United States District Court, E.D. Missouri, Eastern Division
PAINTERS DISTRICT COUNCIL NO. 2, et al., Plaintiffs,
SUSTAINABLE CONSTRUCTION, GROUP, LLC., et al., Defendant.
MEMORANDUM AND ORDER
RICHARD WEBBER SENIOR UNITED STATES DISTRICT JUDGE
matter comes before the Court on Plaintiffs’ Motion for
Creditor’s Bill in Equity and to Pierce the Corporate
Veil. [ECF No. 37].
filed a Motion for Creditor’s Bill in Equity and to
Pierce the Corporate Veil on May 6, 2016. [ECF No. 37]. On
October 8, 2013, this Court entered a Consent Judgment
against Defendants Sustainable Construction Group, LLC
(“Sustainable Construction”) and John
O’Leary, in the amount of $83, 143.00 for delinquent
contributions, liquidated damages, interest, attorney’s
fees, and costs owed to Plaintiffs under collective
bargaining agreements as a result of Plaintiffs’
lawsuit brought under the Employee Retirement Income Security
Act (“ERISA”), 29 U.S.C. § 1132, and the
Labor Management Relations Act (“LMRA”), 29
U.S.C. § 185. [ECF No. 32]. To date, Plaintiffs have
only collected $17, 357.97, leaving $65, 785.03 of the
Consent Judgment amount unpaid. [ECF No. 37-1, p. 1].
Plaintiffs move the Court for equitable relief in the form of
a creditor’s bill, to allow Plaintiffs to satisfy the
judgment entered against Sustainable Construction. [ECF No.
37]. Plaintiffs seek to pierce the corporate veil of
Sustainable Construction and to permit Plaintiffs to satisfy
the judgment against its alleged alter ego, Sustainable
Contracting Group, Inc. (“Sustainable
Contracting”). [ECF No. 37]. Defendants did not file a
response to the motion and Plaintiffs’ motion is
corporations hold many similarities related to their
business. Sustainable Construction was operating as a
construction company from approximately 2007 until 2010. [ECF
No. 37-8, pp. 9-10]. Originally, Sustainable Construction was
equally owned by four members; George Mathes
(“Mathes”), John O’Leary
(“O’Leary”), John Nighswander, and James
Butler. Id. at p. 14. In 2009, Mathes and
O’Leary bought the other two members out, and retained
equal membership of Sustainable Construction. Id.
Also in 2009, Sustainable Construction stopped accepting new
contracts and worked to complete all outstanding contracts.
Id. at p. 26. Towards the end of 2009, while
Sustainable Construction was completing their final
contracts, Sustainable Contracting was formed with Mathes and
O’Leary as principal owners. Id. at p. 22. By
early 2010, Sustainable Contracting assumed all functional
aspects of Sustainable Construction, including leasing the
equipment owned by Sustainable Construction. Id. at
pp. 22, 26. Along with overtaking the functional aspects of
Sustainable Construction, Sustainable Contracting also took
over Sustainable Construction’s customer base.
Id. at p. 37. Sustainable Contracting “picked
up where Sustainable Construction left off, ” and
Sustainable Construction has not performed any work since
roughly the end of 2009. Id. at p. 38.
Construction primarily performed infrastructure repair using
high-strength composites, did corrosion protection work, and
general industrial fittings. Id. at p. 33.
Sustainable Contracting primarily performs structural repair
with the use of high-strength composites. Id. Both
companies have employed the same employees in the same
positions. Sustainable Construction initially employed Tim
Irvin, the director of operations, Frank Bolin, the safety
director, and Bob Durham, quality control, and when
Sustainable Contracting took over Sustainable
Construction’s operations, Tim Irvin, Frank Bolin, and
Bob Durham retained their same position at Sustainable
Contracting. Id. at p. 28. Sustainable Construction
owns and leases a building located at 115 2nd Avenue,
Edwardsville, IL 62025, to Sustainable Contracting, without a
written lease. Id. at pp. 15-16. However,
Sustainable Contracting continually pays rent to Sustainable
Construction for their occupation of the building.
Id. at pp. 15-17, 19.
Construction stopped all operations on January 1, 2010,
transferring of all functions to Sustainable Contracting and
the cessation of payroll from Sustainable Construction.
Id. at pp. 25-26. Sustainable Construction had
ceased all business operations over one year prior to signing
the consent judgment with Plaintiffs on February 28, 2013.
[ECF No. 30, p. 1]. On or about February 28, 2013,
Sustainable Construction entered into a promissory note and
settlement agreement with Plaintiffs in the amount of $83,
143.00. [ECF No. 37-7, p.1]. Sustainable Construction ceased
performance under the promissory note and Plaintiffs moved
for this Court to enter a consent judgment for the remainder
of the promissory note. [ECF No. 31]. This Court entered the
Consent Judgment against Sustainable Construction and
O’Leary for the amount of $65, 785.03, on October 8,
2013. [ECF No. 32]. Plaintiffs registered the judgment in the
U.S. District Court for the Southern District of Illinois, on
March 4, 2015. [ECF No. 37-7, p. 2]. Plaintiffs filed a
garnishment on March 10, 2015, with Scott Credit Union
seeking any monies held in a bank account for Sustainable
Construction and/or O’Leary. Id. On April 1,
2015, Scott Credit Union filed its answers to the garnishment
interrogatories, thereby informing Plaintiffs no monies were
contained in any accounts owned by Sustainable Construction
or O’Leary. Id.
August 27, 2015, Plaintiffs filed a garnishment with
Sustainable Contracting to recover the rental payments it was
paying to Sustainable Construction. Id. Plaintiffs
never received a certified mail receipt or any responses to
the garnishment interrogatories from Sustainable Contracting.
Id. On October 19, 2015, Plaintiffs filed another
garnishment with Sustainable Contracting in an attempt to
recover the rental payments made to Sustainable Construction.
Id. at p. 3. The return date for the garnishment
interrogatories was November 18, 2015, and the court did not
grant Plaintiffs’ Motion to Appoint a Private Process
Server until December 21, 2015, 33 days after the return
date. Id. On November 30, 2015, Plaintiffs filed a
third garnishment with Sustainable Contracting to recover the
rental payments being paid to Sustainable Construction.
Id. Sustainable Construction has no accounts
receivable, no deposit accounts with any banks, and very few
assets. [ECF 37-8, pp. 16-17]. O’Leary has a bank
account with no balance and the only assets he possesses are
personal in nature and not affiliated with Sustainable
Construction. [ECF No. 37-9, pp. 9, 12].
absence of a controlling federal statute, the district court
has the same authority to aid judgment creditors in
supplementary proceedings as is provided to state courts
under local law. United States ex rel. Goldman v.
Meredith, 596 F.2d 1353, 1357 (8th Cir. 1979). The Court
has supplemental jurisdiction, under 28 U.S.C. § 1367,
regarding a motion for a creditor’s bill in equity
which relates to an underlying ERISA delinquency. Greater
St. Louis Construction Laborers Welfare Fund v. Sunrise
Const., Inc., 2009 WL 73664, at *1 (E.D. Mo. 2009). The
remedy of a creditor’s bill in equity is available
under Missouri law. H.H. Robertson Co., Cupples Products
Div. v. V.S. DiCarlo General Contractors, Inc., 994 F.2d
476, 477 (8th Cir. 1993).
of a creditor’s bill in equity is an equitable remedy
“available to a creditor who seeks to enforce the
payment of debts out of assets which cannot be reached by
traditional means of execution on a judgment established in a
suit at law.” Shockley v. Harry Sander Realty
Co., 771 S.W.2d 922, 924 (Mo.Ct.App. 1989) (citing
Dobbs, Handbook on the Law of Remedies § 1.3 at 11
(1973); General Grocer Co. v. Ahlemeier, 627 S.W.2d
61, 64 (Mo. App. 1981); Publicity Building Realty Corp.
v. Thomann, 183 S.W.2d 69, 72 (Mo. 1944)). A
creditor’s bill in equity may be brought: (1) to set
aside a fraudulent transfer; or (2) to discover assets the
judgment debtor has hidden. Id. A creditor must
exhaust her legal remedies before proceeding in equity to
pierce the corporate veil. Buckley v. Maupin, 125
S.W.2d 820, 823 (Mo. 1939). A return of nulla bona, upon
execution, is evidence of the exhaustion of remedies, but
action on the execution may be dispensed where the judgment
debtor has been shown to be insolvent. Id. Only
creditors who have a judgment on the property, have the
ability to maintain an action to set aside a fraudulent
conveyance in order to receive the monies owed to them
through their judgment. Buckley, 125 S.W.2d at
823-24. The alter ego corporation against whom the
creditor’s bill is brought need not have been parties
to, or even have had formal notice of earlier proceedings.
H.H. Robertson, 994 F.2d at 476.
argue they are entitled to a creditor’s bill in equity
in order to satisfy the judgment against Sustainable
Construction and John O’Leary from the assets of
Sustainable Contracting. [ECF No. 37-1, p. 15]. Plaintiffs
also contend the corporate veil of Sustainable Construction
must be pierced because it is controlled by Sustainable
Contracting and the formation of Sustainable Contracting has
prevented Plaintiffs from collecting their debts.
Missouri, the creditor’s bill enables a judgment
creditor to trace the value of the goods and services
rendered to an empty-shell corporation to the parties behind
such corporation who have received and benefited from the
property or services. Shockley, 771 S.W.2d at 925.
Through a creditor’s bill in equity, a judgment
creditor can pierce the corporate veil of its debtor and
satisfy the judgment from the assets of the real parties in
interest. Fleming Companies, Inc. v. Rich, 978
F.Supp. 1281, 1294 (E.D. Mo. 1997). The prerequisites to
obtaining a creditor’s bill are the existence of a
judgment, the issuance of execution against said ...