United States District Court, S.D. Indiana, Indianapolis Division
MARK MCGRIFF and WILLIAM NIX, Trustees, on behalf of INDIANA STATE COUNCIL OF CARPENTERS PENSION FUND, Plaintiffs,
SCHENKEL & SONS, INC., and SCHENKEL CONSTRUCTION, INC., Defendants.
ENTRY ON DEFENDANT'S MOTION TO DISMISS AND
REQUEST FOR ATTORNEYS' FEES
WALTON PRATT, JUDGE United States District Court
matter is before the Court on a Motion to Dismiss and Request
for Attorneys' Fees filed by Defendant Schenkel &
Sons, Inc. (“Schenkel”) (Filing No. 42).
Plaintiffs Mark McGriff and William Nix, Trustees of the
Indiana State Council of Carpenters Pension Fund (“the
Fund”), brought this action on behalf of the Fund to
collect interim withdrawal liability payments from Schenkel
and co-defendant Schenkel Construction, Inc. (“Schenkel
Construction”). Following the Indiana/Kentucky/Ohio
Regional Council of Carpenters and its predecessors
(“the Union”) unilateral termination of the
collective bargaining agreement between the Union and
Schenkel, the Fund demanded withdrawal liability payments
from Schenkel. When Schenkel disputed its withdrawal
liability, the Fund initiated this litigation for interim
withdrawal liability payments. Schenkel initiated arbitration
between the parties, and after the arbitration resolved the
withdrawal liability dispute, Schenkel moved for dismissal of
this action for interim withdrawal liability payments. For
the following reasons, the Court grants the
Motion to Dismiss but denies the request for
Fund is a multiemployer pension plan under the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), 29 U.S.C. § 1001, et
seq., which is administered in Indianapolis, Indiana.
Plaintiffs Mark McGriff and William Nix are Trustees of the
Fund and may initiate litigation as fiduciaries on behalf of
the Fund under ERISA.
is a family-owned and operated Indiana corporation based in
Fort Wayne, Indiana, which was engaged in the building and
construction industry when it participated in the Fund. In
2012, Schenkel began to cease its operations and wind up its
business. On January 1, 2014, Schenkel officially ceased all
operations. Schenkel Construction also is an Indiana
corporation based in Fort Wayne, Indiana. It is engaged in
the building and construction industry.
participated in the Fund pursuant to collective bargaining
agreements with the Union, which consisted of local unions of
the Indiana/Kentucky/Ohio Regional Council of Carpenters and
its predecessors. Schenkel and the Union most recently
entered into a collective bargaining agreement in 2012, and
the term of the agreement is March 13, 2012 through May 31,
2017 (Filing No. 43-2 at 29). Schenkel was considered an
“employer” under ERISA, and the collective
bargaining agreement between Schenkel and the Union required
Schenkel to pay contributions to the Fund on behalf of
bargaining unit employees working in the construction
industry (Filing No. 43-2 at 23-24). Schenkel last
contributed to the Fund in December 2013 (Filing No. 1 at 3).
February 2014, during the term of the current collective
bargaining agreement, the Union sent a notice through its
counsel that it was unilaterally terminating the collective
bargaining agreement then in effect with Schenkel. The Union
terminated the agreement and indicated that it had no
interest in entering into further collective bargaining
agreements with Schenkel (Filing No. 43-2 at 32). Based on
the termination of the collective bargaining agreement, in
May 2014, the Fund determined that Schenkel completely
withdrew from the Fund for the plan year ending March 31,
2014, and thus, according to the Fund, Schenkel became liable
for withdrawal liability payments. On May 7, 2014, the Fund
notified Schenkel that it had been assessed a withdrawal
liability of more than $1.8 million (Filing No. 43-2
at 36). In the Fund's letter, it demanded that Schenkel
make its first quarterly payment by June 1, 2014.
did not pay any withdrawal liability payments by June 1,
2014. In response to Schenkel's inaction, the Fund sent
another letter to Schenkel dated June 23, 2014. In this
letter, the Fund demanded payment of the June 1, 2014
quarterly installment plus interest.
August 4, 2014, Schenkel formally requested a review of the
Fund's withdrawal liability assessment. Schenkel disputed
any withdrawal liability. It noted that it was no longer in
business, was not a viable company, and possessed no assets.
It asserted that it was protected by the “construction
industry exception” under ERISA because it was no
longer operating in the construction industry. Schenkel also
denied that it was obligated to make any interim payments
(Filing No. 34-2 at 2).
October 24, 2014, the Fund initiated this lawsuit against
Schenkel and Schenkel Construction. The Fund brought the
litigation under ERISA, asserting that Schenkel was liable to
make interim withdrawal liability payments while the parties
disputed the final withdrawal liability. Schenkel
Construction was included as a defendant in the case because
the Fund asserted that Schenkel Construction was the alter
ego of Schenkel or a continuation of the same company, just
under a new name.
November 19, 2014, the Fund responded to Schenkel's
request for review, asserting that there was no basis to
modify the Fund's prior assessment for complete
withdrawal liability in the amount of more than $1.8 million
(Filing No. 34-3 at 2).
to its rights under ERISA, on December 18, 2014, Schenkel
initiated arbitration to resolve the parties' dispute
regarding Schenkel's withdrawal liability. In its notice
initiating arbitration, Schenkel again raised the
construction industry exception to dispute withdrawal
liability, and it also asserted that it fell within
ERISA's exception to the requirement of “pay now,
dispute later” because the Fund's claim was
frivolous, and making Schenkel pay interim payments during
the pendency of the dispute would cause irreparable harm
(Filing No. 34-4 at 2).
and Schenkel Construction answered the Fund's Complaint
on January 9, 2015, denying any liability, asserting that
Schenkel had not experienced a complete withdrawal, noting
that the Fund could not unilaterally terminate the collective
bargaining agreement, and explaining that Schenkel
Construction was not the alter ego of Schenkel.
after filing their Answers, Schenkel and Schenkel
Construction filed a motion with the Court to stay the
litigation pending the outcome of the ongoing arbitration
(Filing No. 33). On March 13, 2015, the motion to stay was
granted in part and denied in part, allowing the claim
against Schenkel to proceed but staying the litigation
against Schenkel Construction. The Court determined that ...