Disputes Continue in CBO/International Painters' Suit
August 10, 2012

by Penny Stacey, pstacey@glass.com

Officials with the International Painters and Allied Trades Pension Fund (IPAT) have requested that the U.S. District Court for the District of Maryland deny a motion to dismiss a case IPAT filed against the company and two of its executives. IPAT alleges that CBO Glass and two of its officials, Gilbert DiMaio, president and CEO, and Paul F. Hogan, principal, "failed to pay amounts due under the Labor Contracts, Trust Agreements and Plan," in the amount of approximately $472,000. DiMaio and Hogan had motioned for the court to dismiss the charges against them, alleging that the complaint fails to state a claim upon which relief may be granted.

While DiMaio and Hogan had argued that neither could be considered a fiduciary of the plan, as defined by
Employment Retirement Income Security Act (ERISA), IPAT officials disagree, citing information from U.S. Code (USC) 29.

"Individual defendants are fiduciaries with respect to the Pension Plan and Annuity Plan under 29 USC … with respect to amounts not paid to the fund by reason of their possession, authority and control respecting the management or disposition of plan assets with respect to assets of the pension plan and annuity plan in their possession," writes IPAT. "As a custodian and fiduciary in possession of Pension Plan and Annuity Plan assets, individual defendants had a duty prudently to safeguard the plan assets, to place them in trust apart from the assets of [the] company as soon as practicable and deliver them to the Fund, on demand or earlier, and to account for assets received and earnings or profits … "

In addition, IPAT argues that even under ERISA, "an individual is a fiduciary … if that person exercises control or authority over plan assets."

The opposing memo continues, "Individual defendants … adversely affected or damaged the plan and/or their participants or beneficiaries by retaining plan assets that were not properly payable to them and/or diverting plan assets to their own use or benefit."

The Fund further argues that a case should only be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim … "

"The plaintiffs have set forth facts in support of their claims, which entitle them to relief," writes IPAT. "As such, plaintiffs should be allowed to proceed to the next stage of litigation."

In summary, the plaintiffs write, "The allegations above clearly demonstrate that individual defendants breached their fiduciary duties to the funds by exhibiting control over plan assets; i.e., unpaid contributions, and by not remitting these amounts at the time they became payable to the Funds. Individual defendants are, therefore, personally liable for all fringe benefits contributions, interest, liquidated damages, audit costs and attorneys' fees and costs owed by company, to the Funds … "

At press time, the court had not yet ruled on the motion to dismiss.