Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-07-01256/USCOURTS-ca8-07-01256-0/pdf.json

Parties Involved:
Olaf Bjorkedal
Appellee
Tamara Bjorkedal
Appellee
Trustees of the Graphic Communications International Union Upper Midwest Local 1M Health and Welfare Plan
Appellant

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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Nos. 07-1256/07-1258

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Trustees of the Graphic

Communications International

Union Upper Midwest Local 1M

Health and Welfare Plan,

Appellants/CrossAppellees,

v.

Olaf Bjorkedal; Tamara Bjorkedal,

Appellees/CrossAppellants.

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Appeal from the United States

District Court for the

District of Minnesota.

 [PUBLISHED]

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Submitted: November 15, 2007

 Filed: February 22, 2008

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Before MURPHY, HANSEN, and GRUENDER, Circuit Judges. 

________________

HANSEN, Circuit Judge.

The Trustees of the Graphic Communications International Union Upper

Midwest Local 1M Health and Welfare Plan (Trustees) brought an action against Olaf

and Tamara Bjorkedal, shareholders of Nordic Printing and Packaging, Inc., under the

Employee Retirement Income Security Act (ERISA) after Nordic Printing and

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The Honorable Patrick J. Schiltz, United States District Judge for the District

of Minnesota.

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Packaging stopped making payments to the Graphic Communications International

Union Upper Midwest Local 1M Health and Welfare Fund. The Trustees sought

relief based on breach of contract, breach of fiduciary duty, and piercing the corporate

veil theories of liability. The Trustees now appeal the district court's1

 grant of

summary judgment in favor of the Bjorkedals, and the Bjorkedals cross-appeal the

district court's denial of their motion for attorney's fees. We affirm.

I.

Olaf Bjorkedal and Harry Jacobson incorporated Nordic Press, Inc. in 1968,

which they operated as a printing shop. They also incorporated two other printingrelated businesses, Nordic Packaging, Inc. and Nordic Pak, Inc., as well as a fourth

business, Nordic Leasing, Inc., which was not involved in the printing business but

which leased cars and specialized equipment. Bjorkedal and Jacobson both served as

officers and directors of each corporation, and each owned 50% of the stock of Nordic

Press and Nordic Packaging. Nordic Pak and Nordic Leasing were owned 40% by

Bjorkedal, 40% by Jacobson, and 20% by Alvin Vander Plaats, who served as the

general manager and eventually became the financial controller and secretary of the

various corporations. Bjorkedal and Jacobson each gifted part of their stock to family

members, but all of the Nordic Press and Nordic Packaging stock, and 80% of the

Nordic Pak and Nordic Leasing stock, remained within the two families. 

In the early 1970s, Olaf and Tamara Bjorkedal and Harry Jacobson and his

wife, acting as individuals, together built a warehouse at 5017 Boone Avenue North,

New Hope, Minnesota, which they leased to the Nordic companies. The Bjorkedals

and Jacobsons also owned as individuals a building at 8501 54th Avenue North in

New Hope, and the two families leased space in it to Nordic Packaging and Nordic

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Pak. The buildings were treated as rental properties on the Bjorkedals' and Jacobsons'

personal income tax returns. No written agreement controlled the rental activities, but

the rental activities were operated as a general partnership. 

Jacobson died in 1993, and his share of the corporations was placed in a trust

for his family. Vander Plaats retired in 1997 and was replaced by Dave McKay.

Business declined substantially following Vander Plaats' retirement, and the Nordic

companies faced serious financial trouble. Bjorkedal stopped taking a salary from any

of the entities in September 2001 and made numerous cash infusions of his own

money during that time. McKay was replaced by Dee Dee Foster as chief financial

officer (CFO) in December 2001. In 2002, Bjorkedal acquired 100% of the stock of

Nordic Press, Nordic Packaging, and Nordic Pak and consolidated them into a

company called Nordic Printing and Packaging, Inc. (P&P). Nordic Leasing ceased

operations in 2002. At that time, Bjorkedal also acquired 100% ownership in the

Boone Avenue Warehouse, and the 54th Avenue Warehouse was sold and the

proceeds paid to the Jacobson family trust. Bjorkedal continued to advance his own

money to P&P, contributing $350,000 in June 2003 and pledging his personally

owned real estate in an attempt to keep the company afloat. P&P filed for bankruptcy

protection in September 2003 and was ultimately sold to Marcom, a company owned

40% by Foster.

Prior to its consolidation with P&P, Nordic Press had employed union labor.

Pursuant to a series of Collective Bargaining Agreements (CBAs), Nordic Press

participated in the Graphic Communications International Union Upper Midwest

Local 1-M Health and Welfare Fund (the Fund), which provided health and medical

benefits to the union employees. The CBAs required Nordic Press to pay for sixty

months of health coverage for employees following their retirement. In 1988, the

Fund and Nordic Press entered into an Adoption Agreement Contract (Agreement),

which amended the then-current CBA. The Agreement incorporated the Rules and

Regulations of the Trustees, attached as an exhibit to the Agreement. The Rules and

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Regulations obligated employers who withdrew from the Fund to pay a lump-sum

withdrawal contribution to the Fund to cover the sixty months of retiree health

coverage. 

P&P, as Nordic Press's successor, had continued to employ union labor and

took over Nordic Press's obligations under the CBAs and the Agreement. Faced with

financial trouble, P&P stopped making contributions for health benefits to the Fund

in March 2003, resulting in a delinquency owed for health benefit premiums of

$75,005. It also failed to remit payments withheld from employees' wages for the

employees' portion of the health benefit premiums totaling $6,440. The Fund's

Trustees notified P&P of its contractual withdrawal liability, estimating the liability

needed to cover the sixty months' worth of retiree health benefits at approximately

$260,000. The Trustees brought an adversarial proceeding within the bankruptcy

proceeding against P&P, Bjorkedal, and Foster for statutory withdrawal liability

related to P&P's pension obligations. The pension liability dispute was settled with

the Marcom sale. P&P's contractual liability for health and welfare benefits, however,

was not litigated within the bankruptcy proceeding. 

Following P&P's bankruptcy, the Trustees brought suit against the Bjorkedals

personally, claiming that they were liable for P&P's corporate obligations to the health

and welfare plan under breach of contract, breach of fiduciary duty, and alter

ego/piercing the corporate veil theories of liability. The district court granted

summary judgment to the Bjorkedals, finding that P&P was a valid, separate entity,

and that the Bjorkedals were not personally liable for P&P's obligations under any of

the asserted theories. The district court denied the Bjorkedals' claim for attorney's

fees, finding that the Trustees had acted properly in asserting the claims. Both parties

appeal. 

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II.

We review the district court's order granting summary judgment de novo. 

LaSalle v. Mercantile Bancorporation, Inc. Long Term Disability Plan, 498 F.3d 805,

808 (8th Cir. 2007). The Trustees characterize their action as involving two types of

payments: contractual obligations based on the premiums owed but not paid to the

Fund, and withdrawal liability, which arose when P&P withdrew from the Fund and

became obligated to cover the cost of health benefit premiums for retirees for a period

of five years. This is something of a mischaracterization. The withdrawal liability at

issue is wholly contractual in nature. Although ERISA imposes statutory withdrawal

liability on employers who withdraw from pension plans, see 29 U.S.C. § 1381; see

also Hughes v. 3M Retiree Med. Plan, 281 F.3d 786, 790 (8th Cir. 2002) (explaining

that pension plans have required vesting requirements while welfare plans do not), the

Fund at issue here is a welfare plan, not a pension plan, and the § 1381 statutory

withdrawal liability does not apply to P&P's withdrawal from the Fund, see

Manchester Knitted Fashions, Inc. v. Amalgamated Cotton Garment & Allied Indus.

Fund, 967 F.2d 688, 694 n.8 (1st Cir. 1992) (noting that § 1381 applies to pension

funds, not welfare funds). Thus, P&P faced withdrawal liability only because it

agreed to it in the Agreement. Both types of claims involved in this case–the

delinquent premiums and the withdrawal liability–are really only contractual claims.

A. ERISA § 515 liability

The Trustees style their complaint as an ERISA § 515 action, which requires

that "[e]very employer who is obligated to make contributions to a multiemployer plan

under the terms of the plan . . . shall, to the extent not inconsistent with law, make

such contributions in accordance with the terms and conditions of such plan." 29

U.S.C. § 1145. While P&P was certainly an employer obligated to make contributions

to a multiemployer plan, this action is against the Bjorkedals personally. The Trustees

try to reach the Bjorkedals personally by defining "employer" within § 1145 by

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reference to 29 U.S.C. § 1301, which treats trades or businesses under common

control as a single employer. See 29 U.S.C. § 1301(b)(1). The Trustees link the two

statutory provisions by asserting that the Bjorkedals jointly owned a separate entity

that owned the building leased to P&P, that that separate entity was under common

control with P&P because both were owned by Olaf Bjorkedal and managed by

Vander Plaats, and that Olaf and Tamara Bjorkedal, who operated the rental activity

as a partnership at the time of the delinquency in the welfare payments, are therefore

the employers of P&P's employees.

The first problem with the Trustees' argument is that § 1301 applies only to

subchapter III of ERISA, see § 1301(b)(1) ("For purposes of this subchapter, . . . all

employees of trades or business (whether or not incorporated) which are under

common control shall be treated as employed by a single employer"), and that

subchapter explicitly applies only to pension plans, see 29 U.S.C. § 1321(a) (limiting

coverage of "this subchapter" to pension plans or similar plans under the Internal

Revenue Code). As we have already pointed out, the Fund at issue is a welfare plan,

which is separate and distinct from a pension plan for ERISA purposes. Thus, the

broad definition of employer contained in § 1301(b)(1) does not impose statutory

liability on commonly controlled entities for liabilities based on delinquent

contributions to a multiemployer welfare plan under § 1145.

The Trustees recognize that the § 1301 definition of employer does not apply

directly to § 1145 liability, but argue that it applies in this case because the Agreement

explicitly incorporated the definition. The Agreement incorporates the Rules and

Regulations of the Fund, which provide that "the term 'employer' shall be as defined

in ERISA section 4001(b)(1) [29 U.S.C. § 1301(b)(1)]. In cases of common control,

all trades or businesses which are under common control as defined in [I.R.C.] Section

414(c) will be considered as a single employer." (Appellees' Add. at 5.) The Trustees

focus much of their argument on whether the rental partnership is a business under

common control with Nordic Press within the meaning of § 1301(b)(1). But Vander

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Plaats signed the Agreement in his capacity as "V.P. Secretary" of Nordic Press, Inc.

(Appellees' Add. at 1), not on behalf of the rental partnership. Just as a corporation

acts through its officers, a partnership acts through its partners. See Minn. Stat.

§ 323A.0301(1) ("An act of a partner . . . for apparently carrying on in the ordinary

course the partnership business . . . binds the partnership."). Vander Plaats was not

a partner in the rental operation and did not sign the Agreement expressly on its

behalf. While Nordic Press is free to obligate itself to whatever contractual provisions

it chooses, one entity cannot obligate another entity, even a related entity, without the

second entity's consent. To the extent an individual signs an agreement purporting to

bind related entities, the person so signing must first have authority to act for those

separate and distinct entities. Thus, we need not decide whether there is evidence to

establish that the rental partnership is a trade or business under common control with

Nordic Press unless the evidence first creates a material question of fact regarding

whether Vander Plaats (or through him Nordic Press) had the authority to bind any

other entities under common control. In other words, to prevail in their argument that

the Bjorkedals are personally liable as "employers" under the Agreement, the Trustees

must first establish that Vander Plaats bound the rental partnership when he signed the

Agreement that included controlled entities in its definition of employer.

 This court applies general "corporate law principles to determine employer

liability under ERISA, where such principles comport with the language and purposes

of the statute." Greater Kan. City Laborers Pension Fund v. Superior Gen.

Contractors, Inc., 104 F.3d 1050, 1055 (8th Cir. 1997); see also Minn. Laborers

Health & Welfare Fund v. Scanlan, 360 F.3d 925, 927-28 (8th Cir. 2004) ("In

Employee Retirement Income Security Act (ERISA) § 515 cases, we apply the

corporate law standard to determine alter ego status because it 'strikes an appropriate

balance between the congressional intent of ERISA and the long-established principle

that a corporation's existence is presumed to be separate and may be disregarded only

under narrowly prescribed circumstances.'" (internal marks omitted)). "In general,

only a party to a collective bargaining agreement is bound by its terms . . . ." Crest

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Tankers, Inc. v. Nat'l Mar. Union of Am., 796 F.2d 234, 237 (8th Cir. 1986). Thus,

the Trustees can reach the rental partnership (and through it potentially the Bjorkedals

personally) only if an exception to that general rule applies. See Superior Gen.

Contractors, 104 F.3d at 1055-56 (applying the corporate law standard of alter ego

rather than the labor law alter ego doctrine to an ERISA § 515 claim seeking to hold

one corporation liable for another corporation's fringe benefit contributions to a

welfare fund). The Trustees tacitly agree that they must use general corporate

doctrines to bind the rental partnership to the Agreement, which was signed only on

behalf of Nordic Press. (See Appellants' Br. at 35.) The Trustees assert that the rental

partnership is liable as a controlled entity with Nordic Press based on the doctrines of

agency, alter ego, joint venture, and ratification. 

1. Agency

An agent can bind a principal through actual authority, either express or

implied, and through apparent authority. Actual authority is that authority given by

the principal to the agent to act on its behalf, and it requires that the principal manifest

its consent to the agent's ability to bind the principal. See Restatement (Third) of

Agency § 3.01 (2006). Actual "authority must be traced to the principal's dealings

with the agent; it cannot be inferred from the agent's dealings with third parties."

Tullis v. Federated Mut. Ins. Co., 570 N.W.2d 309, 313 (Minn. 1997). 

The Trustees have presented no evidence that either Bjorkedal or Jacobson, on

behalf of the rental partnership, manifested an intent that Vander Plaats bind the

partnership to contracts, let alone that they assented to Vander Plaats binding the

partnership to this particular Agreement. While Vander Plaats was able to receive

rental deposits and direct funds to be paid from the partnership's checking account, he

was not authorized to sign checks on the partnership checking account. Nor did he

sign contracts on behalf of the partnership; Bjorkedal and Jacobson personally signed

the lease agreements as owners of the leased buildings. The only business of the

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partnership was leasing buildings. The partnership had no employees, and binding it

to a CBA as an employer cannot be construed as acting in the rental partnership's

ordinary course of business. There is no evidence that Vander Plaats himself thought

he was binding the rental partnership when he signed the Agreement. Vander Plaats

did not have actual authority–either express or implied–to enter into contracts on

behalf of the partnership. See Tullis, 570 N.W.2d at 313-14 (reinstating summary

judgment for corporation where the plaintiff failed to offer any evidence that the

corporation's executive director was given either express or implied authority by the

corporation to receive service of process on behalf of the corporation despite fact that

the executive director identified himself as such to the process server).

Apparent authority, on the other hand, is based on a third party's reasonable

belief that the agent has the authority to bind the principal. See Restatement (Third)

of Agency § 2.03 (2006). The third party's belief "must be founded on the principal's

actions, not those of the agent, since no agent by his own act can create evidence of

authority." Lyman Lumber Co. v. Three Rivers Co., 400 N.W.2d 811, 814 (Minn. Ct.

App. 1987) (internal marks omitted). Not only must the Trustees establish an

affirmative course of conduct by the partnership of holding out Vander Plaats as its

agent, but the Trustees must also establish that they relied on the partnership's implied

grant of authority at the time Vander Plaats allegedly entered into the Agreement on

behalf of the partnership. See Truck Crane Serv. Co. v. Barr-Nelson, Inc., 329

N.W.2d 824, 826-27 (Minn. 1983) ("Apparent authority exists only as to those third

persons who learn of the manifestation from words or conduct for which the principal

is responsible." (internal marks omitted)). There is no evidence that the Trustees even

knew of the existence of the partnership in 1988, let alone that they believed, based

on the partnership's actions, that Vander Plaats was authorized to bind the partnership.

See id. (holding that even though individual's name appeared on corporate checks as

secretary-treasurer, plaintiff's lack of awareness of that fact precluded it from relying

on that fact to establish individual's apparent authority to bind corporation); Kenneally

v. First Nat'l Bank of Anoka, 400 F.2d 838, 842 (8th Cir. 1968) ("[O]nly those who

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We reject the Trustees' reliance on cases applying the labor law standard of the

alter ego doctrine, which "involves a more lenient standard for disregarding the

corporate form than that employed in corporate law." Superior Gen. Contractors, 104

F.3d at 1055 (rejecting labor law cases in an ERISA § 515 case). In any event, the

Trustees' argument also fails under that more lenient standard, which is generally

appropriate only when an employer reconstructs its business into another business in

an effort to avoid its union obligations. See Trafford Distribution Ctr. v. N.L.R.B.,

478 F.3d 172, 182 (3d Cir. 2007) (holding a start up company liable for its

predecessor's union obligations), cert. denied, 128 S. Ct. 110 (2007); Flynn v. R.C.

Tile, 353 F.3d 953, 959 (D.C. Cir. 2004) (holding a subsequent business that took over

a CBA signatory's tile business liable under the CBA where the subsequent business

was owned and operated by the same family out of the same location and completed

the signatory's subcontracts); Mass. Carpenters Cent. Collection Agency v. Belmont

Concrete Corp., 139 F.3d 304, 307 (1st Cir. 1998) ("The alter ego doctrine is meant

to prevent employers from evading their obligations under labor laws and collective

bargaining agreements through the device of making a mere technical change in the

structure or identity of the employing entity without any substantial change in its

ownership or management." (internal marks omitted)). 

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have acted in reliance upon the apparent authority of the agent are entitled to recover

where the agent possessed no actual authority."), cert. denied, 393 U.S. 1063 (1969).

The district court properly concluded that the Trustees failed, as a matter of law, to

establish that Vander Plaats acted as an agent for the rental partnership when he

signed the Agreement on behalf of Nordic Press.

2. Alter Ego

We also reject the Trustees' attempt to use the alter ego doctrine to hold the

rental partnership liable for Nordic Press's contractual obligations under the

Agreement.2

 "[T]he alter ego doctrine as developed under corporate law provides that

the legal fiction of the separate corporate entity may be rejected in the case of a

corporation that (1) is controlled by another to the extent that it has independent

existence in form only and (2) is used as a subterfuge to defeat public convenience,

to justify wrong, or to perpetuate a fraud." Superior Gen. Contractors, 104 F.3d at

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1055. The rental partnership existed independently from Nordic Press. Bjorkedal and

Jacobson as partners owned two buildings that were leased to Nordic Press in addition

to the other Nordic companies. Bjorkedal and Jacobson reported the income and

expenses from the partnership on their individual tax returns using Schedule E for

rental income, whereas Nordic Press filed its own corporate tax returns. There was

nothing fraudulent about Bjorkedal and Jacobson owning the buildings individually

and leasing them to their wholly-owned corporations. As a corporate matter, this is

a common practice, considered wise from a business perspective. Cf. Alson R. Martin

& Michael D. Carson, Choice of Business Entity: Business, Tax, and Other

Non-fringe Benefit Considerations, ALI-ABA Course of Study, SE66 ALI-ABA 525,

549 (Feb. 17, 2000) (noting parenthetically that "a building (. . . if owned, should

almost always be owned in a separate partnership or limited liability company)"). The

assertion that the rental partnership was the alter ego of Nordic Press lacks any merit.

3. Joint Venture

The Trustees' attempt to use the joint venture concept fares no better. "[A] joint

venture . . . generally arises when necessary to impute negligence between two entities

that otherwise have no legal relationship." Stelling v. Hanson Silo Co., 563 N.W.2d

286, 290-91 (Minn. Ct. App. 1997) (finding no joint venture between a corporation

and its shareholder because they already had a legal relationship). Further, "[a] joint

venture exists when two or more persons combine their money, property, time, or

skills in a business enterprise and agree to share the resulting profits." Duxbury v.

Spex Feeds, Inc., 681 N.W.2d 380, 390 (Minn. Ct. App. 2004). Here, a legal

relationship already existed between Nordic Press and the partnership, that of a

landlord and tenant pursuant to the leasing agreement. Further, the partnership was

entitled to a set lease payment and was not entitled to share in any profits of an alleged

enterprise with Nordic Press. See id. ("If the amount that one party receives is fixed,

regardless of the success or failure of the enterprise, there is no joint venture."). There

was no joint venture between Nordic Press and the partnership.

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4. Ratification

Finally, the Trustees assert that the rental partnership is liable under the

Agreement because it ratified Nordic Press's actions of signing the Agreement on

behalf of the partnership as a controlled entity. "Ratification occurs when a person

with 'full knowledge of all the material facts, confirms, approves, or sanctions, by

affirmative act or acquiescence, the originally unauthorized act of another.'" Wells

Fargo Home Mortgage, Inc. v. Chojnacki, 668 N.W.2d 1, 5 (Minn. Ct. App. 2003)

(quoting Anderson v. First Nat'l Bank of Pine City, 228 N.W.2d 257, 259 (Minn.

1975)). "Conversely, ratification cannot occur when the principal does not have full

knowledge of all material facts, unless constructive knowledge is imputed by the

principal's acceptance of a transaction's benefits." Gresser v. Hotzler, 604 N.W.2d

379, 385 (Minn. Ct. App. 2000); see also Anderson, 228 N.W.2d at 259 (noting that

lack of knowledge defeats a claim of ratification). 

First, as already noted, Vander Plaats did not sign on behalf of the rental

partnership. Second, there is no evidence that the rental partnership–acting through

either Bjorkedal or Jacobson as its partners–confirmed, approved, or sanctioned

Vander Plaats' alleged act of signing the Agreement on behalf of the partnership as a

controlled entity with Nordic Press. Third, there is no evidence that Bjorkedal or

Jacobson had "full knowledge" that Vander Plaats signed the Agreement on behalf of

the partnership and that his signature could bind the rental partnership as an employer

responsible for Nordic Press's contributions to the Fund. Finally, there can be no

constructive knowledge because the rental partnership did not benefit from the

Agreement. Nordic Press certainly benefitted by reducing its contributions to the

Fund. But any indirect benefit to the partnership from its tenant's choosing to

continue to make lease payments to the partnership (as the landlord), instead of paying

its health benefit contributions, is not the type of direct benefit contemplated by the

concept of ratification. Cf. Gresser, 604 N.W.2d at 385 (holding that acceptance of

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The Trustees raise a common law alter ego theory separate from their use of

that theory in their attempt to hold the rental partnership to the Adoption Agreement

as a controlled entity with Nordic Press. They admit, however, that this alternate alter

ego theory, which attempts to treat the rental partnership as the alter ego of Nordic

Press and its successor P&P, "mirrors" the one we have already rejected (Appellants'

Br. at 51), and we need not address it again. 

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earnest money was not a benefit from a sales contract containing modified terms

unknown to the seller). 

B. Piercing the Corporate Veil

In addition to the Trustees' claim that the Bjorkedals, as owners of the rental

partnership, are the "employer" under the Agreement for purposes of ERISA § 515,

the Trustees also seek to hold Olaf Bjorkedal, as the primary shareholder of P&P,

personally liable under the separate common law doctrine of piercing the corporate

veil.3

 The primary benefit, and often the primary purpose, of incorporating a closelyheld business is to shield the shareholders from liability for the corporation's debts.

See Victoria Elevator Co. of Minneapolis v. Meriden Grain Co., 283 N.W.2d 509, 512

(Minn. 1979) ("Doing business in a corporate form in order to limit individual liability

is not wrong; it is, in fact, one purpose for incorporating."). In certain circumstances,

however, it is appropriate to hold the shareholders liable for the corporation's

liabilities, see Urban ex rel. Urban v. Am. Legion Post 184, 695 N.W.2d 153, 161

(Minn. Ct. App. 2005) ("Generally, a [shareholder] cannot be held liable for the

wrongdoing of a [corporation] without a showing of improper conduct, fraud, or bad

faith."), aff'd on other grounds, 723 N.W.2d 1 (Minn. 2006), and Minnesota courts

apply a two-part test when considering whether to pierce the corporate veil to reach

the shareholders. The first part involves determining whether the corporation (P&P)

is the alter ego or a mere instrumentality of the shareholder (Bjorkedal). In making

this determination, "a number of" factors must exist before a shareholder will be held

liable for the obligations of a corporation: "(1) insufficient capitalization, (2) failure

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to observe corporate formalities, (3) nonpayment of dividends, (4) insolvency of

debtor corporation, (5) siphoning of funds, (6) nonfunctioning of officers and

directors, (7) absence of corporate records, or (8) existence of corporation as a mere

[] facade for individual dealings." Id. The second part of the test "requires a finding

of injustice or fundamental unfairness." Id. at 162. The Trustees must establish a

genuine issue of material fact concerning both parts of the test to avoid summary

judgment. Id.

We agree with the district court that this is not the appropriate case to pierce the

corporate veil to reach the individual shareholder. The undisputed facts demonstrate

that Bjorkedal did not treat P&P as an extension of himself; rather, P&P was treated

separate and distinct from Bjorkedal's personal interests. P&P was the result of

consolidating three corporate entities that had been in business for nearly 40 years.

Bjorkedal did not siphon off funds, but rather made large cash infusions to try to save

the corporation long after the CFO thought it wise to do so. That corporate formalities

may not have been scrupulously followed does not change the fact that Bjorkedal

treated P&P as its own business. We need not reiterate the district court's thorough

discussion of the factors. Suffice it to say that P&P was neither the alter ego nor a

mere instrumentality of Olaf Bjorkedal. 

We also agree that there is no element of injustice or unfairness in recognizing

P&P's separate corporate existence. The fact that P&P continued to make payments

on its building lease rather than make its contributions to the Trustees does not rise to

the level of unfairness or injustice required to pierce the corporate veil. See Ass'n of

Mill & Elevator Mut. Ins. Co. v. Barzen Int'l, Inc. 553 N.W.2d 446, 450 (Minn. Ct.

App. 1996) (reversing district court's finding that corporate veil should be pierced

based on the fact that subsidiary paid down loan guaranteed by the parent corporation

rather than pay trade creditors, thereby benefitting parent to the detriment of creditors,

because decision to pay secured creditor, although beneficial to parent corporation,

was based on legal obligations and was not the type of inherent unfairness needed to

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support piercing the corporate veil). With limited cash and an inability to pay all of

its creditors, it was within P&P's management's discretion to choose to pay its lease

obligations and stave off an eviction from its premises in an attempt to continue its

operations instead of paying benefit contributions for its employees. The Trustees

have failed to provide any evidence to support a finding of injustice or fundamental

unfairness, and the district court's grant of summary judgment on the corporate veil

piercing theory is affirmed. 

C. Fiduciary Liability

The Trustees finally attempt to hold Olaf Bjorkedal liable for the delinquent

premiums as a plan fiduciary. Bjorkedal was not a named fiduciary under the plan.

Nonetheless, an individual is subject to fiduciary duties under ERISA "to the extent

he exercises any discretionary authority or discretionary control respecting

management of such plan or . . . management or disposition of its assets." 29 U.S.C.

§ 1002(21)(A)(i). Subsection (i) imposes a fiduciary duty on those who exercise

discretionary authority, "regardless of whether such authority was ever granted."

Olson v. E.F. Hutton & Co., 957 F.2d 622, 625 (8th Cir. 1992). The Trustees argue

that Bjorkedal exercised discretionary authority concerning the disposition of plan

assets when he failed to ensure that both the employees' premiums withheld from their

paychecks and the employer's share of the premiums were paid to the Fund. 

The fiduciary status applies, however, only when the individual is performing

a fiduciary duty; it "is not an all-or-nothing concept." Darcangelo v. Verizon

Communications, Inc., 292 F.3d 181, 192 (4th Cir. 2002) (internal marks omitted).

Persons who serve as fiduciaries may also act in other capacities, even capacities that

conflict with the individual's fiduciary duties. What "ERISA requires[, is,] 'that the

fiduciary with two hats wear only one at a time, and wear the fiduciary hat when

making fiduciary decisions.'" Holdeman v. Devine, 474 F.3d 770, 780 (10th Cir.

2007) (quoting Pegram v. Herdrich, 530 U.S. 211, 225 (2000)). "In every case

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charging breach of ERISA fiduciary duty, then, the threshold question is not whether

the actions of some person employed to provide services under a plan adversely

affected a plan beneficiary's interest, but whether that person was acting as a fiduciary

(that is, was performing a fiduciary function) when taking the action subject to

complaint." Pegram, 530 U.S. at 226. 

Corporate assets do not become plan assets merely because an employer has a

corporate obligation to make payments to the plan. A corporate officer facing limited

cashflow who chooses to pay corporate obligations in lieu of employer contributions

to an ERISA plan does not breach a fiduciary duty when he makes those decisions

wearing his corporate officer hat rather than his fiduciary duty hat. See Holdeman,

474 F.3d at 780 ("[W]hen Devine was deciding whether to allocate State Line funds

to the Plan or [to owner distributions and charitable contributions], it is clear that he

was acting in his capacity as CEO of State Line, and not in his capacity as a plan

fiduciary."). See also In re Luna, 406 F.3d 1192, 1203 (10th Cir. 2005) (holding that

an employer that fails to make plan contributions violates a contractual duty, not a

fiduciary duty, because a contractual obligation to fund a plan is not a discretionary

decision regarding management or disposition of plan assets); Local Union 2134,

United Mine Workers of Am. v. Powhatan Fuel, Inc., 828 F.2d 710, 714 (11th Cir.

1987) ("[T]his decision by [the president] to pay bills other than the insurance

premiums was not made in his capacity as fiduciary of the health plan, it was made as

the president of the corporation. Indeed, until monies were paid by the corporation

to the plan there were no assets in the plan under the provisions of ERISA."). Thus,

to the extent P&P failed to remit its share of the benefit premiums, the decision to pay

P&P's other obligations rather than the Fund premiums was a corporate decision, not

a fiduciary decision concerning plan assets. 

This still leaves the issue of the $6,440 delinquent obligation owed for the

employees' share of the health benefit premiums. Although those funds were Fund

assets once they were withheld from the employees' paychecks, see In re Luna, 406

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F.3d at 1206 n.13 (distinguishing between employer-owed contributions, which are

not plan assets, and employee paycheck withholdings, which are plan assets); Phelps

v. C.T. Enters., Inc., 394 F.3d 213, 219 (4th Cir. 2005) ("Where . . . an employer is

entrusted with employee funds for remittance to a claims administrator . . . the

employer is acting in a fiduciary capacity under ERISA."), ERISA imposes a fiduciary

duty under subsection (i) only "to the extent [the fiduciary] exercises any discretionary

authority," § 1002(21)(A)(i). As noted, subsection (i) imposes fiduciary obligations

on individuals who are not named as fiduciaries but nonetheless exercise actual

authority over plan assets. Because this subsection imposes a fiduciary duty on those

not named as a fiduciary, its reach is limited to circumstances where the individual

actually exercises some authority. Here, the only evidence in the record is that

Bjorkedal was not personally involved in the decision not to remit the employee

withholdings to the Fund, or for that matter, any of the decisions regarding which

creditors got paid and which did not (including P&P's share of the premiums). In fact,

Bjorkedal testified that he specifically asked Foster if they were paid up with the

union at the time P&P filed for bankruptcy protection. The Trustees implicitly

acknowledge the adverse record by arguing that by omission Bjorkedal failed to

ensure that the employee withholdings reached the Fund. (Appellants' Br. at 61.)

Their argument proves too much. An act of omission fails to satisfy the requirement

that the individual exercise discretionary authority over plan assets. See

§ 1002(21)(A)(i). There is no evidence that Bjorkedal exercised any authority over

the employees' withholdings. He was not involved in any of P&P's financial

decisions; rather, the only evidence in the record reveals that Foster handled all

financial matters, informing Bjorkedal only when cashflow was insufficient to make

payroll. The district court appropriately granted summary judgment to Bjorkedal on

the breach of fiduciary duty claim. 

Because we affirm the district court's grant of summary judgment to the

Bjorkedals, we need not address the Trustees' alternative arguments that they are

entitled to summary judgment.

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III.

The district court declined to award attorney's fees to the Bjorkedals under 29

U.S.C. § 1132(g)(1), which gives the district court discretion to award attorney's fees

and costs to either party. We have previously recognized that "[a] district court

considering a motion for attorney's fees under ERISA should . . . apply its discretion

consistent with the purposes of ERISA, those purposes being to protect employee

rights and to secure effective access to federal courts." Starr v. Metro Sys., Inc., 461

F.3d 1036, 1040 (8th Cir. 2006) (internal marks omitted). We consider five factors

in determining whether a district court abused its discretion concerning a fee award,

including: (1) the opposing party's culpability or bad faith, (2) the opposing party's

ability to pay an award of attorney's fees, (3) the deterrent value an attorney's fee

award might have on other persons acting under similar circumstances, (4) whether

the requesting party sought to benefit all of the participants and beneficiaries of an

ERISA plan or sought to resolve a significant legal question related to ERISA, and (5)

the relative merits of both parties' positions. Leonard v. Sw. Bell Corp. Disability

Income Plan, 408 F.3d 528, 532 (8th Cir. 2005). We agree with the district court that

the Trustees, acting as fiduciaries for the Fund, brought the action to protect the Fund

and did not act in bad faith. The district court did not abuse its discretion in refusing

to award attorney's fees to the Bjorkedals for their successful defense of this ERISA

action. 

IV.

The district court's judgment granting summary judgment to the Bjorkedals and

its judgment denying the Bjorkedals' request for attorney's fees are affirmed.

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