United States District Court, N.D. Illinois, Eastern Division
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND; and ARTHUR H. BUNTE, JR., as Trustee, Plaintiffs,
SIDNEY INSULATION, INC., a Missouri corporation, Defendant.
MEMORANDUM OPINION AND ORDER
I. Shadur Senior United States District Judge
Insulation, Inc. ("Sidney Insulation") is an
insulation contractor in the St. Louis area owned by majority
shareholder Sarah Sidney ("Sarah") and her minority
shareholder siblings Kevin Sidney ("Kevin") and
Patrick Sidney ("Patrick"). Their father David
Sidney had owned a successful insulation company, Flexo
Supply Company, Inc. d/b/a Stovey Company Division
("Stovey"), until it went out of business in 2011.
action stems from Stovey's withdrawal from the Central
States Pension Fund ("Pension Fund") on November 27,
2011 and its resulting withdrawal liability of $639, 495.41
as determined under 29 U.S.C. § 1381(b), part of the
Employee Retirement Income Security Act of 1974
("ERISA") (P. St. ¶ 5).
April 30, 2013 this Court's colleague Honorable Matthew
Kennelly entered judgment in favor of Pension Fund and
against Stovey in the amount of $787, 967.48 (P. St. ¶
6). Because Stovey has not paid and cannot pay that
withdrawal liability, Pension Fund brought this action to
enforce that judgment against Sidney Insulation as a claimed
successor to Stovey. That has generated cross-motions for
summary judgment, and with those motions now fully briefed
they are ripe for decision.
Rule 56 movant bears the burden of establishing the absence
of any genuine issue of material fact (Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose
courts consider evidentiary records in the light most
favorable to nonmovants and draw all reasonable inferences in
their favor (Lesch v. Crown Cork & Seal Co., 282
F.3d 467, 471 (7th Cir. 2002)). Courts "may not make
credibility determinations, weigh the evidence, or decide
which inferences to draw from the facts" in resolving
motions for summary judgment (Payne v. Pauley, 337
F.3d 767, 770 (7th Cir. 2003)). But a nonmovant must produce
more than "a mere scintilla of evidence" to support
the position that a genuine issue of material fact exists
(Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir.
2008)) and "must come forward with specific facts
demonstrating that there is a genuine issue for trial"
(id.). Ultimately summary judgment is warranted only
if a reasonable jury could not return a verdict for the
nonmovant (Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986)).
is a potential added complexity where, as here, cross-motions
for summary judgment are presented. Because the court must
then adopt a dual perspective that this Court has often
referred to as Janus-like, it must credit the nonmovant's
version of any disputed facts as to each motion, and that
could on occasion lead to the denial of both motions.
Fortunately that is not the case here, for the undisputed
facts readily suffice to cause Pension Fund's motion to
was formed in 1922 (D. St. ¶ 7), and David Sidney took
over the company from his father in 1981 (D. Dep. 6:13-15).
Its business comprised two operations: It ran a supply house
where it sold insulation materials to insulation contractors,
and it provided insulation installation services as a
subcontractor to mechanical contractors on commercial
building projects (D. St. ¶ 8). Stovey's obligations
to Pension Fund arose under collective bargaining agreements
with Teamsters' Local Union No. 862 ("Local
862")(P. St. ¶ 4), agreements that David Sidney
Dated: behalf of Stovey (P. St. ¶ 11).
in the 2000s Stovey ran into financial trouble when it was
routinely named as a defendant in a national wave of asbestos
liability lawsuits (D. St. ¶ 18). When the company's
liability insurance ran out, Stovey found itself unable to
secure bonds for new insulation projects (id.). From
about 2006 to 2010 Stovey's annual income shrank from
$1.5 million to $22, 908 (P. St. ¶ 23). Although Stovey
ceased contracting about 2007 or 2008, it continued to
operate its supply house business until 2011 (D. St. ¶
19). Then in November 2011 Stovey terminated its sole
warehouse employee and ceased making contribution payments to
Pension Fund (D. St. ¶ 19). David Sidney was
Stovey's sole shareholder at the time of its withdrawal
from Pension Fund (P. St. ¶ 8).
often the case in family-owned businesses, David's
children worked for the company at various points throughout
its existence. Sarah worked at Stovey during the 1990s (D.
St. ¶ 11), after which she moved to various other cities
to pursue educational and career opportunities until she
returned in 2002 to work at Stovey again, acting in a
clerical position (D. St. ¶ 11, 12).
should be acknowledged at this point that there is an area of
the factual background on which the litigants part company:
the roles that Sarah played over the years vis-a-vis both
Stovey and Sidney Insulation. For their part defendants
insist that Sarah was never an officer of Stovey, nor did she
hold any position as a director or manager (D. Resp. P. St.
¶ 19)), nor did she handle payroll (D. St. ¶¶
11, 12), while for its part Pension Fund asserts that Sarah
served as a Stovey board member in 2004 and as an officer in
2004 and 2005 (P. St. ¶ 24 (d)). Notably, Sarah is
referred to as an officer of Stovey in its 2004 and 2005 tax
returns (P. Ex. H at 30) and as an officer and member of
Stovey's board of directors in its 2004 filings with the
Missouri Secretary of State (D. Dep. Ex. A). Pension Fund
claims (1) that Stovey's accountant had erroneously
listed Sarah as an officer and director in 2004 and (2) that
in actuality Sarah would have been prohibited by law from
being an officer or director of Stovey while owning a WBE
"at the same time" (D. Resp. P. St. ¶
lest those differences impermissibly pre-signal the defeat of
either or both summary judgment motions even before this
opinion turns to the relevant legal analysis, a brief preview
of a critical aspect of that analysis -- though normally out
of place in the section of an opinion labeled Factual
Background -- is in order. Remember first that the
universally stated test of a Rule 56 motion is its showing of
the absence of any "genuine issue as to any material
fact" (Colotex Corp., 477 U.S. at 322-23). And
for that purpose the universally stated definition of a
"material fact" is set out in the seminal
opinion in Anderson, 477 U.S. at 248:
As to materiality, the substantive law will identify which
facts are material. Only disputes over facts that might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.
as the ensuing section of this opinion -- that labeled
Sidney Insulation's Successor Liability -- will
demonstrate in spades, the parties' just-described
differences are not "material" --not even
potentially outcome-determinative. And that being so, the
later legal analysis can proceed apace to decide whether
summary judgment may properly be granted.
return to the factual background as such, it is undisputed
that in 2004 Sarah incorporated Sidney Insulation, a company
whose primary business is also insulation, as its sole
shareholder (D. Resp. Mem. 4). Sarah applied for but was
denied certification as a WBE in 2004 (S. Dep. 35:7-13). One
year later she applied again and received such certification
(id.), which conferred special status under Missouri
law in competing for bids (D. St. ¶ 13). From 2006 to
2010 Sidney Insulation's annual income grew from $539,
703 to $1.2 million (P. St. ¶ 23).
Insulation and Stovey are both in the business of installing
insulation, though Sidney Insulation asserts that its target
market was quite distinct from Stovey's because it worked
on much smaller scale projects, including
"setasides" for minority-owned businesses (D. St.
¶ 13). But documents from Enterprise Bank also listed a
casino, Washington University and a township as some of
Sidney Insulation's contracts in 2007 (P. St. Ex. G at
and 2008 Sidney Insulation purchased from Stovey some
vehicles and a host of equipment needed to construct and
install insulation (P. St. ¶¶ 10, 11, 26). At one
point Stovey also supplied insulation to Sidney Insulation,
among other users (P. St. ¶ 28). When Stovey started
sourcing its insulation from third parties, Sidney Insulation
began buying insulation from those same suppliers
Insulation and Stovey ran at least part of their operations
out of the same warehouse space at 5701 Manchester Road in
St. Louis (P. St. ¶ 22). For official purposes, however,
Sidney Insulation listed its business address at Sarah's
personal residence in Webster Grove, Missouri (id.).
In 2007 Stovey sold the Manchester Road building to DMC, LLC,
which is owned in equal shares by Sarah, Kevin, Patrick and
Megan Minnear, David Sidney's daughter-in-law (D. St.
¶ 28). DMC leased the building to Sidney Insulation, and
then Sidney Insulation subleased part of the building back to
Stovey (P. St. ¶ 22). As Stovey needed less
space for its operations, Sidney Insulation expanded
(id.). Although Sidney Insulation listed its address
as 130 Roseacre Lane (Sarah's residential address) on its
report filed with the Missouri Secretary of State, Enterprise
Bank notes on its loan documents that Sidney Insulation
operates out of the Manchester Road address (P. St. Ex. G at
started Sidney Insulation with money she had from an
inheritance as well as a personal loan from David Sidney (D.
St. ¶ 13). In the latter part of 2008 Sidney Insulation
received a line of credit from Commerce Bank that was
cross-collateralized with Stovey and personally guaranteed by
both Sarah and David (P. St. ¶ 25). Pension Fund also
provides documentation showing that on July 2, 2007, Sidney
Insulation received a line of credit from Enterprise Bank and
Trust in the amount of $210, 000, the stated ...