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Carpenters Pension Trust Fund v. Michael G. Moxley Aka Mgm's

March 30, 2011


The opinion of the court was delivered by: Richard Seeborg United States District Judge

*E-Filed 3/31/11*



Appellant Carpenters Pension Trust Fund for Northern California (the "Fund") filed a complaint in the chapter 7 bankruptcy proceeding of appellee Michael Moxley. The Fund contends 22 that an alleged debt based on Moxley's withdrawal from the pension fund is non-dischargeable under 23 the Bankruptcy Code. After the bankruptcy court granted summary judgment in favor of Moxley, 24 the Fund filed an appeal in this Court. For the reasons stated below, the decision of the bankruptcy 25 court is affirmed. 26


In 1999 Moxley, as the sole owner and operator of MGM's Cabinet Installation, entered into a collective bargaining agreement with the 46 Northern California Counties Carpenters Conference Board. Under the agreement, Moxley was required to make contribution to a multiemployer 2 pension fund. The parties' agreement expired in June 2004 and Moxley declined to renew it. For 3 purposes of this action, Moxley does not dispute that he effected a "withdrawal" from the pension 4 plan by continuing to perform work in the same location "of the type for which contributions were 5 previously required." 29 U.S.C. § 1383(b)(2). Under the Employee Retirement Income Security Act (ERISA), withdrawal from a multiemployer plan triggers an employer's obligation to 7 compensate the plan for its share of the unfunded vested liability. See 29 U.S.C. § 1381.

$172,045 and included a schedule of payments pursuant to 29 U.S.C. 1399(b)(1). In February 2007, 10 the Fund filed suit in district court seeking to recover the amount allegedly owed. On November 16, 2008, Moxley filed a chapter 7 bankruptcy petition with the Bankruptcy Court for the Northern District of California. The Fund initiated an adversary proceeding seeking an order from the 13 bankruptcy court that the withdrawal liability constitutes a non-dischargeable debt. The Fund moved 14 for summary judgment and on November 18, 2009, the court entered its order denying the motion.

Based on its conclusion that no issues of material fact remained to be decided, it sua sponte granted 16 summary judgment in favor of Moxley. The Fund sought reconsideration, and after reviewing the 17 parties' arguments, the bankruptcy court denied the motion for reconsideration. Subsequently, the


When considering an appeal from the bankruptcy court, a district court applies the same standard of review that a circuit court would use in reviewing a decision of a district court. See Ford v. Baroff (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997). A grant of summary judgment is 23 reviewed de novo. United States v. City of Tacoma, 332 F.3d 574, 578 (9th Cir. 2003). Under the Federal Rules of Civil Procedure, a court shall grant summary judgment "if the pleadings, 25 depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 26 show that there is no genuine issue as to any material fact and that the moving party is entitled to a 27 judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the initial burden of 28 demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S.

In March 2005, the Fund notified Moxley that the amount of his withdrawal liability was Fund filed an appeal of the bankruptcy court's judgment in this Court. 317, 323 (1986). The burden then shifts to the nonmoving party to "set forth specific facts showing 2 that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). The nonmoving party must identify 3 factual disputes that "might affect the outcome of the suit under governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Irrelevant or unnecessary factual disputes do not 5 raise any genuine issue for trial. Id. To preclude entry of summary judgment, the nonmoving party 6 must present sufficient evidence such that a jury could return a verdict in his or her favor. Id.

A. Discharge of Debt Based on Withdrawal

Liability under section 523(a)(4) of the Bankruptcy Code. Under that provision, a bankruptcy discharge does not relieve an individual of debt for defalcation while acting in a fiduciary capacity. U.S.C. § 523(a)(4). Defalcation involves the misappropriation or failure to account properly for "trust funds or money held in any fiduciary capacity." Blyler v. Hemmeter (In re Hemmeter), 242 F.3d 1186, Moxley serves in a fiduciary capacity with respect to the unpaid withdrawal liability and he has committed defalcation by failing to produce the money owed. 18 authority or discretionary control respecting management or disposition of its assets." 29 U.S.C. ยง 1002(21)(A)(i). "Plan assets" within the meaning of ERISA do not include future contributions to a 20 pension fund. See Collins v. Pension & Ins. Comm. of the S. Cal. Rock Prods. & Ready Mixed Ninth Circuit: "Until the employer pays the employer contributions over to the plan, the 23 contributions do not become plan assets over which fiduciaries of the plan have a fiduciary 24 obligation; this is true even where the employer is also a fiduciary of the plan." Cline v. Industrial ...

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