Trustees of Detroit Carpenters Fringe Benefit Funds v. Patrie Construction Co.
618 F. App'x 246
5th Cir.2015Background
- Trustees of Detroit Carpenters Fringe Benefit Funds sued Patrie Construction Co., Francesco Woodwork, Inc., and owner Andrea M. Bercich under ERISA, the LMRA (via §185), and the Michigan Building Contract Fund Act (MBCFA), alleging Francesco was an alter ego used to evade fringe-benefit obligations.
- Patrie was a long‑time signatory to the collective bargaining agreement (CBA) requiring payment of fringe benefits and allowing audits; Francesco manufactured millwork and was owned by Bercich after 2007.
- Trustees alleged shared management, equipment, facilities, employees, customers, and ownership, and that in December 2011 Patrie subcontracted covered carpentry work to Francesco (White Lake Project) to avoid fringe payments.
- District court dismissed all claims against Francesco and Bercich for failure to plead alter‑ego with sufficient factual particularity, and dismissed some ERISA claims as time‑barred; it also dismissed MBCFA and fiduciary claims against Bercich. It allowed the Trustees to amend; the amended complaint was again dismissed. Trustees appealed; defendants cross‑appealed for fees.
- Sixth Circuit: affirmed dismissal of claims against Francesco and Bercich for insufficient alter‑ego allegations, reversed dismissal of certain non‑alter‑ego claims against Patrie (audit refusal and unauthorized subcontracting), and affirmed denial of defendants’ fee/sanctions requests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amended complaint plausibly alleged Francesco is Patrie’s alter ego | Allegations of shared management, equipment, facilities, employees, customers, owners and a December 2011 subcontracting incident support alter‑ego inference | Allegations are conclusory, a formulaic recitation of alter‑ego elements without factual detail | Dismissal affirmed: pleadings insufficient under Twombly/Iqbal to show substantially identical management, business, purpose, operation, equipment, customers, supervision, ownership |
| Whether district court should have considered exhibits submitted with earlier briefing on a 12(b)(6) motion | Trustees argued exhibits (tax returns, invoices, emails) collectively support alter‑ego and should be considered | Defendants argued exhibits were not part of the complaint and reliance on them converts motion to summary judgment | Court held district court properly limited review to the amended complaint because exhibits were not incorporated by reference or central to the pleading |
| Whether ERISA claims against Patrie independent of alter‑ego theory survived | Trustees argued auditing claim and subcontracting/delinquency claims against Patrie stand on their own | Defendants argued all claims depended on alter‑ego theory and lacked factual support | Court reversed dismissal as to (1) claim that Patrie refused Trustees’ audit request and (2) claim that Patrie subcontracted covered work to avoid fringe payments — those claims plausibly alleged against Patrie alone |
| Whether defendants entitled to attorney fees or sanctions | Trustees contended suit was brought in good faith and not frivolous | Defendants claimed suit was frivolous and counsel multiplied proceedings; sought fees under ERISA §1132(g)(1), §1927, Rule 11 | Denial of fees and sanctions affirmed: district court did not abuse discretion applying the King/Majestic Star factors and found Trustees had a reasonable basis and did not act in bad faith |
Key Cases Cited
- Trs. of Detroit Carpenters Fringe Benefit Funds v. Indus. Contracting, LLC, 581 F.3d 313 (6th Cir. 2009) (test for alter‑ego: substantially identical management, business, purpose, operation, equipment, customers, supervision and ownership)
- NLRB v. Fullerton Transfer & Storage Ltd., Inc., 910 F.2d 331 (6th Cir. 1990) (discussing alter‑ego/double‑breasted operations analysis)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts making claim plausible, not merely conceivable)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions need factual support; courts need not accept conclusory allegations)
- Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559 (1985) (ERISA requires employers to maintain adequate records; duties to furnish information to plans)
- Shelby Cnty. Health Care Corp. v. Majestic Star Casino, LLC, 581 F.3d 355 (6th Cir. 2009) (five‑factor test for attorney’s fees under ERISA §1132(g)(1))
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (standard of review and deference for district court fee determinations)