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Carpenters Combined Fund, Inc. v. Lucci

United States District Court, W.D. Pennsylvania

September 13, 2017

CARPENTERS COMBINED FUND, INC., by James R. Klein, Administrator, Plaintiff,
v.
JOHN LUCCI, and THOMAS VELOTTA, Defendants. LABORERS' COMBINED FUNDS OF WESTERN PENNSYLVANIA, Plaintiff,
v.
JOHN LUCCI, and THOMAS VELOTTA, Defendants.

          OPINION AND ORDER

          MAUREEN P. KELLY, CHIEF UNITED STATES MAGISTRATE JUDGE. [1]

         Plaintiff Carpenters Combined Funds, Inc. (“the Carpenters Fund”) and Plaintiff Laborers' Combined Funds of Western Pennsylvania (“the Laborers Fund”) (collectively “Plaintiffs” or “the Funds”) filed these related actions against John Lucci (“Lucci”) and Thomas Velotta (“Velotta”) for recovery of certain unpaid fringe benefit contributions and related interest, liquidated damages and attorneys' fees pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq.

         Presently before the Court are the Motions for Summary Judgment against Defendant Velotta filed by Plaintiffs. ECF No. 39.[2] For the following reasons, both motions will be denied.

         I. PROCEDURAL BACKGROUND

         A. The Carpenters Fund Action

         The Carpenters Fund brought its action at Civil Action No. 13-1287 under ERISA for fringe benefit contributions related to work performed by carpenters during the period from 2012 to 2013, which all were due and owing to the Carpenters Fund by Concrete Restoration Services, LLC (“CRS” or “Concrete Restoration Services”) by virtue of a collective bargaining agreement (“CBA”) and trust agreements incorporated therein. See C.A. No. 13-1287: ECF No. 3 (generally) and ¶ 3. The Carpenters Fund seeks to hold Velotta liable under ERISA, alleging that he was an ERISA fiduciary during the relevant time period regarding the fringe benefit payments due.

         B. The Laborers Fund Action

         Plaintiff Laborers Fund brought essentially the same action at Civil Action No. 13-1288[3]under ERISA for fringe benefit contributions related to work performed by Laborers for CRS between 2012 and 2013. See C.A. No. 13-1288: ECF No. 3 (generally) and ¶ 16. As the principal payments regarding the laborers' work have been paid and are no longer outstanding, the Laborers Fund now only seeks to hold Velotta liable under ERISA for payment of the remaining unpaid liquidated damages, interest, and attorneys' fees. See ECF No. 42-1 (Affidavit of Botsford, Administrator Laborers Fund).

         Plaintiffs also brings a state law claim for conversion at Count II seeking recovery for amounts they claim were withheld from workers' wages for union dues and legislative funds (“political action committee” or “PAC” contributions) but not remitted to the Funds. See ECF No. 3, ¶¶ 19-25.

         Both of these matters were stayed until February 26, 2015 at the request of Plaintiffs. ECF Nos. 28, 29. On April 8, 2016, counsel for Velotta filed a motion to withdraw as counsel in both cases, which the Court granted. ECF No. 34, 35. Velotta has since been proceeding pro se.

         C. Motions for Summary Judgment

         On January 9, 2017, Plaintiffs each filed a Motion for Summary Judgment against Velotta with Brief in Support, ECF Nos. 39, 40, [4] arguing that they are entitled to summary judgment on the ERISA claim against Velotta for breach of fiduciary duty based on the contention that Velotta was a fiduciary under ERISA either by virtue of his position at CRS, or alternatively, under a theory that Velotta Company and CRS constituted a “single employer” and Velotta would be liable with respect to Fund assets representing the work performed by laborers and contractors for CRS by virtue of his position at Velotta Company. Plaintiffs' Motions do not mention Count II, although that count is briefly addressed in the supporting briefs. Plaintiffs filed Concise Statements of Material Facts in support of their Motions, ECF No. 41, with separate Appendices. ECF No. 42. On January 30, 2017, Velotta filed Responses in Opposition, ECF No. 44, disputing certain of the Material Facts asserted by Plaintiffs, namely: 1) that Velotta is a personally liable “fiduciary” under ERISA during the relevant time period for which the Funds seek payment, as Velotta contends he was not an officer or employee of CRS during the relevant time period and thus did not then have authority or control over CRS payments to the Funds; and 2) that Velotta Company is a “single employer” with CRS, as Velotta maintains the two were maintained as separate legal entities. In opposition, Velotta relies on the record as contained within Plaintiffs' Appendices. On February 13, 2017, Plaintiffs filed replies in support of their motions for summary judgment, ECF No. 45, arguing that because the pro se defendant failed to file a separate response to each of their Concise Statement of Material Fact as required by the rules, the stated facts should be deemed admitted. Velotta responded with motions to strike the replies as untimely, ECF No. 47, which the Court denied. ECF No. 52. Plaintiffs' motions for summary judgment are now ripe for resolution.

         II. STANDARD ON SUMMARY JUDGMENT

         In deciding a summary judgment motion under Federal Rule of Civil Procedure 56, a court must view the facts in the light most favorable to the nonmoving party and must draw all reasonable inferences, and resolve all doubts in favor of the nonmoving party. Matreale v. New Jersey Dep't of Military & Veterans Affairs, 487 F.3d 150, 152 (3d Cir. 2007); Woodside v. Sch. Dist. of Phila. Bd. of Educ., 248 F.3d 129, 130 (3d Cir. 2001). Rule 56 specifically provides that: “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Thus, summary judgment is warranted where, “after adequate time for discovery and upon motion . . . a party . . . fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Marten v. Godwin, 499 F.3d 290, 295 (3d Cir. 2007) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).

         A disputed fact is “material” if proof of its existence or nonexistence would affect the outcome of the case under applicable substantive law. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); Gray v. York Newspapers, Inc., 957 F.2d 1070, 1078 (3d Cir. 1992). An issue of material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 257; Brenner v. Local 514, United Brotherhood of Carpenters and Joiners of America, 927 F.2d 1283, 1287-88 (3d Cir. 1991). When determining whether there is a genuine issue of material fact, the court must view the facts and all reasonable inferences in favor of the nonmoving party. EEOC v. Allstate Ins., 778 F.3d 444, 448 (3d Cir. 2015).

         Ordinarily, the movant bears the initial burden of demonstrating that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. at 322. See Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir. 2004). “W]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). If the nonmoving party bears the burden of proof at trial and fails to make a sufficient showing on any essential element of its case, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323.

         Where, as here, however, the moving parties -- Plaintiffs -- bear the burden of proof on each element of their claims, succeeding on their motions for “affirmative” summary judgment can prove a more difficult but not insurmountable task because “the standard is more stringent.” Nat'l State Bank v. Fed. Reserve Bank, 979 F.2d 1579, 1582 (3d Cir. 1992). The moving Plaintiffs:

[b]ear[] the burden of proof on [their ERISA and conversion claims]. “After all, the burden of proof includes the obligation to persuade the factfinder that one's propositions of fact are indeed true. Thus, if there is a chance that a reasonable factfinder would not accept a moving party's necessary propositions of fact, pre-trial judgment cannot be granted. Specious objections will not, of course, defeat a motion for summary judgment, but real questions about credibility, gaps in the evidence, and doubts as to the sufficiency of the movant's proof, will.”

Wallace v. Nat'l Indem. of Mid-Am., No. 14-1253, 2016 WL 6948781, at *3 n.2 (W.D. Pa. July 8, 2016) (quoting El v. Se. Pa. Transp. Auth. (SEPTA), 479 F.3d 232, 238 (3d Cir. 2007)). Plaintiffs must convince the Court that they have met this exacting standard on every essential element of their claims. As the United States Court of Appeals for the Third Circuit further explained in Nat'l State Bank, “where the movant bears the burden of proof at trial and the motion does not establish the absence of a genuine factual issue, the district court should deny summary judgment even if no opposing evidentiary matter is presented.” 979 F.2d at 1582 (emphasis added) (citing Resolution Tr. Corp. v. Gill, 960 F.2d 336, 340 (3d Cir. 1992)).

         III. FACTS RELATIVE TO MOTIONS FOR SUMMARY JUDGMENT[5]

         A. Response to Plaintiffs' Concise Statement of Facts

         At the outset, the Court must address the application of the Local Rules of this Court and Plaintiffs' argument that the Concise Statement of Material Facts, ECF No. 41, to which Velotta did not separately respond, is deemed admitted in all respects. ECF No. 45.

         Local Civil Rule 56, sets forth the requirements for filings in summary judgment motions. Local Civil Rule 56.B.1 requires the movant to file a separate concise statement of material facts citing “to a particular pleading, deposition, answer to interrogatory, admission on file or other part of the record supporting the party's statement, acceptance, or denial of the material fact.” LCvR 56.B.1. In response, the opposing party is required to provide a separately filed concise statement admitting or denying the facts in the moving party's concise statement, LCvR 56.C.1.a, setting forth the basis for a denial of the moving party's concise statement with reference to the record, LCvR 56.C.1.b, and providing any additional material facts that are necessary for the court's ruling on the motion. LCvR 56.C.1.c. Finally, Local Civil Rule 56.E provides that facts asserted as undisputed by either party “will for the purpose of deciding the motion for summary judgment be deemed admitted unless specifically denied or otherwise controverted by a separate concise statement of the opposing party.” LCvR 56.E.

         Although Velotta, proceeding pro se, did not provide a separate responsive Concise Statement of Facts as required by Local Rule 56.C.1, he did specifically indicate certain facts he vehemently disputes with citations to evidence in the record in his responsive briefs.

         Considering the admonition of the United States Court of Appeals for the Third Circuit in Nat'l Bank regarding the standard on movants' motions, the Court will consider as contested the specifically challenged facts by Velotta where they are adequately supported by the record. The remaining statement of facts proffered by Plaintiffs, to the extent they are adequately supported by the record as required by Local Civil Rule 56.B.1 and are in accordance with the standards applicable to motions under Federal Rule of Civil Procedure 56, will be deemed admitted for purpose of the summary judgment motions in accordance with Local Civil Rule 56.E.

         B. Relevant Facts

         The Carpenters Fund and the Laborers Fund are multi employer fringe benefit funds that provide medical and retirement benefits to carpenters, laborers and their families. ECF No. 41 ¶ 1.[6] CRS was bound by the CBAs and their incorporated Trust Agreements entered into with the Carpenters Union and the Laborers Union. ECF No. 41 ¶ 11. See ECF No. 42-6 (Laborers CBA from 2008 to 2010); ECF No. 42-7 (Laborers CBA from 2010 to 2013); ECF No. 42-12 (Carpenters CBA from 2008 to 2010); ECF No. 42-13 (Carpenters CBA from 2011 to 2013). The CBAs require the timely payment of fringe benefit contributions and wage deductions to the Funds on a monthly basis with associated interest, liquidated damages and attorneys' fee due for failure to timely make required payments. ECF No. 41 ¶ 11. At some point, though the precise dates are never provided by Plaintiffs, Velotta Company also was a signatory to the CBAs with the Carpenters Union and the Laborers Union. ECF No. 42-22 at 55-56. Velotta Company appears to have made its payments to the Fund as required by the CBAs, ECF No. 42-22 at 55-56, and is not a defendant in this action.

         CRS failed to make certain principal contributions it owed to the Carpenters Fund for work performed from September 2012 to June 2013, ECF No. 3, ¶ 15, regarding which the Carpenters Fund seeks payment through Civil Action No. 13-1287. According to the Carpenters Fund, the amount due and owing by CRS through December 31, 2016, including liquidated damages, attorney's fees, and interest for Count I totals $85, 151.08. ECF No. 42-14.[7] Regarding Count II for conversion, the amount due and owing to the Carpenters Funds through December 31, 2016 for principal and interest totals $4, 209.95. ECF No. 42-14.

         As to the Laborers Fund, it is alleged in the Amended Complaint in Civil Action No. 13-1288 that CRS did not make payment for certain principal contributions it owed to the Laborers Fund for work performed from June 2012 through June 2013. ECF No. 3, ¶ 16. According to the Affidavit of Dawn Botsford, Administrator of the Laborers Fund, all of these principal payments were eventually made to the Laborers Fund, but amounts remain outstanding for interest, liquidated damages, and attorneys' fees. ECF No. 42-1, ¶ 2 (“Botsford Affidavit”). The remaining amount due and owing to the Laborers Funds by CRS through December 31, 2016, totals $218, 809.41 under Count I pursuant to ERISA for interest, liquidated damages, and attorney's fees, ECF No. 42-8, and totals $13, 386.19 for interest under Count II for conversion. ECF No. 42-8.[8]

         1. Concrete Restoration Services (“CRS”)

         CRS is an Ohio Limited Liability Company that was started and originally owned by its two members, Lucci and his brother. ECF No. 42-22 at 18, 33. Subsequently, Velotta Company became part owner of CRS through a purchase of CRS equipment. ECF No. 42-22 at 34. According to the amended and restated operating agreement of CRS (“CRS Operating Agreement”) dated January 1, 2006, signed by Lucci for himself and signed by Velotta on behalf of Velotta Company, Lucci and Velotta Company were then the two Members of CRS with Velotta Company owning 68 % of CRS and Lucci owning 32 %. ECF No. 42-22 at 28-29; ECF No. 42-18 at 2-3, 12, 15, 23-24. The CRS Operating Agreement also provided that if the members holding the majority of interest determined that additional funds were required to pay CRS operating costs, then the members shall contribute additional funds in proportion to their interest. ECF No. 42-18 at 3. If a member is unable or unwilling to make a proportionate contribution, the contributing member could make the non-contributing member's proportionate contribution resulting in a loan from the contributing member. ECF No. 42-18 at 3 (emphasis added).

         At one point, Velotta was an officer of CRS, serving as its Vice President. ECF No. 42-22 at 16-17. In his capacity as an officer of CRS, Velotta, amongst other things, assisted in estimating jobs, and was an additional signatory on CRS' checking account, ECF No. 42-22 at 19; ECF No. 42-24 at 6. Velotta, however, did not have any role in determining amounts of salary, wages, or fringe benefits of CRS employees, ECF No. 42-22 at 41, and did not sign any of the CRS employee paychecks which were all were signed with Lucci's signature using a signature stamp. ECF No. 42-24 at 5. Other details regarding Velotta's work for CRS are either not provided by Plaintiffs through record evidence or are disputed by Velotta's testimony. Lucci, who admittedly worked for CRS and whose signature was on all of CRS issued paychecks, received a CRS paycheck through December 2013, during the relevant time period. ECF No. 42-24 at 5.

         The parties dispute the precise time period during which Velotta served as an officer of CRS and whether Velotta served as its Vice President or its President.[9] Velotta testified at his deposition that “at one time” he was a Vice President at CRS, ECF No. 42-22 at 16-17; that he was never the President, ECF No. 42-22 at 21; that he had check writing authority for CRS “a long time ago” and that Lucci had the check writing authority for CRS, ECF No. 42-22 at 19; that he resigned from CRS and quit the company having signed a resignation letter dated May 1, 2008, and that, at the very least by October of 2010, he was no longer employed and had nothing to do with CRS, ECF No. 42-22 at 13, 16, 21, 25; and that he had not worked for CRS for at least “six, seven years” as of the date of his January 2017 deposition. ECF No. 42-22 at 25, 16.[10]

         Velotta explained that it was his signature on the May 1, 2008 resignation letter, but offered that given that the events occurred nearly a decade prior to his deposition he could not specifically recall handing the resignation letter to Lucci or telling Lucci of his resignation, but assumed that he had done so. ECF No. 42-22 at 22. His testimony supports that, at the very least sometime between May 1, 2008 and October of 2010, he ceased working for CRS and serving as its Vice President. ECF No. 42-22 at 21-22. Regarding his reasons for resigning from CRS, Velotta was able to recall that:

[a]t that time, Velotta Company had some work in Pennsylvania and it needed 100 percent of my attention because things were going sour on some jobs, and I didn't like the way-I didn't like dealing with John Lucci and how he performed his work, and so I decided just to quit and get away from it.

ECF No. 42-22 at 43. After Velotta quit working for CRS, Velotta never took any personal action to take his name off of the signature card held at the bank for the CRS account.[11] ECF No. 42-22 at 31.

         2. Velotta Company

         Velotta Company is an Ohio Corporation. ECF No. 42-21, ¶ 2. Robert Velotta, Defendant Velotta's uncle, was President of Velotta Company up until February of 2016. ECF No. 42-22 at 7, 8. As of 2012, Velotta, his father Michael Velotta, Carolann Velotta, and her father Robert Velotta were each 25% owners of the Velotta Company. ECF No. 41 ¶ 6; ECF No. 42-22 at 7, 30. Defendant Velotta served as Velotta Company's Vice President of Operations. ECF No. 41 ¶ 5. Carolann Velotta served as Velotta Company's Vice President of Finance, ECF No. 42-22 at 27, was responsible for signing the checks of Velotta Company and for maintaining its finances and financial records. ECF No. 42-22 at 36-37. She did not report to Defendant Velotta and he was not responsible for finances at Velotta Company. ECF No. 42-22 at 26, 35, 37.[12]

         Jody Meager (“Meager”), was an employee of Velotta Company, ECF No. 42-22 at 38-39, who at one point filled out and signed an “employer survey” form provided by the auditor of the Laborers dated July 21, 2009, in which she listed herself as CRS' controller, see ECF No. 42-11 (indicating CRS as the correct name of “your company”), and listed that Velotta was President of CRS and Lucci was Vice President of CRS. Velotta, however, testified that he was never the President of CRS. ECF No. 42-22 at 21. Although Lucci indicated that Velotta was President of CRS and that he ...


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