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BAC Local Union 15 Welfare Fund v. Williams Restoration Co.

United States District Court, D. Kansas

July 12, 2019

BAC LOCAL UNION 15 WELFARE FUND, et al., Plaintiffs,
v.
WILLIAMS RESTORATION COMPANY, et al., Defendants.

          MEMORANDUM AND ORDER

          Kathryn H. Vratil, United States District Judge.

         Plaintiffs BAC Local Union 15 Welfare Fund, et al., bring suit against Williams Restoration Company, Inc. and Fox Holdings, Inc. Plaintiffs are trust funds under the Labor Management Relations Act, as amended, Section 302, 29 U.S.C. § 186, and employee benefit plans under Section 3 of the Employee Retirement Income Security Act, 29 U.S.C. § 1003 (“ERISA”). Plaintiffs seek to collect unpaid contributions to an employee benefit plan under a collective bargaining agreement with Williams Restoration. Pretrial Order (Doc. #152) filed March 14, 2019 at 5-6. Plaintiffs also contend that Fox Holdings is a successor to Williams Restoration and is thus bound and liable for unpaid contributions. Id. This matter is before the Court on Plaintiffs' Motion For Partial Summary Judgment Against Defendant Fox Holdings, Inc. (Doc. #139) filed February 11, 2019, which seeks to hold Fox Holdings liable as a matter of law on a theory of successor liability. For reasons stated below, the Court overrules plaintiffs' motion.

         Legal Standards

         Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Hill v. Allstate Ins. Co., 479 F.3d 735, 740 (10th Cir. 2007). A factual dispute is “material” only if it “might affect the outcome of the suit under the governing law.” Liberty Lobby, 477 U.S. at 248. A “genuine” factual dispute requires more than a mere scintilla of evidence in support of a party's position. Id. at 252.

         The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Nahno-Lopez v. Houser, 625 F.3d 1279, 1283 (10th Cir. 2010). Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial as to those dispositive matters for which the nonmoving party carries the burden of proof. Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). To carry this burden, the nonmoving party may not rest on the pleadings but must instead set forth specific facts supported by competent evidence. Nahno-Lopez, 625 F.3d at 1283.

         The Court views the record in the light most favorable to the nonmoving party. See Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir. 1991). It may grant summary judgment if the nonmoving party's evidence is merely colorable or is not significantly probative. See Liberty Lobby, 477 U.S. at 250-51. In response to a motion for summary judgment, a party cannot rely on ignorance of facts, speculation or suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial. Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988); Olympic Club v. Those Interested Underwriters at Lloyd's London, 991 F.2d 497, 503 (9th Cir. 1993). The heart of the inquiry is “whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, 477 U.S. at 251-52.

         Factual Background

         For purposes of summary judgment, the following facts are either uncontroverted or where controverted, the contentions of each party are noted.[1]

         Williams Restoration is in the business of waterproofing, concrete and masonry restoration and roofing. Jeffery Williams is its president and owner. Fox Holdings is in the business of commercial and industrial waterproofing and concrete and masonry restoration. Jordan Fox is its president and owner.

         I. Williams Restoration's Agreement With Plaintiffs

         On July 10, 2013, Williams Restoration and BAC Local Union 1 executed an agreement, effective through May 31, 2016 “and thereafter from year to year unless changed in accordance with Article XVIII of this Agreement.” Agreement at 1, Exhibit 5 to Index Of Exhibits (Doc. #142) filed February 11, 2019 at 1.[2] Among other things, the agreement obligates Williams Restoration to contribute to the union's health, welfare, pension, training and education and promotion funds. Id. at 11. Article XVIII states that the agreement will expire on May 31, 2016 and that “[e]ither party desiring changes in provisions of this Agreement shall notify the other party in writing at least ninety (90) days prior to May 31, 2016 and this Agreement than [sic] shall be opened for discussion relative to such change or changes.” Id. at 17. In addition, Article XIV provides as follows:

This Agreement shall be binding on all successors and assigns of the Employer, in the event of a sale of transfer of the Employer's business, the Employer agrees to give the Union ten (10) days notification of said proposed sale or transfer of assets and agrees this contract shall become a part of and bind the successor Employers.

Id. at 15. Williams Restoration never notified plaintiffs of any proposed sale or transfer of assets.

         At some point between July and September of 2014, BAC Local Union 1 notified Williams that it had merged with BAC Local Union 15. Williams Restoration agreed to an amendment, effective November 1, 2014, which acknowledged the merger, changed the identity of BAC Local Union 1 to BAC Local Union 15, and changed where Williams Restoration directed its benefit payments. See id. at 18.

         II. Asset Purchase Agreement Between Williams Restoration And Fox Holdings

         Williams Restoration engaged Sunbelt Business Advisors, Inc. to solicit a sale of its assets. In early September of 2014, Williams Restoration and Fox Holdings began negotiating an Asset Purchase Agreement (“APA”). On November 6, 2014, they executed the final APA by which Fox Holdings purchased assets and equipment from Williams Restoration.

         The record reveals a genuine issue of material fact whether, during the course of negotiations, Williams disclosed to Fox Holdings the agreement of July 10, 2013 or its successor provision.[3] The parties also dispute whether Williams Restoration and Fox Holdings specifically revised the APA to address disclosure of the collective bargaining agreement or any other union contracts.[4]

         III. Business Of Fox Holdings Post-Sale

         On the advice of Small Business Administration loan officers, Fox Holdings did not make any changes during the six months immediately after the asset purchase. After the sale, Fox Holdings performed the same type of work as Williams Restoration, conducted business as Williams Restoration had performed, retained the same non-supervisory employees and used the same primary material suppliers, telephone number, mailing address and principal place of business as Williams Restoration. Until April of 2015, when it gave raises, Fox Holdings also maintained the same wages for employees.

         The parties dispute the extent to which Fox Holdings retained the same supervisory employees and customers. Plaintiffs assert that Fox Holdings assumed the contracts of Williams Restoration and performed work on union-only projects, but Fox Holdings asserts that it has never signed a contract to work on a union-only project. Fox Holdings also asserts that it ...


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