UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

MICHIGAN LABORERS’ PENSION FUND,

TRUSTEES OF; MICHIGAN LABORERS’

HEALTH CARE FUND, TRUSTEES OF;

MICHIGAN LABORERS’ VACATION FUND,

TRUSTEES OF; MICHIGAN LABORERS’

TRAINING FUND, TRUSTEES OF;

MICHIGAN LABORERS’-EMPLOYERS’

COOPERATION AND EDUCATION TRUST

FUND, TRUSTEES OF; and MICHIGAN

LABORERS’ ANNUITY FUND, TRUSTEES

OF,

Plaintiffs,

v.

IMPROVEMENT TECHNOLOGIES

COMPANY, a dissolved Michigan

corporation; and RYAN SAWALL, an

Individual, jointly and severally,

Defendants.

 /

Case No. 09-cv-11839

HONORABLE STEPHEN J. MURPHY, III

OPINION AND ORDER GRANTING PLAINTIFFS’ 

MOTION FOR DEFAULT JUDGMENT (document no. 8)

This action is currently before the Court on Plaintiffs' motion for default judgment.

Docket no. 8. For the reasons stated below, the Court will grant the motion and enter a

default judgment in favor of Plaintiffs.

Plaintiffs are jointly administered, multi-employer benefit funds that receive fringe

benefit contributions from employers pursuant to collective bargaining agreements ("CBAs")

binding employers. Defendant Improvement Technologies Company ("ITC") is a dissolved

Michigan corporation that operated as an employer within the meaning of 29 U.S.C. §

185(a) (LMRA) and 29 U.S.C. § 1002(5) (ERISA). Defendant Ryan Sawall was the resident

agent and President, and a Director and Shareholder of ITC. Plaintiffs seek to hold Sawall

2:09-cv-11839-SJM-RSW Doc # 9 Filed 12/18/09 Pg 1 of 5 Pg ID 94
 1

 This amount includes $13,722.35 in benefit contributions and $2,183.24 in

assessments. Pursuant to the trustee policies in effect when the audit was performed,

incorporated by reference into the CBA, audit assessments were charged on unpaid

contributions at the rate of 12% per year. 

2

personally liable for the obligations of ITC under a theory of piercing the corporate veil. On

this theory, the complaint alleges that Sawall has, among other things:

(a) failed to follow business formalities; (b) failed to adequately

capitalize the business which has resulted in a failure to properly remit

contributions to the Funds; (c) commingled personal and business

assets; and (d) committed fraud by taking monies from the business

while failing to make contributions to the Funds. An injustice will be

imposed on Plaintiffs and the Funds in the absence of individual liability

because, inter alia, Defendant ITC has dissolved and its ability to pay

delinquencies owed by it is in serious doubt.

Compl. ¶ 6.

The complaint further alleges that ITC was at all relevant times bound by the CBA it

entered into with the Laborer's Union. Among the provisions contained in the CBA is a

requirement that ITC make contributions to the Funds on behalf of employees in the

appropriate bargaining unit. Under the CBA and related trust agreements, reports of

contributions and the contributions themselves must be received by the plaintiff funds each

month following the month in which hours were worked by employees covered by the CBA.

From September 2004 through June 2005, ITC failed to submit contributions and

reports of owed to Plaintiffs as required by the CBAs. As a result, ITC became indebted

to Plaintiffs for the payment of contributions and assessments pursuant to the terms of the

CBA. Plaintiffs conducted an audit of ITC's business records for the period of September

2004 through June 2005. The audit indicates that ITC owes Plaintiffs delinquent

contributions and assessments totaling $15,905.591

 for the audited period.

Defendants were served on June 1, 2009. Defendants having not responded to the

complaint or otherwise defended the action, the clerk entered a default with respect to both

2:09-cv-11839-SJM-RSW Doc # 9 Filed 12/18/09 Pg 2 of 5 Pg ID 95
3

Defendants on July 9, 2009. Plaintiffs filed their motion for default judgment on July 10,

2009.

Federal Rule of Civil Procedure 55(b)(2) provides that a party must apply to the Court

for a default judgment when its claim is not for a sum certain. The Court need not conduct

a hearing on a motion for default judgment unless it needs to conduct an accounting,

determine the amount of damages, establish the truth of any allegation by evidence, or

investigate any other matter. Fed. R. Civ. P. 55(b)(2). Notice to the defaulting party is not

required when the defaulting party has not appeared personally or by a representative. Id.

Plaintiffs sue under 29 U.S.C. § 1132, which provides specific remedies for recovery

of delinquent contributions to an ERISA plan, and 29 U.S.C. § 185, which authorizes suits

for the enforcement of CBAs. Trustees of fringe benefits funds, such as Plaintiffs, may sue

delinquent employers to enforce the terms of the CBA as third-party beneficiaries to the

CBA. 29 U.S.C. § 1132(a); Trustees of Painters Union Deposit Fund v. Ybarra Const. Co.,

113 Fed. Appx. 664, 667 (6th Cir. 2004) (unpublished).

From the Court's review of the allegations in the complaint, which the Court must

accept as true, the audit, and the affidavits provided by Plaintiffs, ITC is in default with

respect to audit assessments and past-due contributions owed the Plaintiffs pursuant to the

CBA and 29 U.S.C. § 1145. Accordingly, the Court will enter judgment for Plaintiffs and

award damages in the amount of the unpaid benefit contributions ($13,722.35) and audit

assessments ($2,183.24). 

Furthermore, Plaintiffs are entitled to an award of reasonable attorneys' fees and costs

pursuant to 29 U.S.C. § 1132(g)(2)(D). The affidavit of Plaintiffs' counsel, Michael J.

Bommarito, states that Bommarito spent 5 hours on the case at a rate of $190 per hour,

for a total of $950 in attorneys' fees. The Court finds that an award of $950 in attorneys'

2:09-cv-11839-SJM-RSW Doc # 9 Filed 12/18/09 Pg 3 of 5 Pg ID 96
 2

 The lodestar approach is the proper method for determining the amount of reasonable

attorneys' fees. Building Servs., 46 F.3d at 1401. In applying the approach, the starting

point for reasonable fees is the number of hours reasonably expended on the litigation

multiplied by a reasonable hourly rate. Id. There is a strong presumption that this lodestar

figure represents a reasonable fee. Id. Other considerations may lead the court to adjust

the fee upward or downward. Id. Here, however, there has been no argument that the fee

should deviate from the lodestar figure.

4

fees in this case is reasonable as determined under the lodestar approach, since the hourly

rate and the number of hours expended are both reasonable.2

 See Building Servs. Local

47 Cleaning Contractors Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1401 (6th Cir.

1995) (in ERISA cases, "the award of attorneys' fees must be reasonable as determined

under the lodestar approach."). Costs incurred in the case consist of the $350 filing fee.

Plaintiffs are entitled to recover $1,300 for attorneys' fees and costs.

The Court also finds that Sawall is personally liable for the judgment amount in this

case under a theory of piercing the corporate veil. An individual owner or officer of a

company may be held personally liable under 29 U.S.C. § 1145 for unpaid fringe benefit

contributions of the employer company if the plaintiff is successful in piercing the corporate

veil. Cf. Scarbrough v. Perez, 870 F.2d 1079, 1083 (6th Cir. 1989) ("[W]here a court is

without justification for piercing the veil separating a corporate employer from its

owner-chief executive, the owner-executive may not be held personally answerable for the

corporation's delinquent contributions."). 

The Sixth Circuit has held under federal common law that "most cases" involving

piercing the corporate veil may be decided by addressing three factors: (1) the amount of

respect given to the separate identity of the corporation by its owners; (2) the degree of

injustice visited upon the litigants by recognition of the corporate entity; and (3) the

fraudulent intent of the incorporators. No one factor is controlling. Pipefitters Local 636

Defined Pension Benefit Fund v. L & R Servs., Inc., No. 06-12019, 2007 WL 1814680, *9

2:09-cv-11839-SJM-RSW Doc # 9 Filed 12/18/09 Pg 4 of 5 Pg ID 97
5

(E.D. Mich. June 20, 2007) (citing NLRB v. Fullerton Transfer & Storage, Ltd., 910 F.2d

331, 340-42 (6th Cir. 1990)). 

Applying these standards, the allegations in the complaint at ¶ 6 regarding Sawall's

conduct and the relationship between Sawall and ITC are sufficient to impose personal

liability on Sawall for ITC's failure to remit delinquent contributions. All three factors of the

above test for piercing the corporate veil are present in this case. Sawall's failure to

respect the corporate form and failure to keep his personal and business assets separated

demonstrate he did not respect the separate identity of the corporation. Furthermore, there

would be a high level of injustice to Plaintiffs in the absence of piercing the veil because it

is not likely that ITC, a dissolved corporation, will be able to pay the judgment itself. Finally,

Sawall committed fraud by siphoning funds from the business while failing to make

contributions to the funds. Accordingly, Sawall will be held personally liable for the failure

of ITC to remit unpaid contributions to Plaintiffs. ITC and Sawall will be jointly and severally

liable for the amount of the judgment.

WHEREFORE, it is hereby ORDERED that Plaintiffs' motion for default judgment

(docket no. 8) is GRANTED and judgment will be entered against Defendants ITC and

Ryan Sawall, jointly and severally.

SO ORDERED. 

s/Stephen J. Murphy, III 

STEPHEN J. MURPHY, III

United States District Judge

Dated: December 18, 2009

I hereby certify that a copy of the foregoing document was served upon the parties and/or

counsel of record on December 18, 2009, by electronic and/or ordinary mail.

Alissa Greer 

Case Manager

2:09-cv-11839-SJM-RSW Doc # 9 Filed 12/18/09 Pg 5 of 5 Pg ID 98