Malcolm v. Harden Harden, Inc.

Full title: SCOTT MALCOLM and TIMOTHY McGOUGH, Plaintiffs, v. HARDEN HARDEN, Inc. and…

Court: United States District Court, D. Minnesota

Date published: Sep 23, 2004

Civil No. 03-5211 (JRT/FLN) (D. Minn. Sep. 23, 2004)

Opinion

Civil No. 03-5211 (JRT/FLN).

September 23, 2004

David J Wymore, KOEPKE DANIELS, Plymouth, MN, and Pamela Hodges Nissen, McGRANN SHEA ANDERSON CARNIVAL STRAUGHN LAMB, Minneapolis, MN, for plaintiffs.

Opal L. Harden, Terrell, TX, pro se.

ORDER ADOPTING THE REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE

JOHN TUNHEIM, District Judge

Plaintiffs Scott Malcolm and Timothy McGough, trustees and fiduciaries under the Employee Retirement Income Security Act ("ERISA") of several Minneapolis-area fringe benefit funds ("the funds"), allege that defendants Harden Harden, Inc. and Opal Harden (collectively "defendants") failed to make certain fringe benefit contributions to the funds and seek damages and expenses incurred by plaintiffs in collecting the delinquent payments. Plaintiffs filed a motion for summary judgment. United States Magistrate Judge Franklin L. Noel considered plaintiffs' motion and recommended that it be granted. For the following reasons, the Court adopts the recommendation of the Magistrate Judge.

BACKGROUND

Defendant Harden Harden, Inc. is a Texas construction corporation; defendant Opal Harden is its President. On March 27, 2003, Opal Harden, on behalf of Harden Harden, Inc., executed an Independent Agreement, agreeing to abide by the terms of a Collective Bargaining Agreement ("CBA") between the Independent Millwright Contractors Association of Southern Minnesota, Western Wisconsin and South Dakota, the Millwrights and Machinery Erectors Local Union No. 548, and the Lakes and Plains Regional Council of Carpenters and Joiners. The Agreement included a guaranty provision explicitly stating that "[i]f this Agreement is signed for and on behalf of a corporation, then the person signing this agreement not only binds the corporation but also binds himself individually to the full and faithful performance of all of the terms and provisions of this Agreement." (Wilson Aff. Ex. A.)

Under the terms of the CBA, Harden Harden, Inc. was to make monthly contributions on behalf of its covered employees to the funds administered by plaintiffs and provide a monthly employee payroll fringe fund report. The CBA requires each month's contributions to be submitted by the 15^th of the following month. The CBA provides that in the event that an employer fails to timely submit the required contributions, the funds are entitled to liquidated damages in the amount of 10% of the delinquent payment and any attorney fees and costs incurred in collecting the delinquent payment.

Harden Harden, Inc. contracted with WASP, Inc., a general contractor, to work on a project in Minnesota from April through September 2003. Plaintiffs allege, and defendants do not dispute, that the required contributions and reports for July, August, and September were not timely submitted to the funds. Based on an audit of Harden Harden, Inc.'s records, plaintiffs determined that a total of $101,728.25 was due to the funds for these three months. Several months after this lawsuit was filed, well after the due dates for the July, August, and September payments, WASP, Inc. paid the funds a total of $101,728.25.

Plaintiffs contend that the terms of the Agreement and the CBA are clear, and that Harden Harden, Inc. and Opal Harden, as guarantor, remain liable to plaintiffs under the liquidated damages and costs and fees provisions in the CBA. The Magistrate Judge determined that there were no material facts in dispute and recommended that summary judgment be granted to plaintiffs. Defendants filed a letter with the Court describing the difficulties they had on the WASP project, objecting generally to the ongoing nature of this matter, and asking that the matter be dismissed against Opal Harden.

ANALYSIS

I. Standard of Review

The Court reviews defendants' objections to the Magistrate Judge's Report and Recommendation de novo. 28 U.S.C. § 636(b)(1)(C), D. Minn. LR 72.1(c)(2).

II. Individual Liability of Opal Harden

Liberally construed, defendants' letter to the Court objects to the Magistrate Judge's conclusion that Opal Harden is individually liable for Harden Harden Inc.'s obligations under the CBA. The letter offers no legal basis or reasoning in support of that objection. Based on the clear language contained in the CBA, the Court agrees with the Magistrate Judge's recommendation on this point.

In Minnesota, "a guaranty is construed the same as any other contract, the intent of the parties being derived from the commonly accepted meaning of the words and clauses used, taken as a whole." Am. Tobacco Co. v. Chalfen, 108 N.W.2d 702, 704 (Minn. 1961). "Unambiguous contract language must be given its plain and ordinary meaning, and shall be enforced by courts even if the result is harsh." Minneapolis Pub. Hous. Auth. v. Lor, 591 N.W.2d 700, 704 (Minn. 1999); see also Atkins v. Hartford Cas. Ins. Co., 801 F.2d 346, 348 (8^th Cir. 1986) ("[i]f the court determines that there is no ambiguity, then the . . . interpretation of the contract is for the court to determine, as garnered from the four corners of the document.") (citations omitted); Cooper v. Lakewood Eng'g Mfg. Co., 874 F. Supp. 947, 953 (D. Minn. 1994) (same). In other words, the parties' "outward manifestation of assent is determinative, rather than a party's subjective intention." Speckel by Speckel v. Perkins, 364 N.W.2d 890, 893 (Minn.Ct.App. 1985) (citations omitted).

The Agreement constitutes a contract between plaintiffs and Harden Harden, Inc. to abide by the terms of the CBA and, additionally, between plaintiffs and Opal Harden as individual guarantor of Harden Harden, Inc.'s obligations. The language of the Agreement stating that any individual signing the Agreement on behalf of a corporation also agrees to individual liability is clear and unambiguous. Thus, Opal Harden is individually liable for the obligations incurred by Harden Harden, Inc. under the CBA.¹

1 The Court notes that defendants may have a claim for contribution against WASP, Inc. with respect to these unpaid obligations.

III. Harden and Harden, Inc.'s Outstanding Obligations

As noted above, the Agreement provided that in the event that defendants failed to timely meet any of their obligations, plaintiffs would be entitled to the full amount of the missed payment(s), liquidated damages in the amount of 10% of the missed payment(s), and any costs and fees incurred in collecting the payments. The Magistrate Judge determined that defendants failed to timely make payments totaling $101,728.25, and accordingly recommended that defendants be held liable for 10% of that amount, or $10,172.83, in liquidated damages. Further, based on submissions from plaintiffs, the Magistrate Judge determined that plaintiffs had incurred costs and fees in the amount of $7,048.11 in pursuing the delinquent payments, and that these costs and fees were reasonable. Defendants did not object to any of these findings. The Court therefore adopts the Magistrate Judge's recommendation that defendants be held liable for unpaid liquidated damages, attorney fees, and costs in the total amount of $17,220.94.

ORDER

Based on the foregoing, the submissions of the parties, and all of the files, records, and proceedings herein, the Court OVERRULES defendants' objections [Docket No. 28], and ADOPTS the Report and Recommendation of the Magistrate Judge [Docket No. 27]. Accordingly, IT IS HEREBY ORDERED that:

1. Plaintiffs' motion for summary judgment [Docket No. 18] is GRANTED.

2. Defendants Harden Harden, Inc. and Opal Harden are jointly and severally liable to plaintiffs for all unpaid liquidated damages, attorney fees, and costs in the amount of $17,220.94.

The Clerk is respectfully directed to mail a copy of this Order to the defendants.

LET JUDGMENT BE ENTERED ACCORDINGLY.