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Neca-Ibew Pension Trust Fund v. Bays Electric

September 23, 2011

NECA-IBEW PENSION TRUST FUND, NECA-IBEW WELFARE TRUST FUND, AND INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION NO. 725, PLAINTIFFS,
v.
BAYS ELECTRIC, INC., PREMIER ELECTRICAL CONTRACTORS, INC., AND THEIR SUCCESSORS IN INTEREST, DINKI ELECTRIC INC., BAYS COMPANY, LLC, AND DENKI ELECTRIC CORPORATION, INC., DEFENDANTS.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

E-FILED Friday, 23 September, 2011 04:19:59 PM Clerk, U.S. District Court, ILCD

OPINION

This case is before the court for ruling on the Motion for Summary Judgment (#110) filed by Defendants, Bays Electric, Inc., Premier Electrical Contractors, Inc., Dinki Electric, Inc., Bays Company, LLC and Denki Electric Corporation, Inc., and the Cross Motion for Partial Summary Judgment as to Liability (#112) filed by Plaintiffs, NECA-IBEW Pension Trust Fund, NECA-IBEW Welfare Trust Fund and International Brotherhood of Electrical Workers Local Union No. 725. This court has carefully considered the arguments of the parties and the documents filed by the parties. Following this careful and thorough review, this court concludes that genuine disputes as to material facts exist. Therefore, Defendants' Motion for Summary Judgment (#110) is DENIED and Plaintiffs' Cross Motion for Partial Summary Judgment (#112) is DENIED. This case remains scheduled for a final pretrial conference on January 5, 2012, at 2:30 p.m. and for a bench trial on January 23, 2012, at 9:00 a.m.

FACTS*fn1

Bays Electric was established on August 31, 1990. Terry Bays was the sole owner of Bays Electric. Terry Bays testified that Bays Electric was an electrical contractor. Terry Bays ran the company. On September 25, 1990, Terry Bays, as president of Bays Electric, signed two letters of assent and authorized the Central Indiana Chapter of the National Electrical Contractors Association (NECA) as its collective bargaining representative for all matters pertaining to the labor agreements between NECA and the International Brotherhood of Electrical Workers Local Union No. 725 (IBEW Local 725). Under the terms of the agreements between NECA and IBEW Local 725, Bays Electric was obligated to make contributions to the NECA-IBEW Pension Trust Fund (Pension Fund) and the NECA-IBEW Welfare Trust Fund (Welfare Fund). Bays Electric made such contributions for its employees, including Terry Bays, until November 2006. The November, 2006 monthly payroll report for Bays Electric listed Terry Bays, Tim Bays, Nathan Brown, Ernest Tessman and Roy Smith as employees. On June 28, 2006, Terry Bays sent a letter to NECA and stated that "effective immediately, Bays Electric, Inc. hereby terminates any authority it may have previously given to [NECA] to negotiate with the [IBEW] on behalf of Bays Electric, Inc." Just prior to this, in April 2006, Terry Bays formed Bays Company, LLC. Terry Bays testified that Bays Company, LLC is a general contractor and did not perform any work until 2008.

On September 22, 2006, IBEW Local 725 hand delivered a letter to Terry Bays which stated that the letter was being hand delivered because Terry Bays had repeatedly refused to accept certified mail from IBEW Local 725. The letter also stated, "[p]lease be advised that Local 725 is prepared to take all necessary legal action to uphold its members' rights under the collective bargaining agreement including, but not limited to, proceeding before the Council of Industrial Relations ("CIR") pursuant to the labor agreement and filing appropriate litigation to enforce that interest arbitration clause." The CIR subsequently held a hearing regarding Bays Electric's obligations. No representative of Bays Electric appeared for the hearing. On November 13, 2006, the CIR issued a Decision which stated that the "parties are directed to sign and implement immediately the Inside Agreement which is attached hereto and hereby made a part of this decision." The effect of this decision was to extend IBEW Local 725's labor agreement with Bays Electric for two years.

Premier Electrical Contractors (Premier Electric) was established on September 3, 1992. Plen Smith and Deborah Smith were the sole owners of Premier Electric. Premier Electric was a commercial and residential electrical contractor. Plen Smith ran Premier Electric. Deborah Smith worked as a full-time teacher and had a limited role in the company. On December 3, 1992, Deborah Smith, as president of Premier Electric, signed two letters of assent and authorized NECA as its collective bargaining representative for all matters pertaining to the labor agreements between NECA and IBEW Local 725. Under the terms of the agreements between NECA and IBEW Local 725, Premier Electric was obligated to make contributions to the Pension Fund and Welfare Fund. Premier Electric made such contributions for its employees, including Plen Smith, until November 2006. A 2006 monthly payroll report for Premier Electric listed Jim Carlson, Johnny Crow, James Smith and Plen Smith as employees. On June 28, 2006, Deborah Smith sent a letter to NECA and stated that "effective immediately, Premier Electrical Contractors, Inc. herby [sic] terminates any authority it may have previously given to [NECA] to negotiate with the [IBEW] on behalf of Premier Electrical Contractors, Inc." On August 28, 2006, IBEW Local 725 sent notification to Plen Smith regarding negotiating an agreement between Premier Electric and IBEW Local 725. Premier Electric apparently did not respond and the CIR held a hearing regarding Premier Electric's obligations. No representative of Premier Electric appeared for the hearing. On November 13, 2006, the CIR issued a Decision which stated that the "parties are directed to sign and implement immediately the Inside Agreement which is attached hereto and hereby made a part of this decision." The effect of this decision was to extend IBEW Local 725's labor agreement with Premier Electric for two years.

On November 20, 2006, Terry Bays delivered a letter to IBEW Local 725 which stated:

Effective November 22, 2006 Bays Electric, Inc. is laying off all of its employees and will thereafter have no employees. Therefore it is revoking its recognition of IBEW Local 725 as the collective bargaining agent representing its employees and rescinding any and all collective bargaining agreements which may have arisen out of such recognition because it no longer has any employees.

On November 17, 2006, Deborah Smith sent a letter to IBEW Local 725 which stated:

Effective November 29, 2006 Premier Electrical Contractors, Inc. is laying off all of its employees and will thereafter have no employees. Therefore, it is revoking its recognition of IBEW Local 725 as the collective bargaining agent representing its employees and rescinding any and all collective bargaining agreements which may have arisen out of such recognition because it no longer has any employees.

In his affidavit, Terry Bays stated that Bays Electric has not had any employees since November 22, 2006 and ceased doing business on November 30, 2006. Bays Electric was administratively dissolved on December 31, 2007. In his affidavit, Plen Smith stated that Premier Electric ceased operating on November 30, 2006, and has not had any employees since that date. Premier Electric was administratively dissolved on June 30, 2007. On December 6, 2006, Terry Bays began working for Dinki Electric, Inc. He testified that Dinki Electric was an electrical contractor. Terry Bays supervised electricians on jobs for Dinki Electric and testified that his job title was project manager. On December 10, 2006, Plen Smith began working for Dinki Electric. He testified that he did design and estimating work for Dinki Electric and was also the day-to-day manager. Plen Smith testified that Dinki Electric did light commercial and residential electrical work. Dinki Electric also employed Tim Bays, Terry Bays' brother, and Chris Bays, Terry Bays' son. Tim Bays had previously worked for Bays Electric. In addition, Dinki Electric employed James Smith and James Carlson, who previously worked for Premier Electric. Plen Smith testified that he did the hiring for Dinki Electric, with some input from Terry Bays. Terry Bays and Plen Smith stated that they were paid $36.00 per hour at Dinki Electric. Plen Smith testified that he also had insurance and a 401(K).

Bill Hillis incorporated Dinki Electric in September 2006. Hillis testified that he made no capital contribution to the company. Hillis testified that he is 76 years old and his vocation is in the financial services, banking and underwriting industries. Hillis testified that Plen Smith is the son-inlaw of Hillis' very close friend, Bill Roach. Hillis testified that he has known Bill Roach for 40 years. Hillis' daughter and Plen Smith's wife grew up together and Hillis has known Plen Smith for about ten years. Hillis testified that he had a conversation with Bill Roach and he started Dinki Electric because he "thought we could make a dollar." Hillis testified that Dinki is Japanese for electric. He said the name could have come from Roach's wife, who is Japanese.

Hillis was questioned extensively regarding his involvement with Dinki Electric and it was clear he knew very little about the business. Hillis testified that Terry Bays and Plen Smith "knew the electrical business" and he did not. Hillis agreed that he could be characterized as "sort of a hands-off, silent partner." Hillis did testify that Dinki Electric went out of business in 2010. It is undisputed that Dinki Electric was dissolved in 2010.

Plen Smith testified that he opened an office in Terre Haute for Dinki Electric. Plen Smith had a stamp of Bill Hillis' signature and paid bills for Dinki Electric. There was an address for a Dinki Electric office near Indianapolis. Hillis testified that, when he was in the Indianapolis office of Dinki Electric, he spent most of his time working on other projects not related to Dinki Electric. Hillis testified that he did not really know who did the hiring for Dinki Electric. He testified that the only employee he hired was Plen Smith. He also testified that, other than Plen Smith, Plen Smith's son and Terry Bays, he did not know any of Dinki Electric's employees. Hillis was paid $10,000 in one year by Dinki Electric for what he characterized as "[a]dvisory services."

Plaintiffs have provided evidence that Bays Electric bid on a job that was later completed by Dinki Electric.*fn2 Also, Todd Thacker, Business Manager for IBEW Local 725, testified that, after Bays Electric and Premier Electric had given notice that they had laid off all their employees and were no longer operating, he saw employees who were previously employed by Bays Electric and Premier Electric working jobs for the same customers. Thacker testified that he approached Terry Bays on a job where Terry Bays was working in a management position and was taking pictures of the job. Terry Bays told Thacker to get off the property. Plaintiffs have also provided a printout from a website which identified the company as "Denki Electric" at the top of the page and gave contact information for Plen Smith and Terry Bays. The email addresses listed for Plen Smith and Terry Bays spelled the company name "Dinki."*fn3

Plen Smith testified that he formed Denki Electric Corporation, Inc. on April 2, 2007. Plen Smith testified that his wife is half Japanese and Denki means electric in Japanese. Plen Smith testified that Denki Electric Corporation did not perform any work until 2008. Plen Smith testified that, through Denki Electric, he does "a little contracting as a general contractor." Defendants attached copies of some income tax returns to their ...


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