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Board of Trustees of the Plumbers' Local Union No. 93 U.A. v. Encotech Construction Services

May 14, 2010

BOARD OF TRUSTEES OF THE PLUMBERS' LOCAL UNION NO. 93 U.A.; BOARD OF TRUSTEES OF THE PLUMBERS' LOCAL UNION NO. 93 U.A. RETIREMENT ACCOUNT FUND; BOARD OF TRUSTEES OF THE PLUMBERS' LOCAL UNION NO. 93 U.A. PENSION FUND; BOARD OF TRUSTEES OF THE PLUMBERS' LOCAL UNION NO. 93 U.A. HEALTH AND WELFARE FUND; BOARD OF TRUSTEES OF THE JOINT APPRENTICESHIP COMMITTEE FUND OF THE PLUMBING & HEATING INDUSTRY OF LAKE AND MCHENRY COUNTIES; AND THE INDUSTRY ADVANCEMENT FUND PLAINTIFFS,
v.
ENCOTECH CONSTRUCTION SERVICES, INC. AND DIANE L. FRANK, DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

This action is brought by the Board of Trustees of the Plumber's Local Union No. 93 U.A. (the "Union"), the Board of Trustees of the Plumber's Local Union No. 93 U.A. Retirement Account Fund, the Board of Trustees of the Plumber's Local Union No. 93 U.A. Pension Fund, the Board of Trustees of the Plumber's Local Union No. 93 U.A. Health and Welfare Fund, the Board of Trustees of the Joint Apprenticeship Committee Fund of the Plumbing and Heating Industry of Lake and McHenry Counties, and the Industry Advancement Fund (collectively the "Funds"). The Union and the Funds (collectively "Plaintiffs") filed suit against Defendants Encotech Construction Services, Inc. ("Encotech") and Diane Frank ("Frank"), alleging breach of contract under § 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, and § 301 of the Labor-Management Relations Act, 29 U.S.C. § 185. Pursuant to Fed. R. Civ. P. 56(b) and Local Rule 56, Plaintiffs have moved for summary judgment. For the reasons stated herein, Plaintiffs' Motion is granted.

STATEMENT OF UNDISPUTED FACTS*fn1

In 2001, Encotech and the Union entered into a Subscription Agreement whereby Encotech agreed to "be bound by the terms and conditions of the Collective Bargaining Agreement between [the Union] and the Lake & McHenry Counties Plumbing & Heating Contractors Association."*fn2

(Def. 56.1 Resp. ¶ 4.) Encotech was required to make monthly reports of hours worked by covered Union employees ("monthly contribution reports") and pay contributions to the Funds for each hour worked by Union employees. (Def. 56.1 Resp. ¶ 6.) Although the only Collective Bargaining Agreement ("CBA") in evidence is dated "June 1, 2005 THROUGH May 31, 2008," (see R. 38, Ex. 2), Encotech made contribution reports and payments to the Funds both before and after these dates. (Def. 56.1 Resp. ¶¶ 6, 19.) Encotech did not submit contribution payments from January 2005 through March 2007.*fn3

(Def. 56.1 Resp. ¶ 9.) Section 502(g)(2) of ERISA and the terms of the then-operative CBA provide that employers who fail to submit their monthly contribution reports and contributions to covered benefit funds on a timely basis are responsible for the payment of liquidated damages plus any reasonable attorney's fees and cost of maintaining suit. (Def. 56.1 Resp. ¶ 8.) Accordingly, Plaintiffs filed this suit for recovery of the unpaid contributions on April 6, 2007. (See R. 1, Compl.)

In May of 2007, Encotech and Frank, as President of Encotech and in her personal capacity, entered into a Settlement Agreement with Plaintiffs for the payment of $253,272.15 over a thirty-six month period at an interest rate of 8.25%. (Def. 56.1 Resp. ¶¶ 10, 14.) The Settlement Agreement obligated Encotech and Frank to submit monthly contribution reports and payments to the Funds for all periods subsequent to April 31, 2007, (Def. 56.1 Resp. ¶ 12), and stipulated that any payment not received on the due date would constitute a default on the Settlement Agreement. (Def. 56.1 Resp. ¶ 13.) The Settlement Agreement provided that Frank would be individually liable for all the obligations of Encotech under the terms of the Agreement, (Def. 56.1 Resp. ¶ 15), and that in the event Encotech or Frank defaulted on any of their obligations under the terms of the Agreement, all remaining payments would be accelerated and become immediately payable. (Def. 56.1 Resp. ¶ 16.) The Settlement Agreement also provided for a waiver of the final two payments if all previous payments were submitted on time. (Def. 56.1 Resp. ¶ 33.) On Plaintiffs' motion, the Court dismissed Plaintiffs' suit without prejudice and with leave to reinstate on or before June 1, 2010. (See R. 12).

After executing the Settlement Agreement, Encotech continued to employ members of the Union and submitted monthly contribution reports and payments for the months of April 2007 through August of 2008 and October through December 2008. (Def. 56.1 Resp. ¶ 19.) It is unclear whether Encotech submitted a contribution report for September of 2008, but undisputed that no payments were made in that month.*fn4 (Def. 56.1 Resp. ¶ 20.) Encotech ceased to employ members of the Union in February 2009 after failing to submit union dues from September of 2008 through February 2009 and failing to submit monthly contribution reports or payments in January and February 2009. (Def. 56.1 Resp. 20-22.) As a result of its failure to timely remit these contribution payments and Union dues, Encotech's liability for unpaid contribution amounts is $5,457.76 and its liability for unpaid Union dues is $1,868.12. (Def. 56.1 Resp. ¶¶ 28-29.) Additionally, a payroll audit conducted in April 2009 revealed that Encotech owes additional contribution deficiencies in the amount of $12,618.43. (Def. 56.1 Resp. ¶¶ 30-31.) Because Encotech's liability for these amounts was secured by the Settlement Agreement, and because the Agreement provided that Frank "shall be individually liable for all the obligations of Encotech" under it, Frank is also liable for these unpaid dues and contribution amounts. (See R. 52, Ex. 4.)

The monthly contribution reports submitted by Encotech, and signed by an Encotech representative, stated:

[T]he employer hereby agrees to be bound to the terms of the current collective bargaining agreement executed between the Plumbing and Mechanical Contractors Association of Northern Illinois and the Lake County and McHenry County Journeyman Plumbers' Local Union 93 of the United Association. Further, the undersigned hereby expressly accepts and agrees to be bound by the trust agreements governing U.A. Plumbers' Pension and Welfare, et al., and accepts all of the terms thereof with the intention of providing benefits to it's [sic] U.A. 93 plumbers[.] (Def. 56.1 Resp. ¶ 25.)*fn5

Pursuant to the terms of the Settlement Agreement, Encotech and Frank submitted settlement payments for the months of May of 2007 through January of 2009. (Def. 56.1 Resp. ¶ 17.) However, Encotech and Frank failed to submit settlement payments for the months of February through October of 2009. (Def. 56.1 Resp. ¶ 18.) As a result of this failure, Plaintiffs moved to reinstate this action and add Frank as a Defendant on February 10, 2009; the Court granted the Motion to Reinstate on February 18, 2009. (See R. 14, 19.) On April 16, 2009, Plaintiffs filed an Amended Complaint against Encotech and Frank. (Def. 56.1 Resp. ¶ 1; see R. 38, Am. Compl.)

Under the Settlement Agreement, Encotech and Frank owe an unpaid principal amount of $97,838.96 and liquidated damages in the amount of $9,783.89. (Def. 56.1 Resp. ¶ 26-27.) Plaintiffs also assert that Encotech and Frank owe them "$17,514.95 in reasonable attorney's fees pursuant to the terms of the" CBA. (Def. 56.1 Resp. ¶ 32.)

STANDARD OF REVIEW

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, the Court will "limit its analysis of the facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statement." Bordelon v. Chi. Sch. Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact is supported by the record and not adequately rebutted, the court will accept that statement as true for purposes of summary judgment. An adequate rebuttal requires a citation to specific support in the record; an unsubstantiated denial is not adequate. See Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001); Drake ...


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