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Chicago Regional Council of Carpenters Pension Fund, Chicago v. Woodlawn Community Development Corporation

December 15, 2011

CHICAGO REGIONAL COUNCIL OF CARPENTERS PENSION FUND, CHICAGO REGIONAL COUNCIL OF CARPENTERS WELFARE FUND, CHICAGO AND NORTHEAST ILLINOIS REGIONAL COUNCIL OF CARPENTERS APPRENTICE AND TRAINEE PROGRAM, LABOR MANAGEMENT UNION CARPENTRY COOPERATION PROMOTION FUND, ET AL. PLAINTIFFS,
v.
WOODLAWN COMMUNITY DEVELOPMENT CORPORATION, AN ILLINOIS CORPORATION DEFENDANT.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Plaintiffs, the Chicago Regional Council of Carpenters Pension Fund, the Chicago Regional Council of Carpenters Welfare Fund, the Chicago and Northeast Illinois Regional Council of Carpenters Apprentice and Trainee Program, the Labor/Management Union Carpentry Cooperation Promotion Fund, and their Trustees ("Trust Funds"), filed this suit against defendant, Woodlawn Community Development Corporation ("Woodlawn"), to recover allegedly delinquent contributions to the several funds pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1132 and 1145.*fn1 This court's jurisdiction is invoked under 29 U.S.C. § 1132(e) and (f) and 29 U.S.C. § 185©). Venue is proper under 29 U.S.C. § 1132(e)(2). Trust Funds seek payment for all delinquent benefit contributions plus ERISA damages for the period of April 1, 2005 to March 31, 2007. Before the court are Trust Funds' motion for summary judgment [dkt. #60] and motion to strike affidavits [dkt. #84]. For the reasons set forth below, Trust Funds' motions are granted in part and denied in part.

SUMMARY JUDGMENT STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record to determine whether there is a genuine need for trial. See Advisory Committee Note to 1963 Amendment of Fed. R. Civ. P. 56(e). While the court must construe all facts in a light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), where a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The party seeking summary judgment bears the initial burden of proving there is no genuine issue of material fact. Id. at 323. In response, the non-moving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000).

Northern District of Illinois Local Rule 56.1(a) requires the party seeking summary judgment to submit, among other things, a statement of material facts, which consists of short, numbered paragraphs and specific references within each paragraph to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph.

L.R. 56.1(a)(3). The nonmoving party must then submit a concise response to the movant's statement of facts. Id. at 56.1(b)(3). Material facts improperly denied by the nonmoving party are deemed admitted by the court.Id. at 56.1(b)(3)©); Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003).

BACKGROUND*fn2

Trust Funds are multi-employer funded trusts that provide pension, welfare, training and promotional benefits to members of the Chicago Regional Council of Carpenters and Joiners of America (the "Union"). (Plfs. L.R. 56.1 ¶ 1.) Trust Funds are organized, administered and operated pursuant to the Pension, Welfare, Trainee and Labor/Management Fund Trust Agreements (collectively "Trust Agreements") and the Area Agreement. (Id. at ¶¶ 2--7.) Trust Funds collect and manage contributions from employers who have agreed to be bound by the terms of the Trust Agreements and the Area Agreement. (Id. at ¶ 10.) The trustees for each Trust Fund have the authority to interpret and mange the terms of their respective Trust Agreements. (Id. at ¶ 12.)

Under the Area Agreement, an employer is prohibited from subcontracting jurisdictional work to nonunion subcontractors. (Id. at ¶ 14.)*fn3 The Area Agreement defines jurisdictional work to include "[w]ork at the construction site covered by the occupational jurisdiction of the 'UNION.'" (Id. at ¶ 13.)*fn4 If an employer subcontracts such work to a nonunion person or company, then the employer shall either require the subcontractor to become a signatory to the Area Agreement or maintain daily records of the subcontractor's employee's jobsite hours and pay the requisite fringe benefit contributions for the work performed by those employees. (Id. at ¶ 15.)*fn5 An audit of the employer is one way for Trust Funds to determine how much the employer owes for unpaid contributions for its nonunion subcontractors.

Woodlawn is an Illinois corporation that owns one multi-family residential property and manages other multi-family residential properties for the Chicago Housing Authority ("CHA") and various entities. (Def. Resp. L.R. 56.1 ¶¶ 21--22; Def. Answer ¶ 4.) On January 25, 1978, Woodlawn signed a contract ("1978 Contract") with the Union, whereby it agreed to be bound by the terms and conditions of the Area Agreement and Trust Agreements. (Plfs. L.R. 56.1 ¶ 23.) Woodlawn claims it terminated the 1978 Contract in the mid to late 1980s, although it does not have a copy of the written termination. (Def. Resp. L.R. 56.1 ¶ 26; Millison Aff. ¶ 6.)

In April 2005, Trust Funds audited Woodlawn's fringe benefit contributions for the period of April 1, 2002 to March 31, 2005 and determined that Woodlawn owed $12,937.53 for subcontracting work to nonunion companies or persons. (Plfs. L.R. 56.1 ¶¶ 29--30.) Although Woodlawn believed that it had previously terminated the 1978 Contract, it paid the claimed amount to avoid litigation. (Id. at ¶ 31; Millison Aff. ¶ 6.) After making the payment, Woodlawn notified Trust Funds that it considered the contract terminated at that time. (Millison Aff. ¶ 6.) Trust Funds dispute these facts and has moved to strike the evidence upon which Woodlawn relies. (See Part I, infra.)

In 2007, Trust Funds again audited Woodlawn, this time for the period of April 1, 2005 to March 31, 2007. (Plfs. L.R. 56.1 ¶ 32.) Trust Funds hired James Egan & Associates ("Egan") to conduct the compliance audit ("initial audit"). (Id.) Egan reviewed, inter alia, bank statements, contribution reports, federal tax return filings and unemployment wage reports. (Id. at Ex. O.) Egan relied on a sample of Woodlawn's invoices to estimate which of the payments made to nonunion subcontractors listed on Woodlawn's check register were for work falling within the jurisdiction of the Union. (Plfs. L.R. Ex. L, Ragona Dep. at 41--44; Ex. Q.) For example, if Egan had three invoices for one subcontractor, and two of them showed that the subcontractor performed jurisdictional work, Egan assumed that all of the remaining check registry entries for that subcontractor were payments for jurisdictional work. (Id.) As long as the subcontractor performed some jurisdictional work during the audit period, Egan assumed that all of its work fell within the jurisdiction of the Union, unless contradicted by other documentation. (Id.) Using this method, Egan concluded that Woodlawn owed $76,153.25 in contributions for 5,980 hours of nonunion jurisdictional work completed by eight nonunion subcontractors.*fn6 (Id. at ¶ 33.) Trust Funds presented Woodlawn with Egan's findings and Woodlawn refused to pay. (Id. at ¶ 34.)

On July 1, 2009, Trust Funds filed a four count complaint seeking the outstanding contributions identified in the initial audit. (Dkt. #1.) Nathaniel Lagalo, the Audit Coordinator for Trust Funds, was responsible for gathering additional documents and adjusting the initial audit in this case. (Plfs. L.R. 56.1 Ex. K Lagalo Aff. ¶¶ 1 & 3.) During the course of the litigation, Lagalo received previously undisclosed invoices describing payments Woodlawn made to nonunion subcontractors, including payments for jurisdictional work. (Id. at ¶¶ 11 & 12.) Based on these records, Lagalo prepared a revised estimate of Woodlawn's outstanding contributions ("adjusted audit").(Id. at ¶ 13.) The adjusted audit revealed that Woodlawn owed Trust Funds $83,584.20 for 6,482 hours of nonunion jurisdictional work. (Plfs. L.R. 56.1 ¶ 34.)

On March 24, 2011, Trust Funds moved for summary judgment on their claims seeking unpaid contributions, liquidated damages, interest, auditors' fees and attorney's fees. (Dkt. #60.) In its response, Woodlawn denied liability and attached in support the affidavits of Carole Millison, Woodlawn's former president, Georgette Reynolds, in-house counsel, and Ray Smith, controller. (Dkt. #80, Attachments 1--3.) Trust Funds then moved to strike the affidavits ...


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