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New Jersey Building Laborers' Statewide Pension Fund v. Richard A. Pulaski Construction

United States District Court, D. New Jersey

May 16, 2018

NEW JERSEY BUILDING LABORERS' STATEWIDE PENSION FUND AND TRUSTEES THEREOF, Plaintiff,
v.
RICHARD A. PULASKI CONSTRUCTION, R. PULASKI & SONS CONSTRUCTION, INC., PULASKI BROTHERS CONSTRUCTION, INC, and RA. PULASKI CONSTRUCTION COMPANY, L.L.C. Defendants.

          MEMORANDUM AND ORDER

          PETER G. SHERIDAN, U.S.D.J.

         The New Jersey Business Laborers' Statewide Pension Fund and the Trustees thereof (Pension Fund) brought this action to recover withdrawal liability due to it from Pulaski Construction (the Signator), asserting claims "against a construction family on the basis of successor liability . .." (Defendants' Trial Brief at 2 (ECF No. 79)). This action is governed by the Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. § 1001, et seq., specifically § 4301 of ERISA, 29 U.S.C. § 1451. (Stipulated Facts ¶1).

         Role of the Court

         In this case, the Court has three roles. First, as trier of fact, the Court's duty is to decide the facts from the evidence that was heard and seen in court during the hearing. The second duty is to apply the law to the facts. The third duty is to clearly explain the facts and the legal principles underpinning the Court's decision.

         Like any jury, the Court performs these duties fairly and impartially. The Court will not allow sympathy, prejudice, fear, or public opinion to influence its decision. The Court will not be influenced by any person's race, color, religion, national ancestry or gender. Here, both parties stand on equal footing. Since the Court's decision is based upon evidence seen and heard in the courtroom, the Court followed the same guidelines as a jury would in determining the evidence and what weight should be given to it.

         The Court did not let rumors, suspicions, or anything else that it may have seen or heard outside of the court influence its decision in any way. In order to assess the evidence, the Court used common sense, and considered it in light of everyday experience with people and events; and as such, the Court gave the evidence whatever weight it believed it deserved. See Model Jury Charge 1.5.

         The evidence in this case primarily consisted of the testimony of two witnesses: Richard Pulaski and Gary Ramsey. Both witnesses were honest and forthright.

         Burden of Proof

         Plaintiff presented three theories of withdrawal liability: alter ego liability; successor in interest liability; and control group liability. Although these theories overlap, there are some differences and each is discussed separately in the "Conclusions of Law" section below.

         The burden of proof for establishing any of the three theories "rests with the party attempting to negate the existence of a separate entity." Trs. of the Natl Elevator Indus. Pension, Health Benefit & Educ. Funds v. Lutyk, 332 F.3d 188, 197 (3d Cir. 2003). Alter ego liability must be established by clear and convincing evidence, id. at 192, and is "notoriously difficult for plaintiffs to meet." Pearson v. Component Tech. Corp., 247 F.3d 471, 485 (3d Cir. 2001).

         Findings of Fact

         The Pension Fund was and still is a trust fund established and maintained pursuant to § 302(c)(5) of the Labor Management Relations Act, ("LMRA"), 29 U.S.C. § 186(c)(5), and an employee benefit plan within the meaning of § 3 of ERISA, 29 U.S.C. § 1301(a)(3). The Pension Fund qualifies to commence this action under §§ 502(d)(1) and 4301(a)(1) of ERISA, 29 U.S.C. §§ 1132(d)(1), 1451(a)(1). (Stipulated Facts ¶2). The Trustees of the Pension Fund are fiduciaries and, as such, are entitled to bring and maintain this action under § 4301(a)(1) of ERISA, 29 U.S.C. § 1451(a)(1). (Stipulated Facts ¶3).

         Pulaski Construction (hereinafter, the "Signator") was subject to a Collective Bargaining Agreement ("CBA") with the New Jersey Construction Building Laborers District Council ("Union") for work performed within the Union's jurisdiction. (Stipulated Facts ¶8) (Plaintiffs Exh. 5). Named Defendants are not the Signator, but are alleged to be the "alter ego" of the Signator, since they are family members who operated the Signator. Under the terms of the CBA, the Signator was obligated to hire members of the Union, and to pay wages and benefits. (Stipulated Facts ¶9). Said payments and benefits were paid until April 2012; Signator defaulted on payment thereafter. At that time, the amount due to the Pension Fund was $87, 152.00.

         The Pension Fund brought an action for the amount owed against the Signator, and a default judgment in the amount of $137, 017.12 was awarded. This included principle, legal fees, costs, interest, and liquidated damages. (Stipulated Fact ¶24). Since the Signator was defunct, the Pension Fund brought this suit against Pulaski Brothers Construction Co., Inc. (Brothers), R. Pulaski & Sons Construction, Inc. (Sons) and Richard A. Pulaski Construction based on successor liability theories.

         Patricia Pulaski has three sons, Richard, Ronald, and Rob. Patricia is 82 years of age. Her sons have worked in the construction business for a number of years. Richard testified he first began work in construction in 1976 and he has remained in the construction business ever since. (Tr. 106:20-23). In 1984, Ronald Pulaski formed the Signator, in which he was the owner and Richard was the manager, supervisor and contract negotiator. (Tr. 7:7-13; Stipulated Facts ¶¶34-35). Patricia was never involved in any capacity with the Signator. (Tr. 112:1-4). The Signator primarily worked on heavy construction projects, which involved the hiring of union labor. (Tr. 43:22-25). It entered contracts to construct hospitals, hotels, arenas and schools, as well as large private sector projects. Examples of such construction projects include: (a) contract between Signator and Middlesex County dated January 18, 1990 (Defendants' Exh. 6); (b) contract between Sordoni Shansha and Signator dated October 20, 2000 for construction of Robert Wood Johnson Foundation (Defendants' Exh. 7); and (c) contract between Signator and Hill Construction, for construction of a library (Defendants' Exh. 8). Each of these heavy construction projects involved a CBA and the Pension Fund. At the height of its success, the Signator employed hundreds of union members, including those union laborers subject to the Pension Fund. (Tr. 97:16-17; 101:5-18). The Signator was affiliated with another Pulaski company, R&R Pulaski, LLC, which owned real estate including an office building and yard located at 2115 Hamilton Avenue, Hamilton, New Jersey.

         In any event, after about 15 years of heavy construction operations, the Signator's success ebbed, and losses mounted in or about 1999-2000. (Tr. 88:15-17). At the time, the Signator was constructing the Sovereign Bank Arena in Trenton, New Jersey. The contract price negotiated was far less than the actual cost of construction (Tr. 32:3-20).

         In or about 2008, the Signator's affiliate, R&R Pulaski, LLC, borrowed $1.6 million to pay off vendors and other creditors. (Tr. 89:13-22; Defendants' Exh. 13). R&R Pulaski mortgaged the real estate and the office building at 2115 Hamilton Avenue, as well as other real estate located on Youngs Road. As security for the loan, R&R Pulaski pledged all of the heavy equipment and real property it owned. (Tr. 91:15-21).

         In July 2012, Signator's business financially crumbled. Richard Pulaski testified at deposition that the Signator ceased operations when it ran out of work. (Stipulated Fact ¶41). At some point, the mortgagee, LRL, LLC, evicted the Signator's affiliate from the Youngs Road warehouse/shop and seized all the equipment owned by the Signator. The lender also levied upon the heavy construction equipment and other assets, all of which were sold at an auction by LRL, LLC. (Tr. 92:6-18). Later that year, First Choice Bank, an affiliate of LRL, LLC, foreclosed on the 2115 Hamilton Avenue property, and was subject to a sheriffs sale. (Tr. 91:21-92:8). In 2012, the Signator's bank accounts were also levied upon and closed due to negative balances. (Stipulated Fact ¶42). In addition, some of the leased equipment and vehicles were repossessed by the leasing company. (Stipulated Fact ¶60).

         Thereafter, First Choice Bank, as the foreclosure purchaser, approached the Pulaskis and offered to permit them to remain in the office building at 2115 Hamilton Avenue, rent-free and utility-free, for a short period of time. The Pulaskis agreed and remained on the premises and now lease the property from First Choice Bank. (Tr. 93:1-8).

         At this time, Richard Pulaski and his brother, Ronald, each personally filed for Bankruptcy under Chapter 11, which was later converted to Chapter 7. The Signator and its affiliates were listed in both petitions. Thereafter, the Bankruptcy Court discharged them of all debts that they were personally liable for. (Tr. 94:1-25). Richard acknowledged that the Signator could have filed a Chapter 7 bankruptcy, but it did not do so since the Signator's lawyers advised that since it had no assets, there was no reason for it to file for bankruptcy. (Tr. 95:19-23).

         More than a year after the bankruptcy proceedings, in December 2013, Ronald Pulaski created a new construction company that would not undertake projects involving union laborers. His mother, Patricia, agreed to finance the start up of the company. The new company was named Pulaski Brothers Construction Co., Inc. (hereinafter "Brothers") and was incorporated in January 2014. (Tr. 37:4-11; T. 38:3-10). Evidently, the mother allowed Brothers to use her credit line to purchase materials for the business.

         At its inception, Brothers was solely owned by Patricia. Her sons, Richard, Ronald and Robert were employees. (Tr. 8:8-10). Richard handled contract negotiations (Tr. 6:15-25), Ronald supervised the field work (Tr. 7:5-13), and Robert, who is disabled, worked occasionally as laborer and carpenter. (Tr. 7:17-25). Brothers retained the previous bookkeeper of Signator, Eileen, [1] and an administrative assistant, Kayla Dowd. (Tr. 10:7-17). As of July 2016, it had two additional workers on the payroll, for a total of about seven employees. (Defendants' Exh. 14; Tr. 61:18-25; 62:1-15).

         According to the testimony, Brothers consistently confined its work to residential and light commercial construction. Presently, Brothers is working on the Straube Center in Pennington, New Jersey, performing drywalling, spackling and installing ceilings (Tr. 12:8-14). Only two people are working on that job, Ronald and an independent subcontractor named Curt, who installs metal studs and sheetrock, and spackles ceiling tiles. (Tr. 12:15-13:1-2). Brothers has not undertaken any projects where heavy construction equipment, such as a crane, is utilized. Instead, its work focuses primarily on jobs where hand-held tools are used. (Tr. 98:19-99:9). Brothers still uses the same phone number as Signator and operates from the its former location; however, it now leases the property. (Tr. 92:21-25; 93:1-23).

         During the trial, Richard Pulaski noted the difference between heavy construction ...


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