Opinion
Civil Action 2:05-CV-54.
May 6, 2008
OPINION AND ORDER
Plaintiffs, trustees of employee benefit plans, assert claims for injunctive and monetary relief under § 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185, and § 502 of the Employees Retirement Income Security Act of 1972, 29 U.S.C. § 1132 et seq., against defendants Paul and Timothy Jenkins (collectively, "the Jenkins defendants") and Dan-Ray Construction, Inc. ("Dan-Ray"). Paul Jenkins is the president of Dan-Ray; Timothy Jenkins, Paul's son, is the vice-president of Dan-Ray. Dan-Ray's corporate charter was cancelled by the Ohio Secretary of State in 1992. See Opinion and Order, at pp. 4-6, Doc. No. 61. On March 30, 2007, and with the consent of the parties, see 28 U.S.C. § 636(c), final judgment was entered in favor of plaintiffs and against all defendants in the total amount of $86,956.43. Judgment, Doc. No. 62. Defendants' appeal from that judgment remains pending. Board of Trustees v. Jenkins, et al., Case No. 07-3641 (6th Cir.). This matter is now before the Court on the motions of the Jenkins defendants to set aside the judgment entered against them personally ( "Motion for Relief from Judgment"), Doc. No. 70, and to stay execution of the judgments against them pending resolution of their motion for relief from judgment ( "Motion to Stay"). Doc. No. 69. For the reasons that follow, the Court denies both motions.
This Court entered judgment against the Jenkins defendants personally, reasoning that, upon cancellation of Dan-Ray's corporate charter, the corporation existed (and protected the Jenkins defendants from personal liability) only for the purpose of winding up its affairs. See O.R.C. § 1701.88(A). Entering into the October 2001 collective bargaining agreement that forms the basis of this action, this Court found, was inconsistent with winding up the affairs of the corporation. Opinion and Order, at p. 7, Doc. No. 61, citing Chatman v. Day, 7 Ohio App.3d 281, 282 (Montgomery Cy. Ct. App. 1982). Thus, this Court concluded, the Jenkins defendants, officers and operators of Dan-Ray, were personally liable to the plaintiffs for their defaults under the collective bargaining agreement. Id.
When . . . the articles of the corporation have been cancelled, . . . the corporation shall cease to carry on business and shall do only such acts as are required to wind up its affairs, or to obtain reinstatement of the articles . . ., or are permitted upon reinstatement . . ., and for such purposes it shall continue as a corporation." O.R.C. § 1701.88(A).
In their Motion for Relief from Judgment, the Jenkins defendants establish that, on November 20, 2007, Dan-Ray's corporate charter was reinstated by the Ohio Secretary of State. Affidavit of Paul Jenkins, ¶ 4, attached as Exhibit 1 to Motion for Relief from Judgment; Exhibit A attached to Affidavit of Paul Jenkins.
The Jenkins defendants summarize the basis for their request for relief from the judgment entered against them: "[T]he basis upon which the Court entered judgment against the Jenkins defendants individually — the cancellation of the corporate charter of Defendant [Dan-Ray] — no longer exists. Dan-Ray's corporate charter has been reinstated as of November 20, 2007." Motion for Relief from Judgment, at p. 2.
The Jenkins defendants seek relief from the judgment entered against them pursuant to F.R. Civ. P. 60(b)(4), (6). That rule provides, in pertinent part, as follows:
Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order or proceeding for the following reasons:
* * *
(4) the judgment is void;
* * *
(6) any other reason that justifies relief.
F.R. Civ. P. 60(b) (2007).
The Jenkins defendants contend that the judgment entered against them personally is void within the meaning of F.R. Civ. P. 60(b)(4), reasoning that, because the reinstatement of Dan-Ray's charter applies retroactively, "no valid jurisdictional or legal basis exists for the Court to have entered judgment individually against" them. Motion for Relief from Judgment, at pp. 7-8. They also base this motion on F.R. Civ. P. 60(b)(6), arguing that "`principles of equity mandate relief.'" Id., at p. 8 (quoting Blue Diamond Coal Co. v. Trustees of the UMWA Combined Benefit Fund, 249 F.3d 519, 524 (6th Cir. 2001)).
The initial hurdle that the Jenkins defendants must overcome is, of course, the pendency of their appeal. Since the filing of a notice of appeal divests the district court of jurisdiction except for matters in aid of that appeal, see Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F.3d 1007, 1013 (6th Cir. 2003), a district court lacks jurisdiction to grant relief from judgment under Rule 60(b). Id. In First Nat'l Bank of Salem v. Hirsch, 535 F.2d 343 (6th Cir. 1976), the United States Court of Appeals for the Sixth Circuit established the proper procedure to be followed under such circumstances: "If the district court is disposed to grant the [Rule 60(b)] motion, he may enter an order so indicating and the [moving] party may then file a motion to remand in [the court of appeals]." Id., at 346. For the reasons stated infra, this Court is disinclined to grant relief from judgment even if the appeal were remanded for that purpose.
Under Ohio law, upon reinstatement of a corporation's articles of incorporation, actions taken on behalf of the corporation by an officer, agent or employee of the corporation will have "the same force and effect [as] if the corporation's . . . articles had not been cancelled" under the following circumstances:
(a) The exercise of or an attempt to exercise the right, privilege or franchise was within the scope of the corporation's . . . articles of incorporation that existed prior to cancellation; [and]
(b) The officer, agent, or employee had no knowledge that the corporation's . . . articles of incorporation had been cancelled.
O.R.C. § 1701.922(B)(1). "[A]s long as both statutory requirements are satisfied, any contract the corporation enters into during the period between the cancellation of its articles and the reinstatement of the articles is retroactively valid." Central Funding, Inc. v. CompuServe Interactive Services, Inc., 2003 WL 22177226, *5 (Franklin Cy. Ct. App. 2003) (unpublished) (citing Thomas v. Price, 133 Ohio App.3d 585, 590 (Hamilton Cy. Ct. App. 1999)). See also O.R.C. § 1708.922(B)(2).
The Jenkins defendants assert, and plaintiffs do not dispute, that the execution in October 2001 of the collective bargaining agreement on behalf of Dan-Ray fell within the scope of the original articles of incorporation. Affidavit of Paul Jenkins, at ¶ 2; Memorandum contra Motion for Relief from Judgment, at p. 7, Doc. No. 72. Moreover, the Jenkins defendants assert that neither was aware, until this lawsuit, that Dan-Ray's corporate charter had been cancelled. Affidavit of Paul Jenkins, ¶ 3, Affidavit of Timothy Jenkins, ¶ 2, attached as Exhibit 2 to Motion for Relief from Judgment.
In this regard, the Jenkins defendants argue that they are entitled to relief from the judgment entered against them unless plaintiffs can prove "actual notice" to the Jenkins defendants of the cancellation. Reply in Support of Motion for Relief from Judgment, at p. 1. This Court concludes that the evidence presented by plaintiffs, and indeed this Court's own records, establish that the Jenkins defendants had knowledge that Dan-Ray's articles of incorporation had been cancelled at the time Dan-Ray entered into the collective bargaining agreement in October 2001.
This Court may take judicial notice of its own records, particularly of other cases between the same parties. United States v. Doss, 563 F.2d 265, 269 n. 2 (6th Cir. 1977). See also Saylor v. United States, 315 F.3d 664, 667-68 (6th Cir. 2003).
Notice of the cancellation of Dan-Ray's articles of incorporation appears to have been sent by the Ohio Secretary of State to defendant Paul Jenkins on December 15, 1992. Exhibit A, attached to Exhibit 4, attached to Memorandum contra Motion for Relief from Judgment, Doc. No. 72. Moreover, this is not the first lawsuit in which plaintiffs have been granted judgment against one or both of the Jenkins defendants personally in connection with Dan-Ray's obligations. See, e.g., Board of Trustees v. Timothy Jenkins, et al., C-2-02-287 (S.D. Ohio 2003); Jack Shaw, Trustee v. Timothy Jenkins, et al., C-2-99-597 (S.D. Ohio 2001).
The latter case is particularly instructive on the issue of the Jenkins defendants' knowledge of the cancellation prior to the October 2001 collective bargaining agreement. The complaint in that action named only Paul and Timothy Jenkins as defendants and expressly alleged, inter alia, "the Secretary of State cancelled the corporate charter to Dan-Ray Construction Co., Inc. December 15, 1992." Id., Complaint, ¶ 3, Doc. No. 1. Service of process, including a copy of that complaint, was executed as to both named defendants, Id., Return of Service, Doc. No. 2. The Jenkins defendants' answer in that case expressly referred to Paragraph 3 of the complaint, although it denied the truth of the allegations contained in that paragraph. Id., Answer, ¶ 3, Doc. No. 12. The motion for summary judgment, and defendants' memorandum contra the motion, expressly addressed the issue of personal liability. This Court summarized the positions of the parties as follows:
The certified mailing of service of process was signed for by defendant Timothy Jenkins. Id., Return of Service, Doc. No. 2. The defendants' answer, Doc. No. 12, did not challenge the sufficiency of process or service of process.
Plaintiff actually sought monetary relief in that case only from defendant Paul Jenkins; plaintiff sought injunctive relief from both Jenkins defendants.
In support of his motion for summary judgment, plaintiff provides evidence demonstrating that the Ohio Secretary of State canceled Dan-Ray's corporate charter on December 15, 1992. Exhibit A Attached to Plaintiff's Motion for Summary Judgment. Plaintiff also attaches an agreement signed by Paul Jenkins on October 15, 1985 in his capacity as president of Dan-Ray, Exhibit B Attached to Plaintiff's Motion for summary Judgment, and two agreements signed by Timothy Jenkins on June 23, 1994, Exhibits B, C Attached to Plaintiff's Motion for Summary Judgment, which agreements purport to obligate Dan-Ray to contribute to the funds on behalf of certain employees. . . .
Defendants contend that plaintiff has failed to meet his burden of proof because plaintiff failed to present evidence that defendants Paul and Timothy Jenkins were personally obligated to contribute to the funds.Id., Opinion and Order, at p. 3, Doc. No. 28.
On March 21, 2001, this Court granted summary judgment to plaintiff against the Jenkins defendants personally. This Court found uncontroverted the evidence of the cancellation of Dan-Ray's corporate charter in 1992. Id., at p. 8. This Court also found that, in 1994, Timothy Jenkins signed two collective bargaining agreements purporting to obligate Dan-Ray. Id. Because those new agreements were inconsistent with winding up Dan-Ray's corporate affairs, the Court entered judgment against both Jenkins defendants personally. Id. It is significant that this March 2001 judgment entered against the Jenkins defendants in that action pre-dated the October 2001 collective bargaining agreement that forms the basis of the action presently before this Court.
The Court rejects — and is indeed shocked by — any suggestion that, prior to the lawsuit now before this Court, the Jenkins defendants "had no knowledge that the corporation's . . . articles of incorporation had been cancelled." Prior to the October 2001 collective bargaining agreement, the Jenkins defendants had been served with at least one complaint that expressly alleged that Dan-Ray's articles of incorporation had been cancelled. They have been held personally liable on a number of occasions because Dan-Ray's articles of incorporation had been cancelled. It strains credibility to suggest that, prior to the filing of this action, the Jenkins defendants did not know that Dan-Ray's corporate charter had been cancelled.
The Jenkins defendants argue that "[n]one of the documents that Plaintiffs rely on shows that Timothy or Paul Jenkins themselves received actual notice of the corporate charter's cancellation." Reply in Support of Motion for Relief from Judgment, at p. 2, Doc. No. 74. In making this argument, defendants take the position that O.R.C. § 1701.922(B)(1)(b), which requires "no knowledge" of the cancellation of the articles of incorporation, requires actual notice of the cancellation. This Court concludes that the record in this action establishes such notice. To the extent that the Jenkins defendants would argue that actual notice may consist only of service of the original notice of cancellation by the Ohio Secretary of State, the Court rejects such argument.
The Ohio Supreme Court has expressly held that actual notice may be either proved by direct evidence or inferred from circumstances. Cambridge Product Credit Ass'n v. Patrick, 140 Ohio St. 521 (1942).
[I]f the party obtains knowledge or information of facts, tending to show the existence of a prior right in conflict with the interest which he is seeking to obtain, and which are sufficient to put a reasonably prudent man upon inquiry, then it may be a legitimate and perhaps even necessary, inference that he acquired the further information which constitutes actual notice. . . . [I]f it appears that the party has knowledge or information of facts sufficient to put a prudent man upon inquiry and that he wholly neglects to make any inquiry or having begun it fails to prosecute it in a reasonable manner, then, also, the inference of actual notice is necessary and absolute.Id., at 532-33.
This Court finds that, prior to the October 2001 execution of the collective bargaining agreement on behalf of Dan-Ray, both of the Jenkins defendants had knowledge of, and indeed actual notice that, Dan-Ray's articles of incorporation had been cancelled.
Under these circumstances, the retroactive relief offered by O.R.C. § 1701.922(B)(1) is not available to the Jenkins defendants. The Motion for Relief from Judgment, which is based on application of O.R.C. § 1701.922(B)(1), is therefore without merit.
Moreover, because the Court denies the Motion for Relief from Judgment, the Motion to Stay pending resolution of the Motion for Relief from Judgment is denied as moot.
Accordingly, the motions filed on behalf of Paul and Timothy Jenkins, for relief from the judgment entered against them in this action, Doc. No. 70, and the motion to stay, Doc. No. 69, are DENIED.