United States District Court, C.D. Illinois, Springfield Division
RICHARD MILLS, District Judge.
Pending before the Court is the Plaintiffs' Motion for Summary Judgment.
Plaintiffs Central Laborers' Pension Fund, et al., seek summary judgment against Defendant Demolition Excavating Group, Inc. ("the Defendant" or "DEG") on Counts I and II of the Complaint. Count One seeks liability against DEG as the alter ego of Dem/Ex Group, Inc. ("Demex"), the judgment debtor in Case Number 08-3069. Count II seeks judgment against DEG as the successor of Demex for contributions owed by Demex.
DEG contends that genuine issues of material fact preclude the entry of summary judgment in favor of the Plaintiffs on Counts I and II. The Defendant claims it is entitled to summary judgment.
II. FACTUAL BACKGROUND
Demex is an active Illinois corporation that was incorporated on March 9, 2004. Edward Fisher is the President and Secretary of Demex. He owns 62.5% of the stock in Demex. Demex has been a demolition and excavating contractor which also sells scrap metal. The business address of Demex is 805 Adams Street in Manito, Illinois.
Demex signed several labor agreements that bound the company to pay fringe benefit contributions for employees performing covered work under the agreements. Since June 2005, Demex had submitted contribution report forms, for covered work performed by its employees, to Central Laborers' and a contribution report for May 2011 received by Central Laborers' indicated that Demex was no longer operating. The agreements signed by Demex also bound the company to the terms and provisions of the Restated Trust Agreements of Central Laborers' Pension, Welfare and Annuity Funds, as well as the Trust Agreements of the other Plaintiffs in Case Number 08-3069.
On March 13, 2008, the Plaintiffs filed suit against Demex and Edward Fisher, Individually, for delinquent contributions and to conduct a payroll examination for unknown contributions.
On August 18, 2008, DEG was formed as an Illinois corporation. Illinois Secretary of State records show Rhonda Fisher as the President of DEG. Edward Fisher is married to Rhonda Fisher. Rhonda Fisher is the principal owner of DEG.
The Defendant alleges Rhonda Fisher formed DEG because she desired to own her own company and have authority over its operations. She also hoped to take advantage of incentives for woman-owned businesses. The Plaintiffs dispute the allegations regarding Fisher's reasons for starting DEG. They state she had no previous experience owning or managing a demolition company. Rhonda Fisher had worked as a security officer, bank teller, managing a water and fire restoration company, a cleaning business and had done office work for Demex.
On November 10, 2010, Demex and DEG entered into an Asset Purchase Agreement whereby Demex transferred possession and control of its construction equipment, vehicles and other assets to DEG. At the time of the Asset Purchase Agreement, Rhonda Fisher, as President and Secretary of DEG, signed a Non-Negotiable Promissory Note in which DEG promised to pay Demex $1, 455, 347.00. The Non-Negotiable Promissory Note requires DEG to pay Demex $1, 455, 347.00 on demand, but demand may not be made until or after November 10, 2022. It does not require DEG to pay any interest to Demex. The Non-Negotiable Promissory Note provided that DEG would assume certain debts of Demex including equipment loans, a line of credit, certain accounts payable, and certain other obligations of Demex.
On June 27, 2011, Demex and the Plaintiffs entered into a stipulated judgment in the amount of $330, 816.31 against Demex for past due fringe benefit contributions, liquidated damages, audit costs and attorney's fees. Judgment was entered more than ten months after the formation of DEG.
The Plaintiffs allege that on March 16, 2012, Demex executed notes and loans with Heartland Bank and Trust Company amounting to $352, 382.80. DEG disputes the allegation and states that Plaintiffs offer only three unsigned promissory notes in support of the assertion.
Like Demex, DEG is a contractor whose primary source of revenue is the demolition of buildings and the sale of scrap materials extracted from the demolition sites. DEG's business address is also 805 S. Adams Street, Manito, Illinois 61546. DEG uses, or has used, many of the same workers who had previously been employed by Demex, including: Rhonda Fisher, Edward Fisher, Jeffrey Conklin, Daniel Dawe, Tyler Dawe, Shawn Morris, Seth Rice and Larry Saal. Citing Rhonda Fisher's Affidavit, DEG alleges that some of its employees were formerly employed by Demex but many of DEG's employees were not employed by Demex.
The Plaintiffs allege DEG acquired its equipment, vehicles, and tools of the trade by entering into the Asset Purchase Agreement with Demex. DEG disputes the allegation to the extent that although some of the equipment, vehicles and tools were purchased from Demex, many of DEG's assets are not former Demex assets.
The Plaintiffs allege that, until the related loans are paid, the titles to the equipment, vehicles and tools of the trade that were transferred to DEG pursuant to the Asset Purchase Agreement remain in Demex's name. DEG disputes the allegation and states that title to the equipment and tools sold to DEG by Demex were transferred pursuant to a Bill of Sale executed concurrently with the Asset Purchase Agreement.
The Plaintiffs allege at the time that DEG executed the Asset Purchase Agreement with Demex, DEG's officers knew that Demex owed fringe benefit contributions to the Plaintiffs. Moreover, DEG incorporated for the purpose of avoiding the collective bargaining agreements executed by Demex.
DEG disputes the foregoing assertions and states that the only support offered by the Plaintiffs is DEG's alleged untimely response to their Requests for Admission, which was the subject of DEG's Motion to Withdraw Admissions which the Court allowed. Moreover, Rhonda Fisher claims she had no knowledge of any claim by the Plaintiffs against Demex at the time the Asset Purchase Agreement was executed. Additionally, DEG claims it was incorporated for a number of reasons, none of which were to avoid the collective bargaining agreements involved in this case. In fact, the Defendant contends Rhonda Fisher was not aware of any collective bargaining agreement to which Demex was a signatory at the time she formed DEG. The Plaintiffs dispute this allegation.
Edward Fisher has represented DEG at pre-job meetings and receives contract proposals from prospective customers. Rhonda Fisher had no prior experience as an owner of a demolition company/contractor. Edward Fisher has received checks from DEG totaling $29, 582.64 from January 7, 2011 through March 9, 2012.
DEG contends that none of its shareholders, directors, or officers are shareholders, directors or officers of Demex. The Plaintiffs dispute the allegation and suggest that Edward Fisher, the President of Demex, is an officer of DEG based on the posting of a $15, 000 payment to Edward Fisher categorized as an "Officer Payable." Moreover, the major shareholder and President of Demex is married to the majority shareholder and sole officer of DEG.
DEG asserts Edward Fisher has no authority to act on its behalf. He has no authority to sign checks or any other document on behalf of DEG and DEG does not hold out Edward Fisher as its agent or as a manager. The Plaintiffs dispute the allegation, pointing to an exhibit which shows Edward Fisher was sent a contract proposal for work to be performed at the Decatur Firestone plant. Moreover, they cite an exhibit which is a memorandum to DEG employees under the names of Edward Fisher and Rhonda Fisher.
Edward Fisher is skilled at estimating and bidding on jobs. DEG claims he provides consulting duties in that capacity and provides general advice regarding job-site coordination, but is not an employee. DEG contends any payments it made to Edward Fisher were reimbursements for business expenses he incurred performing consulting duties on behalf of DEG. The Plaintiffs dispute the allegation and claim that DEG's own accounting records classify payments to Edward Fisher as "employee advances" and "officer's payable." Moreover, during Rhonda Fisher's deposition, she was asked why a $5, 000 payment was made to Edward Fisher and she responded, "You'll have to ask him that."
The Defendant alleges DEG is owned by the following three individuals: Rhonda Fisher (76.9%), Steven Fisher (11.55%), and Tyler Dawe (11.55%). The Plaintiffs dispute the allegation and note that Defendant's Answers to Interrogatories initially stated that Rhonda Fisher owned 100% of the stock in DEG.
DEG claims to currently own the assets listed on the Bill of Sale. Several such assets are subject to various bank liens but Demex no longer owns any of the assets. The Plaintiffs dispute the assertion and allege Rhonda Fisher testified that title to vehicles or equipment remains in Demex's name. In addition, the Defendant's ...