Solis v. Dombek (In re Dombek)

In re: JOHN DOMBEK III, DebtorHILDA L. SOLIS, Secretary of Labor,United States Department of Labor, Plaintiff,

v.JOHN DOMBEK III, Defendant.

Case No. 11-40894

Adv. No. 12-00565

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Dated: October 4, 2012

Dated: October 16, 2012

Chapter 7

Hon. Jack B. Schmetterer

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT

I. FINDINGS OF FACTS

This matter is before the Court on the Secretary of Labor's motion for entry of default judgment against Defendant John Dombek III ("Defendant") pursuant to Federal Rule of Bankruptcy ("BR") 7055 and Federal Rule of Civil Procedure ("FRCP") 55. An order of defaul was entered and all allegations of the complaint are thereby admitted.

1. This adversary proceeding is brought by the Secretary of Labor ("Plaintiff" or "Secretary") pursuant to 11 U.S.C. § 523(a)(4) to recover money owed by Defendant to the following pension plans covered by the Employee Retirement Income Security Act of 1974 ("ERISA"): the Wisconsin Tool and Stamping Company 401(k) Profit Sharing Plan and Trust (the "WTSC 401(k) Plan"), the J.D. Acquisition 401(k) Profit Sharing Plan and Trust (the "J.D. Acquisition 401(k) Plan"), and the JJD Industries Group Health Plan (the "Group Health Plan") (collectively, "Plans").

2. As a result of Defendant's failure to answer or otherwise plead, the allegations in the Secretary's Complaint, apart from allegations of damages, are deemed admitted pursuant to BR 7008 and FRCP 8(b)(6). See Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994); In re Underly, 2012 WL 2050235 *1, Adv. No. 12-00391, (Bankr. N.D. Ill. June 6, 2012). The facts regarding damages are established by the Declaration of Senior Investigator Ashley Romanacce in Support of Plaintiffs Motion for Default Judgment ("Declaration"), attached to Plaintiff's Motion for Default Judgment as Exhibit A.

The WTSC 401(k) Plan

3. Defendant was the president and part owner of Wisconsin Tool and Stamping Company ("WTSC"), the sponsor of the WTSC 401(k) Plan. Defendant was an authorized signatory on WTSC's corporate accounts. Since 2008, Defendant has been responsible for determining what creditors, including the WTSC 401(k) Plan, would be paid by WTSC and when such payments would be made. Complaint ¶¶ 5, 6, 14, 17.

4. The WTSC 401(k) Plan's governing documents, which were adopted by WTSC, provided in pertinent part that participants could make pre-tax contributions from their compensation to the WTSC 401(k) Plan in an amount up to the contribution limitations set by the Internal Revenue Code on a yearly basis. Since the inception of the WTSC 401(k) Plan in 2002, WTSC has withheld employee contributions from its employees' paychecks for contribution to the WTSC 401(k) Plan. Complaint ¶¶ 13, 15, 16.

5. During the period from January 1, 2008, through September 17, 2010, WTSC withheld $20,176.57 from its employees' pay in employee contributions and failed to remit the amounts so withheld to the WSTC 401(k) Plan. Complaint ¶ 18; Declaration ¶ 3(b).

6. During the period from January 1, 2008, through September 17, 2010, Defendant caused WTSC to retain the employee contributions it withheld from its employees' pay in its own general assets and failed to ensure that the amounts withheld from its employees' pay were remitted to the WTSC 401(k) Plan. Complaint ¶ 19.

7. During the period January 1, 2008, through September 17, 2010, WTSC withheld $5,460.78 from its employees' pay in employee contributions to the WTSC 401(k) Plan and failed to remit the amounts so withheld to the WTSC 401(k) Plan in a timely manner. WTSC retained in its own general assets the employee contributions withheld from its employees' pay until they were remitted to the WTSC 401(k) Plan. Complaint ¶ 20; Declaration ¶ 3(b).

8. During the period from January 1, 2008, through September 17, 2010, Defendant caused WTSC to retain employee contributions to the WTSC 401(k) Plan withheld from its employees' pay and failed to ensure that the amounts withheld from its employees' pay were remitted promptly to the WTSC 401(k) Plan. Complaint ¶ 21.

9. Through October 6, 2011, $1,253.50 accrued in lost opportunity costs for unremitted and untimely remitted employee contributions to the WSTC 401(k) Plan. Declaration ¶ 3(c).

The J.D. Acquisition 401(k) Plan

10. Defendant was the president and part owner of J.D. Midland Chutes, Inc. d/b/a J.D. Acquisition Corporation ("J.D. Acquisition"), the sponsor of the J.D. Acquisition 401(k) Plan. Defendant was an authorized signatory on J.D. Acquisition's corporate accounts. Since 2008, Defendant has been responsible for determining what creditors, including the J.D. Acquisition 401(k) Plan, would be paid by J.D. Acquisition and when such payments would be made. Complaint ¶¶ 7, 8,25,28.

11. The J.D. Acquisition 401(k) Plan's governing documents, which were adopted by J.D. Acquisition, provided in pertinent part that participants could make pre-tax contributions from their compensation to the J.D. Acquisition 401(k) Plan in an amount up to the contribution limitations set by the Internal Revenue Code on a yearly basis. Since the inception of the J.D. Acquisition 401(k) Plan in 2003, J.D. Acquisition has withheld employee contributions from its employees' paychecks for contribution to the J.D. Acquisition 401(k) Plan. Complaint ¶¶ 24, 26, 27.

12. During the period from January 1, 2008, through October 25, 2010, J.D. Acquisition withheld $1,929.98 from its employees' pay in employee contributions and failed to remit the amounts so withheld to the J.D. Acquisition 40l(k) Plan. J.D. Acquisition retained in its own general assets the withheld employee contributions. Complaint ¶ 29; Declaration ¶ 3(e)

13. During the period from January 1, 2008, through October 25, 2010, Defendant caused J.D. Acquisition to retain the employee contributions in its own general assets and failed to ensure that the amounts withheld from its employees' pay were remitted to the Plan. Complaint ¶ 30.

14. During the period January 1, 2008, through October 25, 2010, J.D. Acquisition withheld $525.18 from its employees' pay in employee contributions to the J.D. Acquisition 401(k) Plan and failed to remit the amounts so withheld to the J.D. Acquisition 401(k) Plan in a timely manner. J.D. Acquisition retained in its own general assets the employee contributions withheld from its employees' pay until they were remitted to the Plan. Complaint ¶ 31; Declaration ¶ 3(f).

15. During the period from January 1, 2008, through October 25, 2010, Defendant caused J.D. Acquisition to retain employee contributions to the J.D. Acquisition 401(k) Planwithheld from its employees' pay and failed to ensure that the amounts withheld from its employees' pay were remitted promptly to the J.D. Acquisition 401(k) Plan. Complaint ¶ 32.

16. Through October 6, 2011, $219.15 accrued in lost opportunity costs for unremitted and untimely remitted employee contributions to the J.D. Acquisition 401(k) Plan. Declaration ¶ 3(g).

The Group Health Plan

17. Defendant was the president and part owner of JJD Industries, Inc., ("JJD Industries"), the sponsor of the Group Health Plan. Complaint ¶¶ 9, 10.

18. JJD Industries transacted its business through several related companies, each of which was co-owned by Defendant, including: WTSC; Akorat Metal Fabricators, Inc./Smithco Fabricators, Inc. ("Akorat/Smithco"); J.D. Acquisition; and Pavo, Inc./Injection Plastics Corporation ("Pavo/Injection Plastics") (collectively, the "Related Companies"). Defendant was an authorized signatory on all of the Related Companies' corporate accounts. Since 2008, Defendant has been responsible for determining what creditors, including the Group Health Plan, would be paid by each of the Related Companies and when such payments would be made. Complaint ¶ 11, 37, 38.

19. The Group Health Plan was originally effective as of March 1, 2007, through a fully-insured group health insurance contract with Blue Cross Blue Shield of Illinois. The purpose of the Group Health Plan was to provide health and dental benefits to the employees of all of JJD Industries' Related Companies. Since the inception of the Group Health Plan in 2007, premiums for the Group Health Plan were partially funded through weekly employee payroll deductions. Each Related Company was responsible for withholding contributions to the Group Health Plan from its own employees. Complaint ¶¶ 35, 36.

20. During the period from May 6, 2010, through August 20, 2010, Akorat/Smithco withheld $15,867.85 from its employees' pay in employee contributions and failed to remit the amounts so withheld to the Group Health Plan or Blue Cross Blue Shield of Illinois for the payment of premiums. Akorat/Smithco retained in its own general assets the withheld employee contributions. Complaint ¶ 39; Declaration ¶ 3(h).

21. During the period from May 6, 2010, through August 20, 2010, Defendant caused Akorat/Smithco to retain the withheld employee contributions and failed to ensure that the amounts withheld from its employees pay were remitted to the Group Health Plan or Blue Cross Blue Shield of Illinois for the payment of premiums. Complaint ¶ 40.

22. During the period from April 5, 2010, through August 20, 2010, J.D. Acquisition withheld $5,084.64 from its employees' pay in employee contributions and failed to remit the amounts so withheld to the Group Health Plan or Blue Cross Blue Shield of Illinois for the payment of premiums. J.D. Acquisition retained in its own general assets the withheld employee contributions. Complaint ¶ 42; Declaration ¶ 3(i).

23. During the period from April 5, 2010, through August 20, 2010, Defendant caused J.D. Acquisition to retain the withheld employee contributions and failed to ensure that the amounts withheld from its employees pay were remitted to the Group Health Plan or Blue Cross Blue Shield of Illinois for the payment of premiums. Complaint ¶ 43.

24. During the period from May 3, 2010, through ...