The opinion of the court was delivered by: Joan Humphrey Lefkow United States District Judge
Plaintiffs, Trustees of Chicago Painters ("Trustees") and Decorators Pension, Health and Welfare, Deferred Savings, Apprenticeship, Scholarship, and Joint Cooperation Trust Funds ("the Funds"), filed this suit against defendants, Destiny Decorators, Inc. ("Destiny") and Daniel McDuffie ("McDuffie"), to recover allegedly delinquent contributions to the Funds pursuant to Section 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1132(g)(2) and 1145, and to pierce the corporate veil to hold McDuffie personally liable for the alleged delinquent contributions.*fn1 This court has jurisdiction under 29 U.S.C. §185(a), as amended, and 29 U.S.C. § 1132. Before the court are the parties' cross- motions for summary judgment. For the reasons set forth below, the court grants plaintiffs' motion [#47] and denies defendants' motion [#50].
Destiny is party to a collective bargaining agreement between Painters District Council No. 14 of the International Union of Painters and Allied Trades and its affiliated locals ("District No. 14") and the Painting and Decorating Contractor's Association, Chicago Council ("the Association"). This collective bargaining agreement ("CBA")*fn3 binds Destiny to trust agreements that establish the Funds. Together, the CBA and the trust agreements require Destiny to submit, based on an employee's hourly wage, various fringe benefit contributions and union dues to the Funds on behalf of bargaining unit employees who do the type of work specified in the CBA within the territorial jurisdiction of District No. 14.
Article III, Section 1 of the CBA defines "bargaining unit" as all journeymen, apprentice and painters, decorators, paperhangers, drywall tapers and applicators using tools of the trade to apply or remove materials used for or preparatory to decorating or protecting surfaces, who are employed to do such work by the present and future Employer members of the Association in that area of Chicago, Cook, Lake, Will and Grundy Counties, Illinois, and whatever additional jurisdiction may be awarded the Union, and such other work over which the Union may hereafter acquire jurisdiction.
To determine whether Destiny was making the required contributions for all covered painting work performed by bargaining unit members, the Funds hired Benjamin Vargas ("Vargas") to perform a compliance audit on Destiny for the time period covering October 1, 2005 through August 31, 2007. Vargas requested payroll records, personnel records, tax returns and cash disbursement records from Ringold Financial, Destiny's accountant, and from Destiny itself. Vargas testified that he was only given some payroll check copies, some payroll reports and state quarterly unemployment returns. Deposition of Benjamin Vargas 28:11-18, Sept. 26, 2008, attached as Ex. 13 to Pls.' L.R. 56.1 SoF (hereinafter "Vargas Dep."). He further testified that he did not receive any W-2s, 1099s, time cards, certified payroll documents, cash disbursement records, Destiny's general ledger, or company invoices. Id.
Unsatisfied with Destiny's record keeping, the Funds filed the current action and subpoenaed the missing documents. Through the subpoena, Vargas obtained, inter alia, copies of canceled checks from two bank accounts, one at Charter One Bank and one at First American Bank. It is undisputed that the Charter One account was used by Destiny for business purposes; however, as discussed below, the parties dispute whether the First American account was another Destiny business account or McDuffie's personal account.
In conducting the audit, Vargas found that the First American checks did not correspond with the payroll records provided by Destiny. Some of the First American checks were issued to Destiny employees who were on the Destiny payroll at the relevant time, others were issued to payees who did not appear anywhere in Destiny's records, and others were written to "cash." None of these checks appears in Destiny's records, and neither Destiny nor McDuffie has any record or description of the type of work performed in exchange for them. It is undisputed that Destiny did not contribute to the Funds for any of the hours underlying the amounts in the First American checks.
Vargas included the majority of the First American checks in his audit. He excluded First American checks that were issued to Daniel and/or Deshon McDuffie and First American checks that were clearly issued for non-painting services;*fn4 however, he included the rest. Vargas testified that he included all First American checks for which there was no explanation as to the type of work performed. Vargas Dep. 22:8-23:4. Vargas issued his audit on June 24, 2008. It indicated that there were four categories of possible additional reportable hours for which contributions and dues were owed.
Category I was derived mainly from First American checks and a few Charter One checks. It consisted of 1221.65 alleged under-reported hours of twelve Destiny employees on behalf of whom Destiny made some contributions.
Category II was derived mainly from First American checks and a few Charter One checks. It consisted of 2680.75 alleged under-reported hours of 43 individuals for whom Destiny failed to make contributions. Some of the 43 individuals were Destiny employees and some did not appear in Destiny's payroll records.
Category III was derived from checks written to "cash" from both the First American and Charter One accounts and consisted of 1508.25 alleged under-reported hours for unnamed individuals.
Category IV was derived from the First American checks, the Charter One checks and Destiny's payroll journals and consisted of 2359.25 alleged under-reported hours for two named District 30 apprentices who performed covered painting work in District 14's geographic jurisdiction.
In total, the audit report claimed delinquent contributions of $81,659.13 and liquidated damages, as provided for in the CBA, of $12,163.48.
II. The Dispute over the Vargas Audit Procedures
The Funds argue that the First American account was a business account that belonged to Destiny and that all checks Destiny wrote from this account, including those written to cash, were used to pay bargaining unit employees for covered work. The Funds also argue that Destiny used checks written to cash from the Charter One account to pay bargaining unit employees for covered work. The defendants contend, however, that the First American account was McDuffie's personal account that he used it to pay individuals who performed non-covered work for him in his individual capacity. They maintain that the First American checks written to cash were used to purchase building materials for McDuffie's personal real estate projects.
A. Evidence Supporting the Funds' Contention
"Destiny Decorators, Inc." is the name listed on the First American account and printed on the checks and McDuffie's name does not appear on any of the documents related to the account. The few 1099s and single W-2 that defendants eventually produced*fn5 for the work ...