Failing to Make Required Union Contributions Can Lead to Personal Liability Thumbnail

Failing to Make Required Union Contributions Can Lead to Personal Liability

A recent decision from Ohio’s Seventh Appellate District in Ohio Carpenters' Pension Fund Bd. of Trustees v. Ramunno provides a refresher on the importance of understanding union pension contributions obligations and the trailing implications that can be associated with them.

Husband and wife Mark and Nancy Ramunno were the sole owners of Ramunno Builders, Inc. and Ramunno Family Builders, Inc. The Companies were both Union shops subject to a collective bargaining agreement with the Carpenters Union. As part of the collective bargaining agreement, Ramunno Builders was required to pay into a pension fund.

Ramunno fell behind on its pension contributions, and incurred outstanding liabilities over $250,000 with accruing interest and penalties. Unsurprisingly, the Union demanded payment of the outstanding pension amounts. After not receiving payment, the Union eventually commenced an action in federal court to recover the outstanding pension liabilities.

After the federal lawsuit was filed, Mark and Nancy transferred properties to themselves individually, as well as to their children. Some properties were transferred for as little as $1, while others were sold for $10,000, which was still significantly less than market value. Those transfers drew the attention of the Union given the timing and amount of the transfers and the significant outstanding liability owed to the plan. As a result, the Union filed a fraudulent transfer claim against Mark and Nancy individually and the Companies in state court to recover the amount owed to the plan.

Both the trial and appellate courts found that the property transfers were fraudulent and a clear attempt to evade the Union debt. For the properties still within the Ramunno families’ control, the court rescinded the sales and awarded the real property to the Union. Ohio Carpenters’ provides a good reminder as to how significant union pension plan problems can become, and the consequences of not paying the contributions required under the collective bargaining agreement. As to the Ramunnos, the outstanding pension liability likely contributed to the bankruptcy of their company, limited their right to transfer property to their children, and resulted in costly, public litigation.

Pension liability can be a significant issue for unionized construction companies. Understanding the risks associated with current pension plans and future withdrawal liabilities are fundamental financial obligations that companies, and company owners, need to understand. If you have any questions regarding the above referenced case, union pension plans, or other labor and construction issues, contact Nora Loftus, Jon Scandling or any member of Frantz Ward’s Construction, Labor & Employment or Tax groups.

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