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Laborers' Pension Fund v. Francis, LLC

United States District Court, Seventh Circuit

August 21, 2013

LABORERS' PENSION FUND and LABORERS' WELFARE FUND OF THE HEALTH AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL LABORERS' DISTRICT COUNCIL OF CHICAGO AND VICINITY, JAMES S. JORGENSEN, Administrator of the Funds, Plaintiffs,
v.
FRANCIS, LLC Defendant.

PLAINTIFFS' MOTION TO REINSTATE THIS CAUSE AND ENTER JUDGMENT CONSISTENT WITH THE PARTIES' SETTLEMENT AGREEMENT

AMY J. ST. EVE, District Judge.

Plaintiffs, the Laborers' Pension and Welfare Funds (the "Funds"), by their attorneys respectfully request this Court to reinstate the above captioned matter and enter judgment against the defendant, Francis, LLC, consistent with plaintiffs' affidavits and the Parties' Settlement Agreement. In support of this motion plaintiffs state as follows:

1. On or about February 21, 2012, the Parties entered into a Settlement Agreement (the "Agreement"), covering the audited period of May 24, 2010 through October 31, 2010. A copy of the Agreement signed by Francis, LLC's President, Steven Searles, is attached hereto as Exhibit 1, as well as Francis, LLC's Installment Note with the Funds, which is attached as Exhibit 2.

2. The Agreement provides that, if Francis, LLC failed to pay either its Installment Note or its ongoing monthly contributions, Francis, LLC shall be deemed in default within ten (10) days after the date payments are due, or within ten days of a material breach of the terms of the Agreement or Installment Note, and further provides that the Funds will have the right to reinstate this action (Exh. 1, ¶4). According to the terms of the Agreement, Francis, LLC is not permitted to raise defenses to bar judgment of the unpaid balance (Exh. 1, ¶5). The Installment Note also contains an acceleration clause enabling the Funds to collect the full amount remaining on the Note if Francis, LLC defaults (Exh. 2, ¶8). Thereby, upon motion, the Funds are entitled to entry of the balance owed against Francis, LLC.

3. According to the Agreement, the judgment shall include all unpaid amounts plus attorneys' fees incurred in the Funds' efforts to seek compliance with the terms of the Agreement (Exh. 1, ¶5; Exh. 2, ¶8). The undersigned counsel has communicated with Mr. Searles by email and/or telephone as recently as July 15th, 26th and 29th, to give him notice of plaintiffs' motion to reinstate the cause, and move for judgment for the balance remaining on the Installment Note, plus the attorneys' fees.

4. Thus, plaintiffs seek to reinstate this cause consistent with the Stipulation permitting this Court jurisdiction for the purpose of enforcing the parties' Settlement Agreement through February 22, 2013. This deadline was extended by the Court to August 30, 2013. (See, Dk# 28, 32, 40, 41).

5. According to the affidavit of James Fosco, the Funds' Field Representative, Francis, LLC failed to submit any of its Note payments since January 1, 2013, and the amount of $21, 375.45 remains due to the Funds pursuant to the Agreement and the Installment Note. (See, Fosco Affidavit, Exhibit 3).

6. According to the undersigned's attached affidavit and fee report, the attorneys' fees incurred in the Funds collection efforts from the date of breach on January 11, 2013 to the present show the amount of $5, 822.50 is owed pursuant to the Parties' Settlement Agreement. (See, Schumann Affidavit, Exhibit 4; Fee Report Exhibit 4A)

7. The Funds retain the right to file a new lawsuit for any audit findings for the as yet unaudited period from November 1, 2010 through the present, as Francis, LLC has failed to submit several monthly reports and payments to the Funds and a compliance audit is currently in progress for this period. However, the Funds find no just reason to delay the judgment in the present matter.

8. Plaintiffs seek judgment in the total amount of $27, 197.95 against the defendant, Francis, LLC, and in favor of the Funds, consisting of the remaining amount due on defendant's Installment Note pursuant to the Parties' Settlement Agreement plus the attorneys' fees incurred in the Funds' collection efforts from defendant's breach to the present.

WHEREFORE, plaintiffs request this Court enforce the Parties' Agreement and thereby reinstate this cause, entering judgment in the total amount of $27, 197.95 against Francis, LLC, and in favor of the Funds, pursuant to defendant's breach of the Parties' Agreement and default on its Installment Note, covering the audited period of May 24, 2010 through October 31, 2010, plus attorneys' fees incurred by the Funds' collection efforts to the present.

Exhibit 1

SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release ("Agreement") is entered into by and between the Laborers' Pension Fund and the Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity, and James S. Jorgensen, Administrator of the Funds (the "Funds") and Francis, LLC ("Francis"), (the Funds and the defendant will be collectively referred to as the "Parties"), to fully and finally settle and resolve any and all issues raised in Laborers' Pension Fund et al., v. Francis, LLC, No. 11 C 3884 (N.D. Ill) (the "lawsuit"). The Parties agree to the following:

1. Simultaneously with the execution of this Settlement Agreement and Release, Francis, by its President, Steven Searles, will sign the Installment Note (the "Note"), which is incorporated by reference and which provides for payment of a total amount of $26, 375.45 (inclusive of precalculated interest to accrue over the entire term of the Note). This amount of $26, 375.45 is the total amount owed pursuant to the Note which includes accumulated interest owed for the unpaid contributions from the period of May 24, 2010 through October 31, 2010 and includes additional precalculated interest to accrue over the term of the Note.

2. Francis will make its first installment payment on or before March 1, 2012, in the total amount of five hundred dollars ($500.00), which also consists of amounts owed to the Training and Ancillary Funds. The Note further indicates that Francis will continue to pay monthly installments for 52 consecutive months beginning on April 1, 2012 and ending on June 11, 2016. All of the note payments as described by the Note are hereinafter referred to as the Settlement Payments and must be made in accordance with the terms and conditions provided in the Note.

3. The Parties agree that the Settlement Payments referred to in paragraphsl and 2 above and in paragraphs 5 and 6 of the Note replesent a resolution of the lawsuit for the period from May 2010 through October 2010. Francis represents that it has properly reported contributions due to the Funds for the period from November 2010 through January 2012, however, contribution amounts have not been reviewed by the Funds' auditors. As consideration for the Funds' acceptance of this representation and the documentation submitted by the Company in support of such representations, Francis hereby agrees to permit the Funds an opportunity to audit the books and records of the corporation under the collective bargaining agreement, Trust Agreements and the Funds' Policies and Francis agrees that it may be liable for contributions owed, in the event that an audit determines amounts owed to the Funds. The parties agree that after an audit report is presented to Francis in the regular course of business, the Funds at their discretion may file an action against Francis seeking unpaid contributions for the November 2010 through January 2012 time period.

4. In the event that Francis fails to maintain its obligations under this Agreement, the collective bargaining agreement and the Funds' respective Agreements and Declarations of Trust, including but not limited to its obligations to submit timely contribution reports and to make timely current contribution payments, Francis shall be deemed in default within ten (10) days after payments are due, or within ten days of a material breach of the terms of this Agreement or Note and the Funds shall have the right to reinstate this action. In the event of such a default, the Funds may declare the entire unpaid amounts immediately due and accelerate collection of the total balance owed (including monthly payments plus the unpaid balance owed under the Note less any precalculated interest not yet accrued at the time of default). The Funds, on motion in accordance with the Court rules and notice to defendant at its usual place of business at 79 West Monroe Street, Suite 808, Chicago, Illinois 60603 shall be entitled to entry of judgment by the Court against Francis.

5. In the event that a Judgment is entered pursuant to the terms in Paragraph 4 of this Agreement, such Judgment will be entered for all unpaid amounts due, less all precalculated interest not yet accrued as of the date of the Judgment, plus reasonable attorneys' fees incurred by the Funds in their efforts to obtain compliance with this Settlement Agreement. Defendant Francis will not be permitted to raise defenses to bar judgment of the unpaid balance other than payment or a miscalculation of the proper amount of the Judgment. Plaintiffs are entitled to judgment for reasonable attorneys' fees and costs incurred in connection with efforts to enforce the Settlement Agreement and Release.

6. In consideration of the receipt of all amounts owed as described in paragraph I and promises made by the parties, the Funds hereby release and discharge Francis and each of their affiliates, parents, subsidiaries, divisions, partners, owners, stockholders, directors, officers, employees, agents, representatives, and their predecessors, successors, heirs, executors, administrators and assigns, agents, attorneys, representatives, trustees, administrators, and all persons acting by, through or under any of them jointly and severally, in their individual, fiduciary and corporate capacities, or any of them, of and from all actions, causes of action, grievances, suits, complaints or claims, arising out of the obligation to contribute to the Funds for the period from May 24, 2010 through October 31, 2010.

7. The Laborers' Funds agree to execute a Stipulation of Dismissal which will dismiss without prejudice all claims asserted by the Funds against Francis in this lawsuit after receipt by the Funds' counsel of record, Sara S. Schumann, of an original or a copy of the Settlement Agreement and Release and the Installment Note. The Parties have agreed that when Francis completes its Settlement Payments this lawsuit be dismissed with prejudice, and in the event that Francis does not make its Settlement Payments pursuant to the schedule in the Note, or this Agreement and Release, or otherwise materially breaches the terms of the Note or this Agreement and Release that either party may reinstate this lawsuit.

8. This Agreement is entered into solely for the purpose of settling disputed claims, and shall not be construed as an admission by the defendant of any (a) liability or wrongdoing; (b) violation of any statute, law regulation, collective bargaining agreement or declaration of trust; or (c) waiver of defenses as to those matters within the scope of this Agreement. It is understood that defendant denies engaging in unlawful conduct, and this Agreement does not constitute an admission by defendant of any violation of any law, regulation, collective bargaining agreement or declaration of trust.

9. This Agreement and the Note constitute the entire Agreement between the Parties concerning the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements, if any, between the Parties relating to the subject matter hereof. This Agreement may be amended only by a written document signed by an authorized representative of the Funds and Francis.

10. Each of the undersigned has read this Settlement Agreement and Release, understands its contents, has had the opportunity to and did negotiate over the terms of this Agreement, and is authorized to sign same on behalf of the entity indicated below.

11. Each party signing this Agreement represents to the other party that it has the authority to release the claims, demands and causes of action which are purported to be released herein and note of said claims, demands or causes of action has been previously assigned to or is owned by any other person or entity.

12. Francis may prepay the amounts due in this Settlement Agreement at any time without penalty and without payment of the precalculated Note interest which has not accrued as of the date full payment is made. In the event of such prepayment, the Funds will recalculate the balance owed, so as to deduct all precalculated interest that has not yet accrued as of the date of the prepayment. Francis is responsible for all note interest owed to the Funds as recalculated to reflect the interest due on the date such prepayment is received by the Funds.

13. The Funds may without notice and without releasing liability of any party hereto grant extensions and/or renewals from time to time of any terms in this Settlement Agreement and Release and in the Installment Note. No delay by the Funds in exercising any power or right hereunder and no partial exercise of such power or right shall operate in any way as a waiver of any subsequent exercise thereof. The Funds shall not be prejudiced by gating of an extension or a renewal of any term in this Settlement Agreement.

14. This document may be signed in, separate counterparts which Will have the same effect as if signed on one document the event that any of the provisions of this Agreement are found by a judicial or other tribunal to be unenforceable; the remaining provisions of this Agreement will remain enforceable.

15. The language of all parts of this Agreement Shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties, This Agreement shall be governed and construed in accordance with the laws of the State of Illinois, The Funds will request the United States District Court for the Northern District of Illinois, Eastern Division, to retain jurisdiction to enforce the terms of this Agreement and the Installment Note.

Exhibit 2

INSTALLMENT NOTE

This Installment Note ("Note") is made between the Laborers' Pension Fund ("Pension Fund") and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity ("Health and Welfare Fund" or collectively the "Funds"), the parties of the first part, and Francis, LLC (the "Company"), the party of the second part.

WHEREAS, the Company has at all relevant times been party to a collective bargaining agreement ("CBA") with the Construction and General Laborers' District Council of Chicago and Vicinity, whereunder it is obligated to make certain contributions to the above-named Funds, as well as to the Training Fund, on behalf of its covered employees, and to submit payment of all employee union dues:

WHEREAS, the Company has failed to timely pay certain contributions owed to the Funds for the audit period of May 24, 2010 through October 31, 2010.

WHEREAS, the Company has failed to remit all employee union dues to the Funds, as the designated collection agent for the Construction and General Laborers' District Council of Chicago and Vicinity, for the audit period of May 24, 2010 through October 31, 2010.

WHEREAS, the Company desires to pay all delinquencies owed to the Funds, to pay all union dues owed to the Construction and General Laborers' District Council of Chicago and Vicinity, together with liquidated damages, and interest, as set forth below and further desires to remain current in its obligation to pay contributions to the Funds.

THE PARTIES HEREBY AGREE as follows:

1. The Company will pay $13, 630.25 to the Health and Welfare Fund (comprised of $6, 409.89, in delinquent contributions, $1, 281.98 in liquidated damages, $2, 562.50 in attorneys fees and costs, $300.00 in audit costs and $3.075.88 in interest) (based on an interest rate of 12%). The Company will also pay $11, 542.90 to the Pension Fund (comprised of $5, 167.71 in delinquent contributions, $1.033.54 in liquidated damages, $2, 562.50 in attorneys fees and costs, $300.00 in audit costs and $2, 479.15 in interest). All of these amounts shall be paid according to the schedule described below in paragraph 5.
2. The Company will also pay $360.33 to the Training Fund (comprised of $271.35 in delinquent contributions, $54.27 in liquidated damages and $34.71 in interest), $59.23 to the CAICA Fund (comprised of $48.24 in delinquent contributions, $4.82 in liquidated damages and $6.17 in interest), $51.82 to the LECET Fund (comprised of $42.21 in delinquent contributions, $4.22 in liquidated damages and $5.39 in interest), $88.85 to the LDCMC Fund (comprised of $72.36 in delinquent contributions, $7.24 in liquidated damages and $9.25 in interest and $642.07 in union dues (comprised of $583.70 in delinquent contributions and $58.37 in liquidated damages). These delinquent amounts totaling $1, 202.30 shall be paid out of the $500.00 per month payments unfit exhausted. (See paragraph 5)
3. The Company will also pay the Funds or the sum of $5.125.00 representing attorney fees and costs incurred by the Funds in Case No. 11CO3884. This amount is split equally between Welfare and Pension as described in paragraph 1 above.
4. The Company will also pay the Funds the sum of $600.00 in audit costs. This amount split equally between Welfare and Pension as described in paragraph 1 above,
5. The total payments equal 52.75 (2.4 plus 50.35). The first 2.4 payments will payoff the $1, 202.30 in paragraph 2, For 50.35 consecutive months commencing on March 1, 2012 and ending on June 11, 2016, the Company will pay $270.73 per month to the Health and Welfare Fund and $229.27 per month to the Pension Fund.
6. The Company will remit all payments to the Funds' Administrative Offices, which are located at 11465 Cermak Road, Westchester, Illinois 60154,
7. The Company understands and agrees that this Installment Note is based on reports submitted by the Company to the Funds and that the Funds reserve the right to conduct an audit, in accordance with the terms of the collective bargaining agreement and the Funds' respective Agreements and Declarations of Trust, to determine benefit contribution compliance for the time period covered herein and further reserve the right to collect any unpaid contributions, union dues, interest, liquidated damages, and audit costs as shown on said audit.
8. Payments made pursuant to this Installment Note shall he considered "contributions" as defined under the terms of the CBA, and the Fund's respective Agreements and Declarations of Trust. If the contributions are not paid by the 10th day following the date on which payment should have been received, the contribution shall be considered delinquent and all charges which apply to the late payment of contributions under the terms of the CBA, and the Fund's respective agreements and Declarations of Trust shall apply, including, bat not limited to, the assessment of interest and liquidated damages. Further, in the event the Company fails to timely make any payments described in this Note. All amounts deseribed in paragraph I herein shall immediately become due on the 10th day following the date on which payment should have been received by the Fund's under the terms of this Note. In such event the Company further agrees to pay all attorney fees and costs incurred by the Funds in any action to enforce any part or this entire Note.
9. This Installment Note is conditioned on the Company's staying current on its obligations to the Funds under the terms of the collective bargaining agreement and the Funds' respective Agreements and Declarations of Trust. In the event that the Company fails to maintain its obligations under the terms of the collective bargaining agreement and the Funds respective Agreements and Declarations of Trust, including, but no limited to, its obligations to submit timely contribution reports and to make timely contribution payments by the tenth day following the month in which laborers' work was performed, then the ids shag have the right to accelerate and collect all amounts due under this Installment Note, plus payment of all attorneys' fees and costs incurred by the Ponds in any action to accelerate this Installment Note and less any pre-calculated Interest not yet accrued at the time of such default.
10. The Company further agrees that it will maintain its self-insured status with the Funds who currently held a $5, 000 cheek in lieu of a surety bond to insure the payment of wages and benefit contributions as required under the terms of the CBA.
11. The Company shall have the right to prepay the entire amount due under the Note prior to the date upon which payment is due without penalty and without payment or any precalculated Note interest that has not accrued as of the date full payment has been made.

Exhibit 3

James Fosco being first duly sworn on oath, deposes and states as follows:

1. I am a Representative of the Field Department, employed by the Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (the "Funds"), the plaintiffs in the above referenced action. My responsibilities include oversight of the collection of amounts owed by Francis, LLC (the "Company"). This affidavit is submitted in support of the Laborers' Funds' Motion To Reinstate This Cause Consistent With The Settlement Agreement And To Compel Reporting Information.

2. The Company has been a signatory employer at least since May 24, 2010 as reflected by the Funds' records and as shown in the collective bargaining agreement that was attached to the Complaint, and is a true and correct copy of the agreement between the Company and the Construction and General Laborers' District Council of Chicago and Vicinity and its affiliated local ("Union"), on file with the Funds.

3. On or about February 21, 2011, the Funds and the Company (collectively hereinafter the "parties") signed a Settlement Agreement and Release (the "Agreement") and an Installment Note to resolve the above captioned case and covering an audited period of May 24, 2010 through October 31, 2010 and an as yet unaudited period of November 1, 2010 through January 31, 2012.

4. The parties also signed a stipulated dismissal, consenting that this Court retain jurisdiction for the duration of the Company's note payments pursuant to the Agreement and the Installment Note for the purpose of enforcing the Agreement and Installment Note.

5. Since January 1, 2013, the Company has failed to submit any of its note payments, and to date $21, 375.45 remains due to the Funds pursuant to the Agreement and the Installment Note.

6. The Company has also failed to submit its monthly reports and payments to the Funds for February 2013 and March 2013, and has failed to submit its monthly reports and payments to the Dues Funds for April 2011, December 2011, January 2012, February 2012, and April 2012 to the present.

7. The respective Agreements and Declarations of Trust of the Laborers Funds, to which the Company is bound, require payment of liquidated damages in the amount of 20 percent of any delinquent principal contributions to the Welfare, Pension, and Training funds, The same agreements establish that liquidated damages are due in the amount of 10 percent of the principal amount of delinquent contributions to the LDCLMCC, CAICA and LECET funds, and for Union

8. To establish the amounts that Francis LLC owes to the Funds for its unreported principal contributions, Union dues, liquidated damages and accumulated interest, the Funds may require the Company to submit to a compliance audit, covering the unaudited period from November 1, 2010 through the present, pursuant to the Company's obligations under its collective bargaining agreement with the Union and the respective Agreements and Declarations of Trust of the Laborers Funds.

9. The Company is further obligated to pay the Funds for the costs associated with a compliance audit, as well as all reasonable attorneys' fees and court costs incurred by the Funds to enforce the Settlement Agreement and Release and Installment Note.

10. As required by Article IX, paragraph 1 of the collective bargaining agreement, all employers are required to procure, carry and maintain a surety bond in an amount that is satisfactory to the Union. This surety bond must be in excess of $5, 000.00 to guarantee the payment of wages, Pension and Welfare Trust Contributions during the term of the Agreement. The Company must show proof of maintaining a surety bond as required by the contract.

Exhibit 4

Sara Stewart Schumann, being first duly sworn on oath, deposes and states as follows:

1. I am an associate attorney at the law firm of Allison, Slutsky & Kennedy, P.C., counsel for plaintiffs Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (the "Funds") in the action against Francis, LLC (the "Company"). This affidavit is submitted to document attorneys' fees and costs incurred by the Laborers' Funds, in its efforts to enforce the Parties' Settlement Agreement and collect on defendant's Installment Note delinquency, covering work performed from the date of defendant's breach on January 11, 2013 through the present.

2. Since January 11, 2013, this firm has billed the Laborers' Funds on an hourly basis for collection services rendered to the Funds, at a rate of $200.00 per hour for shareholders, $175.00 per hour for associates, and $100.00 per hour for clerks/paralegals. In this cause records kept for legal work on this matter were kept contemporaneously and are attached hereto as Exhibit 4A.

3. This fee report is attached here to as Exhibit 4A and sets forth the time expended from January 11, 2013 through the present, by the firm's attorneys and paralegals in this matter. The billable entries were reviewed, and any duplicate entries were struck. As set forth in Exhibit 4A, the Funds have incurred legal fees to my firm in this matter in the amount of $5, 822.50.


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