Purchaser of Company Liable for Unpaid Pension Contributions

March 30, 2012 (PLANSPONSOR.com) – A federal court has found that a company is liable for the multiemployer pension plan contributions unpaid by a firm the company purchased.

In granting summary judgment to the Board of Trustees of the Plumbers and Pipefitters Local No. 172 Welfare Fund, U.S. District Judge Theresa L. Springmann of the U.S. District Court for the Northern District of Indiana cited previous case law in the 7th Circuit, which states: “[S]uccessor entities can be liable for multiemployer pension contributions if (1) there is sufficient continuity between the two companies and (2) the successor company had notice of the predecessor’s liability.”   

The court found the facts supporting a sufficient continuity of operations between MKH Mechanical, the successor company, and Matrix Plumbing and Heating, the company that was sold, are well-established and uncontested. MKH and Matrix used the same business name, operated out of the same office building, were managed by the same group of people, employed many of the same individuals, served the same customers, and used the same equipment and licenses.   

In addition, notice on the part of Matthew Keenon Helms, who purchased Matrix, and MKH, through Helms, of the debts owed to the plaintiffs can reasonably be inferred from Helm’s role as project manager at Matrix prior to the asset transfer. Accordingly, the court found that MKH was a successor to Matrix with notice of Matrix’s debts to the pension fund.  

Springmann cited another 7th Circuit case, which established that the determination of whether an individual or a corporation is the alter ego of another “focuses on the existence of a disguised continuance of a former business entity or an attempt to avoid the obligations of a collective bargaining agreement, such as through a sham transfer of assets.” For Helms, the pension fund provided evidence supporting the relevant factors and, as he failed to respond, this evidence remains uncontested.  

According to the court opinion, the first factor, lack of respect for the corporate entity was demonstrated by Helms’s decision to initially take on Matrix’s assets and continued operation through the Asset Purchase Agreement in his own name. Helms did not incorporate MKH until March 13, 2009, almost two weeks after personally taking on Matrix’s assets under the terms of the Asset Purchase Agreement on March 1. Similarly, Helm’s decision to add no capital to the enterprise and to “pay” for it essentially out of Matrix’s operations support both the lack of separate identity between the corporation and Helms and an inference that he intended to defraud.   

“If the Court allowed Helms to avoid liability to the Plaintiffs after taking on Matrix’s assets and continuing its operations under the same name with the same management, clients, and even partially completed jobs without paying anything for the company, then the Court would be sanctioning an injustice worked through an abuse of the corporate form and a sham transfer of assets,” Springmann wrote. The Court found Helms personally liable for Matrix’s obligations to the pension fund as an alter ego of Matrix.  

In addition, Springmann said, the document’s terms and Matrix President Joseph Laskowski’s decision to sign his own name as “seller” rather than in an official capacity as owner or president of Matrix indicates that he, rather than Matrix, was selling the company’s assets and that he, rather than Matrix, should receive payment for those assets. These actions demonstrated his disregard of the corporate form.   

Additionally, the court decided that Laskowski’s actions that failed to distinguish between himself and Matrix, particularly taking payment for the corporation’s assets personally and paying down personal tax liability with that payment, also provide some indirect evidence of Laskowski’s fraudulent intent.  

In addition to finding them liable for past due pension contributions, the court ordered Helms and MKH to submit to a payroll compliance audit and provide the pension fund with all documents necessary to complete that audit for the time period beginning January 1, 2009 to the present.

Case Background  

In July 2007, Matrix, owned and operated by Joseph Laskowski, entered into a Subscription Agreement whereby it agreed to be bound by the provisions of the Collective Bargaining Agreement (CBA) with the pension fund for the period July 20, 2007 through May 30, 2010. The Subscription Agreement required payments that Matrix failed to make.   

In September 2008, the fund filed suit to enforce the contract. On January 29, 2009, the court entered a Final Judgment and Order in favor of the pension fund in the amount of $138,750.32 for unpaid contributions, liquidated damages, interest and attorney’s fees accrued through December 2008.  

On February 9, 2009, Laskowski and Helms signed the Asset Purchase Agreement, effective March 1, 2009, transferring the assets of Matrix to Helms for a promise to pay $35,000 within one year. Helms incorporated MKH on March 13, 2009, giving himself all shares in the corporation and infusing no capital.  

The court’s opinion is here.