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Einhorn v. Dubin Brothers Lumber Co., Inc.

United States District Court, D. New Jersey

July 16, 2014

WILLIAM J. EINHORN, Administrator of the Teamsters Pension Trust Fund of Philadelphia and Vicinity, Plaintiff,
v.
DUBIN BROTHERS LUMBER CO., INC., Defendant

Page 505

Matthew D. Areman, Esq., MARKOWITZ & RICHMAN, Philadelphia, PA, Attorney for Plaintiff William J. Einhorn, Administrator of the Teamsters Pension Trust Fund of Philadelphia and Vicinity.

Liam Y. Braber, Esq., JACOBY DONNER, PC, Mount Laurel, NJ, Attorney for Defendant Dubin Brothers Lumber Co., Inc.

OPINION

Page 506

JEROME B. SIMANDLE, Chief U.S. District Judge.

I. INTRODUCTION

This matter comes before the Court on Plaintiff William J. Einhorn's motion for summary judgment.[1] [Docket Item 19.] Plaintiff argues that he is entitled to summary judgment as to amounts owed by Defendant Dubin Brothers Lumber Co., Inc. to the Teamsters Pension Trust Fund of Philadelphia and Vicinity pursuant to a 2011 settlement agreement between the parties, as well as to amounts owed as the result of withdrawal liability under Sections 502(g)(2) and 4301(e) of the Employee Retirement Income Security Act of 1974 (" ERISA" ).

The primary issues presented are whether withdrawal liability under ERISA is properly discharged under a Chapter 11 bankruptcy filed seven years before an employer withdraws completely from the fund, and whether an employer's failure to challenge the amount or existence of withdrawal liability through arbitration precludes the employer from arguing in a civil action to collect withdrawal liability that a portion of that liability was discharged through bankruptcy.

For the reasons discussed below, the Court will grant Plaintiff's motion for summary judgment.

II. BACKGROUND

A. Facts

The following facts are undisputed. At all relevant times, Plaintiff William J. Einhorn has been the Administrator of the Teamsters Pension Trust Fund of Philadelphia and Vicinity (" the Fund" ). (Pl. Statement of Material Facts (" SMF" ) [Docket Item 19-2] ¶ 1.) The Fund is a multiemployer pension plan and an employee pension benefit plan maintained to

Page 507

provide retirement and related benefits to eligible participants and beneficiaries. (Id. ¶ 3.) The Fund receives contributions from employers who are obligated to make those contributions pursuant to collective bargaining agreements with various local unions affiliated with the International Brotherhood of Teamsters. (Id. ¶ 4.) Defendant Dubin Brothers Lumber Co., Inc. does business as Suburban Lumber Company and has participated in the Fund pursuant to a series of collective bargaining agreements between it and the International Brotherhood of Teamsters, Local Union No. 676 (" the Union" ). (Id. ¶ 6.) The most recent such collective bargaining agreement (" CBA" ) indicates effective dates from March 1, 2010 to February 28, 2013. (Id.; see also Certification of William J. Einhorn (" Einhorn Cert." ), Ex. A [Docket Item 19-3.]) The CBA requires Defendant to make timely contributions to the Fund for each hour worked by each employee covered by the CBA. (SMF ¶ 7; see also Einhorn Cert., Ex. A at Art. 61.) Participating employers are bound by the terms of the Fund's plan documents. (SMF ¶ 8.)

In a letter dated May 28, 2009, the Fund notified Defendant of its determination that Defendant had " effected a complete withdrawal" from the Fund, as defined in 29 U.S.C. § 1383(a), on or about December 15, 2008, and demanded payment for withdrawal liability in the amount of $147,930.84. (Id. ¶ 9; see also Certification of Richard Dubin (" Dubin Cert." ), Ex. B [Docket Item 27-3.]) Defendant subsequently failed to make its required withdrawal liability payments to the Fund. (Id. ¶ 10.) As a result, on October 6, 2010, the Trustees of the Fund filed a complaint in the United District Court for the District of New Jersey to collect Defendant's withdrawal liability payments. (Id. ¶ 11; see also Trustees of the Teamsters Pension Trust Fund of Philadelphia and Vicinity v. Dubin Bros. Lumber Co., Civ. 10-5149, ECF No. 1.) On May 18, 2011, the parties entered a Settlement Agreement, which provided in pertinent part:

1. Dubin acknowledges its obligation to make timely contributions to the Fund pursuant to its agreements with Teamster Local 676, dated May 18, 2011 (attached);
2. Dubin agrees to make retroactive payments to the Fund, pursuant to the aforementioned agreements with Teamsters Local 676, dated May 18, 2011;
3. If Dubin fails to make payment in accordance with Paragraph 2 of this Agreement, such shall constitute a material breach and default of this Agreement, in which event, Dubin shall be responsible for all monies released by this Agreement, and same will be due and owing to the Fund immediately;
4. Dubin hereby agrees to waive all statutes of limitations that may apply to any action or proceeding brought by the Funds to enforce this Agreement;
5. Upon execution of this Agreement by the Fund and Dubin, and upon receipt of the payments due pursuant to Paragraph 2, the Fund shall remise, release and forever discharge Dubin, their respective employees, officers, heirs, executors, administrators, personal representatives, attorneys, successors and assigns and all persons, which might be claimed to be jointly or severally liable with them, from any and all actions, causes of action, damages, suits, debts, claims and demands related to the specific subject matter (i.e., alleged December 2008 withdrawal and liability) of the Fund's Complaint (USDC, District of New Jersey Dkt. No. 10-5149), though nothing in this Agreement shall be construed to relieve Dubin of its ongoing obligations to the Fund, including any

Page 508

future liability to the Fund by reason of a future withdrawal from participation in the Fund.

(Settlement Agreement dated May 18, 2011 (" Settlement Agreement" ), Einhorn Cert., Ex. B [Docket Item 19-3] ¶ ¶ 1-5.) The dollar amount of the retroactive pension contributions due pursuant to the Settlement Agreement was $9,218.97. (SMF ¶ 13.) These retroactive payments were simply the overdue contributions on behalf of covered employees, and they were not payments toward any withdrawal liability, since the parties agreed that Dubin would continue to contribute to the Fund as required by the collective bargaining agreement. On May 18, 2011, the Trustees of the Fund filed a notice of voluntary dismissal and the civil action against Defendant was terminated. (Id. ¶ 14; see also Civ. 10-5149, ECF No. 8.) Defendant paid a total of $5,000 toward the amount owed to the Fund for retroactive contributions through consistent payments of $1,000 per month from November, 2011 through March, 2012, leaving $4,218.97 due under the Settlement Agreement. (SMF ¶ ¶ 15-16.) No subsequent payments toward these retroactive contributions have been made. (Dubin Cert. [Docket Item 27-2] ¶ 9.)

In a letter dated April 18, 2012, the Fund notified Defendant of its determination that Defendant " effected a complete withdrawal" from the Fund " during the 2011 Plan Year" and demanded payment of $209,956.78 (covering the years from 1979 to 2010) in quarterly installments beginning July 17, 2012. (Id. ¶ 19; see also Einhorn Cert., Ex. D [Docket Item 19-3.]) Having not received any payment from Defendant, on June 20, 2012, the Fund sent a second letter demanding that Defendant make its required payment within 60 days. (SMF ¶ 20; see also Einhorn Cert., Ex. E [Docket Item 19-3.]) Defendant admits that it made no further payments to the Fund. (SMF ¶ 21.) By letter dated August 21, 2012, the Fund advised Defendant that its failure to make timely withdrawal liability payments resulted in a default and demanded immediate payment with interest. (Id. ¶ 22; see also Einhorn Cert., Ex. F [Docket Item 19-3.]) Defendant admits that it never requested review of the Fund's determination and assessment of withdrawal liability. (SMF ¶ 23.) Defendant also admits that it never filed a demand for arbitration within the timeframe established under 29 U.S.C. § 1401. (Id. ¶ 24.)

Defendant made its last prospective hourly contribution to the Fund in early 2009 and did not contribute anything but retroactive payments to the fund under the Settlement Agreement. (Dubin Cert. ¶ 10.) Defendant has not employed a member of the Union since 2009. (Def.'s Resp. to Pl. SMF (" Def. SMF" ) [Docket Item 27-1] ¶ ¶ 18-20.) However, in May, 2011, around the time of the settlement agreement, Dubin represented that it had one covered employee, Steven Brees. The parties agreed at oral argument that Defendant employed Brees as a truck driver from January 1, 2010 to September 23, 2011. Brees ultimately declined to join the Union. Brees was thus a covered employee under the Plan, for whom Defendant was obligated to make pension contributions under the collective bargaining agreement. (Einhorn Cert., Ex. A at Art. 61.)

Finally, going back a decade, on April 23, 2002, Defendant filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of New Jersey. (In re Dubin Bros Lumber Co., Inc., Bankr. No. 02-14096 (JHW), ECF No. 1.) The Bankruptcy Court entered an Order ...


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