The opinion of the court was delivered by: Sue E. Myerscough, U.S. District Judge:
Thursday, 20 October, 2011 09:16:36 AM Clerk, U.S. District Court, ILCD
This matter is before the Court on the Motion to Dismiss Second Amended Complaint (d/e 19) (Motion) of Defendants Matthew E. Hacker, Vincent Herman, and Track Services, Inc. Because the allegations in Plaintiff's Second Amended Complaint are sufficient to avoid dismissal under Federal Rule of Civil Procedure 12(b)(6), Defendants' Motion is DENIED.
A. The Second Amended Complaint
On March 24, 2011, Plaintiff filed its three-count Second Amended Complaint (d/e 18) which alleges as follows. Plaintiff Railroad Maintenance and Industrial Health and Welfare Fund (the Fund) is an employee benefit plan created and administered pursuant to a Restated Agreement and Declaration of Trust. The Fund is administered in accordance with the Labor Management Relations Act of 1947 and the Employee Retirement Income Security Act of 1974 (ERISA). The Fund entered into an agreement with H&H Trackworks, Inc. to receive employer contributions on behalf of the corporation's employees.
H&H Trackworks, Inc. is a railroad and industrial equipment contractor located in Bartonville, Illinois, that employed members of Operating Engineers Local 150 who participated in the Fund pursuant to a Participation Agreement and Letter of Assent. Defendant Hacker is a five percent owner and the President of H&H Trackworks, Inc. Defendant Herman owns the remaining ninety-five percent interest in H&H Trackworks, Inc. and serves as its Secretary. Defendant Track Services, Inc. is a Tennessee corporation owned by Tracy J. Hacker and Barb Herman, the spouses of Defendants Matthew Hacker and Vincent Herman.
Count I of the Second Amended Complaint alleges that Hacker and Herman each breached the duties incumbent upon an ERISA plan fiduciary pursuant to 29 U.S.C. §§ 1104 and 1145. Count II alleges that Hacker and Herman each breached the terms of a Trust Agreement between Plaintiff and H&H Trackworks. Finally, Count III alleges that Track Services, Inc. is the alter ego of H&H Trackworks and is therefore liable for the amounts owed the Fund.
B. Allegations Relating to H&H Trackworks' Bankruptcy Plaintiff brought this suit to recover unpaid employer contributions, liquidated damages, interest, and audit costs it alleges are owed to the Fund. Initially, Plaintiff sought to recover directly from H&H Trackworks, Inc. Plaintiff hired Romolo and Associates, an accounting firm, to do anaudit of H&H Trackworks' payroll records.
Romolo and Associates determined that H&H Trackworks owed a total of $41,281.16 in contributions, interest, liquidated damages, and audit costs for a period from January 1, 2006 through December 31, 2008. Further, except in June 2010, Defendants submitted contribution reporting forms to the Fund without contribution payments from January 1, 2009 through October 2010. Including the cost of the audit, Plaintiff alleges Defendants owe a total of $276,084.22. However, Plaintiff's suit against H&H Trackworks was dismissed due to H&H Trackworks' bankruptcy.
On October 28, 2010, H&H Trackworks filed a Chapter 11 bankruptcy. On November 22, 2010, at the first meeting of creditors in the bankruptcy proceeding, Defendant Hacker stated under oath that he was responsible for deciding which H&H Trackworks' creditors to pay, and that he decided not to pay Plaintiff the contributions H&H Trackworks owed. In addition, Hacker noted that Defendant Herman contributed significant capital to the business operations of the corporation. Further, Hacker stated that, prior to H&H Trackworks' bankruptcy filing, H&H Trackworks had "migrated customers" to a new, nonunion company, Track Services, Inc. Hacker also concurred with the statement that Track Services, Inc. was a "spin off" corporation of H&H Trackworks. Track Services is in the same business as H&H Trackworks and uses H&H Trackworks' equipment in its operations. Ten employees laid off by H&H Trackworks were rehired by Track Services. As noted earlier, Track Services, Inc. is owned by Tracy J. Hacker and Barb Herman, the spouses of Defendants Hacker and Herman.
Prior to its bankruptcy, H&H Trackworks had assets of $1,845,616. The company had gross receipts of $2,819,787 in 2009 and $1,500,000 in 2010. Following its bankruptcy filing, ...