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Board of Trustees of Carpenters Fringe Benefit Funds of Illinois By Ambrose v. Southside Concrete, Inc.

United States District Court, Northern District of Iowa, Eastern Division

November 6, 2014

THE BOARD OF TRUSTEES OF CARPENTERS FRINGE BENEFIT FUNDS OF ILLINOIS by ANGELICA B. AMBROSE, ADMINISTRATIVE MANAGER, Plaintiff,
v.
SOUTHSIDE CONCRETE, INC., Defendant

For Carpenters Fringe Benefit Funds of Illinois, The Board of Trustees by Angelica B Ambrose, Administrative Manager, Plaintiff: Timothy Michl Feeney, LEAD ATTORNEY, McCarthy, Callas & Feeney, P.C., Rock Island, IL; Michael W Halpin, PRO HAC VICE, McCarthy, Callas & Feeney, PC, Rock Island, IL.

For Southside Concrete, Inc, Defendant: Francis William Henkels, LEAD ATTORNEY, Henkels Law Office, Dubuque, IA.

RULING

JON STUART SCOLES, CHIEF UNITED STATES MAGISTRATE JUDGE.

TABLE OF CONTENTS

I. INTRODUCTION

II. PROCEDURAL HISTORY

III. RELEVANT FACTS

A. The Parties

B. Custom Concrete Designs, Inc.

C. Southside Concrete, Inc.

D. First Lawsuit

E. Contributions to the Funds

F. Compliance Examination

IV. DISCUSSION

A. Is Southside the Alter Ego of Custom?

B. What Amount is Owed By Custom?

V. RULING

I. INTRODUCTION

On the 21st day of July 2014, this matter came on for trial on the Complaint (docket number 1) filed by the Plaintiff on May 13, 2013. The Plaintiff Board of Trustees was represented by its attorneys, Michael W. Halpin and Timothy M. Feeney. Defendant Southside Concrete, Inc. was represented by its Vice-President, Scott McAtee, and its attorney, Francis Wm. Henkels.

II. PROCEDURAL HISTORY

On May 13, 2013, the Board of Trustees of Carpenters Fringe Benefit Funds of Illinois, acting by its Administrative Manager, Angelica B. Ambrose, filed a complaint against Southside Concrete, Inc., seeking judgment for amounts owed to the Funds by Custom Concrete Designs, Inc., plus interest, attorney fees, and costs. Southside Concrete filed an answer on July 29, denying that it has any responsibility for amounts owed by Custom Concrete, and asking that the case be dismissed.

On October 3, 2013, the case was referred to me for the conduct of all further proceedings and the entry of judgment, in accordance with 28 U.S.C. § 636(c) and the consent of the parties. After consulting with counsel, a non-jury trial was scheduled for July 21, 2014. With the Court's permission, Plaintiff filed a post-trial brief on August 25, Defendant filed a post-trial brief on September 29, and Plaintiff filed a reply brief on October 14.

III. RELEVANT FACTS

A. The Parties

Plaintiff Carpenters Fringe Benefits Funds (" the Funds") includes the Carpenters Pension Fund of Illinois and the Carpenters Retirement Savings Fund of Illinois. The Funds receive contributions from numerous employers pursuant to Collective Bargaining Agreements (" CBAs") between the employers and the Carpenters local unions. It constitutes a " multiemployer plan, " as defined in 29 U.S.C. § 1002(37)(A).

Non-party Custom Concrete Designs, Inc. (" Custom") entered into a CBA that required it to pay monthly fringe benefit contributions to the Funds. The CBA also bound Custom to the provisions of the " Agreement and Declarations of Trust, " which created the Funds. From September 10, 2001, to September 2010 -- when it stopped doing business -- Custom was an Iowa corporation engaged in the business of concrete construction.[1] Custom was solely owned by Scott McAtee and his wife, Jeni McAtee. Jeni McAtee held the title of President, and Scott McAtee held the title of Vice-President.

Defendant Southside Concrete, Inc. (" Southside") was incorporated on September 7, 2010. Southside, which is solely owned by Scott McAtee and Jeni McAtee, is also engaged in the business of concrete construction. Jeni McAtee is President of Southside and Scott McAtee is Vice-President.

B. Custom Concrete Designs, Inc .

Scott McAtee testified that when Custom was started in 2001, McAtee intended to perform primarily decorative concrete work. McAtee discovered that there was not enough work in that area to sustain a business, however, and he expanded into commercial work. Eventually, Custom specialized in " big commercial work, " such as strip malls and multi-story buildings. When it ceased doing business in 2010, Custom was devoting 90% of its time to commercial work, 15 % to decorative work, and 5 % to residential (apparently " giving 110%"). At its maximum, Custom had 15 to 20 employees.

With the exception of summer help, Custom's employees were members of the Carpenters Union and the Laborers Union. Scott McAtee himself was a member of the Carpenters Union. Under the terms of the CBAs and Trust Agreements, Custom was required to contribute to the Funds when employees were performing " covered work." McAtee testified that whenever a union member was working, it was considered " covered work." McAtee testified, however, that the non-union employees did not perform " covered work" as defined in the CBAs with the Carpenters Union.

Scott McAtee testified that it was apparent Custom was having financial problems toward the end of 2009 and during 2010. According to McAtee, the economy " turned bad, " there was less work, and competitors were submitting lower bids. Toward the middle or latter part of 2010, McAtee realized that Custom could not survive, and he considered his options so he could " feed my family."

McAtee decided to stop doing business as Custom Concrete Designs, Inc., and start doing business as Southside Concrete, Inc. Kevin Phillips, a journeyman carpenter, testified that McAtee " sat us down" and told them of his intentions. Because Southside was not going to be a " union shop, " Phillips " chose to stay with the union" and find similar work elsewhere. The parties stipulated that if he were called ...


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