The opinion of the court was delivered by: Reagan, District Judge
I. Introduction and Procedural Background
Plaintiffs, the trustees of various employee benefit funds ("the Funds"), brought suit against Defendants, Trudi Springman ("Ms. Springman"), Aaron Springman ("Aaron") and A. C. Springman Electric, Inc., under Sections 502 and 515 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§ 1132, 1145 and under Section 301of the Labor Management Relations Act, as amended, 29 U.S.C. § 185 ("LMRA"). The Funds seek to recover fringe benefit contributions and working dues allegedly owed them by Defendants. On July 7, 2008, the Funds amended their complaint to add Leo M. Springman ("Mr. Springman") doing business as Springman & Son Electrical Contractors and Springman & Son Electrical Contractors, Inc.; Aaron Springman doing business as Springman & Son Electrical Contractors and Springman and Son Electrical Contractors, Inc.; and Springman & Son Electrical Contractors, Inc. As to these additional Defendants, Plaintiffs allege that when the Springman & Son entities succeeded their predecessors, they operated as a single employer and/or as successors to each other and/or as alter egos. As such, the Springman & Son entities were obligated by the provisions of the Collective Bargaining Agreements ("CBAs") to file reports and pay monthly contributions.
Pursuant to Federal Rule of Civil Procedure 56, Plaintiffs seek summary judgment against Defendants for the period from March 1, 2005, through May 31, 2008, in connection with the labor performed by all employees in the following amounts: $51,465.68 in unpaid contributions; $2,543.16 in unpaid union working dues; $9,401.16 in liquidated damages; $5,196.39 in interest; and reasonable attorneys' fees, costs and audit fees to be calculated at the conclusion of the case (Doc. 69). The motion is fully briefed and ready for disposition. For all the reasons stated herein, the Court will grant summary judgment on the issue of liability but will reserve on the amount of delinquent contributions due as well as other damages, fees and costs.
II. Applicable Legal Standards
Summary judgment is proper if the pleadings, depositions, interrogatory answers, admissions, and affidavits leave no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In determining whether a genuine issue of material fact exists, the Court views the record in the light most favorable to -- and draws all reasonable inferences in favor of -- the non-moving party.
Because the primary purpose of summary judgment is to isolate and dispose of factually unsupported claims, the non-movant may not rest on the pleadings but must respond, with affidavits or otherwise, setting forth specific facts showing that there is a genuine issue for trial. Oest v. Illinois Department of Corrections, 240 F.3d 605, 610 (7th Cir. 2001). The non-movant must do more than demonstrate some factual disagreement between the parties. Logan v. Commercial Union Ins. Co., 96 F.3d 971, 978 (7th Cir. 1996).The issue in dispute must be material. Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute. Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir. 2001).
Stated another way, only disputes that could affect the outcome of the suit under governing law properly preclude the entry of summary judgment. Outlaw at 837 (citing McGinn v. Burlington Northern R.R. Co., 102 F.3d 295, 298 (7th Cir. 1996). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (A factual dispute is "genuine" only when there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in his favor.).
Plaintiffs submit that Defendants are jointly liable for the unpaid contributions due for work performed January 1, 2006, through May 31, 2008, based upon the application of three theories for liability. First, with respect to Springman Electric and Springman Electric, Inc., Plaintiffs contend that Ms. Springman represented herself to be the "owner" of these Defendants and signed letters of assent binding these Defendants to the CBAs. Plaintiffs submit that she thereby became liable under ERISA § 515 to pay contributions to the employee benefit plans. Second, the Plaintiffs contend that the Springman family created four separate entities with no change in the operations or ownership other than shifting the ownership from the mother/son to the father. Plaintiffs maintain that, under the successor doctrine applied in ERISA cases, each successor became liable for its predecessor's unpaid contributions. Third, Plaintiffs contend that, under the alter ego doctrine, the Springman & Son entities are liable under the CBA and required to report and pay contributions to the employee benefit plans as if they were signatories to the CBA.
A. Ms. Springman, Springman Electric and Springman Electric, Inc.
The Funds submit that Ms. Springman is an employer within the meaning of ERISA and the CBAs, and, as such, she was required to file reports and pay monthly obligations to the benefit plans covered by this complaint at the rates set forth in the CBAs for the benefit of bargaining unit employees.
It is undisputed that on four occasions, between March 2005 and June 2006, Ms. Springman signed letters of assent on behalf of Springman Electric (3/1/05, 4/1/05) and Springman Electric, Inc. (6/1/06).*fn1 Each letter of assent provided as follows:
In signing this letter of assent, the undersigned firm does hereby authorize Alton-Wood River Division, IL Chapter NECA as its collective bargaining representative for all matters contained in or pertaining to the current and any subsequent approved Residential [or "inside"] labor agreement between the Alton Wood River IL Chapter NECA and Local Union 649, IBEW. In doing so, the undersigned firm agrees to comply with, and be bound by, all of the provisions contained in said current and subsequent approved labor agreements.
The forms indicate that Ms. Springman "signed for the employer" and as "owner." Under ERISA, an employer is "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(2)(B)(5).
29 U.S.C. § 1145 provides as follows:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement. 29 U.S.C. § 1145.
In Central States, Southeast and Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir. 1989), the Seventh Circuit concluded that this provision means "that a plan may enforce the writings according to their terms, if 'not inconsistent with law.'" 870 F.2d at 1149. The Court reasoned that a "pension or welfare fund is like a holder in due course in commercial law, ... or like the receiver of a failed bank, ... - entitled to enforce the writing without regard to understandings or defenses applicable to the original parties." Id. (internal citations omitted). The Court then explained,
Plans rely on documents to determine the income they can expect to receive, which governs their determination of levels of benefits. Multi-employer plans are defined-contribution in, defined-benefit out. Once they promise a level of benefits to employees, they must pay even if the contributions they expected to receive do not materialize - perhaps because employers go broke, perhaps because they are deadbeats, perhaps because they have a defense to the formation of the contract. Id. at 1151.
Stated simply, plans are entitled to rely on documents; they project their income based on these representations and determine benefits. Ms. Springman signed the letters of assent, representing herself to be the "owner" of Springman Electric and Springman Electric, Inc. The Plans were entitled to rely on this representation. Even if Ms. Springman were acting only indirectly, "in the interest of an employer, in relation to the employee benefit plan," she is an employer within the meaning of ERISA. 29 U.S.C. § 1002(2)(B)(5). The Court concludes that the Funds are entitled to hold Ms. Springman to her written agreement that she was the owner of Springman Electric and A. C. Springman Electric, Inc., and, consequently, liable for contributions to the Funds.
From March 1, 2005 through December 31, 2005, Springman Electric engaged in the electrical construction business - under the ownership and control of Ms. Springman and Aaron -and filed reports and paid contributions as required under the CBAs. On May 23, 2005, Springman Electric, Inc., was incorporated and engaged in the electrical construction business from January 1, 2006, until its involuntary dissolution on October 2, 2006. Springman Electric, Inc., assented to the CBAs retroactive to June 1, 2006, and filed monthly reports from June 2006 through July 31, 2007, but failed to pay contributions. Following the dissolution of Springman Electric, Inc., Ms. Springman and Aaron continued to engage in the electrical construction business as Springman Electric or Springman Electric, Inc.
Springman Electric, Inc., was a successor to Springman Electric and was liable for both Springman Electric's and its own contributions. Other than Springman Electric, Inc., having a corporate form, the entities operated in the same manner - performing the same type of electrical construction work and having a common address, phone number, assets and equipment (E350 Econoline truck, tools, office ...