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Johnson v. Allied Excavating, Inc.

United States District Court, D. Minnesota

August 8, 2019

GLEN JOHNSON, TIMOTHY GILLEN, KYLE JONES, STEVEN HALL, CLAYTON JOHNSON, MARK HUBBARD, STEVE PIPER, and BILL PATT, as Trustees of the Operating Engineers Local #49 Health and Welfare Fund; MICHAEL R. FANNING, as a Fiduciary of the Central Pension Fund of the International Union of Operating Engineers and Participating Employers; JOSEPH RYAN, BRUCE CARLSON, GLEN JOHNSON, FRANK FRATTALONE, LEE HILLER, TONY PHILLIPI, GREG WAFFENSMITH, and MARK RYAN, as Trustees of the Local #49 International Union of Operating Engineers and Associated General Contractors of Minnesota Apprenticeship and Training Program; THE OPERATING ENGINEERS LOCAL #49 HEALTH AND WELFARE FUND; THE CENTRAL PENSION FUND OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS AND PARTICIPATING EMPLOYERS; and THE LOCAL #49 INTERNATIONAL UNION OF OPERATING ENGINEERS AND ASSOCIATED GENERAL CONTRACTORS OF MINNESOTA APPRENTICESHIP AND TRAINING PROGRAM, Plaintiffs,
v.
ALLIED EXCAVATING, INC. and JEFFREY JEWISON, Defendants.

          Christy E. Lawrie, McGRANN SHEA CARNIVAL STRAUGHN & LAMB, CHTD, for plaintiffs.

          Mark S. Mathison and Tara C. Adams, GRAY PLANT MOOTY, for defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM CHIEF JUDGE

         Plaintiffs are three multi-employer jointly-trusteed fringe benefit plans and their fiduciaries and trustees (collectively the “Funds”). Defendant Allied Excavating, Inc. (“Allied”) is an employer who executed a collective bargaining agreement (“CBA”) with the Associated General Contractors of Minnesota, Highway, Railroad, and Heavy Construction Division and the Internati No. 49 (collectively, the “Union”).[1] Defendant Jeffrey Jewison (“Mr. Jewison”) is one of Allied's corporate officers.[2] The Funds seek unpaid contributions and other damages from Defendants. This case is before the Court on the Funds' Motion for Summary Judgment on three issues: (1) whether Defendants can maintain a termination of CBA defense; (2) how much, if any, unpaid contributions exist; and (3) whether Mr. Jewison is personally liable for any unpaid contributions.

         The Court will grant the Motion in part and deny it in part, finding that Defendants failed to establish contract termination as a matter of law; a genuine dispute of material facts remains as to the amount of unpaid contributions; and Mr. Jewison is personally liable for certain unpaid contributions.

         BACKGROUND

         Defendants and the Union have had a contractual relationship going back to at least 2002. On August 29, 2011, Allied's CEO Pamela Jewison (“Ms. Jewison”) executed a CBA with the Union effective May 1, 2011 to April 30, 2014. (Decl. of Michael Streater (“Streater Decl.”) ¶ 27, Ex. N (“First CBA”), Feb. 22, 2017, Docket No. 42-2; Aff. of Mike Streater (“Streater Aff.”) ¶ 2, Ex. B at 49, Dec. 16, 2015, Docket No. 13-1.) On January 7, 2015, Ms. Jewison executed a subsequent CBA with the Union effective through April 30, 2017. (Streater Aff., Ex. A (“Second CBA”); Ex. B at 50.) At all relevant times, the applicable CBA required Allied to make monthly contributions to the Funds on behalf of employees for hours worked on tasks covered by the CBA.[3] (First CBA at 15-17; Second CBA at 15-17.)

         Prior to the execution of the relevant CBAs, on March 16, 2002, Mr. Jewison (then CEO of Allied) executed the Operating Engineers Local #49 Health and Welfare Fund Participating Agreement (“Welfare Participating Agreement”). (Streater Aff., Ex. C.) The Welfare Participating Agreement, which complements the CBA in force at any given time, specifically obligates Allied to make contributions to the Operating Engineers Local #49 Health and Welfare Fund (the “Health & Welfare Fund”) as specified in the applicable CBA, and it also purports to bind in an individual capacity any corporate officer signing on behalf of an employer. (Id.) The Welfare Participating Agreement is “in effect for the period stipulated in [the CBA applicable at the time of execution] and any renewal or extension thereof.” (Id.)

         1. Termination of the Second CBA

         The duration provision of the Second CBA provides:

ARTICLE 25 - DURATION
25.01 All terms of this Agreement shall take effect on May 1, 2014. Wage and benefits for the 2014 year only will start on May 5th, 2014.
25.02 This Agreement shall remain in full force and effect through April 30, 2017.
25.03 Any party has the right to terminate or amend this Agreement by giving notice to the other party, sixty (60) days before the expiration of this Agreement. Failure to give such notice shall cause this Agreement to be renewed automatically for a further period of twelve (12) months.
25.04 In the event such written notice is given and a new Agreement is not signed before the expiration of this Agreement, then this Agreement shall continue in force until a new Agreement is signed, or until negotiations are formally broken off, or until a strike or lockout occurs.

(Second CBA at 18.) Defendants allege that they terminated the Second CBA in March 2015. Defendants cite to the following as evidence of that termination.

         A day after Allied was notified that an audit would be conducted, a representative from the audit company inquired whether Pam Riley, a Union representative, knew whether Allied changed its name to Vortech Hydro Vac (“Vortech”) because that was the name on a remittance report. (Decl. of Mark Mathison (“Mathison Decl.”) ¶ 2, Ex. A at 2, Dec. 21, 2018, Docket No. 90-1.) Riley responded that she did not know, and that “[t]hey'll have to sign everything again under the new name.” (Id.)

         On or about March 9, 2015, Ms. Jewison had a conversation with Douglas Zila, then Treasurer and Area Business Representative of the Union, asking him if the Second CBA could be terminated because the covered work performed by Allied employees had begun to be performed by Vortech employees instead. (Decl. of Pamela Jewison (“Pamela Decl.”) ¶ 3, Feb. 15, 2017, Docket No. 36.) Zila informed Ms. Jewison that as long as Vortech was under contract with the Union then the Second CBA would be terminated. (Id.) Ms. Jewison spoke with Zila again on March 17, 2015 and Zila confirmed that as long as Vortech was under contract with the Union, Allied would be released from the Second CBA. (Id. ¶ 4.) Zila told Ms. Jewison that he had confirmed this information with Glen Johnson, the Business Manager for the Union and trustee of two of the Plaintiff-funds. (Id.) On March 26, 2015, Zila visited Allied's offices and brought new agreements for Vortech to sign. (Id. ¶ 5, Ex. A at 2, Docket No. 36-1; Supp. Decl. of Pamela Jewison (“Supp. Pamela Decl.”) ¶ 2, Dec. 21, 2018, Docket No. 92.) At that meeting, Ms. Jewison, as a representative for Vortech, signed a new Acceptance of Agreement to be bound to the CBA. (Pamela Decl. ¶ 5, Ex. A at 2.) Ms. Jewison states that Zila held himself out as the representative for both the Union and Funds, and that she and Mr. Jewison believed that Zila had the authority to terminate the Second CBA. (Pamela Decl. ¶ 6.)

         On April 6, 2015, Melissa Urban-Brown, a Supervisor in Auditing and Collections with Wilson-McShane, (Mathison Decl. ¶ 3, ) emailed Michael Streator, the auditor performing the audit on Allied, to “do the audit through current and make it a final audit, ” because Allied had not re-signed the CBA under Allied, (Id. ¶ 4, Ex. C at 6.)

         In April 2015-post “termination” of the Second CBA-Allied delivered a contribution to the Health Fund for covered work performed in March 2015, prior to the termination of the Second CBA. (Pamela Decl. ...


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