9 F. Supp. 3d 863
N.D. Ill.2014Background
- NRF seeks withdrawal liability recovery from Hotel 71 Lender and related controlled group under ERISA after Chicago H&S Hotel Property, LLC’s Chapter 11 plan and sale; Plan 13.1 releases claims and Plan 13.4 enjoins suits; NRF asserted a withdrawal liability claim despite sale and Plan protections.
- Hotel 71 Lender held 100% ownership of Chicago H&S after a 2007 foreclosure; purchase triggered pre-existing CBAs and NRF’s claim for withdrawal liability.
- Bankruptcy Court confirmed the Plan in March 2008; sale of Hotel 71 occurred in July 2008 to the Senior loan holder, who assumed the CBA obligations and NRF contributions.
- NRF and Trustees later asserted withdrawal liability against Hotel 71 Lender and related trades under common control, seeking liquidated damages, interest, and fees; Plaintiffs moved for summary judgment asserting Plan releases and injunctions.
- Court addresses DJA jurisdiction and whether Hotel 71 Lender is a trade or business under common control; court resolves whether Plan provisions grant relief to Plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the DJA action has proper jurisdiction and seeks actual relief | Plaintiffs seek declaratory relief under DJA, supported by §1334(a) jurisdiction | NRF argues for withdrawal liability claim despite Plan | Yes; DJA jurisdiction proper and relief is available |
| Whether Hotel 71 Lender is a trade or business under MPPAA | Hotel 71 Lender is not a trade or business; passive investment | NRF contends common-control trade/business exists | Hotel 71 Lender is not a trade or business under Groetzinger framework |
| Whether Hotel 71 Lender is under common control with Chicago H&S | Lender held 100% ownership, establishing common control | NRF disputes control scope beyond mere ownership | Yes, common control found under 414(c) framework (parent-subsidiary) |
| Whether Plan sections 13.1 and 13.4 release/injunction foreclose NRF claims | Plan releases and permanently enjoins withdrawal liability claims | NRF argues plan does not release third-party claims and is unenforceable | GRANTED for Plaintiffs on withdrawal liability release; declaratory relief granted to extent stated; NRF’s claim denied on that issue. |
Key Cases Cited
- Massena Prods. v. Cent. States, Se. & Sw. Areas Pension Fund, 706 F.3d 874 (7th Cir.2013) (MPPAA common-control liability and Groetzinger framework cited (unfunded benefits))
- Central States, Se. & Sw. Areas Pension Fund v. SCOFBP, 668 F.3d 873 (7th Cir.2011) (common-control analysis under § 1301(b)(1))
- Groetzinger, Commissioner of Internal Revenue v., 480 U.S. 23 (1987) (test for trade or business: continuity, regularity, and profit motive)
- Slotky v. Central States, Se. & Sw. Areas Pension Fund, 956 F.2d 1369 (7th Cir.1992) (requires trade/business question potentially decided on summary judgment)
- Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) (Article III and declaratory judgment standards)