Central States, Southeast & Southwest Areas Pension Fund v. Cardwell , 41 F. Supp. 3d 728 ( 2014 )

MEMORANDUM OPINION AND ORDER

MILTON I. SHADUR, Senior District Judge.

This Court’s June 6, 2014 memorandum opinion and order (“Opinion”) held defendant E. Louise Cardwell (“Cardwell”) hable to plaintiffs Central States, Southeast and Southwest Areas Pension Fund and its Trustee Arthur H. Bunte, Jr. (collectively referred to as “the Fund” for convenience) for the fraudulent transfer to Cardwell, the sole shareholder of Healy Spring Company (“Healy Spring”), of valuable real estate in conjunction with Healy Spring’s liquidation without having paid or provided for payment of a large consent judgment for nearly $250,000 that was entered against Healy Spring because of its withdrawal liability under ERISA.¹ Indeed, the fraudulent nature of the transfer was so patent that it is difficult to understand how Cardwell and her counsel could oppose this action in the objective and subjective good faith demanded by Fed. R.Civ.P. (“Rule”) 11(b) and, as to counsel, perhaps 28 U.S.C. § 1927 as well: Card-well caused Healy Spring to transfer that real estate (referred to in the Opinion as the “Central Avenue Property”) on May 15, 2008 (just one day after the Fund had brought suit for withdrawal liability against Healy Spring), and she permitted the consent judgment on account of that withdrawal liability to be entered against the denuded-of-assets Healy Spring some months later.

At that point all that remained in this action was to calculate the amount that Cardwell owed the Fund by reason of her misconduct. On that score the consent judgment’s Decretal Paragraph C, which required quantification, added this to the agreed judgment amount of $243,479.93:

That Plaintiffs are awarded post judgment interest on the entire judgment balance at an annualized interest rate equal to two percent (2%) plus the prime interest rate established by Chase Manhattan Bank (New York, New York) for the fifteenth (15th) day of the month for which interest is charged and shall be compounded annually as set forth in the Central States Pension Plan and Trust Agreement.

Accordingly, when the Fund noticed up for presentment on August 15, 2014 its motion for entry of final judgment against Card-well, with Cardwell and her counsel having said neither “aye” or “nay” to the Fund’s calculation, this Court entered a brief minute entry (Dkt. 61) that ordered Cardwell’s counsel “to file by 8/27/2014 citations of any caselaw bearing on defendant’s obligation to pay post judgment interest on the judgment against the dissolved corporation.”

On August 27 Cardwell’s counsel did indeed file “Defendant’s Response to August 15, 2014 Order.” Most importantly in substantive terms, that filing acknowledged the correctness of the Opinion’s holding as to the existence of Cardwell’s liability to the Fund — here is the penultimate sentence of that Response:

Defendant agrees that she is liable for the amount of the judgment entered against Healy Spring Company ($243,-479.93), attorney’s fees ($17,143.50), and costs ($1,880.48).

But as to this Court’s August 15 directive to quantify that liability in terms of post judgment interest vel non, the Response was really unprofessional — it stated that counsel had conducted research but that:

Despite their effort, Defendant’s attorneys were unable to find any case law similar to the case at hand that supported or opposed the argument that an individual Defendant has an obligation to pay post judgment interest on a judgment against the dissolved corporation. Defendant’s attorneys did find some case law that allowed for a judgment of post judgment interest stemming from a judgment against a dissolved corporation but the cases are distinguishable as they involved individuals whose liability resulted from a piercing of the corporate veil.

There is really no mystery about the characterization of that last sentence’s disclaimer as “unprofessional.” There Card-well’s counsel has flouted the obvious and fundamental concept that it is for the court and not for counsel to determine whether the prior caselaw is on all fours with the case at issue or whether it may instead be distinguishable (and in the latter case whether, though distinguishable, the earlier caselaw is instructive in resolving the issue — the situation in which the difference between the earlier cases and the current one is often spoken of as “a distinction without a difference”). It is really inexcusable for counsel to say “yes, we ‘did find some ease law that allowed for a judgment of post judgment interest stemming from a judgment against a dissolved corporation’ ” but that “we don’t think those cases are relevant,” without identifying those prior cases so that the court can make its own (and controlling) decision on that score.

In any case, this Court put its able law clerk to the task that counsel should have performed but didn’t — and that search turned up the opinion in Central States, S.E. & S.W. Areas Pension Fund v. Minneapolis Van & Warehouse Co., 764 F.Supp. 1289 (N.D.Ill.1991), an opinion written by this Court (no less) and startlingly parallel to this case: It was brought by the selfsame Fund that is plaintiff here against a Minnesota corporation (as Healy Spring was in this case), and it (exactly like this case) dealt with the responsibility of the corporation’s sole stockholder (also a defendant in that case) to pay withdrawal liability under ERISA where a transfer of corporate assets had been made without satisfying or providing for satisfaction of that liability. Although that case did not speak to the responsibility for post judgment interest under the specific circumstances presented here (obviously so, for no consent judgment had been entered there), its thrust clearly points to the answer to that question for this case.

With Minneapolis Van having been discovered, this Court had initially considered its usual procedure of selective quotation from a prior case that bears on a current one. But here the identity of analysis is so compelling that the rhetorical assertion that the earlier opinion “could have been written for this case” is literally true. So even though this Court often repeats the appropriate lesson from our Court of Appeals that District Court opinions are not precedential (and it accordingly seldom cites to or quotes from them in its own opinions), here the wholesale incorporation of Minneapolis Van’s entire discussion on the subject of shareholder liability remains so compelling to this Court (which cannot of course be accused of plagiarism in so doing) that it attaches relevant pages 764 F.Supp. at 1293-97 in their entirety to this opinion.

To be brief, nothing in Minnesota law alters the fundamental analysis that applies here, under which the situation should be treated just as though Healy Spring had remained in existence while its liability under the consent judgment remained unsatisfied, as it is to this day, and as though Cardwell’s stripping of 'Healy Spring’s ability to pay that judgment by her fraudulently self-dealing acquisition of the major corporate asset that could and should have been used to satisfy that judgment prevented the corporation itself from doing so. Remember that Cardwell could have cut off any further accrual of interest by the simple act of satisfying the judgment through the use of the Central States Property, and her failure to do so renders her liable to pay that judgment in accordance with its terms (including the liability for ongoing interest charges as specified in the judgment itself).

Hence the Fund’s proposed judgment order in this case provided an appropriate itemization of the then aggregate amount of $344,139.59 as of August 7, 2014. To be sure, Cardwell had retained something less than that — $332,330.17—for herself out of the $495,000 sale price that was realized on the September 26, 2008 sale of the Central States Property. But that does not of course take account of Cardwell’s continued retention for nearly six years of her latched-onto proceeds from the sale of the real estate (once again she kept and reinvested those proceeds instead of honoring her obligation to pay the consent judgment).

To make the Fund whole, this Court adds to the Fund’s calculation the further delinquent charge of $1,376.16 to reflect a September 1 rather than an August 7 obligation,² so that judgment is ordered to be entered in favor of plaintiffs Central States, Southeast and Southwest Areas Pension Fund and trustee Arthur H. Bunte, Jr. and against E. Louise Cardwell in the total amount of $345,515.75.³ Because it would seem beyond dispute that Cardwell’s realization from the property’s sale, taking into account her use of the proceeds for a period of years, would far exceed that figure, the burden is on her to establish that she is not responsible for the entire amount specified here.

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1 . That stipulated judgment was entered on December 18, 2008 by this Court’s then colleague Honorable Wayne Andersen, to whose calendar the case had been assigned.

2 . That amount is based on the detailed month by month calculation attached as Ex. 1 to the affidavit of Andrew Sprau, which in turn is Ex. A to the Fund's Motion for Prove-up of Damages and for Entry of Judgment.

3 . This Court recognizes that the text calculation shortchanges plaintiffs somewhat — it makes no allowance for their additional attorneys’ fees or any additional expenses attributable to their most recent efforts toward enforcement of the judgment, nor does it take into account any amount (presumably less than $1,000) that is addable to the consent judgment figure as of September 15 if the payment obligation is not honored by then. But because the moving-target phenomenon would always change the precise judgment figure on a day-to-day basis and because no per diem number was included in the Fund’s submission, it is best to settle on a determination that is essentially correct. What has been ordered in the text does so.