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Trustees of the Chicago Regional Council of Carpenters Pension Fund v. Riteway-Huggins Construction Services

March 15, 2010

TRUSTEES OF THE CHICAGO REGIONAL COUNCIL OF CARPENTERS PENSION FUND, CHICAGO REGIONAL COUNCIL OF CARPENTERS WELFARE FUND, AND CHICAGO REGIONAL COUNCIL OF CARPENTERS APPRENTICE & TRAINEE PROGRAM FUND, PLAINTIFFS,
v.
RITEWAY-HUGGINS CONSTRUCTION SERVICES, INC., DEFENDANT.



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

MEMORANDUM OPINION AND ORDER

The trustees of the pension, welfare, and apprentice and trainee program funds of the Chicago Regional Council of Carpenters (the Funds) have sued Riteway-Huggins Construction Services, Inc. (Riteway) under section 502(a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §1132(a)(3), and section 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C. §185(a). The Funds seek to collect contributions they claim Riteway owes for time worked by its and its subcontractors' employees. The Funds have moved for summary judgment on the issue of liability. For the reasons stated below, the Court grants the motion in part and denies it in part.

Facts

Because the Funds have moved for summary judgment, the Court views the facts in the light most favorable to Riteway and draws reasonable inferences in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The Funds receive contributions from employers pursuant to collective bargaining agreements (CBAs) between the employers and the Carpenters Union (Union). Riteway, a commercial construction company, is a signatory to a CBA with the Union. Under the CBA, Riteway is required to submit to the Funds monthly reports listing the hours worked by its carpenter employees and make corresponding contribution payments. The CBA also prohibits Riteway from subcontracting work within the jurisdiction of the Union to a non-signatory entity that does not meet the CBA's wage, fringe benefit, work hours, and work conditions requirements. An employer that subcontracts such work to a non-signatory entity must require the subcontractor to be bound by the CBA or must maintain records of the work hours of the subcontractor's employees and make the corresponding payments to the Funds.

To determine Riteway's compliance with the CBA, the Funds hired an accounting firm to audit Riteway's books and records. The audit covered the period from October 2003 through June 2006.

The audit showed the following unreported hours for which the Funds allege Riteway owes contributions: 381.5 hours due to clerical error; 32 hours for work performed by a Riteway carpenter named Willie Lee prior to the time Riteway began reporting hours; payments to non-signatory subcontractors Red Flooring and Vanique Custom Designs; payments to non-signatory subcontractor Busy Hands & Feet Construction (BH&F) for hours worked prior to October 2004 and three other categories of payments; and payments to an entity called Huggins Enterprises.

Riteway has admitted liability for contributions owed for the 381.5 hours attributable to the clerical error, the hours worked by Willie Lee, and the hours worked by Red Flooring and Vanique Customs Design workers. This leaves the Funds' claims regarding BH&F and Huggins Enterprises.

1. Busy Hands and Feet

About June 2004, Riteway contracted with BH&F, a drywall subcontractor, to perform drywall installation and painting at a job site known as Madden Wells/Arches of Oakwood. It is undisputed that drywall installation work falls within the scope of the CBA and that BH&F was not a signatory to the CBA during the period in question.

In September 2004, the Union sent Riteway a letter alleging that it was in violation of the CBA for subcontracting covered work to BH&F. Because BH&F was unable to obtain a bond from the Union, Riteway placed BH&F's carpenter employees on Riteway's payroll and began reporting hours to the Funds in October 2004. The last month for which Riteway reported hours worked by BH&F was June 2005.

Riteway contends that it issued checks to BH&F to reimburse it for drywall materials it had purchased in connection with the job. See Huggins Affid. ¶ 15. It also contends that none of its payments related to carpentry work for which contributions were unpaid. Id. ¶ 16. These contentions are supported by an affidavit from Larry Huggins, the owner of Riteway. Riteway admits, however, that a BH&F "payroll advancement" request dated September 14, 2004 indicates that $20,558 in payroll had been issued up to that date. It also admits that it did not maintain time records for the work of the BH&F employees.

The Funds maintain that Riteway owes contributions for hours BH&F worked at the Madden Wells job site prior to October 2004. In support, the Funds have offered the following evidence. First, they have submitted BH&F's work proposal for the Madden Wells job dated June 2004, proposing a price of $329,000 for the job. Second, they have submitted evidence that Riteway made payments to BH&F in August-September 2004 that Riteway recorded as "Advancement -- Madden Wells." Third, they have offered invoices to Riteway from BH&F with dates in September 2004 seeking "payroll advancements." Pl. Ex. 14. The September 28, 2007 invoice lists a total contract amount of $354,395; lists (without explanation) an amount of $100,000 for "payroll account amount"; states that $38,598 of that amount had been "paid to date"; and requests another $9,535. The invoice bears the handwritten notation "approved," signed by someone named M. Ahmed. Id. Finally, the Funds have offered a letter that a representative of the Union sent to Riteway on September 17, 2004, saying that "it has come to our attention that you have subcontracted work to Busy Hands and Feet working at the job site commonly known as Oakwood Shores . . . ." Pl. Ex. 12. The letter does not disclose the basis for the accusation.

The Funds also contend that Riteway is liable for contributions based on payments to BH&F related to the Madden Wells job site for December 2004 and May 2005 when, the Funds argue, covered work was performed; for payments to BH&F for "sub-advancements" unrelated to the Madden Wells job site for which there are no corresponding invoices; and for payments to BH&F for "office maintenance" in ...


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