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Lauer v. Fortune Management, Inc.

United States District Court, N.D. Indiana, Hammond Division

May 14, 2015

Michael Lauer, Board of Trustees Chairman, and William Nix, Board of Trustees Secretary, on behalf of the INDIANA STATE COUNCIL OF CARPENTERS PENSION FUND; et al., Plaintiffs,
v.
FORTUNE MANAGEMENT, INC. and SCOTT A. PITCHER, Defendants.

OPINION AND ORDER

ANDREW P. RODOVICH, Magistrate Judge.

This matter is before the court on the Motion for Summary Judgment Against Defendant Fortune Management, Inc., Only [DE 25] filed by the plaintiffs, Michael Lauer, Board of Trustees Chairman, and William Nix, Board of Trustees Secretary, on behalf of the Indiana State Council of Carpenters Pension Fund, et al., on November 24, 2014, and the Motion for Summary Judgment [DE 27] filed by the defendant, Fortune Management, Inc., on November 24, 2014. For the following reasons, the Motion for Summary Judgment Against Defendant Fortune Management, Inc., Only [DE 25] filed by the plaintiffs is GRANTED, and the Motion for Summary Judgment [DE 27] filed by Fortune is DENIED.

Background

The plaintiffs, Indiana State Council of Carpenters Pension Fund, Indiana/Kentucky/Ohio Defined Contribution Pension Trust Fund, Indiana/Kentucky/Ohio Regional Council of Carpenters Welfare Fund, Indiana Carpenters Apprenticeship Fund and Journeyman Upgrade Program, and United Brotherhood of Carpenters Apprenticeship Training Fund of North America (collectively funds), were multiemployer employee benefits funds that received contributions from employers pursuant to collective bargaining agreements. The parties have agreed that the funds were created subject to the Employee Retirement Income Security Act. The plaintiff, Indiana/Kentucky/Ohio Regional Council of Carpenters (IKORCC), was a labor organization that operated in the State of Indiana. The parties have agreed that IKORCC qualified as a Union subject to the Labor-Management Relations Act.

The defendant, Fortune Management, Inc., was a construction company that operated throughout the State of Indiana. On February 23, 2001, Scott Pitcher, President of Fortune, executed a Memorandum of Agreement between Fortune and IKORCC in Howard County, Indiana. On June 23, 2003, David Schneider, Fortune's Construction Manager, executed a Memorandum of Agreement between Fortune and IKORCC in Lawrenceburg, Indiana. Through the MOAs, Fortune agreed to be bound by the funds' current and future CBAs.

Specifically, each MOA stated that Fortune "agree[d] to be bound by all of the terms and conditions thereof for the duration of such Collective Bargaining Agreements and any future Agreements and for the period of any subsequent extensions including any amendments which may be subsequently made." The MOAs also included language to terminate the adopted CBA and required the desiring party to "notify the other in writing at least sixty (60) days and not more than ninety (90) days prior to the expiration of the commercial Collective Bargaining Agreement...." The funds have had CBAs in effect from the time Fortune signed the MOAs through the present year. Every CBA expired on May 31st, which would require notification for termination between March 2nd and April 1st in the expiring year.

The CBAs set Fortune's pay rate, contribution, and deduction amounts based on a set pay scale for each specialized position. Additionally, they required Fortune to make contributions and deductions to the funds based on the amount of work performed and covered by the CBAs. The parties have agreed that Fortune was required to make payments for work performed by IKORCC members.

After signing the MOAs, Randy Sutton, an IKORCC Field Representative, would visit Fortune job sites to identify any violations of the MOAs or the CBA. In 2001, after discussions with Sutton, Pitcher had the impression that Fortune was not subject to the MOA or CBA if it did not employ IKORCC members. In 2004, Fortune completed a project with IKORCC members. In its Summary Judgment Brief [DE 28], Fortune claimed that it did not employ any IKORCC members or make any contributions or payments to the funds after completing that project in 2004. It also claimed that Sutton continued to visit Fortune job sites from 2004 through 2012, that Pitcher informed Sutton that Fortune intended to remain non-union, and that the funds and IKORCC did not enforce the terms of the MOAs or CBA from 2004 through 2012. Additionally, Fortune alleged that neither the funds nor IKORCC audited Fortune from 2004 through 2012.

The funds and IKORCC disputed many of Fortune's above allegations. First, they indicated that Fortune made payments through January 2009 rather than 2004. Additionally, they noted that Fortune submitted its monthly reporting forms through June 2012, although the reports from February 2009 through June 2012 stated that Fortune had no union employees. Their payroll auditor found that Fortune employed carpenters in 2009 from March through December, in 2010 in January and March through December, in 2011 from February through December, and in 2012 from January through June.

The funds and IKORCC also submitted an affidavit from Sutton that disputes Pitcher's affidavit about their conversations. Sutton stated that he did not have authority to modify a CBA and did not modify any CBAs with Fortune, Pitcher, or another signatory contractor. He also denied telling Pitcher that Fortune was not obligated to make contributions when it did not employ IKORCC members. Rather, he informed Pitcher that Fortune needed to make contributions for all employees performing bargaining unit work, but not for employees who did not perform bargaining unit work. Additionally, Sutton indicated that he complained to Fortune whenever he learned that it did not pay the contractually required wages and fringe benefits.

Arlene David, a payroll auditor at Stewart C. Miller &Co., stated that her company audited Fortune's books and records on March 10, 2006. She indicated that her contact person at Fortune was Karen Browder. Sutton also recalled that Pitcher complained about an audit in 2005 or 2006. In its Reply Brief, Fortune admitted that it incorrectly asserted that it stopped paying contributions after 2004. It attributed that mistake to difficulties gathering information after losing documents during its 2006 relocation and an unrecoverable computer system failure.

In 2012, the funds' payroll auditor calculated Fortune's delinquent contributions and deductions, interest and audit fees, and 10% liquidated damages at $285, 804.87. Specifically, they determined that Fortune owed:

(a) $12, 099.04 in contributions, interest, audit fees and costs; $53.15 in deductions and interest; and liquidated damages for the period of January 1, 2009 through June 30, 2012 for the IKORCC Central Zone 1;
(b) $21, 642.47 in contributions, interest, audit fees and costs; $1, 200.92 in deductions and interest; and liquidated damages for the period of January 1, 2009 through June 30, 2012 for the IKORCC Central Zone 3;
(c) $235, 710.31 in contributions, interest, audit fees and costs; $11, 784.12 in deductions and interest; and liquidated damages for the period of January 1, 2009 through June ...

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