NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION File Na me: 10a0544n.06 No. 08-6545 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT PACE I ND U ST RY U N I O N-MANA GEMENT PENSI ON F UND, a

nd its Trustee s; BOYD YOUNG ; DO NA L D L . LAN GH AM ; RO GE R H EI SER ; G AR Y C O O K ; J A M E S P A

N N E LL; J A M E S C A RM IC H A E L; S U S A N S T A U D U H A R ; R O N H A C K N E Y ; D A LE OL SON; DAL TON J. BAB I NEAUX , Pla int if fs -A pp e lle e s,
v. DANNE X MANUF ACTURI NG CO., I

NC.; ANNEX MANUF ACTURI

NG; AL AN F UNK, De fe nd ants -A

pp e lla nts
. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) O N AP P EAL FROM THE UN I TE D ST AT ES D I STR I CT C O U R T F O R

T H E M ID D LE DI STRI CT OF TEN

NESSEE
O P I N I O N

BEF OR E: CO LE, G ILM AN , a nd WH ITE, Ci r c uitJudg e s. HELE NE N. WHITE, Circuit Jud ge. Da nn e x M a n u f a c tu r in g Co., I nc. (“ Danne x ”), A nnex Manufa cturing Co., I nc. (“ Annex”), and A lan Funk ( “F unk”), a ppeal the dist ri ct cour

t’s g rant of summary judgme nt to the PACE I ndustry Union-Mana g ement P ension Fund ( “F und”) in this action to rec over de linquent contributions to the Fund from Dannex as employ er, a nd Annex and Funk on theories of

vicar ious responsibility

and fr audulent tra

nsfer . We AF F IRM
. I. Bac kgr ound A. Dannex Acquires Annex Anne x wa s f

ound e d in the e arl y pa rt of the tw e nti e th ce ntu

ry by F un k’ s g ra

nd fa the r. Un til the 1960s, it produced satin lini ng s for men’ s hats. After a decline in the me n’s hat business, Anne xNo. 08-6545

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- 2 - turned to cutting , sew ing a nd selling satin inserts for watch and jew elry box es, embossing paper sheets printed by

its customers, and selling satin for use as box lining. F unk was Anne x ’s pre sident and sole shar eholder
. I n the summer of 1997, F unk and thre e other persons for

med Danne x . They

provi ded the
c a pit a l f or Da nn e x to pu

rc ha se the eq

uip me nt, a sse ts, and

bu sin e ss o f D ane Pa

pe r B oa rd Cart on s, I nc. (“D ane” ). Danne x also ac quired most of Anne x ’s business. Funk w as an 85% share holder of Da nn e x an d b e c a me its pr e sid e nt. He re ma ine d A nn e x’s s ole e xec uti ve , s ha re ho lde r a nd fu ll- tim e employ ee. D annex co ntinued Dane ’s line of business, the manuf actur e of f

olding boxes used for packa g ing r etail g oods, along with the bus iness acquir ed fr om Annex, the sale of satin, satin piece g oo ds , and e mbo sse d p a

pe r p ro du c ts. F un k n e g oti a te d D ann e x’s c oll e c tiv e ba rg a ini nga g re e me nts wi th i ts unio n me mbe rs and wa s at th e top of the c ha in of c omm and

a mon g Da

nn e x’s e mpl oy e e s. Many of Da ne’s f ormer e mploy ees c ontinued to work at Da nnex. Anne x’s e nti re bu si ne ss a ft e r 1 99 7 w a s a s a br ok e r b uyingand

the n s e lli ngsatin

to companies located in A sia, and Funk claims he kept Annex in exis tence beca use Anne x ’s purc haser s in Asia wer e fa

miliar with the name. Funk claims that Annex boug ht satin from Da nnex at arm’s leng th and later

sold it. Danne x then bi lled Annex for 85-90% of the s ales pric e, and A nnex retained 1 0

- 1 5 % a s s a le s c o mm is s io n . F u n k c la im s th a t t

h e s e s a le s w e r e inv o ic e d

to c u s to me r s b y

A n n e x. As the district court noted, how ever , Annex’s t a x r e tu

r n s d e mo n s tr a te s u

b s ta n ti a l i n c o n s is te n c y

in te r ms o f th e a mount paid to Danne x for the c ost of the goods sold by Annex. For instance, A nnex’s 2000 ta x re tur n r e fl e c ts that A nn e x’s c os t of g oo ds purc hased was a

pp ro xima te ly

nin e tyNo. 08-6545

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- 3 - perc ent of its g ross receipts ; the cost in 2001 was eig hty -four perc ent; in 2002, se ve nty -o ne pe rc e nt. I n 200 3, 20 04 and 20 05 , A nn e x re po rt e d n o c os t of g oo ds a t a ll b u tr e p o rt e d

s a l e s i nt h e a m o u n to f

$ 1 4 9 , 3 2 0 , $ 1 1 3 , 7 6 7 an d

$ 3 9 , 4 3 1 , r e s p e c t i v e l y. Anne x c on du c te d its bus ine ss pr ima ri ly thr ou g h Dann e x e mpl oy e e s; a Dann e x emp loy e e in the sh ipp ing de pa

rtme nt wo uld re sp on d to an or de r fo r s a tin fr om A nn e x by

wr a pp ingthe satin

in shrink wra

p and sendingit to the ultimate c ustomer. The acc ountant for Funk, Annex, and Danne x state d that “ tow ard s the e nd ” Anne x a nd Da nn e x w e re no t c arr

y ing ou t arm ’s le ng th tr ans a c tio ns . Although F unk was Da

nnex’s president and wa s actively involved in its o p er at i ons, Funk
never rec eived a salary

from Da nnex, but he rece ived a sa lary from Anne x throug h 2005. His father , Morty Funk, may

also have draw n a small sa lary from Annex f rom 1999 throug h 2005, althoug h he lived mostly

in Florida a

nd perf ormed no wor

k for An n ex . Annex owned the prope rty at which Morty Funk r esided in F lorida until Anne x sold the proper ty to him in 2005, and Annex owned a ca r that Morty

Funk dr ove while living in Florida. I n addition to the tax discrepancies de scribed a bove, ther e we re othe r indications that the De fe nd ants ’ f

in a n c i a l de a lin g s w ithe a c h o the r w e re inc on sis te nt w ithAnne x an d D ann e x be ingtr uly dis tin c t busi ne sse s. Sho rt ly a ft e r its fo rm a tio n, Da nn e x be g an lea sin g Anne x’s eq uip me nt at

the ra te of $12,500 per month. I t did so for ten y ear s, ultim ately paying mor e than $1 million from 1997 throug h 2005. The pa

y ments were classified a s “administrative c h ar g es” a nd “administrative income” on D annex and Annex’s respe ctive tax returns, r ather than as e quipment lease pa y ments or
rec eipts, and F unk descr ibed the lea se as “ informal.” D annex also paid for a ll maintenance and repa ir of Anne x ’s equipment fr om 1997 throug h 2005, and had an option to purchase the equipmentNo. 08-6545

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Funk c laims that that number does n o t re fl ect the full amount rece ived for the equipment 1 beca use additional sales w ere made in 2006, but provides no e videntiary support for this position. Under 26 U.S.C. § 1366, S ubchapte r S Corporations do not pay taxes themselves. I nstead, 2 “[e]ach share holder of an S corpor ation . . . pay s tax es at individual rate s on the pro rata share of the c or po ratio n’ s in c ome (i f the re is a ny ) a nd re c e ive s th e pr o r a ta

ta x be ne fi ts ( e.g., losses, deductions and cr edits) of the c orporation.” Maloof v. C.I.R. , 456 F.3d 645, 647 ( 6th Cir. 2006). - 4 - at fa ir marke t value at the e nd of t he lea se but did not do so. I n Dec ember 2005, Danne x conducte d a l i qu i d at i o n s a l e o f i t s as s et s , an d i n cl u d edth e e qu i p m en ti tl ea s edfr o m An n ex , p ro v i d i n g a
wa rr anty a sse rt ingthat it h e ld t itl e to a ll o f t he e qu ipm e nt s old . D e sp ite the su ms D ann e x pa id i n renta l and maintenanc e on the e quipment over the y ear s, Danne x ’s 2005 tax re turn lists t he proc eeds from the liquidation sale a s only $225,000. 1 The re cord a lso revea ls o t h er i nconsistencies in De fenda nts’ financ ial dealing s and bookkeeping . Danne x was a Subchapter

S corporation for federa l income tax purposes and, as such, lia bil ity fo r t a xes o n c or

po rate profi ts sh ou ld h a ve be e n p a id p ro po rt ion a lly by the sh are ho lde rs . 2 I n 2000 and 2001, F unk rec eived pay ments from Da

nnex tot aling$280,687. Although F unk char acte rizes the pay

ments as share holder distributions f rom which he paid his sha re of Danne x ’s taxes, the pay

ments were desig nated a s loans on Danne x ’s tax returns. I n 2005, as a r esult of the I nterna l Revenue Ser

vice ( I RS) au d it in g

D a nn e x, D a nn e x’ s acc ountant, Peter Canter (“Cante r”) , sent pr omi sso ry

no te s to F un k f

or his sig natur e in o rd e r t o s ub sta nti a te the ide nti fi c a tio n o f t he pa y me nts as loans. F unk signe d the promissory notes memorializing his obliga t i o n to repa y the $280,687, wh ic h w e re ba c kd a te d to 20 00 and 20 01 , an d Can te r s ub mit te d th e m to the I RS. F un k n e ve r p a idNo. 08-6545

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This sum i s the re sult of a share holder loan to F unk from Anne x in the amount of 3 $2, 2 9 4 , 2 3 2 , and an e mploy ee loa n to Funk fr om Annex in t he amount of $1,147,184. F unk has never paid intere st on these loans either
. - 5 - interest on these loans, howeve r, and a ppare ntly had no ex pectation of actually repa y ing the money to Dannex. Canter stated t h at “[ w] e tre ated it as a loan just to avoid the tax , but they wer e not loans.” Additionally , s in c e 2002, Annex has repor ted on its tax returns ove r $3 million i n outstanding loans owed to Anne x by

Funk. A portion of the loans f rom Annex to F unk arose in November 2002 3 when Anne x rec eived in excess of $2 million from the pay -off of a mortg ag e it held. Funk a nd Annex were g ener al partne rs in the entity that owned the mortg ag e. Funk, as g ener al partne r in the
e nti ty and the so le sh are ho lde r in Ann e x, ha d the $2 ,0 00 ,0 00 tr ans fe rr e d fr om An ne x’s a c c ount t o his personal a ccount, a

nd char acte rized the sum as a “ loan” f rom Annex to him and reporte d the amount as a loa

n on Annex’s tax returns. Afewday s later, o n November 19, 2002, Funk issued fr om h is p e rs on a l ba

nk a c c ount a

pa y me nt t o D ann e x in th e a mou nt o f $ 2, 00 0, 00 0, wh ic h h e a lso
c ha ra c te ri zed a s a loa n, a lth ou g h th e loa

n w a s n ot, at that po int , do c ume nte d by a pr omi sso ry no te
or any oth e r wr iti ng . Da

nn e x use d th e loa

n p ro c e e ds to p ay

do wn a se c ur e d lo an h e ld b y

the Tr us t Company of Ne w J erse y

from approximately $2,500,000 to a pproxi mately $500,000. Danne x had borrowe d the m o n ey fr o m the Trust Company of Ne w J erse y

in October

2001 for the pur

pose of
a c qu i r i n g t h e a s s e t s o f

an o t h e r c o mp an y.No. 08-6545

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New Jersey ’s U.C.C. Financ ing Stateme nts sy stem g ives public notice of the debt or and 4 secur ed par

ty relationship, and the collatera l involved. As the dis tr ic t c ourt

su mma ri zed : 5 I n 2000 Danne x ’s enter

tainment expenses were $ 78,572; Annex’s entertainment expenses wer e $85,124, despite the fac t that F unk was Annex’s only employ ee a nd - 6 - I n J une 20 0 4 , Da n n ex obtained an ope rating line of cr edit for more than $1 million from Medallion Busine ss Credit, L .L .C. (“Meda llion”). The c ollatera l u s ed t o secur e the 2004 line of
cre dit includ ed t h e eq u ipment owned by Danne x and Anne x . Medallion also re quired a persona l g uara ntee f rom Funk. In late 2003, just befor e Dannex took out the line of cr edit with Medallion, Funk c ommunicated to Canter his plan to take a junior secur ity interest in Danne x ’s assets to sec ure the $2 million l o an t h at h e h ad made in 2002. I n Dec ember 2003, Funk a

nd Danne x executed a pr omi sso ry

n o t e r e l a t i n g t o t h a t l o an , a s w e l l a s a s e c u r i t y a g r e e m e n t g i v i n g F u n k a l i e n j u n i o r t o Medallion’s in Danne x ’s inventory , equipment, ac counts rec eivable, a nd o t her a ssets. Funk perf ecte d that secur ity

interest by

filing a U.C.C. Financ ing Statement with the New Jersey Secre tary of State o n J anuar

y 12, 2004. Acc ording to Funk, betwe en January 2004 and Oc tober 2006 (by 4 which time Danne x was no longe r doing business), Danne x repa id him approximately $1,000,000 of the $2,000,000 he had l o an ed Danne x . Funk c laimed that the money was re paid “by

way of chec ks issued to [ Funk] or to Americ an Express for [his] enter tainment expenses.” Another irr eg ularity

in Dannex’s and Anne x ’s financ es is exhibi ted in the amounts repor ted by both companies a s “ente rtainment” e x penses on t h ei r t ax returns, which the F und’s expert
a c c ounti ngwi tne ss s ta te d w e re “ a s h ig h a s I have e ve r se e n on a bu sin e ss of thi s si ze. ” F un k c ou ld 5No. 08-6545

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Annex reported only

$79,041 in net sales. I n 2001, Danne x ’s enter tainment expenses we re $1 15 ,9 88 ; Ann e x’s we re $7 2, 51 8. I n 200 2 (th e y e ar D ann e x lost a pp ro xima te ly $500,000), Da

nnex’s enter

ta in me nt e xp e n s e s w e r e $ 1 7 5,572; Annex’s were $62,789. I n 2003, Danne x ’s entertainment expenses wer e $231,369; Annex’s wer e $15,619[.] I n 2004 Danne x ’s enter

tainment expenses we re $119,750; Annex ’s wer e $38,969. I n 2005, Danne x ’s enter

tainment expenses wer e $66,560; Annex’s wer e $95,696.

- 7 - not specifica lly

explain what the enter

tainment expenses consisted of, but he be lieved the e x penses likely included purc hases made by individuals with corporate cre d i t ca rd s , including, in Anne x ’s
case , himself and his fathe r. F unk t estified that Da nnex had no formal contr ols to ensure that individuals did not use cor porate cre dit cards f

or per sonal expenses. I n 2006, afte r Annex ha d cea sed operations, Funk cha

rg ed over $12,000 on Annex’s corpor ate c redit ca rd and pa id off the c redit ca rd with company

assets. Danne x closed in January 2006 and it has no re maining a ssets. B. T he F und The F und is a multi-employ er e mploy ee be nefit plan a dminist ere d out of Nas hville, Te nn e sse e . Pa

rt ic ipa nts in t he F un d r e c e ive pe ns ion ben efi ts on re tir e me nt, the va lue of

wh ic h is deter mined by the amount of pe nsion credits ea rned by participa nts based upon the number of hours and y ear s worked pr ior to retire ment and ac cordingto the applicable benef it level in eff

ec t at the time. The Fund fulfills these obligations by collectingmonthly

contributions from employ ers ba sed on the hours wor

ked by participa nts. The Fund de termines what level of be nefit ca n be provide d for the c on tr ibutio n le ve l a g re e d to by the e mpl oy e r i n the a

pp lic a ble c oll e c tiv e ba

rg a ini nga g re e me ntsNo. 08-6545

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- 8 - wi th t he un ion and pa rt ic ipatio n a g re e me nts wi th the F un d, un de r wh ic h emp loy e rs are ob lig a te d to make pa y ments. Prior to its purchase by Danne x , Dane had participated in the Fund since 1981. Af ter Da ne
wa s p ur c ha se d b y

Da nn e x, two unio ns we re re pr e se nte d at D ann e x, the Un ion of Ne e dle tr a de s, I ndustrial and Te x tile Employ ees ( “UNI TE”) , and the United Pape rworke rs I nternational Union (“ UP I U” ). T h e U P I U w as t h e p re d ec es s o r t o t h e P ap er , Al l i ed -Ind u s t ri al , C h em i ca l an d

E n er gy Workers International Union (“PACE”). O nly UPI U/PACE union members wer e cove red by the Fund. In J u n e 1 9 9 7 , C l ar i c e S t
. Lu c e ( “ S t
. Lu c e ” ) , t h e n P r e s i d e n t o f P A C E Lo c a l 1

- 3 0 0 , A F L- C IO (“L ocal 300" ), which repre sented Dannex’s PACE employ ees, informed t he Fund by letter that Da ne
was c losing a

nd selling its assets to Da nnex. S t. Luce a lso inform ed the Fund that Danne x was planning to join the Fund as a contributing employ er pursuant to the collective ba rg aining ag ree ment betwee n Danne x and L ocal 300 that was to g o into e ffe ct on Aug ust 1, 19 9 7
. S t
. L u ce there fore reque sted that the F und provide a cost ca lculation of what the contributio n ra t e wo u ld be for Danne x ’s employ ees. The Fund c ompleted a c ost calculation for Dannex in J une 1997 and, ba sed on that calc ulation, prepa

red a Standard Form of Participation Ag ree ment (“SF A”) that provided for Danne x ’s par

ticipation in the Fund beg inning August 1, 1997. The Fund se nt the SFA to St. L uce to be executed by her f

or the L ocal 300 a

nd by Danne x ’s manag ement. That SFA was not e x ecute d
or re turned to the F und in 1997 or 1998. As a r esult, the Fund did not enr oll any Danne x employ ees as par ticipants in the Fund or attempt to collect contributions from Danne x during that period.No. 08-6545

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- 9 - Danne x and L ocal 300 did, howe ver, e nter into a Collective B arg aining Ag ree me nt ( “ CB A ”),
e ff e c tiv e fr om Aug

us t 1, 19 97 thr ou g h July 31 , 20 01
. Th a t CB A pr ov ide d fo r a $0 .3 46 pe r h our r a te of contribution to the Fund, up to forty hours per wee k per c overe d employ ee, to incr ease to $0.392 pe r c ov e re d h our b e g inn ingAu g us t 19 99 . Funk do e s n ot d isp ute that th os e a mou nts we re ne ve r p a id to the Fund. On J anuar

y 12, 2000, St. L

uce forwa rded to the Fund two fully -executed c opies of the SFA , signe d by St. Luce on be half of L ocal 300 a nd Funk on be half of D annex, providing f or Da nnex’s participation in the Fund ef fec tive Aug ust 1997. The S FA require d Danne x to make contr ibutions
on be ha lf of “al l indi vid

ua ls p e rf or min g wo rk

c ov e re d b y

the c oll e c tiv e ba

rg a ini nga g re e me nt, including pr obationary , temporar y , and par

t-time employ ees, e x cept f or th o s e indi viduals in the employ of the Employ er f

or a pe riod of less than sixt y (60) c alenda

r day s.” N onetheless, Da nnex did not beg in making the require d contributions to the Fund at this t ime either. The Fund c ontends that when it contac ted St. L uce to inquire why Danne x was not making contributions, she informed the Fund that Dannex had cha ng ed its mind, and told the Fund not to pursue the de linquency
. De sp ite the fa c t th a t D ann e x ha d n ot b e e n ma kin g c on tr ibutio ns to the F un d, and a lle g e dly unbeknownst to the F und, St. L uce a nd Danne x enter ed into a sec ond CBA that a lso p rovi ded for p ay m en t s t o t h e F u n d
. T h at C BA we n ti n t o ef fe ct o nAu gu s t1 , 2 0 0 1 , an d co n t i n u edt h ro u gh De ce mber 31, 2005, a

nd provided for

contributions at the rate of $.392 pe r hour, a s well as “two
a dd iti on a l un its fo r t

he c ov e re d e mpl oy e e s” e ff e c tiv e Janu ary

1, 20 04 . Funk

a dmi ts that no pa

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I n J an u ary

2005, the PACE I nternational Union completed a me rg er w ith the United 6 Steelworke rs I nternational Union. I n Fe b ru ary

2005, the United Steelwor kers International Union placed L ocal 300 into a 7 Trustee ship. The United States De partment of Justice also beg an investig ating L ocal 300, leading to t he ind ic tme nt an d pro se c uti on of St. Luc e and

he r s on , w ho a dmi nis te re d th e L oc a l 30 0 H e a lth Fund. On N ovember

8, 2007, St. L uce sig ned a ple a a gre em en t u n d er which she a g ree d to plead g uilty to embezzl ing f

rom L ocal 300. - 10 - wer e made to the Fund over the period cover ed by this CB A either. The Fund c laims it was unawar e of Da nnex’s obligations under the CBAs to contribute to the F und. Towar d the end of

2004 or ea

rly 2005, the United Steelwor kers I nternational U nion beg an 6 inv e sti g a tin g L oc a l 30 0 a nd St. Luc e fo r g ro ss m ism ana g e me nt a nd , a s a re su lt, the F un d b e c a me
awa re that Dannex’s emplo y ee s b el ieved both that they wer e par ticipants in the Fund a

nd that Danne x had been contributi ng to the Fund on their behalf
. The F und deter

mined that, based on the 7 CB As and

SF As be tw e e n L oc a l 30 0 a nd Da nn e x, Da nn e x had an o bli g a tio n b e g inn ingin 1 99 7 to contribute to the F und, and that Danne x employ ees were , in fac t, entitled to pension credits for the entire pe riod of their e mploy ment with Dannex. The F und’s auditor, Bo nd Be ebe A ccounta nts & Advisors ( “B ond Be ebe” ), conduc ted an audit of Danne x to de termine the amount of de linquent contributions. Phi llip Vivirit o (“V ivirito”), Direc tor of Compliance Audits with B ond Be ebe, visited F unk’s home on August 23, 2006, where Danne x ’s re cords were kept. The Dannex documents, purportedly including D annex’s employ ment
rec ords, wer e conta ined in approximately 100 unlabeled, unor g ani ze d b o xe s in F u nk ’ s b a s e me nt, and Funk w a s u n a

b le to p r o v id e g u id an c e a s to w h e r e in th e b o xe s th e r e le v an t d o c u me n ts might beNo. 08-6545

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Vi vir ito c a lc ulate d p ay

ro ll h ours by

div idi ng the e mpl oy e e s’ y e ar- e nd wa g e s b y the low e st 8 wag e rate on the Wag e Schedule in t h e C BA ($ 7
. 24 in 1999 and $7.64 from 2001- 2005). Any employ ee whose y ear -end pay roll hours were calculate d to be less than 320 hour s was not included in the repor

t beca use Vivi rito assumed that he or she was employ ed for less than six ty day s, and thus that he or she was e x cluded unde r the ter ms of the SFA. Se c tio n 5 02 (g )( 2) of

ERI SA, 29 U. S.C. § 1 13 2( g )( 2) (C )( ii) state s: 9 I n any action under this subchapte r by a fiduc iary

for or on behalf of a pla n to enforc e section 1145 of this titl e in which a judgme nt in favor of

the pl an i s aw arded, the court shall awa

rd the plan . . . liquidated da mag es provided f

or under the plan in an amount not in excess of 20 perc ent (or such hi g her perce ntag e as ma y be per mitted under F eder al or State law ) of the [unpaid] amount . . . . - 11 - fo un d. Fun k a

nd Vi vir ito the re fo re a g re e d th a t it wo uld be mor e e ff

ic ie nt f or Vi vir ito to o bta in
re co rd s fr o m Au t o m at edDa t a P r o ce s s i n g, I n c. (“ AD P ”) , Da n n ex ’s p ay ro l l co mp an y . Al t h o u gh Vivirito reque s t ed t hat ADP provide both Maste r Control Schedules and W-2 stateme nts for the Danne x employ ees, he was a ble to obtain only

the latter beca

use that was all that ADP had re tained. Be cause “[n] o pay

roll rec ords, job classifications, or hire and te rmination dates we re a vailable f or
a ud it p ur po se s, ” Vi vir ito ha d to de du c e wh a t in fo rm a tio n h e c ou ld f ro m th e W-2 fo rm s. 8 Vivirito de termined that the total a mount of contributions ow ed by Dan n ex fr o m J anuar y 1999 throug h Dec ember 2005 was $382,257.16, plus inter est on the unpaid contributions in the amount of $34,964.50 as of the date of the audit. The ERI SA liquidated damag es provisi on of 20% of past -d ue c on tr ibutio ns a mou

nte d to $7 6, 45 1. 43 . Purs ua nt t o th e SF A, Da

nn e x wa s a lso 9No. 08-6545

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Section 502(g )(2) of ERI SA, 29 U.S.C. § 1132(g )(2) (D), states that “the c ourt shall awa rd 10 the plan . . . re asonable attorney ’s fe es and c osts of the ac tion, to be paid by the def endant.” The F und’s B oard of

Trustee s is the named fiduc iary of the Fund and there fore is a fiduciar y 11 within the meaning of Section 3(21) A of ERI SA, 29 U.S.C. § 1002(21)(A). - 12 - responsible for

the cost of the a

udit, which was $5,400. The Fund ther efor e re quested $499,073.09 plu s atto rn e y ’s fe e s. 10 C. P roce dural Hi story The F und and its trus t ee s b rought this action under Sec tion 502 of ERI SA, 29 U.S.C. § 11 11 32 , a nd Se c tio n 30 1 of

the L a bo r M ana g e me nt R e la tio ns Ac t of 19 48 , 2 9 U .S. C. § 18 5, a g a ins t Def endants to obtain the contributions a lleg edly owed to the former employ ees of Danne x . On May 28, 2008, the Fund filed separ ate motions for summary judgme nt ag ainst Danne x , Annex, and Funk. The F und claimed that Da nnex was liable to it for delinquent contributions, interest, liquidated damag es, and attorney s’ fe es; that Annex was liable for these same damag es bec ause D annex and Annex were a “sing le integ rate d employ er[] under fede ral labor law,” and wer e alter e g os; and that Funk wa s liabl e for the damag es bec ause he had an outstanding loan he owe d to Dannex in the amount of $280,687, he ha d another outstanding loa

n he owe d to Annex in the amount of over $2 mil lio n, F un k a

nd Anne x we re a lte r e g os , a nd the se c ur ity

int e re st t

hat Funk took i n 2 00 4 in Danne x ’s equipment wa s a fr audulent tra nsfer under N ew Jersey

law. Def endants filed a joi nt reply and cross-motion for summ ary judgme nt. Dannex claimed that the Fund was not entitled to collect a g ainst it due to waiver a nd lache s, and that the a

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- 13 - that r e su lte d in

ov e rs ta te d d e lin qu e nt c on tr ibutio ns . A nn e x cla ime d that it c ou ld n ot b e he ld l ia

ble beca use it was not an a lter eg o of Da nnex. Funk claimed that he wa s n o t l i able be cause : (1) the $280,687 amount that he obtained f rom Danne x was not a loa n, b u t i n s tead wa s a shar eholder d i s t r i b u t i o n ; ( 2 ) F u n k

s h o u l d n o t b e p u n i s h e d

f o r a t t e mp t i n g t o a s s i s tA n n e x an d D an n e x f i n an c i a l l y; and, (3) the only

claim ag ainst Funk in the F und’s Second Ame nded Complaint was for a fra udulent transfe r, and there fo re the Fund w as bar red f rom bring ing a dditional claims ag ainst Funk on summary judgme nt. On Novembe r 12, 2008, the district cour t entere d its opini on g ranting the Fund’s motions for summary judgme nt. I t first considere d the Fund’ s claim of liability ag ainst Danne x for de linquent contributions. The dist rict court ruled: (1) Danne x ’s waiver defense was preempted under ERI SA; (2) Da nnex’s laches de fense was likely pree mpted under ERI SA and, re gar d l es s, failed unde r the fac ts; and, (3) Da

nnex had not sufficiently supported its c laim of err or in the audit to c reate an issue of mater ial fac t. The district court next consider ed the a rg uments of Annex and Funk. T he cour t first found that Funk h ad sufficie nt notice of a ll of the Fund’ s claims, and ther efor e all of the claims wer e proper ly befor e the c ourt. Next, the court found that Dannex and Annex did not qualify as alter eg os under the more “ rela x ed” la bor law standa

rd, but did q u ali fy

as alter eg os under the tr aditional fede ral common law standard, which applies to the pre sent ca se. The district c ourt then found that Funk wa s liable to the Fund a s a re sult of the outstanding sha reholde r loan fr om Annex to hi m in the amount of $2,294,232. T h e cour t also found that Funk w as estopped f rom asser

ting that theNo. 08-6545

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I ncluding delinquent pension fund c ontri b u t i o n s of $382,257.16, update d interest in the 12 amount of $37,589.68, statutory liquidated damag es of $76,451.43, a nd $5,40 0 for the c ost of the audit. - 14 - $280,687 he re ceive d fr o m Da n nex was a shar eholder distribution i nstead of a

loan. Fina lly , the district c ourt held that Funk had violated the New J erse y Fr audulent Transf er Act such that he was individually

liable to the Fund. There fore , the district court g rante d all three of the F und’s motions for summ ary judgme nt and denie d Def

endants’ motion for summar y judgme nt. The district c ourt enter ed judg ment in favor of the fund f

or $5 0 1 , 6 98.27 , plus attorney s’ fe es and c osts in the amount of $116,143.62. 12 Def endants timely

appea led. II. Ana lys is We r e vie w a

g ra nt o f s umm ary

jud g me nt de novo. Litt le v. BP Explorati on & Oil Co., 265 F.3d 357, 361 ( 6th Cir. 2001). A. Laches Def endants a rg ue that they

wer e pre judiced by

the Fund’ s failure pursue co l l ec t i on of the fee s, and that there fore t h e Fu n d should be barr ed by lache s from now pursingcollection fr om De fe nd ants
. “A party asser

ting lache s must show: (1 ) l ac k o f diligenc e by the party ag ainst whom the defe nse is asser

ted, and ( 2) pre

judice to the par

ty asser ting it.” Br idge

po rt Mu sic

, In c. v. Just in Combs Publ’g , 507 F.3d 470, 493 (6th Cir. 2007). “[L ]aches foc uses on the inexcusable de lay afte rNo. 08-6545

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- 15 - possession of t he knowledge of t he facts . . . .” W ells v. U.S. Stee l & Carnegie Pension Fund, Inc ., 950 F.2d 1244, 1250 (6th Cir. 1991) (interna l quotation marks omitted). Under N ew Jersey law, a pa rt y mus t de mon str a te “su bs tanti a l r e lia nc e , to his or

he r d e tr ime nt, on

the oth e r p art

y ’s de lay in
asser ting a rig ht to relief.” Brocke n v. Brock en, N o . F M
- 0 7
- 1 3 5 4

- 0 6 , 2 0 1 0 W L1 5 3 3 0 0 , a t* 5 ( N
. J. S u p er . C t
. C h
. Di v . J an u ary 1 9 , 2 0 1 0 ) ( u np u

b l i s h edd ec i s i o n ) ( ci t i n g Lavin v. Bd. of Educ. of Hack ensack , 447 A.2d 516, 520 (N.J. 1982)). He re , th e re wa s a

su bs tanti a l de lay

fr om t he tim e th e Fund r e c e ive d th e sig ne d SF As un til i t b ro u ght its first complaint in t his matter. Neve rtheless, we aff irm the district court’s holding denying D efe ndants’ cla im of lache s ag ainst the Fund. L ache s is an equitable doc trine and is not available to those who do not come with “c lean ha nds.” See, e.g., Borough of Princeton v. Bd. of Chosen Freeholde rs of Count y of Me rcer, 777 A.2d 19, 32 (N.J
. 2001) (The conce pt of “c lean hands” “ [i ]n si mple parla nce . . . m er el y g ives expression to the equitable princ iple that a cour t should not gra

nt relief to one who is a wrong doer w ith respec t to the s u b j ec t m att er in suit.”). Def endants have har dly

shown clea

n hands. Additionally , the application of lac hes re lies in part on an unexplained delay
. See Lavin, 447 A.2d at 519 (“ L ache s in a g ener al s ense is the neg lect, for an unre asonable and unexplained le ng th of ti m e, u n d er circumstances pe rmitting dilige nce, to do what in law should have be en done.” (e mph a sis a dd e d) ); see also Topping v. J ams Assocs., No. L -171-03, 2 0 0 6 W L2 7 8 7 1 5 8 , a t* 4 ( N
. J. Super. Ct. L aw Div. Sept. 29, 2006) ( “Whether a delay is unreasona

ble is fac t sensitive and depe nds upon all the circ umstances.” ). He re, the Fund has off ere d an explanation for its delay —as par t ofNo. 08-6545

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- 16 - a lar g er fraud that was ult imately prosec uted by the fe dera l gove rnment, St. L uce de ceive d the Fund as to Danne x ’s obliga

tions and intentions. Although def endants c ontest the vera city of the F und’s claim that St. Luce instructed t he Fund not to pursue the delinquent pay ments, they

do not provide evidenc e to the contr ary . L a c he s is a n e qu ita

ble do c tr ine , a

nd a s su c h it is n ot i nte nd e d to su

pp or t an in e qu ita

ble re su lt. Linek v. Korbeil, 75 5 A. 2d 12 29 , 12 35 (N .J. Sup e r. Ct. Ap p. Di v. 20 00 ). Un de r t he se c ir c ums tanc e s,
w e a g r e e w i t h t h e d i s t r i c tc o u rt ’ s d e t e r m i n a t i o nt h atl a c h e s d o e s n o ta p p l y. B. T he Aud it As descr ibed above , Vivirito’s audit utili zed W-2 for ms to calc ulate Da

nnex’s contribution d el i nquencie s beca

use Da nnex’s employ

ment rec ords, assuming they are somewher e amongthe pa pe rs in F un k’ s bas e me nt, we re too dif fi c ult to loc a te
. On July

11 , 2 00 8, F un k f

ile d a n a ff ida vit , in which he c riticized the audit’s ac cura cy on various g rounds. Vivirito responde d to Funk’s criticisms in his own affidavit on August 5, 2008, rebutting F unk’s cl ai m s of audit er ror. On Se pte mbe r 5, 20 08 , F un k su bmi tte d a su

pp le me nta l a ff

ida vit , in wh ic h he a g a in c ri tic ize d th e a ud it, repe ating some of h i s ea rl i er c laims and arguing that he was not made awa re until too late that Vivirito was unable to obta in a ll of the nece ssary information from ADP. The district cour t held that Def endants ha d not succe eded in demonstrating a mater ial issue of fa ct in reg ard to the a mount of the damag es found by

the audit.No. 08-6545

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Def endants’ a rg ument on appea l relate s only to the calc ulation of delinquent c ontributions 13 and, pre sumably , the proportional liquidated damag es u nder ERI SA. They do not challeng e the amount of attorne y s’ fe es or the c ost for the a udit. - 17 - On appe al, Funk r eiterates the var ious cl ai m s o f i n acc urac y that he ra ised in the district
c ourt
. He a lso argue s th a t he wa s und e r the imp re ssi on that Vivi ri to h a d o bta ine d a ll the do c ume nts

13

ne e de d f ro m A DP i n o rd e r t o c on du c t the a ud it, a nd that the F un d ha d ne ve r c on ta c te d F un k o r h is attorney s to inform him otherwise. F unk claims that he did not lear n that cer tain rec ords wer e not available from ADP until he saw V ivirito’s Aug ust 5, 2008 affidavit. W e ne ed n o t d et er m i n e wh et h er t h e in ac cu ra ci es t h at De fe n d an t s al l ege i nt h e m et h o d o l o gy of the a ud it a re su pp or te d o r r e le va

nt. ERI SA r e qu ir e s th a t “e very emp lo y er sha ll .
. . ma int a in
rec ords with respe ct to eac h of his employ ees suf ficient to de termine the benef its due or which ma

y be c ome du e to s uc h e mpl oy e e s. ” 29 U. S.C. § 1 05 9( a )( 1) . Wh e re thi s is no t do ne , “ ERI SA s hif ts the burde n to the employ er to produc e evide nce of t h e am o u n t of work pe rfor med and to re but
rea sonable infe renc es th at ca n b e d rawn from the plaintiff’ s evidenc e.” Trs. of Pai nters Union Deposit Fund v. Y

barra Con s t r . C o., 1 1 3 F. Ap p ’x 6 6 4 , 6 6 7 -6 8 (6 t h C i r. 2 0 0 4 ) ( ci t i n g Mich. Laborers’ Health Care Fund v. G rimaldi Concrete, Inc., 30 F.3d 692, 695 ( 6th Cir. 1994)). Danne x did not keep its employ ment rec ords in a

n a c c e s sible format, a

nd never came forwa

rd wi th e vid e nc e to r e bu t th e a ud it’ s c a lc ulatio ns (e .g ., by pr od uc ingthe re c or ds that are purp or te dly in Funk’s ba sement, providing expert testimony criticizing the audit’s methodolog y , or off eringan al te r n a ti v e c a lc u lati o n )
. I n s te a d , D an n e x r e li e s o n u n s u p p o r te d c la im s o f in a c c u r a c y . T h e s e ar eNo. 08-6545

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- 18 - insufficient to c reate a materia l issue of fac t. See Trs. of Painters Union, 113 F. App’ x at 668 (“ The company did not come forw ard w ith additional re co rd s to substantiate its arg uments that . . . the hours at issue should ha

ve been calc ulated using [a diff ere nt] rate , that cer

tain employ ees should not have be e n in c lud e d in

the c omp utatio n, or

that th e tot a l numbe r of

ho ur s w a s to o h ig h. Th e re su lts of the a udit should be presumed a ccur ate, since no contra dict o ry evidenc e wa s produce d by [t he
e mpl oy e r]. ” (i nte rn a l foo tno te omi tte d) ); Trs. of Detroit Carpenters Health & W elfare Fund v. R iver City Con str
. , 99 F. App’x 612, 614-15 (6th Cir. 2004) (in the a bsence of proof

from the e mploy er
re g ard ingthe a c c ur a te a mou nt, “ the a ud ito r’ s r e po rt

is s uf fi c ie nt p ro of

of the c ontr ibutio ns ow e d to
wa rr ant s umm ary

jud g me nt” ); Bd

s. of T rs. of O hio Lab or e rs’

Fr inge Be ne

fit Pr og ra ms v . J e nk ins , 28 3 F . App ’x 31 5, 31 9 ( 6th Cir . 2 00 8) (h old ingtha

t a pa rt y may no t r e ly on re c or ds wi thi n it s so le control that have not been made part of the re cord in the c ase to c reate a g enuine issue of materia l fac t). Fur

ther, e ven if the F und did not communicate to Def endants prior

to the submissi on of the
a ud it that th e y

we re un a ble to o bta in a ll o f t

he e xpe c te d d oc ume nts fr om A DP, the a ud it i tse lf , f ir st
s u b mi tt e d to th e c o u rt i nM ay

200 8 , d e s c r ib e d

th e me th o d o lo g y

u s e d an d ma k e s c le ar th a t “ [n ]o pa y ro ll r e c or ds , jo b c la ssi fi c a tio ns , or hir e and te rm inatio n da te s we re a va ila ble fo r a ud it p ur po se s” and that, “[d]ue to the absenc e of job c lassifications, the auditor a ssumed all employ ees r ece iving W-2s we re to be repor

ted.” The district c ourt did not enter summary judgme nt until November 2008, but in the intervening months Defenda nts did not submit any evidenc e refuting the audit or produc e the pa y ro ll d oc ume nts
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- 19 - There fore , Def

endants have not establish ed a material issue of f act r eg ardingthe ac cura cy of the a udit, and we f

ind no erro r. Thus, summary judgme nt ag ainst Danne x , the employ er, w as proper . C. Annex’s Liabi lity as an Alter Ego of Dann ex The dist rict court held t hat Danne x and Anne x wer e alter eg os under the “ traditional” fe dera l common-law standa

rd, a f inding th a t A nn e x challeng es on appe al. Whether a lter eg o liability applies in ERI SA actions is a question of fe dera l common law. Flynn v. G reg Anthony Constr. Co., Inc., 95 F . App ’x 72 6, 73 2 ( 6th Cir . 2 00 3) ; see also NLRB v. Full erton Transfer & Storage, Ltd., Inc., 910 F.2d 331, 335 ( 6th Cir. 1990) (“Whether a compa ny or individual is responsible for the financ ial
o b li g a ti o n s o f

an o th e r c o mp an y o r in d iv id u a l i s a qu e s ti o no f

f e d e r a l la w w h e n it ar is e s in th e c o n te xt of a f eder al labor dispute.” ). Althoug h under the fede ral c ommon law “ther e i s n o o n e test t hat g overns whe n one cor

poration will be found to be the alter eg o of anothe r,” id. a t 33 9, thi s Ci rc uit has found guidance in the Supreme Court’s stateme nt that

as Mr. J ustice Cardozo said in Berke y v. Third Ave nue R. Co. , 244 N.Y. 84, 95 155 N.E. 58, 61 “D ominion may be so complete , interfe renc e so obtrusive, that by the gene ral rules of age ncy the parent will be a principal and the subsidiary an ag ent. Where c ontrol is less than this, we are remitted to the tests of honesty and justice.” That is not a complete catalogu e. The seve ral c ompanies may be re pr e se nte d a s o ne . Ap art fr om t hat is the qu e sti on

wh e the r i n f

a c t th e e c on omi c enter prise is one, the c orporate forms be ing la rg el y paper arr ang ements that do no t r e fl e ct th e bu sin e ss r e a lit ie s. On e c omp any may in f a c t be op e rate d a s a division of another; one ma y be only a shell, inadeq u at el y fi nance d; the aff airs of th e g r o u

p ma y b e s o in te r

mi n g le d th a t n o d is ti n c t c o r p o r a te line s are maintained. These are some, though by no means all, of t h e r el evant considerations as the authorities re cog nize.No. 08-6545

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- 20 - Id. (q u o t i n g N.L.R.B. v. Dee na Artware, Inc. , 3 61 U. S. 3 98 , 4 03 -0 4 ( 19 60 )) . T his Ci rcui t has a lso looked to w hether one corpor ation “could not ha ve oper ated in the same fa shion without t he aid of ” the sec ond corpor ation. Id. We affir m the district court’s finding that Annex was a n alter e g o of Da

nnex. I n Fede rated Dept. Stores, Inc . v. J.V .B. Indus., Inc ., 894 F.2d 862, 870 ( 6 th Cir. 1990), we he ld that two corpor ations wer e alter eg os wher e: (1) they wer e both controlled by the same individual; (2) one was a “me re instrumenta lity ” of the other; and, ( 3) one c orporation “provided all the equipment, labor a nd manag ement” f

or the other . As the fa ctual re cord he re sho ws , both Dannex and Annex were controlled by

Funk, who w as the sole sha reholde r of the latter and w as 85% sha reholde r of the f

ormer. F ur the r, Anne x wa s a “ me re ins tr ume nt” of Da

nn e x; b y F un k’ s ow n a dmi ssi on , A nn e x wa s k e pt i n bu sin e ss o nly

be c a us e the name wa s f

a mil iar t o s ome c us tom e rs , a nd a lmo st a ll o f t

he la bo r, a nd a ll of the e qu ipm e nt, ne c e ssa

ry fo r a ny sa le s th a t A nn e x ma de we re pr ov ide d by Da nn e x. Da nn e x als o sold Annex’s equipment as if it w ere Danne x ’s own, and their respe ctive tax re turns are inconsistent with businesses operating indepe n d en t l y of one a nother. Indeed, e ven De fenda nts’ acc ountant admitted that eventua lly

the two companie s cea sed to operate at arm’s leng th. B eca use Anne x has
no t de monst rat e d a

ma te ri a l is su e of

fa c t r e g ard ingAnne x’s o pe ra tio n a s an in de pe nd e nt b us ine ss entity , we a ffirm the district c ourt on this issue. D. F unk ’s Liabi lity 1. The Out st andi ng Lo an F r om Ann e x t o F unkNo. 08-6545

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.

Neither of th e p a r ti e s nor the district cour

t addre ssed choice -of- law conc erns, but all applied 14 New Jersey

state law w here nece ssary . We will therefor e do so as we ll. - 21 - Th e dis tr ic t c ourt

he ld t hat be c a us e Anne x is lia

ble a s an alt er ego of

Da nn e x, and it i s undisputed that there is a n outstanding sha

reholde r loan fr om Annex to Funk of over $2,200,000, Funk is indirec tly

responsible for

the same liabilities on the basis of the outstanding loan. Funk doe s not addres s t h i s aspec t of the district court’ s opinion on appeal. Instead, he challeng es the c ourt’s conclusion that Anne x and Da nnex were a lter eg os, discussed ab ove, and a sserts that the F und’s position as cre ditor of Danne x /Annex does not give it a pr iority position over other c reditors of F unk. B ut t he dis tr ic t c ourt

did no t fi nd that the F un d wa s in a pr ior ity po sit ion , o nly

tha t F un k c ou ld b e he ld persona lly

liable to the extent of his debt to Annex. 2. The $280,687 Paym ent F rom Dannex to F unk- Estoppel Th e dis tr ic t c ourt fo un d that F un k wa s e sto pp e d fr om arguin g that the $2 80 ,6 87 pa id t o h im by Danne x was a s hare holder distribution rather than a loan, be cause Danne x had cla imed the amounts as loans on its tax returns a nd Funk ha d signe d promissory notes in 2005 backdated to 2000
and 20 01 to s ub sta

nti a te the a mou

nts a s lo ans . F un k a dmi tte d th a t he ne ver pai d in tere st o n th e se amounts and stated ther e wa s no expectation that he do so. The Ne w J erse y

Supreme Court has e x plained: 14 There are two basic for

ms of estoppel. “True estoppel” is used to de fine the situation in w hic h o ne part y induc e s ano the r t o r e ly to h is [o r h e r] d a ma g e up on c e rt a in repr esentations. Quasi-estoppel” de scribes a situation in which an individual is not permitted to ‘blow both h o t and cold,’ taking a position inconsistent with priorNo. 08-6545

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- 22 - c on du c t, i f t

his wo uld inj ur e ano the r, re g ard le ss o f w he the r t hat pe rs on

ha s a c tua lly relied the reon. Heue r v. He uer , 704 A.2d 913, 918 (N.J. 1998) (interna l citations and some interna l quotation marks omi tte d) ; see also Burdette Tomlin Mem’l Hosp. v. Estate of Malone , 84 5 A. 2d 61 5 (N .J. Sup e r. Ct. App. Div. 2003) (applying the doctrine of quasi-estoppe l ag ainst a hospi tal wher e it billed Medicar e at one r ate a

nd then attempt ed t o t ri p l e the cha rg es whe n it learne d that the patient’s Me dicar e
cover ag e had expi red)
. “The party seekingto invoke the doctrine has the burde n of provingthat the other pa rty should be estopped.” Heue r, 704 A.2d at 919. Funk r epre sented the r ece ipt as a loan a nd not a distribution , an d t o o k the bene fit of that po sit ion wi t h t h e I R S
. H e c a u s e d D an n e x t o c l a i m t h e p ay m e n t a s a l o an an d h e s i g n e d f o rm s to de mon str a te to t

he I RS th a t it

qu a lif ie d a s a loan. F un k ha s su bmi tte d n o e vid e nc e sh ow inghe pa id taxes on the funds. I nstead, he seeks to blame his acc ountant and arg ues t hat “it would be illog ical for the d i s t ri b u t ions to be considere d true loans.” This contention is insufficient to establish a materi a l f a c tu a l d is p u te , an d

th e r e f o r e w e a f f ir m t h e d is tr ic t c o u rt’ s h o ld in g th a t F u n k is e s to p p ed fr om a rguin g that th e a mou

nts we re no t lo ans . Funk a rg ues in this context as well that his s tatus as
a de bto r o f D ann e x an d th e F un d’ s sta tus a s a jud g me nt c re dit or

of Da nn e x do n ot j oin

tog e the r t o place the Fund in a

position of priority

over F unk’s other c reditors. Ag ain, the cour t did not so hol d. 3. F raudul ent Transfer Th e dis tr ic t c ourt

he ld t hat F un k, in c a

us ingDa nn e x to g ra

nt h im a se c ur ity int e re st i n Danne x ’s assets in De cembe r 2003, which he perfec t ed in J anuar y 2004, committed a fra

udulentNo. 08-6545

Pa c e In du str

yUn ion Ma nage me nt, e t al . v . D an ne xMa nu fac tur ing Co. , I nc ., e t al

.

The F und claimed that F unk committed a fraudulent t ransf er under three of the de finitions 15 in the NJ UFT A. Al tho ug h th e thr e e de fi nit ion s h a ve dif fe re nt e le me nts , a

nd the dis tr ic t c ourt

did no t sp e c if y wh ic h of the de fi nit ion s it

fo un d a pp lic a ble , und e r t

he dis tr ic t c ourt ’s fa c tua l f ind ing s a ll three wer e satisfied. - 23 - t ra n s fe r u n der the New Jersey Uniform F raudule nt Transfe r Ac t (“NJUFTA” ), N.J. S tat. Ann. §§ 25:2-20 to 25:2-34 (1997). 15 On appe al, Funk a sserts multiple claims of err or re g ardingth e d i strict court’s f inding of fra udulent transfe r, most, if not all, of which were w aived by his failure to ra ise them below. Vance

v. W ade , 5 4 6 F
. 3 d 7 7 4 , 7 8 1 ( 6 th Ci r . 2 0 0 8 ) ( “ [T ]h e f a il u r e to p r e s e n t an is s u e to th e d is tr ic t court fo rf e its the ri g ht t o h a ve the argume nt a dd re sse d o n a

pp e a l.” ); Ar

ms tro ng v . Ci ty of M e lv ind ale , 432 F .3 d 6 9 5 , 7 0 0 ( 6 t h C i r . 2 0 0 6 ) ( “ I ti s w e l l

- s e t t l e d t h a tt h i s c o u rt ’ s f

u n c t i o ni s t o r e v i e w t h e c a se prese nted to the district court, rather than a better case fashioned a fter a n unfavor able or der.” (interna l quotation marks, bra ckets, a nd ellipses omitted)). I n any event, we need not addre ss this basis for the district court’s de cision beca use F unk’s debt to Annex more than c overs th e am o u n t b y which the Fund’ s judgme nt exceeds F unk’s debt to Danne x . Ba sed on the for eg oing, w e AF F IRM the judg ment of the district cour t.