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Board of Trustees of Automobile Mechanics' Local No. 701 Union and Industry Pension Fund v. Moroni

United States District Court, N.D. Illinois, Eastern Division

October 25, 2012

BOARD OF TRUSTEES OF the AUTOMOBILE MECHANICS' LOCAL NO. 701 UNION AND INDUSTRY PENSION FUND, Plaintiff,
v.
John MORONI, an individual, d/b/a Westgate Auto Sales, Inc., d/b/a West Gate Auto Sales; Susan Moroni, an individual; and Moroni Auto Sales, Inc., an Illinois Corporation, d/b/a Westgate Auto Sales, Inc., d/b/a West Gate Auto Sales, Defendants.

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Joseph Edward Mallon, Dennis R. Johnson, Jessica Leigh Adelman, William P. Callinan, Jeffrey Allen Krol, Johnson & Krol, LLC, Chicago, IL, for Plaintiff.

Kelly Kathleen Kachmarik, James J. Roche, James J. Roche and Associates, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court is the Motion to Dismiss by Defendants John Moroni (" Moroni" ) and Moroni Auto Sales, Inc. (" Moroni Auto" ). For the reasons stated herein, the Motion is granted in part and denied in part.

I. BACKGROUND

All facts are taken from allegations in Plaintiff's Complaint unless otherwise indicated. Plaintiff Board of Trustees of the Automobile Mechanics' Local No. 701 Union and Industry Pension Fund (" The Fund" ) received a default judgment on December 7, 2010 against Elmhurst Lincoln Mercury, Inc. (" ELM" ) in the amount of $1,086,330.60. The Honorable Blanche M. Manning issued the judgment. The amount represents ELM's withdrawal liability owed to The Fund after ELM stopped contributing to it in 2009. The Fund is governed by the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1001 et seq., which gives this Court jurisdiction.

Plaintiff alleges that ELM was 90 percent owned by the David G. Mears Trust, whose beneficial owners were, in turn, Susan Moroni (" Susan" ) (56 percent of the trust) and John Moroni (44 percent of the trust). David G. Mears owned 10 percent of ELM stock. Susan is also a Defendant in this action and a default judgment has already been entered against her.

Plaintiff alleges that in the fall of 2009, Moroni began operating a sole proprietorship under the assumed names of West Gate Auto Sales and Westgate Auto Sales Inc. (the " Moroni Sole Proprietorship" ). Later, on December 11, 2009, Moroni incorporated the business under the name Moroni Auto Sales, Inc. (" Moroni Auto" ) with Moroni as its sole shareholder. Moroni Auto continues to use the Westgate assumed names. Plaintiff's Complaint is a bit unclear as to the shift between the Moroni Sole Proprietorship and Moroni Auto (it uses John Moroni's name interchangeably with the sole proprietorship), but it nonetheless reasonably alleges that both the Moroni Sole Proprietorship and the later incorporated Moroni Auto are under common control with ELM and therefore ELM, the Moroni Sole Proprietorship (and thus Moroni himself) and Moroni Auto are a single employer under 29 U.S.C. § 1301(b)(1).

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ELM was insolvent as of January 1, 2009 and Moroni and Susan were both officers in ELM. In late 2009, Moroni and Susan began diverting assets to the Moroni Sole Proprietorship, Moroni Auto and themselves without first satisfying ELM's corporate obligations. The Moroni Sole Proprietorship, Moroni Auto and ELM share common employees, tools, inventory, vehicles, equipment, customer lists and corporate records. The Moroni Sole Proprietorship and Moroni Auto have collected accounts due to ELM. The Moroni Sole Proprietorship, ELM and Moroni Auto have commingled assets and Plaintiff alleges the Moroni Sole Proprietorship, Moroni Auto and ELM are alter-egos of one another. Moroni Auto is merely a disguised continuance of ELM and the Moroni Sole Proprietorship, Plaintiff alleges. Plaintiff brings this three-count Complaint alleging (1) joint and several single employer liability under 29 U.S.C. § 1301(b)(1), (2) shareholder and director liability under the Illinois Business Corporation Act, 805 ILL. COMP. STAT. 5/8.65(a)(1) and 9.10(c) and (3) common law successor and alter ego liability.

Defendants seek dismissal under several theories arguing Plaintiff (1) is barred by res judicata from maintaining this suit, (2) is barred by collateral estoppel, (3) has not stated a claim for which relief can be granted (FED. R. CIV. P. 12(b)(6)), (4) has not alleged sufficient facts to pierce the corporate veil, and (5) has ...


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