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Board of Trustees of the Plumbers, Pipefitters & Mechanical Equipment v. J & H Mechanical Contractors

October 24, 2011

BOARD OF TRUSTEES OF THE PLUMBERS, PIPEFITTERS & MECHANICAL EQUIPMENT SERVICE, LOCAL UNION NO. 392 PENSION FUND, ET AL, PLAINTIFFS,
v.
J & H MECHANICAL CONTRACTORS, INC., ET AL, DEFENDANTS.



The opinion of the court was delivered by: Judge Michael R. Barrett

OPINION & ORDER

This matter is before the Court on two motions to dismiss: (1) Defendant J & H Mechanical Contractors, Inc. and Diehard Site Utilities, LLC Motion to Dismiss the Amended Complaint (Doc. 18)*fn1 ; and (2) Defendant Federated Mutual Insurance Company's Motion to Dismiss the Amended Complaint (Doc. 19). Plaintiffs Board of Trustees of the Plumbers, Pipefitters & Mechanical Equipment Service, Local Union No. 392 Pension Fund, et al, (referred to collectively as "the Union") have filed a response in opposition to both motions to dismiss (Doc. 20). Defendant J & H Mechanical Contractors, Inc. ("J & H") and Defendant Diehard Site Utilities, LLC ("Diehard") have filed a joint reply in support (Doc. 21), and Defendant Federated Mutual Insurance Company ("Federated") has filed a reply in support as well (Doc. 22). This matter is ripe for review.

Plaintiffs' First Amended Complaint ("Complaint") (Doc. 5) alleges one claim for breach of contract and requests a declaratory judgment of alter-ego liability against Defendants J & H and Diehard. (Doc. 5 ¶¶ 10--37.) Plaintiffs seek an award of unpaid contributions, liquidated damages, audit fees, and attorneys' fees and costs against Defendants J & H and Diehard. (Doc. 5, 8--9.) Plaintiffs request an enforcement of bond against Defendant Federated. (Doc. 5 ¶¶ 38--44.) They seek monetary judgment against Defendant Federated as well. (Doc. 5, 10.) The Court summarizes its rulings below.

I. Background

The relevant facts here are simple. Plaintiffs seek to collect unpaid fringe-benefit contributions owed by Defendants to the Union and to certain Union trust funds. Plaintiffs allege that Defendant J & H, who is a signatory to the relevant Collective Bargaining Agreement ("CBA"), illegitimately avoided its duty to pay certain contributions owed under the CBA by operating a non-union company, Defendant Diehard, as an alter ego. In other words, J & H allegedly used its alter ego, Diehard, to avoid paying contributions owed by J & H under the CBA. Defendant Federated, as a surety, issued a bond agreeing to pay the Union $5,000 if the obligee, J & H, failed to comply with its obligations to make certain benefit contributions to the Union. Plaintiffs seek to enforce the bond against Federated, and to collect the alleged amounts owing under the CBA from J & H and its alter ego, Diehard.

II. Legal Analysis

Defendants move to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. They argue for dismissal based on a lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted. (Doc. 18, 1--2; Doc. 19, 1--2.) Note that Defendant Federated adopts and incorporates by reference the entirety of Defendants J & H and Diehard's motion to dismiss and reply in support. (Doc. 19, 2; Doc. 22, 1.) Accordingly, the Court only cites to Defendants J & H and Diehard's filings, and it refers to Defendants collectively.

A. 12(b)(1) Standard

Rule 12(b)(1) provides that an action may be dismissed for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). Plaintiffs bears the burden of proving jurisdiction when challenged by a Rule 12(b)(1) motion. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990) (citing Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986)). "[T]he plaintiff must show that the complaint alleges a claim under federal law, and that the claim is substantial." Mich. S. R.R. Co. v. Branch & St. Joseph Counties Rail Users Ass'n, Inc., 287 F.3d 568, 573 (6th Cir. 2002) (internal quotations omitted) (quoting Musson Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244, 1248 (6th Cir. 1996)). "The plaintiff will survive the motion to dismiss by showing 'any arguable basis in law' for the claims set forth in the complaint." Id. (quoting Musson Theatrical, 89 F.3d at 1248).

The Sixth Circuit recognizes that Rule 12(b)(1) motions to dismiss for lack of subject-matter jurisdiction fall into two categories: factual attacks and facial attacks. O'Bryan v. Holy See, 556 F.3d 361, 375 (6th Cir. 2009) (citing Gentek Bldg. Prods. v. Sherwin-Williams Claims, 491 F.3d 320, 330 (6th Cir. 2007)). A factual attack on subject-matter jurisdiction is "not a challenge to the sufficiency of the pleading's allegations, but a challenge to the factual existence of subject matter jurisdiction." United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). In such a factual attack, the court must "weigh the conflicting evidence to arrive at the factual predicate that subject matter jurisdiction exists or does not exist," and there is no presumption of truthfulness to the allegations in a complaint. Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).

A facial attack only questions the sufficiency of the pleading. O'Bryan, 556 F.3d at 375--76. In reviewing a facial attack, the court takes the allegations in the complaint as true-a similar safeguard employed under Rule 12(b)(6) motions to dismiss. Id. at 376; Ohio Nat'l Life Ins. Co., 922 F.3d at 325. Here, Defendants bring a facial attack; they question the sufficiency of the pleading. (Doc. 11-1, 7.) Thus, this Court "takes the allegations in the complaint as true." Ohio Nat'l Life Ins. Co., 922 F.2d at 325.

B. 12(b)(6) Standard

Rule 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In reviewing a motion to dismiss, this Court must "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir. 2008) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). "[T]o survive a motion to dismiss, a complaint must contain (1) 'enough facts to state a claim to relief that is plausible,' (2) more than 'a formulaic recitation of a cause of action's elements,' and (3) allegations that suggest a 'right to relief above a speculative level.'" Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, passim (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). Although the plausibility standard is not equivalent to a "'probability requirement,' . . . it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556).

While the Court must accept all well-pleaded factual allegations as true, it need not "accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). The complaint need not contain detailed factual allegations, yet it must provide "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 555). A pleading that offers labels and conclusions or merely a formulaic recitation of legal elements will not do. Id. Nor does a complaint suffice if it tenders naked assertions devoid of factual enhancement. Id. While a plaintiff need not plead specific facts, the complaint must "give the ...


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