The opinion of the court was delivered by: Katz, Senior District Judge.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The court held a nonjury trial on May 3, 2001 and, as set forth
in detail below, rules: 1) that under the terms of the parties'
agreements, the unpaid contributions in this case are not "plan
assets"; and, 2) that the circumstances of this case justify
piercing of the corporate veil. The defendant is therefore
1. At issue in this case are three jointly trusteed
labor-management trust funds created and maintained pursuant to
Section 302(c)(5) of the Labor Management Relations Act,
29 U.S.C. § 186(c)(5). The three funds are the National Elevator
Industry Pension Fund, the National Elevator Industry Health
Benefit Fund (formerly known as the Welfare Fund) and the
National Elevator Industry Educational Fund (collectively, the
"NEI Funds"). The Pension Fund is an employee pension benefit
plan as defined in Section 3(2) of ERISA, 29 U.S.C. § 1002(2).
The Health Fund and Educational Fund are employee welfare
benefits plans as defined in Section 3(1) of ERISA,
29 U.S.C. § 1002(1). All NEI Funds are also multiemployer plans as
defined in Section 3(37)(A) of ERISA, 29 U.S.C. § 1002(37)(A).
2. The Boards of Trustees of the NEI Funds, the plaintiff in
this case, administer the NEI Funds and are fiduciaries of the
NEI Funds within the meaning of Section 3(21)(A) of ERISA,
29 U.S.C. § 1002(21)(A).
3. Defendant Andrew Lutyk incorporated American Elevator
Company ("American") in late 1992 and has at all times been its
president, one of its three officers, its sole director, and its
4. At all relevant times, American's two other officers were
Lutyk's daughter, Julie Gibbs, Treasurer, and an attorney and
friend of Lutyk's, Patrick Donnelly, Secretary.
5. Aside from those hired through the union for elevator work,
American had several office employees, including Gibbs, who
served as office manager, as well as Lutyk's wife Martha, who
worked for one or two years in the later years of the company's
6. At all material times, American was an "employer" within the
meaning of Section 3(5) of ERISA, 29 U.S.C. § 1002(5), and was
engaged in commerce in an industry or activity affecting commerce
within the meaning of Sections 3(11) and (12) of ERISA,
29 U.S.C. § 1002(11) and (12).
7. Each of the NEI Funds were created pursuant to separate
agreements and declarations of trust (collectively known as the
"Trust Documents"). The Trust Documents were executed and
maintained pursuant to collective bargaining agreements between
the International Union of Elevator Constructors, AFL-CIO
("Union") and contractors and contractor associations in the
8. The Standard Agreement is a collective bargaining agreement
between various signatory employers and the Union. The first
Standard Agreement was effective from July 9, 1992 to July 8,
1997, and the second was effective from July 9, 1997 to July 8,
10. Under the Standard Agreement and the Trust Documents, an
employer is obligated to make monthly contributions to each of
the NEI Funds. The employer's monthly contribution to each Fund
is calculated by determining the total number of hours worked,
including overtime, by each of the employer's covered employees
in that particular month, and multiplying these total hours by
the hourly contribution rates for each NEI Fund. The relevant
hourly contribution rates are set forth in the Standard
Agreement. In addition, with respect to the Health Benefit Fund
only, an employer is obligated to deduct a certain amount from
the paycheck of each covered employee for each hour worked; such
employee wage deductions are considered to be "employee
contributions" or employee "co-pays" to the Health Benefit Fund.
11. The Standard Agreement and the Trust Documents also
obligate an employer to calculate the amount of employer payments
and employee wage deductions due to the NEI Funds, and to prepare
and forward a single combined monthly remittance report to the
NEI Funds. The employer is furthermore required to remit its
employer payments and employee wage deductions to the NEI Funds
by the fifteenth day of the month following the month in which
responsibility for such contributions was incurred.
B. Amounts Owed to the NEI Funds
1. The Boards of Trustees sued American in a separate 1998 suit
in this district for contributions that at that time were owed to
but had not been remitted to the NEI Funds, as well as for
associated liquidated damages, interest, costs, and attorneys'
2. That action, Civil Action No. 98-6544, culminated in a
consent judgment dated June 15, 1999 whereby American agreed to
pay the NEI Funds a total of $280,284.60, representing unremitted
contributions in the amount of $214,453.66 (including both
delinquent employer payments and employee deductions that had
been withheld from paychecks but never remitted); liquidated
damages of $42,890.73; interest of $21,924.21; attorney's fees of
$772.50; and costs of $243.50.
3. American remitted to the NEI Funds $40,000.00 pursuant to
the consent judgment prior to the filing of the instant action on
May 4, 2000. It then remitted to the NEI Funds an additional sum
of $2,524.74 on December 13, 2000, which represented all of the
withheld employee wage deductions due under the consent judgment.
These two sums represent the total amount of money paid by
American pursuant to the consent judgment.
4. On May 4, 2000, the plaintiff initiated the instant suit
against defendant Lutyk personally, seeking to recover from him
individually the full amount that it has been unable to collect
from American, as well as additional contributions accrued by
American after the time of the consent judgment but never
remitted. However, as set forth in the court's memorandum and
order of April 13, 2001, claims as to amounts accrued prior to
May 4, 1997 are time-barred.
5. Plaintiff in this action thus seeks $287,627.43 from Lutyk
personally, as well as attorneys' fees and costs. The sum of
$287,627.43 represents: $212,959.79 in unremitted employer
payments from the period between May 1997 and November 1999,
which includes those accrued both prior to and after the consent
judgment; $50,388.12 in associated liquidated damages; and
$23,946.98 in associated interest. This sum also represents
$332.54 in liquidated
damages and interest associated with the $2,524.74 in employee
wage deductions paid pursuant to the terms of the consent
judgment, which the parties agree was remitted after the
commencement of this action. Thus, although the plaintiff seeks
no employee wage deductions in this action, it does seek interest
and damages on the employee wage deductions that were paid late.
6. Plaintiff seeks liquidated damages of 20% of unpaid
contributions under the terms of the Trust Documents, which
accords with Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2),
which requires liquidated damages to be awarded at the rate
provided for under the benefits plan in an amount not in excess
of 20% of the unpaid contributions.
7. Section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2), also
entitles a benefits plan to interest on unpaid contributions "at
the rate provided under the plan, or, if none, the rate
prescribed under Section 6621 of Title 26." The interest rate for
unpaid contributions in the Trust Documents is the rate used by
the Internal Revenue Service at the time of the delinquencies,
which is the rate prescribed under Section 6621 of Title 26.
8. There is no dispute among the parties that if Lutyk were to
be found liable in this action, he would be liable for the full
amount of the unpaid employer payments, liquidated damages and
interest sought by plaintiff, with the minor exception of
$332.54. The defendant disputes the assessment of $332.54 in
liquidated damages and interest associated with the $2,524.74
that was paid on December 13, 2000 and that represents employee
wage deductions due under the consent judgment. Lutyk argues that
because these ...