Local 134 Board of Trustees of the Toledo Roofers Pension Plan, Plaintiff,
Enterprise Roofing & Sheet M Co. and Enterprise Roofing & Remodeling Services, Inc., Defendants
JAMES G. CARR, Sr., District Judge.
This is an ERISA pension withdrawal liability case in which plaintiff, Local 134 Board of Trustees of the Toledo Roofers Pension Plan (the Plan), claims defendant, Enterprise Roofing and Remodeling Services, Inc. (Services), remains liable for a prior judgment I entered against Enterprise Roofing & Sheet M Co. (Sheet Metal). (Doc. 59). I base this decision on the testimony presented and evidence submitted at the November 6-8, 2012, bench trial. ( see Docs. 71-73, 80-81, excerpts of transcripts).
For the following reasons, I conclude that Services is responsible for satisfying the judgment against Sheet Metal.
Jurisdiction exists under 28 U.S.C. § 1331.
Before going out of business in 2009, Sheet M provided primarily commercial roofing and sheet m services in Northwest Ohio and Southern Michigan for over seventy years. Sheet M operated as a union company and participated in a multi-employer pension plan under a collective bargaining agreement with the Toledo Area Roofing Contractor's Association and Local Union 134, the United Union of Roofers, Waterproofers, and Allied Workers.
Services, a non-union company founded in 1992, provides primarily residential roofing and remodeling services to the same geographical region as Sheet Metal.
The parties dispute the degree to which the two defendant companies, Sheet M and Services, overlap. The Plan asserts that the companies overlapped so substantially that Services, which remains in business, should retain responsibility for the now defunct Sheet Metal's liability to the Plan.
In general, a plan participant, such as Sheet Metal, remains liable for contributions owed to a plan to cover future benefits even after it goes out of business and "withdraws" from the plan. I previously entered a judgment ordering Sheet M to pay the Plan $624, 079 to fund future benefits. (Doc. 59). Because Sheet M cannot satisfy the judgment, the Plan now seeks to collect that sum from Services, an entity owned and operated by the same family.
Richard Entenman's grandfather opened Sheet M in 1932. Richard started working with the business in 1983 and served as Vice President beginning in 1984. From 1987 until he resigned 1998, he served as Sheet Metal's President. (Doc. 71, pp 3-4, 11).
Richard stated that, while he ran Sheet Metal, it performed both commercial and residential roofing projects. (Doc. 71, p 11). When founded, Sheet M worked primarily on residential projects, and Richard learned his trade working residential jobs. Richard formed Services in 1992. (Doc. 71, p 12).
Richard explained he formed Services because he realized Sheet M would probably fail. (Doc. 71, p 14). When he joined Sheet M in 1983 it was in disarray. It lacked quality management, salespeople, and workers, and had suffered significant setbacks that led to very high workers compensation premiums. (Doc. 71, p 12).
In December, 1992, Janice Entenman, Richard's wife, incorporated Services. At that time, Richard was Sheet Metal's president. Richard helped Janice, who had no roofing or operational experience, form Services. (Doc. 71, pp 16-17). Richard stated he and Janice used the same attorney who represented Sheet M to form Services. (Doc. 71, p 16). Two Sheet M employees who worked directly under Richard left Sheet M to serve as Services' managers. Although Janice had no role in running or managing Services, she received all its stock. (Doc. 71, p 17).
Richard explained why all of the stock was issued to Janice:
Q. Okay. What was the reason that you put 100 percent of the shares in Janis' name instead of your own when the company was organized?
A. It was illegal.
Q. It was illegal to what?
A. You can't run a union and a non-union company at the same time. It had to be separate ownership. That's where legal counsel came in. That's where my research came in.
Q. There you go. So at the time you organized this, you were still working and running Enterprise Sheet Metal, right?
Q. And so to avoid that union problem, you had 100 percent of the stock put in your wife's name, right?
[Doc. 71, p 18.]
Richard also explained why he decided to name Enterprise Roofing & Services:
Q. Now, the company that was originally incorporated was named Enterprise Roofing Services, Inc.
Q. Okay. And since 1932, Enterprise Roofing & Sheet Metal, Inc. was a family owned business, right?
Q. Okay. And you'll agree with me, won't you, that Enterprise Services - Enterprise Roofing & Services is pretty close to Enterprise Roofing & Sheet Metal, right?
A. Well, Enterprise, yeah. That's -
Q. And did you believe at the time that you were organizing the new company that you were going to get a benefit for using a very similar name to the company that was organized back in 1932?
A. The benefit is the name.
THE COURT: The good will, right?
THE WITNESS: Good will, ...