United States District Court, W.D. Washington, Tacoma
MARINE CARPENTERS PENSION FUND; and PACIFIC COAST SHIPYARDS PENSION FUND, Plaintiffs,
PUGLIA MARINE, LLC, a Washington limited liability company, et al, Defendants.
ORDER ON PLAINTIFFS' MOTION FOR PARTIAL SUMMARY
JUDGMENT, AN ORDER TO PAY, AND INJUNCTIVE RELIEF
B. Leighton United States District Judge.
MATTER is before the Court on Plaintiffs Marine Carpenters
Pension Fund and Pacific Coast Shipyards Pension Fund's
(the Funds) Motion for Partial Summary Judgment, an Order to
Pay, and Injunctive Relief. Dkt. #19. This dispute originated
when Puglia Engineering, Inc., purchased all the stock of San
Francisco Ship Repair, Inc. (SFSR), quickly realized that the
new venture was financially unsustainable, and then ceased
all operations after just a few months. The Funds assert that
the decision to pull the plug on SFSR amounted to a
“complete withdrawal, ” which triggered
withdrawal liability to pay any “unfunded vested
benefits” to multiemployer pension plans. 29 U.S.C.
Funds assert that all Defendants are jointly and severally
liable for Puglia Engineering and SFSR's withdrawal
liability because they constitute a single
“employer” under the Multiemployer Pension Plan
Amendments Act (MPPAA). This is because, according to the
Funds, each non-individual defendant is a “trade or
business” under the “common control” of
Neil Turney. See § 1301(b)(1). They also
contend that Turney himself is jointly and severally liable
as the sole proprietor of a business that leases property to
Puglia Engineering. The Funds thus ask the Court to enter
judgment in their favor for the outstanding amount of interim
withdrawal liability payments, which comes to $1, 034, 184.
The Funds also request an injunction ordering Defendants to
make future interim withdrawal liability payments, which will
come to roughly an additional $1.3 million before the parties
engage in arbitration.
Puglia Marine, LLC, Puglia Engineering of California, Inc.,
Bari Marine Holdings, LLC, 1410 Thorne Road, LLC, and Neil
Turney (collectively “the Control Group”) do not
oppose the assertion that they are one employer for purposes
of withdrawal liability. They are also relatively silent
regarding whether they owe the amount of withdrawal liability
claimed by the Funds. However, Defendants do ask the Court to
adopt and apply an “equitable exception” to the
MPPAA's requirement that withdrawing employers make
interim payments until their liability can be litigated at
arbitration. Defendants insist that several other circuits
have wisely applied such an exception where making interim
payments would irreparably harm the withdrawing employer. If
the Court applies this exception, Defendants assert that
their likely economic hardship supports denying the
Funds' Motion or at least staying review pending
Engineering is a third-party Washington corporation with 100%
of its stock owned by its president, Neil Turney. Dkt. #18,
at 8. On December 1, 2016, Puglia Engineering entered into a
stock purchase agreement with BAE Systems Ship Repair, Inc.
Through this agreement, Puglia Engineering obtained ownership
of 100% of the stock of SFSR, a subsidiary of BAE Systems
Ship Repair. However, a mere four days after Puglia
Engineering took possession of the shipyard on January 2,
2017, it became clear that at least $15 million worth of
repairs would be necessary to continue the venture. Rather
than expend this large amount, Puglia Engineering ceased
operating the shipyard on May 28, 2017.
Puglia Engineering purchased its stock, SFSR was signatory to
two collective bargaining agreements. The first was with
Carpenters Local Union 2236, affiliated with the Northern
California Regional Council of Carpenters. The second was
with the Bay Cities Metal Trades Council of the Metal Trades
Department, AFL-CIO. Each CBA respectively required SFSR to
report and pay pension contributions to the Marine Carpenters
Pension Fund and the Pacific Coast Shipyards Pension Fund for
each hour of covered work performed by union employees. SFSR
reported and paid pension fringe benefit contributions to
these funds after the CBAs were executed.
Puglia Engineering took ownership of SFSR's stock on
December 1, 2016, it also adopted the terms and conditions of
all the union contracts to which SFSR was bound. Dkt. #22,
Ex. 5, at ¶ 9.06. Specifically, the purchase agreement
states that the Puglia Engineering shall have “sole
responsibility for all Liabilities arising under each such
Union Contract and Benefit/Pension Plan” and explicitly
releases SFSR from “any obligation or Liability . . .
.” Id. Although Puglia Engineering reported
and paid fringe benefit contributions to the Funds while
operating SFSR, this stopped once SFSR was shut down.
April of 2017, both Puglia Engineering and SFSR filed for
Chapter 11 bankruptcy protection. See In re Puglia
Engineering, Inc., United States Bankruptcy Court,
Western District of Washington, No. 18-41324 BDL; In re
San Francisco Ship Repair, Inc., United States
Bankruptcy Court, Western District of Washington, No.
18-41350 BDL. On April 20, 2018, the Funds filed proofs of
claim in both bankruptcy proceedings claiming ERISA
withdrawal liability. Dkt. #23, Exs. 14 & 15. The Marine
Carpenters Pension Fund claimed it was owed a total of $2,
170, 785.00, with quarterly payments of $49, 520.00. Dkt.
#14, Ex. 18. The Pacific Coast Shipyards Pension Fund claimed
it was owed $14, 887, 521.00, with quarterly payments of
$295, 208.00. Dkt. #23, Ex. 15.
addition to owning all of Puglia Engineering's stock,
Neil Turney also owns 100% of the stock in Puglia Engineering
of California, Inc., and is the sole member of Puglia Marine,
LLC, Bari Marine Holdings, LLC, and 1410 Thorne Rd., LLC.
Dkt. #18, at 8; Dkt. #23, Exs. 8 & 9. Turney also owns
two parcels of real property in Tacoma, WA, that he leases to
Puglia Engineering. Dkt. #23, Ex. 10. On May 7, 2018, the
Funds sent written demands for payment of withdrawal
liability to several of the non-bankrupt members of the
Control Group, including Puglia Marine, LLC, Puglia
Engineering of California, Inc., and 1410 Thorne Rd., LLC.
Dkt. #23, Exs. 18 & 19. The letters stated the amounts
owing and that payment was due within 60 days of receipt.
the members failed to pay by July 8, 2018, the date that the
first installment was due,  the Funds sent two additional
letters notifying the members of the Control Group that they
were in default. Dkt. #23, Ex. 20; Dkt. #23, Ex. 21. However,
the quarterly installments due on October 8, 2018, and
January 8, 2019, were also not paid, and no payments
subsequent to those dates have been made either. Dkt. #23, at
¶¶ 10-14; Dkt. #22, at ¶ 12. The Funds filed
this action in October, 2018, to compel payment by the
Control Group. Dkt. #1. The Control Group demanded
arbitration on November 21, 2018. Dkt. #23, at ¶ 12.
declaration, Turney states that Puglia Engineering has not
yet confirmed a plan of reorganization but that its assets
are more than fully encumbered by the secured claims of
Washington Federal Bank. Dkt. #32, at 2. Further, as a
personal guarantor of Puglia Engineering's obligations,
Turney asserts that his personal assets are also encumbered.
Id. at 3. Turney thus states that being ordered to
make the interim payments on the Control Group's
withdrawal liability would effectively force him into
personal bankruptcy and result in little being actually paid
to the Funds. Id. at 4.
judgment is proper “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c). In determining whether an issue of fact
exists, the Court must view all evidence in the light most
favorable to the nonmoving party and draw all reasonable
inferences in that party's favor. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248-50
(1986); Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th
Cir. 1996). A genuine issue of material fact exists where
there is sufficient evidence for a reasonable factfinder to
find for the nonmoving party. Anderson, 477 U.S. at
248. The inquiry is “whether the evidence presents a
sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a
matter of law.” Id. at 251-52. The moving
party bears the initial burden of showing that there is no
evidence which supports an element essential to the
nonmovant's claim. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). Once the movant has met this burden,
the nonmoving party then must show that there is a genuine
issue for trial. Anderson, 477 U.S. at 250. If the
nonmoving party fails to establish the existence of a genuine
issue of material fact, “the moving party is entitled
to judgment as a matter of law.” Celotex, 477
U.S. at 323-24. There is no requirement that the moving party
negate elements of the non-movant's case. Lujan v.
National Wildlife Federation, 497 U.S. 871 (1990). Once
the moving party has met its burden, the non-movant must then
produce concrete evidence, without merely relying on
allegations in the pleadings, that there remain genuine
factual issues. Anderson, 477 U.S. 242, 248 (1986).
Collecting Withdrawal Liability under the ...