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Painters and Allied Trades v. Rdd Investment Group

September 11, 2012

PAINTERS AND ALLIED TRADES DISTRICT COUNCIL 711 HEALTH & WELFARE, VACATION AND APPRENTICE FUNDS AND HARRY HARCHETTS AS TRUSTEE AND FIDUCIARY FOR DISTRICT COUNCIL 711 HEALTH & WELFARE, VACATION AND APPRENTICE FUNDS, PLAINTIFFS,
v.
RDD INVESTMENT GROUP, LLC, ROBERT SOTTILE, AND DAVID SOTTILE DOING BUSINESS AS SOUTHERN STATE ENTERPRISES, LLC, DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

This is an ERISA action to recover unpaid contributions to health and welfare funds. Presently before the Court is the motion of defendants to dismiss plaintiffs' complaint. For the reasons expressed below, defendants' motion will be granted.

BACKGROUND

Plaintiffs, Painters and Allied Trades District Council 711 Health & Welfare, Vacation and Apprentice Funds ("Funds") and Harry Harchetts, as Trustee and Fiduciary for the Funds,*fn1 are third-party beneficiaries of the collective bargaining agreement ("CBA") between Southern State Enterprises, LLC ("Southern State") and the Union of Painters and Allied Trades, District Council 711 ("Union"). Under the CBA, the Union is required to make contributions to the Funds on behalf of Southern State's employees. When Southern State failed to make the proper contributions, plaintiffs filed suit in this District on December 10, 2008 against Southern State, as well as several other defendants including RDD Investment Group, LLC ("RDD"), the sole member of Southern State, and Robert Sottile and David Sottile, two of the members of RDD.

That case was assigned to this Court, with Civil Action Number 08-6053 (NLH)(JS). During the course of those proceedings, plaintiffs settled the case, and on March 29, 2009, they filed a stipulation of voluntary dismissal, without prejudice and costs against any party. On July 15, 2009, plaintiffs filed a motion to enforce the settlement, enter judgment against Southern State, and order the complaint reinstated against the other defendants. Plaintiffs' motion revealed that plaintiffs had entered a settlement agreement with only Southern State, had agreed to dismiss their claims against the other defendants, and that Southern State later defaulted on the agreement. Because of Southern State's inability to pay, plaintiffs wanted this Court to reinstate their claims against the other defendants on alter ego and veil-piercing theories. Southern State did not necessarily object to the motion because it admitted it had defaulted on the settlement agreement, but the other defendants, including RDD and the Sottiles, did oppose the motion because of plaintiffs' attempts to hold them liable for the unpaid contributions.

On October 9, 2009, the Court denied plaintiffs' motion, finding that it no longer had subject matter jurisdiction. We found that at the time the action was closed the Court did not retain jurisdiction to enforce the terms of the settlement agreement or to hear any other requests relating to the matter. (See 08-6053, Docket No. 11.) The Court noted that plaintiffs' recourse for the defendants' alleged failure to abide by the terms of the settlement agreement would be to file a new action for breach of contract. (See id.)

On November 9, 2009, plaintiffs instituted a new action against Southern State to enforce the terms of the settlement agreement. (See Civil Action Number 09-5707 (RBK)(AMD).) The case was assigned to Judge Robert Kugler, who granted plaintiffs' motion for default judgment when Southern State failed to appear. On April 9, 2010, judgment was entered in plaintiffs' favor in the amount of $96,802.27, and the judgment was indexed.*fn2

On September 28, 2011, plaintiffs filed the instant action against RDD and Robert and David Sottile. Even though the CBA was an agreement between Southern State and the Union, plaintiffs have renewed their previously abandoned claim that RDD and the Sottiles are responsible for the unpaid contributions because Southern State did not abide by corporate formalities. Plaintiffs allege in their complaint that an asset deposition of Daniel Sottile revealed that RDD and Southern State are under common ownership and control and since they are therefore a single company, or "employer" under ERISA, RDD and the Sottiles are also responsible for the delinquent contributions.

Defendants have moved to dismiss plaintiffs' case against them for several reasons. Primarily, defendants contend: (1) that this case is an improper attempt to re-litigate the claims resolved in the prior action, (2) that even if these claims are not barred by res judicata principles, they are barred by ERISA's statute of limitations, and (3) that plaintiffs must pursue any remedies in New Jersey state court for lack of subject matter jurisdiction here, since there is no diversity of citizenship or federal question present. Plaintiffs have opposed defendants' motion.

DISCUSSION

A. Subject Matter Jurisdiction

Plaintiffs' purported basis for jurisdiction over this matter is Section 502 of Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132, and Section 301 of the Labor Management Relations Act (LMRA) 29 U.S.C. § 185.*fn3

B. Standards

A motion to dismiss pursuant to Federal ...


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