The opinion of the court was delivered by: McLaughlin, J.
The plaintiffs in this action seek to recover withdrawal liability incurred by a bankrupt shipping company, NPR, Inc. ("NPR"), under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 (the "MPPAA"), 29 U.S.C. § 1381 et. seq. The plaintiffs are two entities that were secondarily liable for NPR's withdrawal liability, and which paid over $14 million to a pension fund in satisfaction of NPR's withdrawal liability. The plaintiffs assert claims against NPR's corporate affiliates and their individual owners under various theories, including "common control," veil piercing and alter ego liability.
The defendants fall into two groups. The first consists of individual defendant Thomas Holt, Sr. ("Holt Sr.") and his wholly-owned company, Orchard Hill Development Corporation ("Orchard Hill"). The second comprises the three sons of Thomas Holt, Sr. - Michael, Leo and Thomas, Jr. - ("the Holt Sons") and ten companies they control ("the Holt Sons Companies"). Presently before the Court are cross-motions for summary judgment between the plaintiffs and defendants Orchard Hill and Holt Sr. For the reasons that follow, the Court will deny the plaintiffs' motion for summary judgment. The Court will grant in part and deny in part the motion for summary judgment of defendants Orchard Hill and Holt Sr.
The plaintiffs filed their original complaint on
October 10, 2002, seeking to recover withdrawal liability from NPR's corporate affiliates on the basis that those entities were members of NPR's "controlled group," pursuant to 29 U.S.C. § 1301(b). With leave from the Court, the plaintiffs filed an amended complaint on September 20, 2004, adding additional defendants, including Holt Sr. The plaintiffs also added supplemental theories of liability based on alter ego and veil piercing.
On October 23, 2003, the plaintiffs filed a motion for summary judgment against defendant Orchard Hill, arguing that Orchard Hill was responsible for NPR's withdrawal liability as a trade or business under common control with NPR. In a Memorandum and Order dated September 14, 2004, the Court denied the motion, because the record contained no evidence on the question of Orchard Hill's activities during the relevant time when it was under common control with NPR.
On November 15, 2006, the plaintiffs filed a renewed motion for summary judgment against defendants Orchard Hill and Holt Sr. In the renewed motion, the plaintiffs argue that the now-complete record compels the conclusion that Orchard Hill was a trade or business under common control with NPR. The plaintiffs also argue that the Court should grant summary judgment on their claim to pierce the corporate veil of Orchard Hill and impose liability on Holt Sr.
On the same date, defendants Orchard Hill and Holt Sr. filed a motion for summary judgment. The defendants do not move for summary judgment on the plaintiffs' "controlled group" claim or the claim to pierce Orchard Hill's corporate veil. Instead, the defendants move for summary judgment on the following claims:
(1) whether Holt Sr. operated a sole proprietorship that constituted a trade or business under common control with NPR;
(2) whether NPR's corporate veil should be pierced to hold Holt Sr. individually responsible for NPR's withdrawal liability; and
(3) whether Orchard Hill should be responsible for NPR's withdrawal liability as an alter ego of NPR. The Court will deny the plaintiffs' motion, and will grant in part and deny in part the defendants' motion.
II. Summary Judgment Record*fn1
The plaintiffs are the Government Development Bank for
Puerto Rico ("GDB") and the Puerto Rico Maritime Shipping Authority ("PRMSA"). Prior to 1995, the PRMSA was engaged in the shipping business. In its shipping operations, the PRMSA utilized longshoremen services at the Port of Elizabeth, New Jersey, and became obligated to pay into the New York Shipping Association - International Longshoreman's Association Pension Trust Fund (the "Fund"), a multi-employer pension plan subject to the withdrawal liability provisions of ERISA. Am. Compl. ¶¶ 13, 15; Holt Sons Mem. of Law in Support of the Mot. for Summ. J. ("Holt Sons S.J. Br."), at 4.
In February 1995, the PRMSA sold its assets to NPR, a private shipping company. Although NPR made payments to the Fund, the PRMSA remained secondarily liable in the event that NPR partially or fully withdrew from the Fund within five years of the sale. Am. Compl. ¶¶ 16-17; Dep. of Delfina Betancourt ...