United States District Court, D. Hawaii
HAWAII MASONS' PENSION TRUST FUND; HAWAII MASONS' AND PLASTERERS' ANNUITY TRUST FUND; HAWAII MASONS' VACATION AND HOLIDAY TRUST FUND; HAWAII MASONS' AND PLASTERERS' APPRENTICESHIP AND TRAINING TRUST FUND; HAWAII MASONS' HEALTH AND WELFARE TRUST FUND, Plaintiffs,
GLOBAL STONE HAWAII, INC.; RENATO FUCHS; DANIEL NELSON; JOHN DOES 1-10; DOE CORPORATIONS 1-10; DOE PARTNERSHIPS 1-10; DOE GOVERNMENTAL AGENCIES 1-10; DOE TRUSTS 1-10, Defendants.
ORDER GRANTING DEFENDANTS RENATO FUCHS AND DANIEL
NELSON'S MOTION TO DISMISS; DENYING DEFENDANTS'
REQUEST FOR ATTORNEYS' FEES; AND GRANTING PLAINTIFF
HAWAII MASONS' REQUEST FOR LEAVE TO AMEND.
OKI MOLLWAY UNITED STATES DISTRICT JUDGE
of trust funds (“Hawaii Masons”) alleges that
Defendant Global Stone Hawaii, Inc. (“Global
Stone”), and two of its officers (Defendants Renato
Fuchs and Daniel Nelson) violated the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001 et.
seq. (“ERISA”), by failing to make certain
contributions to the funds. Fuchs and Nelson move to dismiss.
Hawaii Masons seeks to recover from Fuchs and Nelson in their
individual capacities, asserting claims for breach of
fiduciary duty, alter ego liability, and constructive trust.
Fuchs and Nelson respond that Hawaii Masons' allegations
fail as a matter of law, are devoid of factual detail, and
are merely conclusory. The court agrees with Fuchs and Nelson
and grants the motion to dismiss.
Masons is the trustee of various trust funds maintained on
behalf of Hawaii construction workers (the “Trust
Funds”): Hawaii Masons' Pension Trust Fund; Hawaii
Masons and Plasterers' Annuity Trust Fund; Hawaii
Masons' Vacation and Holiday Trust Fund; Hawaii
Masons' and Plasterers' Apprenticeship and Training
Trust Fund; and Hawaii Masons' Health and Welfare Trust
Fund. ECF 1, PageID # 1. The Trust Funds are jointly trusteed
labor-management trust funds maintained under 29 U.S.C.
§ 186(c)(5) that operate as employee benefit plans. ECF
1, PageID # 3. Hawaii Masons is a fiduciary under ERISA with
respect to the Trust Funds. Id. at PageID #s 2, 3.
Hawaii Masons' principal offices are in Honolulu, Hawaii.
Id. at PageID # 3.
15, 2017, Hawaii Masons filed a Complaint against Global
Stone, Fuchs, and Nelson. Id. at PageID #s 1-2.
Complaint states that at all relevant times Global Stone was
a Hawaii corporation engaged in an industry affecting
commerce under ERISA and the Labor-Management Relations Act
(“LRMA”). See Id. at PageID # 4 (citing
29 U.S.C. §§ 1002(5), (11), (12), and 29 U.S.C.
§ 142(1), (3)). The Complaint alleges that Global Stone
agreed to abide by the terms of a Master Agreement Covering
the Ceramic Tile, Marble & Terrazzo Trades in the State
of Hawaii (the “CBA”) and a Declaration of Trust
Agreement connected to each Trust Fund (the “Trust
Agreements”). Id. at PageID # 5. The Complaint
states that Hawaii Masons is a third-party beneficiary of the
CBA. Id. Under the CBA and the Trust Agreements,
Global Stone allegedly promised to make monthly contributions
to the Trust Funds for employee benefits and for labor
performed by covered employees, and to pay liquidated damages
in the event of any delinquency. Id. at PageID # 7.
Global Stone's payment obligations are allegedly ongoing.
Id. at PageID #s 7-8.
to the Complaint, Global Stone failed to pay the full
contribution amounts from April 2016 to April 2017.
Id. at PageID # 7. Global Stone also allegedly
failed to pay liquidated damages from August 2012 to October
2012, January 2013 to January 2015, and November 2016 to
February 2017. Id. Hawaii Masons seeks to recover
the unpaid funds, accrued interest, damages flowing from the
nonpayments, and costs and attorneys' fees. Id.
at PageID #s 8, 14.
and Nelson are officers of Global Stone and Utah residents.
Id. at PageID # 4; see also ECF 15-2,
PageID # 68. The Complaint asserts three claims against them:
breach of fiduciary duty, constructive trust, and alter ego
the Complaint alleges that “due to breach of fiduciary
duties, ” Fuchs and Nelson “should be held
personally liable for . . . delinquent contributions and sums
owed” by Global Stone under the CBA and Trust
Agreements. ECF 1, PageID # 10. To support this claim, the
Complaint makes the following specific allegations:
1. “[Fuchs and/or Nelson] is a fiduciary under ERISA
because s/he exercised authority or control respecting
management or disposition of plan assets.” Id.
2. “The trust fund contributions were and are plan
assets at all relevant times as the payment of contributions
due from Global Stone to the Trust Funds accrued and w[ere]
considered as being held in trust by Global Stone for the
benefit of the Trust Funds to whom such contributions are due
and payable.” Id. (emphasis omitted).
3. “[Fuchs and/or Nelson] breached his/her fiduciary
duties by intentionally failing to report and/or pay the
required contributions to Trust Funds and failing to
discharge his duties as set forth by ERISA and 29 U.S.C.
§ 1104(a).” Id. at PageID # 11.
Complaint includes no further factual allegations regarding
the breach of fiduciary duty claim. See id.
the Complaint requests that a “constructive trust . . .
be imposed upon the assets of” Fuchs, Nelson, and
Global Stone. Id. at PageID # 12; see also
Id. at PageID # 15. To support this request, the
Complaint makes a single allegation: “As a result
of” Fuchs and Nelson's “breach of their
fiduciary duties of care and loyalty to the participants and
beneficiaries of Trust Funds as alleged herein, plan assets
have been improperly diverted from Trust Funds to Global
Stone and/or” Fuchs and Nelson. Id. at PageID
# 11; see also Id. at PageID # 14 (reiterating the
allegation that contribution amounts “have been
improperly diverted from Plaintiffs to Global Stone
and/or” Fuchs and Nelson (emphasis omitted)).
the Complaint claims that “at all relevant times,
Global Stone was the alter ego and/or the mere
instrumentality of [Fuchs and Nelson].” Id. at
PageID # 12. The Complaint asserts alter ego liability
“based on all or some of the following relevant
b) Failure to observe corporate formalities
c) Absence of corporate records
d) Insolvency of corporation at time of transaction
e) Siphoning off of funds by the dominant shareholder(s)
f) Shareholders guarantying [sic] corporate liabilities in
their individual capacities
g) Nonfunctioning officers or directors
h) Lack of officers or directors
i) Failure to issue stock
j) Absence of consideration for stock
k) Corporation is a facade of the operation of the dominant
l) Corporation's inability to meet payroll and other
m) Commingling of funds or assets
n) Stripping the corporation of assets in anticipation of
o) Use of the corporate shell to advance purely personal ends
p) Treatment of corporate assets as personal assets
q) Cash advances to shareholders/officers/directors
r) Advances to corporation by shareholders
s) Undocumented loans
t) Use of individual rather than corporate checks and
u) Fraud and misrepresentation with respect to Trust Fund
plan assets of which [Fuchs and/or Nelson] was a fiduciary
for the employees covered by the Bargaining Agreement and
Id. at PageID #s 12-13.
Complaint asserts that, with Global Stone as their alter ago
and “instrumentality, ” Defendants Fuchs and
Nelson “should be held liable for all the judgments
entered in favor of [Hawaii Masons] and/or delinquent
contributions or sums owed” under the CBA and Trust
Agreements “as a matter of equity and fairness.”
Id. at PageID # 13. The Complaint supports this
assertion with another list of “factors, ”
“all or some” of which are allegedly
a) Nonpayment of trust fund obligations by Global Stone;
b) Violation of statute or public policy;
c) Misrepresentations by Global Stone and/or
d) The acting principals of Global Stone were responsible
for and ratified administrative decisions exercised on behalf
of Global Stone, were vested with the authority to exercise
discretionary control over the management of the financial
responsibilities and business affairs of GLOBAL STONE, and
exercised discretionary control over the management of the
financial responsibilities and business affairs of GLOBAL
STONE including, but not limited to, authorizing and
tendering the payment of contributions and withholdings due
to the funds pursuant to the Bargaining Agreement and trust
fund agreements; and/or
e) The acting principals of Global Stone intentionally
misrepresented to Trust Funds the amount of hours worked by
its employees by failing to report and/or transmit
contributions in a timely fashion to Trust Funds.
Id. at PageID # 14 (emphases omitted). The Complaint
includes no further factual allegations concerning any of
these “factors.” See id.
Fuchs and Nelson's Motion to Dismiss.
September 20, 2017, Fuchs and Nelson moved to dismiss under
Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF
15. Defendants say that the claims against them are deficient
because they are “merely conclusory, ” lack
“factual allegations, ” and “are not
supported by current law.” ECF 15-2, PageID # 68. They
point to Ninth Circuit cases that they characterize as
holding that “officers of employers are not personally
liable when the employer fails to make contributions to ERISA
plans.” Id. at PageID # 69; see,
e.g., Bos (I) v. Board of Trustees, 795 F.3d
1006, 1009 (9th Cir. 2015) (noting the rule that officers are
not liable for company nonpayments because “unpaid
contributions by employers to employee benefit funds are not
plan assets” covered by ERISA (emphasis
Hawaii Masons' ...