Kelley v. Courtyard Healthcare Ctr.

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GREGORY KELLEY, et al., Plaintiffs v. COURTYARD HEALTHCARE CENTER, LLC, Defendant

No. 21 CV 6594

United States District Court, N.D. Illinois, Eastern Division

March 11, 2024

MEMORANDUM OPINION AND ORDER

JEREMY C. DANIEL, United States District Judge.

Defendant Courtyard Healthcare Center, LLC (“Courtyard”), a defunct nursing home operator, failed to contribute to its employees' benefit funds as required by a collective bargaining agreement. The plaintiffs, the funds' trustees, brought this suit under the Employee Retirement Income Security Act (ERISA) of 1974, as amended, 29 U.S.C. § 1001 et. seq., against Courtyard, its successor entity, and its former managers to recover unpaid contributions and related expenses. (See R 1.)^[1]After settling with all defendants other than Courtyard, the plaintiffs now move for summary judgment on their remaining claims. (R. 96.) For the reasons that follow, the Court grants their motion.

BACKGROUND

The following facts are taken from the parties' Local Rule 56.1 submissions,^[2] the materials cited therein, and other aspects of the record in this case.

The plaintiffs are trustees for the Service Employees International Union Healthcare Il Health and Welfare Fund (the “Welfare Fund”), and the Service Employees International Union Healthcare Il Pension Fund (the “Pension Fund” and, together with the Welfare Fund, the “Funds”). The Funds are multiemployer benefit plans under §§ 3(3) and 3(37) of ERISA that provide retirement and welfare benefits to thousands of employees of nursing homes in Illinois. (Def.'s Resp. to Pl.'s SOF ¶¶ 13); 29 U.S.C.A. §§ 1002(3), (37). They rely on monthly contributions from employers to finance benefit payments. (Id. ¶ 7.) Because employers self-report the amount of their monthly contributions, the plaintiffs audit the employers from time to time. (Id. ¶¶ 7-8.)

Courtyard was formerly an Illinois limited liability company and contributor to the Funds. (Id. ¶¶ 4-6.) Prior to its dissolution in December 2021, Courtyard operated a nursing home facility in Berwyn, Illinois. (Id. ¶ 5.) The company made monthly contributions to the Funds as a signatory to a collective bargaining agreement between the Berwyn facility and its employees (the “CBA”). (Id. ¶ 6.)

In January of 2019, Courtyard sold the Berwyn facility to another entity, Berwyn Skilled Nursing Facility, LLC, d/b/a the Grove of Berwyn (“Grove of Berwyn”). (Pl.'s Resp. to Def.'s SOF ¶ 17.) Although the plaintiffs were aware of the sale, they did not demand that Courtyard pay the outstanding contributions prior to closing. (Id. ¶¶ 3-4.) However, over two years later, on October 6, 2021, the Funds requested an “exit audit” to identify any remaining contributions that might be due for the period beginning in April 2013 through January 2019. (Def.'s Resp. to Pl.'s SOF ¶ 18; see also R. 97-5 ¶ 3.)

On September 21, 2021, Courtyard declined to produce the records needed to conduct the audit and informed the plaintiffs that they were represented by counsel. (Def.'s Resp. to Pl.'s SOF ¶ 20.) On November 18, 2021 Courtyard's attorney requested further information concerning the audit and indicated that Courtyard would produce the requested documents by November 25, 2021. (Id. ¶ 21; R. 56 at 14.) The Funds provided the information, but Courtyard failed to produce the documents as requested. (Def.'s Resp. to Pl.'s SOF ¶¶ 22-24.)

On December 2, 2021, the plaintiffs sent Courtyard a final demand letter requesting the documents needed to conduct an audit. (Id. ¶ 25.) One week later, the plaintiffs filed this lawsuit against Courtyard and Grove of Berwyn, alleging that Courtyard had not produced the necessary documents. (R. 1.) After this lawsuit was filed Courtyard apparently dissolved. (See R. 104-2.)

Despite Courtyard's apparent dissolution, the lawsuit lived on and proceeded to discovery. The plaintiffs requested that Courtyard produce, among other things its payroll and earnings records, account statements, tax returns, and “all documents concerning the Funds' attempts to conduct an audit of Courtyard's contributions to the Funds.” (R. 21-1 at 7-8.) Courtyard failed to produce the requested documents, and the Funds moved to compel production. (Def.'s Resp. to Pl.'s SOAF ¶ 27; R. 21.) The Court granted the motion, (R. 23), and Courtyard eventually produced its payroll records. (Def.'s Resp. to Pl.'s SOF ¶ 27.) Following discovery, the plaintiffs settled their claims against Grove of Berwyn and the Court dismissed them with prejudice. (R. 91.)^[3]

The Funds hired an independent auditor to review the documents that Courtyard produced. The auditor completed a report showing the amount of unpaid contributions for the period of January 1, 2017 through January 31, 2019, as well as interest, liquidated damages, and fees in accordance with the Funds' governing documents and collection procedures. (Id. ¶ 28.) The report revealed the following delinquencies and related costs:

Category

Welfare Fund

Pension Fund

Contributions

$41,610.00

$21,227.65

Interest

$27,885.90

$12,760.77

Liquidated Damages

$8,322.00

$4,245.54

Audit Fee

$8,175.00

$8,175.00

Total Delinquency

$85,992.90

$46,408.96

(Id. ¶ 29; R. 97-6 ¶¶ 4-6; 97-7.)

The plaintiffs served Courtyard with a copy of the audit report on September 16, 2022 and simultaneously served document requests asking Courtyard to identify any documents contradicting the report's findings. (R. 97-5 ¶ 9.) Between January and April 2023, the plaintiffs' counsel requested on at least six separate occasions that Courtyard identify documents contradicting the audit report or to otherwise dispute the findings in the report. (Id. ¶¶ 11-17.) Notwithstanding these requests, Courtyard failed to identify any documents contradicting the findings set forth in the report. (Id. ¶ 18.) The plaintiffs now move for summary judgment, seeking payment for the assessed delinquencies and costs at the rate set forth in the audit report, as well as reasonable attorneys' fees. (R. 96.)

LEGAL STANDARD

“Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Hess v. Bd. of Trs. of S. Ill. Univ., 839 F.3d 668, 673 (7th Cir. 2016) (citing Fed R. Civ. P. 56(a)). When considering a motion for summary judgment, the Court must construe the evidence and draw all reasonable inferences in favor of the non-moving party. Emps. Mut. Cas. Co. v. Skoutaris, 453 F.3d 915, 923 (7th Cir. 2006). Summary judgment is appropriate when the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to the party's case and on which that party will bear the burden of proof at trial.” Celotex v. Catrett, 477 U.S. 317, 317 (1986). To survive a summary judgment challenge, the non-moving party must point to evidence of specific facts demonstrating a genuine issue for trial on any issue for which it bears the ultimate burden of proof. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

ANALYSIS

I. Local Rule 56.1

Before addressing the merits of the plaintiffs' motion for summary judgment, the Court first considers their request to deem certain of Courtyard's responses to their Rule 56.1 Statement of Material Facts admitted for failure to comply with Local Rule 56.1. (See R. 103 at 2-4.)

“Because of the high volume of summary judgment motions and the benefits of clear presentation of relevant evidence and law . . . district judges are entitled to insist on strict compliance with local rules designed to promote the clarity of summary judgment filings.” Stevo v. Frasor, 662 F.3d 880, 886-87 (7th Cir. 2011). Local Rule 56.1 requires nonmovants to submit a response to the moving party's statement of facts that squarely admits or denies the facts asserted by the moving party. N.D.Ill. L.R. 56(a)(1), (d). The Court may disregard any asserted fact that is not supported with a citation to evidence in the record. Id. 56(d)(2). Moreover, a party's failure to admit or deny facts contained in a Local Rule 56.1 statement- including by stating that the party lacks “sufficient information” to admit or deny the facts asserted-is ground for deeming the facts in question admitted. Fujifilm N. Am. Corp. v. D/C Exp. & Domestic Packing, Inc., 339 F.Supp.3d 790, 792 n.2 (N.D. Ill. 2018).

Several of Courtyard's responses to the plaintiffs' Statement of Material Facts are facially insufficient under Local Rule 56.1. In particular:

• Paragraphs 3, 7-16, 19-21, and 28 of Courtyard's response state that Courtyard “lacks sufficient information” to admit or deny the asserted facts;

• Paragraphs 29 and 31 of Courtyard's response fail to admit or deny the corresponding statements of fact, but instead state that Courtyard “has been unable to verify the accuracy of” the asserted facts; and

• Paragraphs 4, 5, and 32 of Courtyard's response deny the stated facts without citing any supporting evidentiary material.

The Court agrees that these responses do not comply with Local Rule 56.1. As a result, Courtyard's responses to these facts are deemed admitted for purposes of this motion. Fujifilm, 339 F.Supp.3d at 792 n.2.

The plaintiffs also request that the Court strike certain portions of Courtyard's Statement of Additional Facts and exhibits attached to Courtyard's response brief. (R. 103 at 4.) The Court declines to strike these statements and exhibits because, for the reasons set forth below, even if the statements and exhibits are considered, they are insufficient to create a genuine issue of material fact precluding summary judgment. Stevo, 662 F.3d at 867 (“[T]he decision whether to apply the [local] rule strictly or to overlook any transgression is one left to the district court's discretion.”) (...