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Trustees of The Southern California Pipe Trades Health and Welfare Trust Fund v. C.H. Stone Plumbing Co.

United States District Court, C.D. California

June 5, 2014

TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES HEALTH AND WELFARE TRUST FUND; TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES PENSIONERS AND SURVIVING SPOUSES HEALTH FUND; TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES RETIREMENT TRUST FUND; TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES DEFINED CONTRIBUTION TRUST FUND; TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES VACATION AND HOLIDAY TRUST FUND; TRUSTEES OF THE SOUTHERN CALIFORNIA PIPE TRADES CHRISTMAS BONUS FUND; TRUSTEES OF THE APPRENTICE AND JOURNEY MAN TRAINING TRUST FUND; TRUSTEES OF THE PLUMBERS AND PIPEFITTERS NATIONAL PENSION FUND; and TRUSTEES OF THE INTERNATIONAL TRAINING FUND, Plaintiffs,
v.
C.H. STONE PLUMBING CO., INC., a California corporation doing business as

LAQUER URBAN CLIFFORD & HODGE LLP, Brian Ray Hodge, Marija Kristich Decker, Michael Y. Jung, Pasadena, California, Counsel for Plaintiffs, Trustees of the Southern California Pipe Trades Health and Welfare Trust Fund, et al.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

GARY ALLEN FEESS, District Judge.

The above-captioned case came on regularly for trial on May 14, 2014, before the above-captioned Court, the Honorable Gary Allen Feess, United States District Judge, presiding. Brian Ray Hodge and Michael Y. Jung of Laquer, Urban, Clifford & Hodge, LLP appeared as counsel for plaintiffs, Trustees of the Southern California Pipe Trades Health and Welfare Trust Fund, Trustees of the Southern California Pipe Trades Pensioners and Surviving Spouses Health Fund, Trustees of the Southern California Pipe Trades Retirement Trust Fund, Trustees of the Southern California Pipe Trades Defined Contribution Trust Fund, Trustees of the Southern California Pipe Trades Vacation and Holiday Trust Fund, Trustees of the Southern California Pipe Trades Christmas Bonus Fund, Trustees of the Apprentice and Journeyman Training Trust Fund, Trustees of the Plumbers and Pipefitters National Pension Fund, and Trustees of the International Training Fund (collectively the "Trustees"). David B. Simpson and Theodore S. Khachaturian of Wolflick & Simpson appeared as counsel for defendant David Kenneth Dean. The trial was conducted pursuant to the Pre-Trial Conference Order, the direct testimony of witnesses presented in declarations filed with the Court, the documentary and oral evidence presented at trial, and the oral arguments by counsel. The case having been submitted to the Court for decision, the Court now makes the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

1. Any finding of fact which is also a conclusion of law shall be deemed to be a finding of a fact and also a conclusion of law.

2. Plaintiffs are Trustees of collectively bargained fringe benefit trusts (the "Trusts"). [Final Pretrial Conference Order, Docket No. 77 ("FPCO"), 5:7-21.] The Trusts are express trusts created pursuant to written agreements and declarations of trust (hereinafter "Trust Agreements") between the Southern California Pipe Trades District Council No. 16 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry ("District Council No. 16") and various employer associations in the plumbing and pipefitting industry in Southern California, or between District Council No. 16, and other councils of the United Association of Plumbers and Pipefitters, and various employer associations across the United States. [FPCO, 5:7-21.] The Trusts are now, and were at all times material to this action, labor-management multiemployer trusts created and maintained pursuant to Section 302(c)(5) of the Labor-Management Relations Act of 1947, as amended, ("LMRA") [29 U.S.C. § 186(c)(5).] [FPCO, 5:7-21.]

3. District Council No. 16 is a labor organization representing employees in the plumbing, pipefitting and landscaping industry in Southern California, and a labor organization representing employees in an industry affecting commerce within the meaning of § 301(a) of the LMRA [29 U.S.C. § 185(a).] [FPCO, 5:22-26.]

4. At all times material herein, defendant C.H. Stone Plumbing Co., Inc., (hereinafter "C.H. Stone") was a corporation duly organized under the laws of the State of California with its principal place of business located in Baldwin Park, California. [FPCO, 6:1-4.]

5. At all times material herein, defendant David Kenneth Dean (hereinafter "Defendant Dean") has been an individual residing in Whittier, California. [FPCO, 6:27-28.]

6. Defendant Dean was the Chief Executive Officer and sole shareholder of C.H. Stone from August 10, 2011, through at least October 2012. [Exs. 27, 59, 61, and 67.] Defendant Dean admits he was the sole shareholder of C.H. Stone from at least September 2011 through October 2012. [Defendant's Direct Testimony By Declaration of David K. Dean, Docket No. 90 ("Decl. Dean"), ¶ 7; Exs. 59 and 61.]

7. C.H. Stone became a member of the California Plumbing and Mechanical Contractors Association ("CPMCA"), a multiemployer association, in June 1997 and remained a member until at least October 2012. [Declaration of Charles Martin, Docket No. 88 ("Decl. Martin"), ¶ 6; FPCO, 6:7-13.] At all times material herein, C.H. Stone delegated to CPMCA the authority to bargain collectively with District Council No. 16 on behalf of C.H. Stone. [Decl. Martin, ¶ 8.]

8. As a member of the CPMCA bargaining unit, C.H. Stone agreed to be bound by the terms and conditions of the written Master Agreement negotiated between District Council 16 and the CPMCA [FPCO, 6:7-13.]

9. Section C.5 of the Master Agreement provides that each of the Trust Agreements is incorporated into the Master Agreement. [Exs. 1 and 2; Declaration of Angela Panomchai, Docket No. 91 ("Decl. Panomchai"), ¶ 7.]

10. Under Section C.5.3 of the Master Agreement, by virtue of being bound to the Master Agreement, C.H. Stone agreed to be bound by each of the Trust Agreements establishing the Local Trusts, and agreed to irrevocably designate and appoint the Employer designated Trustees as its agent with authority to amend the Trust Agreements and bind C.H. Stone to those amendments. [Exs. 1 and 2; Decl. Panomchai, ¶ 7.]

11. Article VI, Section 6, of each of the Trust Agreements establishing the Southern California Pipe Trades Health and Welfare Trust, Southern California Pipe Trades Pensioners and Surviving Spouses Health Fund, Southern California Pipe Trades Retirement Fund Trust Agreement, Southern California Pipe Trades Defined Contribution Fund, Southern California Pipe Trades Vacation and Holiday Trust, Southern California Pipe Trades Christmas Fund Trust Agreement, Southern California Pipe Trades Apprentice and Journeyman Training Trust, and the International Training Fund provides that the Trustees, or a committee appointed by the Trustees, may adopt such rules and procedures concerning payments, audits, liquidated damages, and the collection of delinquent contributions, as they determine necessary. [Exs. 3-9 and 11; Decl. Panomchai, ¶¶ 7-8.]

12. Article VI, Section 5, of the Trust Agreement establishing the Plumbers and Pipefitters National Pension Fund provides that the Trustees may adopt rules and regulations concerning the collection of delinquent contributions. [Ex. 10; Decl. Panomchai, ¶ 7.]

13. Pursuant to the authority granted in the Trust Agreements, at all times material herein the various Boards of Trustees have delegated responsibility for collecting delinquent fringe benefit contributions to a subcommittee called the Delinquency Committee. [Decl. Panomchai, ¶ 7.]

14. Since at least 2002, the Delinquency Committee has established a written Joint Collection Policy & Procedures ("Collection Procedures"), which has been modified from time to time. [Decl. Panomchai, ¶ 7; Exs. 12 and 13, (2005 & 2011 Collection Policy & Procedures.]

15. Pursuant to Sections C.3.4-3.5 of the Master Agreement, and as restated in the Collection Procedures, contributions are due on the tenth (10th) day of each month and are measured by the hours worked by covered employees during the prior month. [Exs. 1, 2, 12 and 13; Decl. Panomchai, ¶ 16.] Contributions are considered delinquent if not post-marked or delivered by the fifteenth (15th) day of that month. [Exs. 1, 2, 12 and 13; Decl. Panomchai, ¶ 17; Declaration of Jesus Gallindo, Docket No. 84 ("Decl. Gallindo"), ¶ 6.] The due date for payment of contributions has not been altered or modified at any time relevant herein. [Decl. Panomchai, ¶ 21; Ex. 22.]

16. The Trusts did not have a practice of deeming contributions paid after the fifteenth (15th) of the succeeding month to be timely. [Decl. Panomchai, ¶ 21; Ex. 22; Decl. Gallindo, ¶ 8.] Defendant Dean received a copy of the written policy stating that contributions were due by the tenth (10th) of the succeeding month and delinquent if not paid by the fifteenth (15th) of the succeeding month. [Decl. Panomchai, ¶ 22; Exs. 12 and 35.] The Trusts' administrative employees also notified Defendant Dean in June 2011 that contributions were delinquent if not paid by the fifteenth (15th) of the succeeding month. [Ex. 36; Decl. Panomchai, ¶ 22.] Dean was in fact notified of delinquences of June 17, 2011 (see exhibit 36) and advised of penalties that were the being imposed as a result. (Id.) the trusts never waived the requirement timely payment.

17. Under the terms of the Master Agreement, C.H. Stone promised to pay fringe benefit contributions to the Trusts for each hour worked by its employees performing any work covered by the Master Agreement. (Exs. 1 and 2; Decl. Panomchai, ¶ 9.]

18. During the time period of November 1, 2007, through at least September 30, 2012, C.H. Stone engaged in plumbing and pipefitting work as either a general contractor or subcontractor. [FPCO, 6:25-27.]

19. C.H. Stone had the primary responsibility to calculate and report the amount of fringe benefit contributions due each month, and this is done without any supervision by the Trusts. [Decl. Panomchai, ¶ 9; FPCO, 7:1-3.]

20. Based on the unpaid monthly reports submitted to the Trusts by C.H. Stone for work performed in November 2011 (the "November Reports"), C.H. Stone owes the Trusts $85, 503.64 for fringe benefit contributions. [FPCO, 7:11-16; Ex. 21.] Those contributions became due and owing no later than December 10, 2011. Additional amounts for liquidated damages and interest became due and owing by C.H. Stone to the Trusts under the Master Agreement, Collection Procedures and Trust Agreements when those contributions became "delinquent" on December 15, 2011. [Decl. Panomchai, ¶¶ 9 and 17; Exs. 1, 2 and 3-12.]

21. In or around July 2011, Miller Kaplan Arase, LLP was retained by the Trustees to perform an audit of the records of C.H. Stone covering the time period from November 1, 2007, through July 31, 2011. [Declaration of Jeffrey Goss, Docket No. 86 ("Decl. Goss"), ¶ 4.] The audit sought to determine the amount of ...


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