retirement Income Security Act of 1974 (ERISA) by failing to make certain fringe benefit contributions for covered employees. See 29 U.S.C. § 1145. For the reasons set forth below, Plaintiffs' Motion for Summary Judgment is allowed, in part, and denied, in part. Defendants' Motion for Summary Judgment is denied.*fn1

BACKGROUND

Plaintiff Central Illinois Carpenters Health and Welfare Trust Fund (CICHWTF) is administered pursuant to the Labor Management Relations Act of 1947 and ERISA. CICHWTF is the fringe benefit collection agent for funds administered by the Mid-Central Illinois District Council of Carpenters (Mid-Central). Plaintiff Carpenters Welfare Fund of Illinois, Carpenters Pension Fund of Illinois, and Carpenters Retirement Savings Fund of Illinois (Welfare, Pension, and Retirement Funds) are administered in accordance with the Labor Management Relations Act of 1947 and ERISA. The Welfare, Pension, and Retirement Funds are the fringe benefit collection agents for funds administered by the Heartland District Council of Carpenters (Heartland).

J & L Construction and J & L Builders are sole proprietorships that were at all relevant times owned by Jay J. Olsen. It is Defendants' position that J & L Construction and J & L Builders are separate businesses engaged in different types of work. Olsen has filed an Affidavit stating that J & L Construction and J & L Builders have always been two separate businesses engaged in different types of work. Defendants' Motion for Summary Judgment, Ex. A, Affidavit of Jay J. Olsen (Olsen Affidavit), ¶ 3. According to Olsen, J & L Construction performs only residential work while J & L Builders performs only commercial work. Id., ¶¶ 4 & 5. Olsen states that J & L Construction and J & L Builders "maintain separate books, separate accounting practices, separate bank accounts and have separate clients." Id., ¶ 6. Plaintiffs assert that Jay Olsen d/b/a J & L Construction and J & L Builders are a single employer that performs both residential and commercial work.

Plaintiffs' Second Amended Complaint alleges three counts. Count I, brought by CICHWTF against Jay Olsen d/b/a J & L Builders, alleges that Jay Olsen d/b/a J & L Builders employs individuals who participate in funds administered by CICHWTF. Count I asserts that Jay Olsen d/b/a J & L Builders entered into a Participation Agreement on April 27, 1998, recognizing Mid-Central as exclusive bargaining representative and adopting all collective bargaining agreements to which Mid-Central was a party. The 1998 Mid-Central Participation Agreement, Complaint Exhibit A, is signed by Jay Olsen as owner of J & L Builders. Count I alleges that the 1998 Mid-Central Participation Agreement obligated Jay Olsen d/b/a J & L Builders to make fringe benefit contributions based on a Collective Bargaining Agreement that is attached as Complaint Exhibit B. Count I further alleges that Jay Olsen d/b/a J & L Builders was obligated under ERISA to make fringe benefit contributions pursuant to a Trust Agreement attached as Complaint Exhibit C. According to Count I, Jay Olsen d/b/a J & L Builders failed to pay all of the fringe benefits owed for the period from April 1, 1998, to March 31, 2000.

In Count II, the Welfare, Pension, and Retirement Funds allege that Jay Olsen d/b/a J & L Builders employs individuals who participate in funds that they administer. Count II asserts that Jay Olsen d/b/a J & L Builders entered into a Memorandum of Agreement on May 14, 1997, recognizing Heartland as exclusive bargaining representative and adopting all collective bargaining agreements to which Heartland was a party. The Heartland Memorandum of Agreement, Complaint Exhibit F, is signed by Jay Olsen as owner of J & L Builders. The Welfare, Pension, and Retirement Funds allege that the Heartland Memorandum of Agreement obligated Jay Olsen d/b/a J & L Builders to make fringe benefit contributions based on a Collective Bargaining Agreement that is attached as Complaint Exhibit G. Count II further alleges that Jay Olsen d/b/a J & L Builders was obligated under ERISA to make fringe benefit contributions pursuant to Trust Agreements attached as Complaint Exhibits H, I, and J. According to Count II, examinations of payroll records revealed that Jay Olsen d/b/a J & L Builders failed to pay all of the fringe benefits owed for the period from May 1, 1998, to December 31, 1998 and January 1, 1999, to March 31, 2000.

Count III is brought by CICHWTF and the Welfare, Pension, and Retirement Funds against Jay Olsen d/b/a J & L Construction.*fn2 Count III alleges that J & L Construction and J & L Builders are a single employer owned and operated by Jay Olsen. According to Count III, Jay Olsen is personally liable for fringe benefits of his employees as alleged in Counts I and II "regardless of whether they were employed by J & L Construction."

Second Amended Complaint, p. 9. Count III references an August 1997 Participation Agreement, Complaint Exhibit N, with Mid-Central that is signed by Jay Olsen as owner of J & L Construction. The 1997 Participation Agreement has the words "Commercial Only" handwritten across the top. Complaint, Ex. N. On January 15, 1998, Jay Olsen sent a letter to Mid-Central stating as follows:

This letter is to inform you that J & L Construction is no longer contracting commercial work.

We will no longer be working under the Collective Bargaining Agreement with the Mid-Central Illinois District Council Of Carpenters. Therefore we request termination of our contract as of April 30, 1998.

Defendants' Motion for Summary Judgment, Ex. N. The letter was signed "J & L Construction, Jay J. Olsen, Owner". Id. Mid-Central responded by letter dated January 20, 1998. Defendants' Motion for Summary Judgment, Ex. O. Mid-Central noted that Olsen's request for termination was not in the form required under the parties' agreements, but nevertheless accepted and agreed to it. Id. Plaintiffs concede that the August 1997 Participation Agreement terminated in January 1998. Plaintiffs' Reply to Defendants' Joint Response to Plaintiffs' Motion for Summary Judgment (d/e 37) (Plaintiffs' Reply), p. 11.

Prior to the filing of the instant suit, CICHWTF engaged an auditor, Romolo & Associates, to examine the payroll records of J & L Builders for the period from April 1, 1998, to March 31, 2000, to determine whether J & L Builders was in compliance with its reporting obligations. On May 16, 2000, M. Joseph Romolo, a Certified Public Accountant, issued a document entitled "Independent Accountant's Report On Applying Agreed-Upon Procedures." Defendants' Motion for Summary Judgment, Ex. G, Independent Accountant's Report On Applying Agreed-Upon Procedures, dated May 16, 2000 (CICHWTF Romolo Report). The CICHWTF Romolo Report indicates that the auditors applied "certain agreed upon procedures" to the selected payroll records. Id., p. 2. After applying these procedures, the auditors formed the opinion that an additional $15,702.19 was owed by the employer. Id. At summary judgment, based on the CICHWTF Romolo Report, CICHWTF seeks to recover $15,161.35 in additional contributions, liquidated damages, and interest from J & L Builders. Specifically, CICHWTF claims that J & L Builders failed to make contributions for three employees as follows:

Derek Harken: 786.25 hours

Todd Conklin: 171.00 hours

Jeff Dickerson: 642.50 ...


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