Unpublished Disposition, 940 F.2d 668 (9th Cir. 1989)

MEMORANDUM^** 

Kenneth M. Walton (Walton) appeals the district court's determination that he owed $84,975.55 in unpaid fringe benefits and penalties to a group of four related Operating Engineers employee benefit plans (the Trusts) under a collective bargaining agreement with the International Union of Operating Engineers, Local Union No. 12 (Local 12).

Walton contends that the trial court erred in concluding that Walton's various business entities operated as a single integrated business and as such was bound by the collective bargaining agreement (the Master Agreement), and that the trial court also erred in holding that the business entities were alter egos and as such were jointly and severally liable to the Trusts. In a consolidated appeal, Walton protests that attorney's fees ought not to have been awarded to appellees; that the amount of the award was unreasonable; and that appellees are not entitled to attorney's fees incurred on this appeal. This court has jurisdiction over the final disposition of all claims by the district court under 28 U.S.C. § 1291. We affirm.

Walton did business as an individual, "Walton," under the names Walton Backhoe Service, Law Plumbing Co., Inc. and Law Plumbing Company. Walton also formed "Walton Enterprises Inc." in February, 1986, which did business as Walton Backhoe Service, Law Plumbing Co., Inc. and Law Plumbing Company.

 "Walton" "Walton Enterprises, Inc." Walton Backhoe Service Walton Backhoe Service Law Plumbing Co., Inc. Law Plumbing Co., Inc. Law Plumbing Company Law Plumbing Company

Walton had signed the Master Agreement with Local 12 on March 10, 1986 in his capacity as "Walton Backhoe Service," sole proprietor, and not as Walton Enterprises, Inc. Under the terms of the Master Agreement, Walton made a commitment to pay fringe benefits to the Trusts and not to subcontract work under Local 12's "craft jurisdiction" to non-signatory employers and to owner-operators. EXH 2 at 1.¹ 

Walton ran his businesses by means of a single office, a single bank account, a single clerical employee, and a single set of books and records. RT (Tape) 26ff; RT 140. He "put them [the companies] all together." RT 181; RT (Tape) 28. From 1986 until 1988, Walton paid fringe benefit contributions to the Trusts on behalf of his backhoe operator, Ronald Kinsley, only for the hours that Kinsley actually operated the backhoe. Walton paid these contributions by means of cashier's checks with funds drawn from the Law Plumbing Co. bank account. RT 193-94. An auditor employed by the Trusts was sent to Walton's offices to perform an audit on April 7, 1988. The auditor reviewed the books and records for March 10, 1986 through March 31, 1988 and concluded that Walton had not properly reported and paid fringe benefit contributions to the Trusts as required by the Master Agreement. EXH 18; RT 19-20. The auditor also determined that Walton had subcontracted covered work to non-signatory subcontractors and to several owner-operators, in violation of the Master Agreement. RT 21; EXH 4, 8-15, 95-99. The Trusts had one of their auditors perform a second audit on May 17 and May 26, 1989, who reached similar conclusions. EXH 18 at 3.

The Trusts sued Walton for breach of contract, and after a bench trial on December 12 and 13, 1989, the district court determined that Walton owed the unpaid fringe benefits, damages from work assigned to non-signatory subcontractors or owner-operators in violation of the Master Agreement, interest, penalties and attorney's fees.

Walton and Walton Enterprises, Inc. are a single integrated

business, bound by the Master Agreement.

The district court found as a factual matter that "at all times after January 1, 1986, Walton operated Walton Backhoe Service, Law Plumbing Company and Law Plumbing Co., Inc. as a single integrated business." ER 10 at 3. A district court's findings of fact are reviewed under the clearly erroneous standard. Rule 52(a), F.R.Civ.P.; Kruso v. International Telephone and Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, 110 S. Ct. 3217 (1990). Questions of law, such as the interpretation of the contractual provisions in the Master Agreement, are reviewed de novo. Kemmis v. McGoldrick, 706 F.2d 993, 996 (9th Cir. 1983).

The evidentiary record fully supports the trial court's finding that Walton operated a single integrated business enterprise under the names Walton Backhoe Service, Law Plumbing Company and Law Plumbing Co., Inc., and Walton is bound by the Master Agreement he signed with Local 12, regardless of whether he used the name of Walton Backhoe Service or Law Plumbing Company. See Operating Engineers Pension Trust v. A-C Company, 859 F.2d 1336, 1341-2 (9th Cir. 1988).

Under the Master Agreement, Walton and Walton Inc. were bound to pay fringe benefit contributions for all hours worked by or paid to employees performing any work "of the nature included in the craft jurisdiction of the Union." EXH 2 at 1. This Circuit has repeatedly interpreted and enforced the identical language of the Agreement in disputes between Local 12 and the Southern California General Contractors Association. See Kemmis v. McGoldrick, 706 F.2d at 996-97; Waggoner v. Wm. Radkovich Co., Inc., 620 F.2d 206 (9th Cir. 1980); Waggoner v. C & D Pipeline Co., 601 F.2d 456 (9th Cir. 1979); Burke v. Lenihan, 606 F.2d 840 (9th Cir. 1979).

The Supreme Court has upheld the type of subcontracting provision provided for in the Master Agreement. Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645 (1982). The trial court found that Walton's subcontracting of work covered under the Master Agreement to owner-operators damaged the Trusts in the amount of $35,636.47, and that his subcontracting to non-signatory entities damaged the Trusts in the amount of $7,922.58. These amounts were calculated using the appropriate methodology. RT 26. See generally Walsh v. Schlecht, 429 U.S. 401 (1977); Brogan v. Swanson Painting Co., 682 F.2d 807 (9th Cir. 1982); Operating Engineers Pension Trust v. Cundiff, 619 F. Supp. 1003 (C.D. Cal. 1985).

Walton furnished no invoices during the 1988 audit, and furnished only some invoices during the 1989 audit. Walton had the burden of coming forward with the invoices to prove any inaccuracy in the audits. Brick Masons Pension Trust v. Industrial Fence & Supply, Inc., 839 F.2d 1333, 1338-39 (9th Cir. 1988).

Walton and Walton Enterprises, Inc. are alter egos, jointly

and severally liable to the Trusts.

Whether the businesses were alter egos is a factual question reviewed for clear error. Brick Masons Pension Trust v. Industrial Fence & Supply, 839 F.2d at 1336; Sheet Metal Workers Local No. 359 v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647, 652 n. 5 (9th Cir. 1988).

Here, the district court found that,

at all times material herein, Walton and Walton, Inc. have had common management, centralized control of labor relations and an interrelation of operations such that Walton and Walton Inc. are 'alter egos' of each other. Walton Inc. has been used by Walton as a technical change in operations to attempt to avoid the obligations of the Agreement....

ER 10 at 4. These are the appropriate standards for finding an alter ego under Brick Masons Pension Trust, 839 F.2d at 1336-37 and Crawford Door Sales and Carpenters District Council of Miami, 226 NLRB No. 174 at 1144, 94 LRRM 1393, 1394 (1977) (alter ego status is determined if two enterprises have "substantially identical management, business purpose, operation, equipment, customers and supervisors as well as ownership"). See also Southport Petroleum v. NLRB, 315 U.S. 100, 106 (1942) (holding that alter ego analysis focuses on whether there was a "bona fide discontinuance and a true change of ownership ... or merely a disguised continuance of the old employer"); A. Dariano & Sons, Inc. v. District Council of Painters No. 33, 869 F.2d 514, 519 (9th Cir. 1989) (establishment of the alter ego enterprise must grow out of an attempt to evade obligations under a collective bargaining agreement).

The district court's findings of common ownership, interrelation of operations and centralized control of employees as between Walton and Walton, Inc. are supported by the record and are not clearly erroneous.

The award of attorney's fees reasonably incurred by the Trusts in recovering amounts due to the Trusts is mandatory under 29 U.S.C. § 1132(g). Operating Engineers Pension Trust v. Cecil Backhoe Service, Inc., 795 F.2d 1501, 1508 (9th Cir. 1986); Operating Engineers Pension Trust v. Reed, 726 F.2d 513, 514 (9th Cir. 1984). We have held that " [i]n determining reasonable attorney's fees, the district court should consider the relevant factors as outlined in Seymour [v. Hull & Moreland Engineering, 605 F.2d 1105, 1117 (9th Cir. 1979) ]." Kemmis v. McGoldrick, 706 F.2d at 997-98.²  The Trusts submitted evidence to the district court on the properly relevant factors, ER 4 at 3-10, and the trial judge weighed these relevant factors in determining the reasonable amount of attorney's fees awarded to the Trusts. ER 4 at 1-2. Under Operating Engineers Pension Trust v. Cecil Backhoe, 795 F.2d at 1508, the Trusts should be awarded the amount of attorney's fees reasonably incurred in this appeal.

The district court's findings were not clearly erroneous.

AFFIRMED.