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Trustees of Plumbers v. Sotelo

United States District Court, D. Nevada

July 3, 2018

TRUSTEES OF THE PLUMBERS AND PIPEFITTERS UNION LOCAL 525 HEALTH AND WELFARE TRUST AND PLAN; TRUSTEES OF THE PLUMBERS AND PIPEFITTERS UNION LOCAL 525 PENSION PLAN; and TRUSTEES OF THE PLUMBERS AND PIPEFITTERS LOCAL UNION 525 APPRENTICE AND JOURNEYMAN TRAINING TRUST FOR SOUTHERN NEVADA, Plaintiffs,
v.
JUAN CARRILIO SOTELO dba SOTELO AIR and SOTELO AIR, INC., dba COOL AIR NOW, Defendants. TRUSTEES OF THE PLUMBERS AND PIPEFITTERS NATIONAL PENSION FUND AND INTERNATIONAL TRAINING FUND, Plaintiffs,
v.
JUAN CARRILIO SOTELO dba SOTELO AIR; SOTELO AIR, INC. dba COOL AIR NOW, a Nevada Corporation; JUAN CARRILIO SOTELO, an individual; NOW SERVICES OF NEVADA, LLC dba COOL AIR NOW, a Nevada limited liability company; NOW SERVICES OF NEVADA, LLC dba PLUMBING REPAIR NOW, a Nevada limited liability company; WESTERN NATIONAL MUTUAL INSURANCE COMPANY, a surety company; JOHN DOES I-X and ROE CORPORATIONS I-X, inclusive, Defendants.

          ORDER FINDINGS OF FACT AND CONCLUSIONS OF LAW AFTER COURT TRIAL

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This case involves a collective bargaining agreement, the National Service and Maintenance Agreement (“Service Agreement”), entered between the United Association of Journeymen and Apprentices of Plumbing and Pipe Fitters Local 525 (“Local 525”) and Defendant Juan C. Sotelo (“Sotelo”) doing business as Sotelo Air, Sotelo Air, Inc., and Now Services of Nevada, LLC (collectively, “Defendants”). Among other requirements, the Service Agreement required Defendants to make union contributions whenever covered work was performed by union and nonunion employees. Plaintiffs Trustees of the Plumbers and Pipefitters Union Local 525 Health and Welfare Trust and Plan, Trustees of the Plumbers and Pipefitters Union Local 525 Pension Plan, and Trustees of the Plumbers and Pipefitters Local Union 525 Apprentice and Journeyman Training Trust for Southern Nevada (“Local Plaintiffs” or “Trust Funds”) and Trustees of the Plumbers and Pipefitters National Pension Fund and International Training Fund (“National Plaintiffs” or “National Funds”) (collectively, “Plaintiffs”) seek unpaid contributions pursuant to the terms of the Service Agreement and Plaintiffs' policy documents, as well as attorneys' fees and costs. The Court held a bench trial in this case on September 1, 2017 and September 5, 2017. The Court rules in favor of the Plaintiffs based on the following findings of fact and conclusions of law.

         II. PROCEDURAL HISTORY

         The Trust Funds' operative Amended Complaint was filed on August 2, 2013. (ECF No. 6). The Complaint raises allegations of delinquent contributions and attorneys' fees and costs, in violation of 29 U.S.C. §§ 1001-1500. On September 10, 2015, the Court ordered that the Trust Funds file a Renewed Motion for Summary Judgment addressing a contract defense raised by Sotelo Air in a prior Countermotion for Summary Judgment. The Court also permitted amendment of the National Plaintiffs' Complaint at that time.

         The National Trust Funds' Amended Complaint was filed on September 17, 2015. (ECF No. 81). In addition to a breach of contract claim, the National Funds asserted a breach of fiduciary duty cause of action under ERISA, 29 U.S.C. §§ 1002, 1104, 1109, and 1132. Defendants filed a Motion to Dismiss that Complaint on October 5, 2015. (ECF No. 85). Renewed Motions for Summary Judgment were filed and fully briefed. However, due to the parties' representations regarding ongoing settlement negotiations, the Court denied all the previously filed motions without prejudice and directed parties to renew them if settlement negotiations failed. (ECF No. 137). A settlement was not reached, and the Trust Funds and National Funds refiled their previously filed renewed Motions for Summary Judgment. (ECF Nos. 140, 141). In its order resolving these motions (ECF No. 216), the Court found as a matter of law: a) a valid contract(s) had formed between Sotelo (and the successor entities) with the Plaintiffs; and b) Sotelo was not a fiduciary and was not therefore subject to liability for a breach of a fiduciary duty. The case proceeded to trial on the factual issues of: a) whether there was a breach of the contracts based on Sotelo's and related entities' not paying contributions as required by the contracts, b) the date of termination of the contracts, and c) the amount, if any, of delinquent contributions and interest owed by Sotelo pursuant to the contracts. Following the bench trial that took place on September 1, 2017 and September 5, 2017, the Court took the matter under submission.

         III. JURISDICTION AND VENUE

         This Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 for claims arising under ERISA. The Court has supplemental jurisdiction over state law claims under 28 U.S.C. § 1367. Venue is proper because the underlying actions and corresponding damages occurred within Clark County, Nevada.

         IV. FINDINGS OF FACT

         Federal Rule of Civil Procedure 52(a)(1) requires the Court to “find the facts specially and state its conclusions of law separately” in a bench trial. Fed.R.Civ.P. 52(a)(1). Factual findings must be sufficient to indicate the basis for the Court's ultimate conclusion. Unt v. Aerospace Corp., 765 F.2d 1440, 1444-45 (9th Cir. 1985) (citing Kelley v. Everglades Drainage Dist., 319 U.S. 415, 422 (1943)). The findings must be “explicit enough to give the appellate court a clear understanding of the basis of the trial court's decision, and to enable it to determine the ground on which the trial court reached its decision.” United States v. Alpine Land & Reservoir Co., 697 F.2d 851, 856 (9th Cir. 1983), cert. denied, 464 U.S. 863 (1983) (citations and quotation marks omitted).

         After receiving evidence at the bench trial, the Court makes the following findings of fact:

1. Sotelo Air knowingly entered into a valid contract and became a signatory to the Service Agreement with Local 525 on May 9, 2008, after receiving the Service Agreement and having the opportunity to ask questions of Local 525 representatives before signing. At that time, Sotelo Air was a sole proprietorship owned and managed by Juan Sotelo. Sotelo and Sotelo Air executed a Standard Form of Participation Agreement (“Participation Agreement”) whereby Sotelo Air agreed to make contributions to the National Pension Fund and to be bound by the terms and conditions of the Service Agreement and any successor Agreement. Among other requirements, the Service Agreement required Sotelo to make union contributions whenever covered work was performed by union and nonunion employees.
2. Sotelo Air, Inc., Now Services of Nevada, LLC d/b/a Cool Air Now, and Now Services of Nevada, LLC d/b/a Plumbing Repair Now were successors in interest to Sotelo Air. Sotelo Air, Inc., incorporated in mid-2013, was the first successor legal entity. It received the usable assets of Sotelo Air without paying for them. At all times, Sotelo was the sole owner and officer of these business entities.
3. The Service Agreement by its own terms did not expire unless a written termination letter was submitted to Local 525.
4. The Service Agreement Sotelo signed was effective from August 1, 2005 to July 31, 2010, and renewed on August 1, 2010 for another five-year period. Sotelo was bound by the Service Agreement until Local 525 received a termination letter from Sotelo on April 9, 2013. The termination was not effective until August 1, 2013. Sotelo did not actually submit a termination letter before the April 2013 letter.
5. Richard Carrillo, a business representative for Local 525 at the time of the events in question, did not receive a termination letter from Sotelo in May 2008.
6. Between May 9, 2008 and April 9, 2013, Sotelo received the benefit of being a signatory to the Service Agreement in the form of union work and union employees being referred to him.
7. Because Sotelo did not submit a written termination letter to Local 525 until April 9, 2013, he owes $95, 013.77 in unpaid contributions to the Local Plaintiffs and $11, 308.93 in unpaid contributions to the National Plaintiffs.

         V. ...


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