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Shales v. Lanas Construction

March 4, 2009

MIKE SHALES, JOHN BRYAN SR., AL OROSZ, DAN BREJC, TOBY KOTH AND GORDON ANDERSON AS TRUSTEES OF THE FOX VALLEY LABORERS' HEALTH AND WELFARE FUND, AND MIKE SHALES, JOHN BRYAN SR., AL OROSZ, TOBY KOTH, GORDON ANDERSON AND DAN BREJC AS TRUSTEES OF THE FOX VALLEY LABORERS' PENSION FUND, PLAINTIFFS,
v.
LANAS CONSTRUCTION, INC., DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

The trustees of the Fox Valley Laborers' Health and Welfare Fund and the Fox Valley Laborer's Pension Fund (collectively, the Funds) have sued Lanas Construction, Inc., asserting violations of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145, and the Labor-Management Relations Act (LMRA), 29 U.S.C. § 185, for alleged failure to remit reports, union dues, and contributions to the Funds. The Funds have moved for summary judgment on each of their claims. For the reasons stated below, the Court grants the motion in part and denies it in part.

Background

On a motion for summary judgment, the Court views the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in its favor. Perez v. Illinois, 488 F.3d 773, 776 (7th Cir. 2007).

Lanas Construction, Inc. (Lanas 1), a construction business, was incorporated in June 1995. Jeff Lanas was vice-president of the company, and Cynthia Lanas, his wife, was the president and sole shareholder. In April 1995, before Lanas 1 was incorporated, Mrs. Lanas executed a short form collective bargaining agreement (CBA) with the Construction and General Laborers' District Council of Chicago and Vicinity. Pursuant to the CBA, Mrs. Lanas agreed to be bound by agreements between the council and employer associations. The CBA required Lanas 1 to submit monthly report and contributions to the Funds on behalf of those employees of Lanas 1 covered by the CBA. The CBA included an evergreen clause providing that the CBA would remain in effect unless either party provided notice otherwise.

Defendant contends that Mr. Lanas did not run the business operations of Lanas 1 and had no ownership stake in the company. Mr. Lanas was, however, employed by Lanas 1. The business was operated out of the Lanas residence, but it utilized a separate phone. In 1997, Lanas 1 was dissolved involuntarily. Defendant contends that Mr. and Mrs. Lanas disagreed over management issues. The Funds contend that prior to its dissolution, Lanas 1 owed $59,177.08 to the Funds for unpaid contributions.

In 1998, J. Lanas Const. (J. Lanas) was incorporated. J. Lanas was also a construction business. Mr. Lanas was the sole shareholder and president of J. Lanas. The Funds contend that between March 2000 and January 2001, J. Lanas incurred a debt to the Funds for unpaid contributions. This debt resulted in a judgment order entered against J. Lanas and Mr. Lanas, the unpaid balance of which is $24,439.13. J. Lanas was dissolved involuntarily on May 1, 2001.

On March 23, 2000, Mr. Lanas and "Lanas Construction, Inc." executed a promissory note in favor of the Funds in the amount of $96,100.48. The Funds contend that the note covered debts owed to the Funds.

From 2001 to 2004, Mr. Lanas operated a construction business as a sole proprietorship. In 2004, he incorporated Lanas Construction, Inc. (Lanas 2), another construction business. Beginning in 2004, Lanas 2 employed at least three employees that were members of the Fox Valley Laborers' Union. Lanas 2 paid the employees' wages at rate prescribed by the CBA and deducted union dues from their paychecks but it failed to remit those dues to the Funds.

From April 2006 through May 2008, Lanas 2 submitted benefits reports to the Funds listing the hours worked by each union employee. Each of the monthly reports contains a certification statement stating that [t]he undersigned employer, if not already a signator, hereby becomes a signatory party to the currently applicable [CBA] with the District Council . . . and also to each agreement and Declaration of Trust, and amendments, establishing the funds for which payment is made herewith.

Pl. Ex. 8. Lanas 2 signed five of the reports containing this statement. Lanas 2 paid some money to the Funds in October 2007.

In 2006, the Funds adopted a "Defaulted Employer" policy through an amendment to the CBA. The amendment provides that an employer that is managed or owned by someone or the spouse of someone who managed or owned a Defaulted Employer is liable to the Funds for the Defaulted Employer's unpaid contributions. A Defaulted Employer is defined as "an employer who previously had in the last [ten] years incurred substantial liability to the Funds of not less than $30,000.00 for delinquent contributions and then ceased operations or became insolvent." Mot. at 13. The CBA amendment also requires that the Funds send written notice to the successor employer concerning the Funds' determination. It states that the notice "will provide the Employer with a date certain, no less than 30 days after the date of transmittal of the Notice to the Employer to provide evidence, satisfactory to the [Funds], that the Employer should not be subject to the [Defaulted Employer policy]." Pl. Ex. 7 at 3.

On April 17, 2007, a collection agent sent notice of the debt and a copy of the amendment to Lanas 2. The notice stated that Lanas 2 owed $84,498.83 in unpaid contributions and liquidated damages and that it was required to pay the full amount to the collection agent by April 30, 2007. The notice also stated that the Funds ...


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