Bd. of Trs. of Kern Cnty. Elec. Pension Fund v. Atkins Specialty Servs., Inc.

BOARD OF TRUSTEES OF THE KERN COUNTYELECTRICAL PENSION FUND, et al., Plaintiffs/Judgment Creditors, v. ATKINS SPECIALTY SERVICES, INC., Defendant/Judgment Debtor.

Case No. 1:16-cv-01925-NONE-SKO

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

March 2, 2021

FINDINGS AND RECOMMENDATION THAT PLAINTIFFS' MOTION TO AMEND JUDGMENT BE DENIED

(Doc. 16)

OBJECTIONS DUE: 21 DAYS

I. INTRODUCTION

On June 10, 2020, Plaintiffs Board of Trustees of the Kern County Electrical Pension Fund, Board of Trustees of the Kern County Electrical Workers Health & Welfare Trust, and Board of Trustees of the Kern County Electrical Journeyman & Apprenticeship Training Trust (collectively, "Plaintiffs") filed a motion to amend the judgment entered against Defendant Atkins Specialty Services, Inc. ("Defendant") to add Jeffrey Atkins, Rhonda Atkins, and Atkins Services Inc. as judgment debtors pursuant to Federal Rule of Civil Procedure 69 (the "Motion"). (Doc. 16.) Plaintiffs filed a reply in support of the Motion on July 22, 2020, noting that they had received an affidavit in response to the Motion, but that it had not been filed with the Court. (Doc. 20.) On July 27, 2020, the district judge vacated the hearing, took the matter under submission, and ordered the filing of any opposition to the Motion by no later than fourteen days from service. (See Doc. 21.)

On October 22, 2020, nonparty Jeffrey Atkins filed a response to the Motion. (Doc. 24.) The Motion was referred to the undersigned for the preparation of findings and recommendations on January 26, 2021. (Doc. 25.)

The undersigned has considered the Motion, supporting documentation, and the belatedly-filed opposition by Jeffrey Atkins.¹ For the reasons set forth below, the Court RECOMMENDS that the Motion be denied.

II. FACTUAL AND PROCEDURAL BACKGROUND²

Plaintiffs are "multiemployer benefit plans operating in the electrical industry and are created pursuant to collective bargaining agreements between the National Electrical Contractors Association, Kern County Chapter ("NECA"), and the International Brotherhood of Electrical Workers, Local 428 ('IBEW')." (Doc. 16-1 at 5; see also Doc. 1 ("Compl.") ¶¶ 4, 7-8.) They exist "to provide pension, health and training benefits to the participants, both active and retired, who are members of the IBEW, and to their beneficiaries." (Doc. 16-1 at 5.) Defendant is a now-dissolved corporation that "performed all types of electrical work" and was listed with the California Secretary of State as an "electrical-instrumentation-con[struction]" business. (Doc. 16-10; Doc. 24 at 10.) Jeffrey Atkins was the Chief Executive Officer (CEO) and director of Defendant. (Doc. 16-9 ¶ 3; Doc. 16-10 at 4.) Rhonda Atkins was the Secretary and Chief Financial Officer (CFO), director, and shareholder of Defendant. (Doc. 16-9 ¶ 3; Doc. 16-10 at 4; Doc. 16-19 ¶ 1.)

In January 2013, Defendant executed a written agreement for the years 2012 through 2014, pursuant to which it became a signatory to collective bargaining agreements between the IBEW and NECA. (Doc. 16-1 at 6; Compl. ¶¶ 7, 9-12.) These agreements contractually obligated Defendant to, among other things, submit "fringe benefit contributions" to Plaintiffs for each hour worked by its employee-members of the IBEW. (Id.) The agreements also bound Defendant to certain termsregarding the collection of delinquent contributions. (Id.) In August 2013, the agreement was renewed for the years 2014 through 2017. (Doc. 16-1 at 6; Compl. ¶ 8.)

Beginning in July 2015, Defendant became "consistently late and deficient" in submitting their fringe benefit payments and accompanying contribution reports. (Compl. ¶ 16.) From June 2016 to November 2016, Defendant made no payments to Plaintiffs. (Doc. 16-26 ¶ 5.) The only check that was received from Defendant in 2016 was returned from the bank for insufficient funds. (Id.)

On December 23, 2016, Plaintiffs filed a complaint against Defendant seeking payment of delinquent fringe benefit contributions, interest, liquidated damages, and attorney's fees . (Compl. ¶¶ 17-18.) After being served with the complaint and prior to answering, Defendant, represented by counsel, filed for bankruptcy. (See Doc. 6 (indicating Chapter 11 proceedings filed January 31, 2017).) Plaintiffs were unsecured creditors with a priority claim in the bankruptcy proceeding. (See Doc. 10 at 2.)

In March 2017, Plaintiffs agreed to the dismissal of Defendant's bankruptcy case in exchange for entering a stipulated judgment in the instant action. (Doc. 16-9 ¶ 11; Doc. 16-18.) Defendant's bankruptcy proceedings were dismissed on June 13, 2017. (See Doc. 8.)

On July 14, 2017, the parties filed a stipulated judgment and order ("Stipulated Judgment") in which the parties agreed judgment would be entered in the amount of $153,526.31 against Defendant, representing unpaid fringe benefit contributions for which Defendant would make one initial payment of $5,000 and monthly payments plus interest until the judgment was satisfied. (See Doc. 9.) So long as Defendant made timely payments to Plaintiffs as required by the Stipulated Judgment, Plaintiffs agreed to not commence collection methods for the full amount of the Judgment. (See id.) If Defendant failed to make any payment in the time and manner specified, however, the total remaining sum of the judgment would become immediately due and payable. (See id.) If such default continued after ten days' written notice to Defendant, the Stipulated Judgment entitled Plaintiffs to seek entry of a Revised Final Judgment in their favor for the amount due as demanded, less any sums paid on account, plus accrued interest in the amount of 10% per annum. (See id.) The Court entered the Stipulated Judgment on July 25, 2017. (Doc. 10.)

Defendant's June 2017 payment made pursuant to the Stipulated Judgment was returned by the bank for insufficient funds. (Doc. 16-1 at 8; Doc. 16-26 ¶ 13; Doc. 16-30.) Defendant satisfied its obligation under the Stipulated Judgment for August and September 2017, but was thereafter in default. (Doc. 16-1 at 8; Doc. 16-26 ¶ 14; Doc. 16-30. See also Doc. 11 at 2.)

On March 15, 2018, Plaintiffs' counsel sent the requisite 10-day notice under the Stipulated Judgment to Defendant. (Doc. 16-1 at 8; Doc. 16-4. See also Doc. 11 at 8.) In response, Jeffrey Atkins wrote that while Defendant "tried over the months following the [bankruptcy] filing to make the company profitable enough to pay their obligations," it "has at this time no assets or contracts in which to move forward." (Doc. 16-5.) On March 18, 2018, Jeffrey Atkins sent "notice" to IBEW that Defendant "has closed its doors for any future business as of 02/23/2018." (Doc. 16-1 at 8; Doc. 16-3. See also Doc. 11 at 9.)

In view of Defendant's default, Plaintiffs sought Defendant's agreement to sign onto a revised final judgment (the "Revised Final Judgment"). (Doc. 16-6 at 1.) Several months later, Rhonda Atkins responded that the Revised Final Judgment had been signed and returned. (See id. at 4.) On October 17, 2018, Plaintiffs filed a joint motion to vacate the prior Stipulated Judgment and enter the agreed-upon Revised Final Judgment. (Doc. 11.) The Court granted the motion and the Revised Final Judgment was entered against Defendant in the amount of $136,361.12 on October 31, 2018. (Docs. 14 & 15.)

On December 21, 2018, Jeffrey Atkins and Rhonda Atkins filed a Certificate of Dissolution of Defendant with the California Secretary of State. (See Doc. 16-9 ¶ 3; Doc. 16-10 at 6.) According to Jeffrey Atkins, Defendant's assets were "repossessed." (Doc. 24 at 2.)

On April 2, 2019, Rhonda Atkins emailed Plaintiffs:

The report lists us as Atkins Speciality [sic] Services Inc. PO Box 330, Tehachapi CA 93561 Fed ID: 46-2143903. This needs to be changed as we have closed Atkins Specialty Services Inc. completely. All corporation items, licenses, insurance. The correct company name is Atkins Services Inc., 1085 Voyager Drive #330, Tehachapi CA 93561 Fed ID : 82-2803183. We would like to report to the correct company for legal purposes.

(Doc. 16-26 ¶ 16; Doc. 16-31.) After receiving Rhonda Atkins' email, Plaintiffs checked past contribution reports purportedly received from Defendant and noted that, beginning in November2017, the reports were made in the name of Atkins Services Inc. ("ASI"), which had been formed in September 2017, instead of in Defendant's name. (See Doc. 16-11 at 1; Doc. 16-26 ¶¶ 17-18.)

On July 23, 2019, Jeffrey Atkins filed a Statement of Information with the California Secretary of State on behalf of ASI. (See Doc. 16-11 at 1-3.) The filing indicates ASI is an "electrical-instrumentation" business and lists Jeffrey Atkins as CEO and director of ASI, and Rhonda Atkins as Secretary and CFO. (See id. at 3.) An amended filing substituted Justin Atkins for Rhonda Atkins as Secretary of ASI. (See id. at 4.) According to Jeffrey Atkins, ASI performs "maintenance work, no construction, no industrial, no remodel, no wire/conduit no instillation of electrical gear," and specifically "work installing and repairing oil field equipment; central pumping units, compressors, engines, oil and water separation units and steam generators." (Doc. 24 at 10.)

Plaintiffs served post-judgment requests for production on Defendant on November 1, 2019; responsive documents were produced in February 2020. (Doc. 16-16; Doc. 16-21; Doc. 16-22.) On June 10, 2020, Plaintiffs filed the present motion to amend the Revised Final Judgment to add Jeffrey and Rhonda Atkins (collectively, the "Atkinses"), as alter egos of Defendant, and ASI, as a successor corporation. (Doc. 16.)

III. DISCUSSION

Federal Rule of Civil Procedure 69(a) "empowers federal courts to rely on state law to add judgment-debtors" to money judgments. In re Levander, 180 F.3d 1114, 1120-21 (9th Cir. 1999). See also Katzir's Floor & Home Design, Inc. v. M-MLS.com, 394 F.3d 1143, 1148 (9th Cir. 2004). Under Rule 69(a)(1), federal district courts in...