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Central States, Southeast and Southwest Areas Pension Fund v. B&M Marine Construction, Inc.

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

January 8, 2018

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and ARTHUR H. BUNTE, JR., as Trustee, Plaintiffs,
v.
B&M MARINE CONSTRUCTION, INC., DIVERSIFIED VENTURES, INC., ROGER WOONTON, ROBERT KENNEDY, GERARD PERRY, and JAMES BRYANT, Defendants.

          MEMORANDUM OPINION AND ORDER

          John Robert Blakey United States District Judge.

         Plaintiffs Central States, Southeast and Southwest Areas Pension Fund and fund trustee Arthur Bunte, Jr., (Plaintiffs, or the Fund) bring this action in connection with an employer's withdrawal from a multiemployer pension plan. [38]. Such withdrawals incur liability under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 29 USC § 1001 et seq. Plaintiffs allege the following claims: (1) ERISA withdrawal liability for Defendant Diversified Ventures, Inc. (Count I); (2) state-law claims for fraudulent transfers against individual defendants Roger Woonton, Robert Kennedy, Gerard Perry, and James Bryant (Count II); (3) a claim under ERISA that defendants Diversified Ventures, Woonton, Kennedy, Perry, and Bryant made transfers to evade or avoid ERISA withdrawal liability (Count III); and (4) successor liability against B&M Marine Construction, Inc. (Count IV). [38]

         Before this Court are motions to dismiss or transfer venue brought by B&M Marine Construction [42] and Robert Kennedy [48]. For the reasons explained below, Defendants' motions are denied.

         I. Background [1]

         A. Prior Judgments

         The Plaintiff pension fund is a multiemployer pension plan within the meaning of ERISA sections 3(37) and 4001(a)(3). [38] ¶ 5; 29 USC §§ 1002(37), 1301(a)(3). The Fund's trustees administer the Fund in Rosemont, Illinois, [38] ¶ 6, within this judicial district. Plaintiffs' suit results from the withdrawal of a Florida corporation, Powermix Industries, from the Fund in 2012. See Id. ¶¶ 17, 24; Cent. States, Se. & Sw. Areas Pension Fund, et al. v. Powermix Indus., Inc., No. 13-cv-6250 (N.D. Ill.Dec. 20, 2013) (Judgment I); Complaint ¶¶ 11-12, Judgment I, No. 13-cv-6250.

         In December 2013, Plaintiffs obtained a judgment against Powermix Industries for its “complete withdrawal” from the Fund on September 9, 2012. See Judgment I; Complaint ¶¶ 11-12, Judgment I, No. 13-cv-6250. The judgment awarded Plaintiffs $1, 179, 689.12 in ERISA withdrawal liability. See Judgment I.

         In November 2014, Plaintiffs obtained a second judgment against Pile & Marine Construction and BK Marine Construction, two Florida corporations under common control with Powermix Industries, and thus jointly and severally liable for Powermix's withdrawal liability. See [38] ¶ 19; Cent. States, Se. & Sw. Areas Pension Fund, et al. v. Pile & Marine Constr., Inc., et al., No. 14-cv-6174 (N.D. Ill. Nov. 14, 2014) (Judgment II). This judgment entitled Plaintiffs to recover Powermix's withdrawal liability from Pile & Marine and BK Marine. Id.

         None of the three Florida corporations against which Plaintiffs obtained judgments-Powermix Industries, BK Marine, and Pile & Marine-have made payments toward the withdrawal liability. [38] ¶ 20.

         B. This Case

         In their present suit, Plaintiffs seek to recover the unpaid withdrawal liability from two additional Florida corporations they allege to be sufficiently related to Powermix Industries to share its withdrawal liability: Diversified Ventures and B&M Marine Construction. Plaintiffs also bring claims against individual defendants for participating in transactions allegedly intended to help Powermix avoid paying its withdrawal liability. [38].

         Plaintiffs allege that, when Powermix Industries withdrew from the Fund in September 2012, Diversified Ventures was part of the group of commonly controlled businesses jointly and severally liable with Powermix. Id. ¶¶ 21-24. Thus, Diversified, Pile & Marine, BK Marine, and Powermix Industries constitute a single employer under ERISA and are jointly and severally liable for Powermix Industries' withdrawal liability. See Id. ¶¶ 24, 47. Plaintiffs call these four companies the “Powermix Controlled Group.” Id.

         In July 2012-three months before Powermix Industries withdrew from the Fund-Plaintiffs allege that Defendant B&M Marine Construction acquired the “assets and operations” of Powermix Industries, Pile & Marine, and BK Marine. Id. ¶ 25. B&M also acquired construction equipment from the Powermix Controlled Group in December 2012 and February 2013. Id. ¶¶ 26, 38. Plaintiff alleges that B&M conducts “the same marine construction operations” previously conducted by the Powermix Controlled Group; operates out of the same commercial property the Group used in Deerfield Beach, Florida; and employs many workers once employed by the Group. Id. ¶¶ 27-29. B&M's four shareholders are the adult sons of two former shareholders of the Powermix Controlled Group who held 50 percent of the Group's shares. See Id. ¶¶ 21-23, 30-32. Finally, two of B&M's shareholders- representing 50 percent of its shares at one time-held overlapping positions as officers in B&M and the Powermix Controlled Group, including at the time of the February 2013 purchase of equipment from the Group. Id. ¶¶ 33-34.

         When Powermix Industries withdrew from the Fund in 2012, Defendant Robert Kennedy owned 25 percent of Pile & Marine and 25 percent of Diversified Ventures. Id. ¶¶ 21-22. At the time, Powermix Industries and BK Marine were wholly-owned subsidiaries of Pile & Marine. Id. ¶ 23. Plaintiffs further allege that Kennedy was a shareholder of Diversified Ventures during the December 2012 and February 2013 sales of equipment from the Powermix Controlled Group-including Diversified-to B&M. Id. ¶¶ 51-54. The proceeds of these sales went to Diversified Ventures “and ultimately to its shareholders, ” including Kennedy. Id. ¶¶ 38, 42, 53-54. Plaintiffs also allege that the Group received a demand for Powermix's withdrawal liability in January 2013, shortly before the February 2013 transfer; that the construction equipment transferred to B&M represented “the essential assets” of the Group's business; and that the transfers began shortly after the Group incurred its withdrawal liability. Id. ¶¶ 35, 54-58. Based upon these events, Plaintiffs allege that Defendant Kennedy participated in transferring equipment to B&M “with actual intent to hinder, delay, or defraud” the Fund, and the principal purpose of evading or avoiding the Group's withdrawal liability. Id. ¶¶ 62-64.

         Plaintiffs initiated this suit in March 2016. [1]. In their original complaint, Plaintiffs named B&M as a defendant based upon its alleged successor liability for Powermix's withdrawal liability. Id. In June 2017, Plaintiffs amended the complaint to add the present defendants and now bring claims for withdrawal liability (Count I), fraudulent transfers (Count II), evading or avoiding ERISA liability (Count III), and successor liability as to B&M (Count IV). [38].

         Before this Court are motions to dismiss or transfer venue brought by B&M Marine Construction [43] and Kennedy [49]. Defendants move to dismiss for lack of personal jurisdiction and improper venue, on the grounds that the ERISA jurisdiction and venue provisions do not apply to Plaintiffs' claims, which are otherwise not properly brought in this district. In the alternative, Defendants seek to transfer venue to the Southern District of Florida. Kennedy also moves to dismiss Count III for failing to state a ...


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