# Board of Trustees of the Toledo Area Sheet Metal Workers Pension Plan v. Karpathia Funding Group, Inc.

> District Court, N.D. Ohio · December 5, 2024

URL: https://www.frixlaw.com/law-library/cases/10755620

## Case

- **Court:** District Court, N.D. Ohio
- **Decided:** December 5, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION

Board of Trustees of the Toledo
Area Sheet Metal Workers Pension Plan,
Case No. 3:22-cv-00264
Plaintiff,

v. ORDER

Karpathia Funding Group, Inc., et al.,

Defendants.

This is a suit for collection on an assessment of withdrawal liability under the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1381 et seq., as amended by the
Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”).
Plaintiff, the Board of Trustees of the Toledo Area Sheet Metal Workers Pension Plan
(“Plaintiff”) seeks to collect withdrawal liability from Defendants Aerodynamics Inspecting
Company, Inc. (“Aerodynamics”), Laszlo Lukacs (“Lukacs”), and several other corporate entities
(collectively, “Defendants”).
On October 25, 2023, I granted default judgment against all corporate Defendants including
Aerodynamics. Defendant Lukacs is the only Defendant whom I have not entered a judgment. See
Bd. of Trustees of Toledo Area Sheet Metal Workers Pension Plan v. Karpathia Funding Grp.,
Inc., 704 F. Supp. 3d 799 (N.D. Ohio 2023) (Carr, J) (“Lukacs I”).
Before me is Plaintiff’s motion for summary judgment against Lukacs. (Doc. 42). Lukacs, pro
se, filed an opposition (Doc. 44), Plaintiff filed a reply (Doc. 45) and, without first seeking leave
to do so, Lukacs filed a sur-reply (Doc. 47).
On November 11, 2024, Plaintiff filed a notice of supplemental authority, informing me of the
Sixth Circuit’s recent decision in Local No. 499, Board of Trustees of Shopmen’s Pension Plan v.
Art Iron, Inc., 117 F.4th 923 (2024). (Doc. 48). On November 19, 2024, Lukacs filed a response
to Defendant’s sur-reply. (Doc. 49).

For the reasons I discuss below, I grant Plaintiff’s motion for summary judgment against
Lukacs.
Background
1. Procedural Background
Plaintiff contends that Defendants: (1) failed to fulfill their obligation to contribute1 to a
multiemployer pension plan;2 and (2) that Lukacs is jointly and severally liable for Defendant
Aerodynamics’ unpaid obligations to the Plan.
Earlier in the case, Plaintiff asked me to grant it a judgment on the pleadings against Lukacs
on this theory. (See Doc. 32). In my Order denying Plaintiff’s motion, I observed that it was
Plaintiff’s burden to link sufficiently Lukacs to Aerodynamics under a legal theory such as piercing

the corporate veil or alter ego. Lukacs I, supra, 704 F. Supp. 3d at 802. I noted that, in general,
courts do not adjudicate piercing the veil or alter ego until the summary judgment phase of the
case. Id.

1 The statute, 29 U.S.C. § 1392(a) defines the “obligation to contribute” as “an obligation to contribute arising—(1)
under one or more collective bargaining (or related agreements)[…] but does not include an obligation to pay
withdrawal liability under this section or pay delinquent contributions[.]”
2 The statute, 29 U.S.C. § 1301, defines a “multiemployer plan” as:
a plan—(A) to which more than one employer is required to contribute,
(B) which is maintained pursuant to one or more collective bargaining agreements between one or
more employee organizations and more than one employer, and
(C) which satisfies such other requirements as the Secretary of Labor may prescribe by regulation,
except that, in applying this paragraph—
(i) a plan shall be considered a multiemployer plan on and after its termination date if the plan was
a multiemployer plan under this paragraph for the plan year preceding such termination, and
(ii) for any plan year which began before September 26, 1980, the term “multiemployer plan” means
a plan described in section 414(f) of Title 26 as in effect immediately before such date[.]
In its summary judgment motion, Plaintiff provides adequate evidence of the connection
between Lukacs personally and Aerodynamics, which I discuss further below. (Doc. 42, PgID.
599).
2. Statutory Background

In Findlay Truck Line, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund, the Sixth Circuit
explained: “Congress enacted [ERISA], to ensure that ‘if a worker has been promised a defined
pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain
a vested benefit—he actually will receive it.’” 726 F.3d 738, 740 (6th Cir. 2013) (quoting Nachman
Corp. v. Pension Ben. Guar. Corp., 446 U.S. 359, 375 (1980)).
Later, Congress realized that “ERISA failed to address the adverse consequences that occurred
when an employer withdrew from a multiemployer pension plan[.]” Id. at 741. Congress enacted
the MPPAA to address this concern. See id.
Several key principles to the MPAA are relevant here.
“The first principle is that an employer withdrawing from a fund must make withdrawal

liability payments.” Id. The Findlay Truck Court explained:
Any employer withdrawing from a multiemployer plan must make a payment of
“withdrawal liability,” which is calculated as the employer’s proportionate share of
the plan’s unfunded, unvested benefits. 29 U.S.C. § 1381(a). The MPPAA provides
that once a fund determines that an employer has withdrawn from its plan, it must
notify the employer of the amount of the liability, prepare a schedule for liability
payments, and demand payment in accordance with the schedule. 29 U.S.C. §§
1382, 1399(b)(1).
Id.
Another key principle is that “even if an employer disputes the withdrawal liability payments,
the employer must make payments to the fund no later than 60 days after the fund demands such
payments, and must continue to make them until the dispute has been resolved.” Id. at 741–42
(citing 29 U.S.C. § 1399(c)(2) and 29 U.S.C. § 1401(d)). This is known as the “pay now, dispute
later” process. Id. at 742 (citation omitted).
The Findlay Truck Court explained: “The congressional intent behind ‘pay now, dispute later’
is to alleviate the risk that during the course of arbitration, an employer will become insolvent, and

the fund will not be able to collect in the event of a favorable award.” Id. (citation omitted).
The last relevant principle “is that disputes over withdrawal liability between an employer and
a fund must be arbitrated.” Id. The statute states: “Any dispute between an employer and the plan
sponsor of a multiemployer plan concerning a determination made under sections 1381 through
1399 of this title shall be resolved through arbitration.” 29 U.S.C. § 1401(a)(1).
Findlay Truck explained: “Congress intended the arbitration provision to promote “‘judicial
economy and judicial restraint.’” Id. (citation omitted).
Along with these principles, Congress recognized the need to prevent employers from dodging
their withdrawal liability obligations through the operation of separate entities. 29 U.S.C. §
1301(b)(1) states:

For purposes of this subchapter, under regulations prescribed by the corporation,
all employees of trades or businesses (whether or not incorporated) which are under
common control shall be treated as employed by a single employer and all such
trades and businesses as a single employer. The regulations prescribed under the
preceding sentence shall be consistent and coextensive with regulations prescribed
for similar purposes by the Secretary of the Treasury under section 414(c) of Title
26.
The Sixth Circuit recognizes this language to impose joint and several withdrawal liability on an
employer under a common control group for withdrawal from multiemployer plans. See Central
States Se. and Sw. Areas Pension Fund v. Chatham Properties, 929 F.2d 260, 263 (6th Cir. 1991).
3. Factual Background
Plaintiff contends that Aerodynamics was an employer obligated to contribute to the Plan under
a collective bargaining agreement. (Doc. 142 PgID. 600). On May 1, 2016, Aerodynamics’
obligation to contribute to the Plan ended. (Id.). Aerodynamics, Plaintiff alleges, continued
performing work in the Plan’s jurisdiction.
This continued work in the same trade or business triggered Aerodynamics’ obligation to pay
withdrawal liability. (Id. at PgID. 599). This is clear from the statute, 29 U.S.C. § 1381, which

states: when “an employer withdraws from a multiemployer plan in a complete withdrawal or a
partial withdrawal, then the employer is liable to the plan in the amount determined under this part
to be the withdrawal liability.”
In accordance with the procedures in 29 U.S.C. § 1399(b), on September 9, 2019, the Plan sent
a demand letter to Aerodynamics and its control group members, including Lukacs. (See Sept. 9,
2019 Letter, Doc. 1-3, PgID. 111–15). The letter explained that recipients were liable for
withdrawal liability in the amount of $217,143.00. (Id. at PgID. 111). It stated: “You may prepay
any or all monthly payments without penalty. A failure to make any monthly payment when due
will result in the Trustees declaring the entire unpaid withdrawal liability to be due and owing,
together with interest thereon until paid in full.” (Id. at PgID. 111).

In his February 22, 2024, deposition Lukacs acknowledged receiving the letter sometime in
September 2019. (Doc. 41-1 PgID. 491–92 (Lukacs Dep. Trans. 23:24–24:11)).
Plaintiff contends that, “Aerodynamics, Lukacs, and the other defendants failed to make the
initial payment on November 1, 2019. None of the Defendants requested a review of the
withdrawal liability assessment and, more importantly, none of the Defendants initiated arbitration
to contest the demand, as statutorily required.” (Doc. 42, PgID. 600–01).
Lukacs confirmed this in his deposition. He testified that neither he, nor any of the other
Defendants, arbitrated after receiving the September 9, 2019 demand letter. (See Doc. 41-1, PgID.
492 (Lukacs Dep. Trans. 24:6–24:18)).
4. Lukacs and Aerodynamics Background
Plaintiff submits the facts below in support of Lukacs’ link to Aerodynamics to support its
argument that I should hold Lukacs liable for Aerodynamics’ withdrawal liability.
Lukacs testified that he owned 100% of Aerodynamics beginning when he purchased it in

about 1968. (Doc. 42, PgID. 602 (citing Lukacs Dep. Trans. Doc. 41-1, PgID. 552–53).
Aerodynamics’ 2015 tax return confirms that Lukacs owned 100% of the company’s stock.3
(See Doc. 43-20, PgID. 918). Further, Lukacs’ personal tax returns confirm his purchase of the
company as well as his sale or disposal of all shares of the company on December 31, 2020. (See
Doc. 43-23, PgID. 1063).
Lukacs testified that he and his wife owned real property located at 6325 Chase Road in
Dearborn, Michigan (“Chase Road Property”). (See Doc. 41-1, PgID. 500). His personal tax
returns show that he and his wife claimed all rents and expenses associated with the Chase Road
Property for several years. (See, e.g., Doc. 32-19, PgID. 832).
Aerodynamics paid Lukacs for rental of the Chase Road Property from 2015 to 2017. (See e.g.,

Doc. 43-19, PgID. 856). Lukacs claimed a sale of the Chase Road Property on January 1, 2018.
(Doc. 43-21, PgID. 948).
Lukacs’ briefs are, to put it generously, difficult to decipher. He repeats several arguments that
he made in earlier filings such as that he is Laszlo A. Lukacs, not Laszlo R. Lukacs, and that the
tax returns indicating Laszlo A. Lukacs owned Aerodynamics are “a mistake.” (Doc. 44, PgID.
1337). He does not provide documentary evidence to support a tax mistake.

3 “Tax returns… are sworn statements.” Art Iron, supra, 117 F.4th at 932.
Legal Standard
Established law provides that summary judgment is appropriate where the evidence presented
in the record shows that there is no genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

The moving party bears the initial burden of proving the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If satisfied, then the non-moving party
“must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986). I draw all justifiable inferences from the evidence presented
in the record in the light most favorable to the non-moving party. Woythal v. Tex–Tenn Corp., 112
F.3d 243, 245 (6th Cir. 1997).
Discussion
Lukacs operated a trade or business under the common control of Aerodynamics. I therefore
treat him as part of the employer, who incurs joint and several liability under ERISA. See 29 U.S.C.
§§ 1362(a), 1301(a)(14)(B), 1301(b)(1).

1. Waiver
The MPPAA states that, where an employer fails to demand an arbitration, it waives its right
to dispute the assessment. See 29 U.S.C. § 1401(b)(1).
Plaintiff has met its burden to show that the Plan complied with its determination, calculation,
and notice obligations. It has also met its burden to show that Lukacs (and Aerodynamics) failed
to challenge the Plan’s determinations under the statute. Lukacs (and Aerodynamics) also failed
to arbitrate. Any argument Lukacs could have made to dispute his obligation is waived.
That said, because (1) Plaintiff has satisfied its burden of showing the Lukacs engaged in trade
or business under common control of Aerodynamics; (2) Lukacs is pro se and I construe his filings
liberally under Erickson v. Pardus, 551 U.S. 89, 94 (2007); and (3) I draw all inferences in favor
of the non-movant (Lukacs), I will briefly discuss this issue.
2. Trade or Business
Lukacs is in a “trade or business” that subjects him to joint and several liability under the

MPPAA. In reaching this decision, I am bound by two Sixth Circuit cases discussing the meaning
of “trade or business” Pension Benefit Guar. Corp. v. Findlay Indus., 902 F.3d 597 (6th Cir. 2018)
and Art Iron, supra, 117 F.4th 923.
In Findlay Industries, Findlay, a company that produced auto parts, went out of business in
2009. Id. at 601. Its unpaid pension obligation to the Pension Benefit Guaranty Corp (PBGC)
totaled over $30 million. PBGC looked to trades or businesses under Findlay’s common control to
satisfy Findlay’s liability. Id. at 600–01. PBGC looked to hold Findlay’s founder’s trust (the
“Trust”) among others, liable for Findlay’s debt. Id.
The Trust was under the control of the founder’s two sons, who also controlled Findlay itself
before Findlay closed. The Trust owned the land on which Findlay was located and leased it to

Findlay. Id. at 600. For the majority of the time the Trust existed, it was leasing back to Findlay
the very land that the founder originally placed in the trust. Id. at 602.
The Trust argued that it should not be liable for Findlay’s debts because it was not a “trade or
business” under ERISA. Id. at 605. The Sixth Circuit disagreed.
The Court explained “ERISA does not define ‘trades or businesses,’ and neither the Supreme
Court nor this court have defined the phrase in the context of ERISA.” Id. at 605. The Court stated,
“What is important is determining whether those assets were effectively Findlay’s and thus should
be used to help pay what Findlay promised its employees.” Id. at 606.
The Court held:
In light of the purpose and the structure of the ERISA provisions at issue, we hold
that the categorical test applies. That test concludes simply that any entity that
leases property to a commonly controlled company is categorically a trade or
business for ERISA purposes. Cent. States Se. & Sw. Areas Pension Fund v.
Messina Prods., LLC, 706 F.3d 874, 882 (7th Cir. 2013). In doing so, the
categorical test stops leases between commonly controlled entities as a way of
offering those entities protection from ERISA liability at very little risk. The facts
here highlight how. By giving the land to a commonly controlled entity, Findlay
guaranteed that it still had the benefit of use (and likely control) of the land, just the
same as if it had never given the land away at all. But now, the land did not
technically belong to Findlay, so it did not count among Findlay’s assets. Thus,
Findlay had all of the meaningful benefit of the land, but none of the risk or
responsibility that came with outright ownership. And the [] Trust did not have to
put in any of the effort or face any of the risk of an arms-length leasing arrangement
with a lessee that was not under common control. This situation is precisely the
type that the common-control rules exist to prevent.
Id. at 607.
The facts before me are nearly congruent. Lukacs owned the Chase Road Property, which he
leased to Aerodynamics during the relevant time period. He owned both the property and the
company leasing it. Similar to the Trust in Findlay Industries, Lukacs had the benefit of owning
the land Aerodynamics operated on, but none of the risk or responsibility to Aerodynamics that
would have come with outright ownership.
I therefore apply the Findlay Industries categorical test. This is consistent with ERISA’s
principle of enforcing an employer’s promise by extending liability for those promises to
commonly controlled entities. Lukacs, by leasing land to his own business, engaged in a “trade or
business” for ERISA purposes. Not only did Lukcas fail to cite a single case “in which leasing
between commonly controlled entities did not result in an entity being a trade or business for
ERISA purposes,” I have found none. Id. at 607.
The second controlling Sixth Circuit case is Art Iron, supra, 117 F.4th 923. There, Art Iron
owed the pension plan for over $1 million in withdrawal liability. Id. at 926. The pension plan
board sought to hold Robert Schlatter, Art Iron’s sole shareholder and director at the time it
withdrew from the plan, liable for Art Iron’s obligation. Id. at 927. Schlatter also operated a
consulting business as its sole proprietor. Id. at 926.
Schlatter did not challenge that his operation of a consulting business qualified as an enterprise
under “common control” as Art Iron. Id. at 928. Rather, he argued that he was not in the “trade or

business” under the MPPAA. Id.
The Sixth Circuit confirmed that when that entity leases property to a company under common
control, the Findlay Industries “categorical test” applies. Id. at 930–31. In Art Iron, Schlatter was
not leasing a company under common control; rather, he ran a consulting business. The Court thus
applied a different test, known as the Groetzinger test,4 for defining trade or businesses outside of
a lease situation.5 Id. at 931.
As I have detailed, the circumstances here involve a lease situation. Thus, the Findlay
Industries categorical test applies. Lukacs’ ownership and lease of the Chase Road Property to
Aerodynamics is, under this test, the same “trade or business” as Aerodynamics.
3. Common Control

In the background section, I cited record evidence that, at the relevant time, Lukacs owned
100% of Aerodynamics. Lukacs and his wife owned the Chase Road Property, which they rented
to Aerodynamics (and other companies). Lukacs claimed that income and rental property expenses
on his personal tax returns.
As Plaintiff aptly explains in its motion, the Internal Revenue Code recognizes three types of
“common control”: (1) parent-subsidiary; (2) brother-sister; and (3) combined groups. (Doc. 42,
PgID. 608 (citing 26 U.S.C. § 1563(a); 26 C.F.R. § 414(c))).

4 Commissioner v. Groetzinger, 480 U.S. 23 (1987).
5 Even applying the Groetzinger test, the Court found that Schlatter was liable for Art Iron’s withdrawal liability
because his consulting work qualified as the same “trade or business” as Art Iron. Id. at 931–32. The Groetzinger test,
however, does not apply here.
Plaintiff persuasively asserts that Lukacs and Aerodynamics satisfy the “brother-sister”
categorization:
The term “brother-sister group of trades or businesses under common control”
means two or more organizations conducting trades or businesses if (i) the same
five or fewer persons who are individuals, estates, or trusts own (directly and with
the application of § 1.414(c)–4) a controlling interest in each organization, and (ii)
taking into account the ownership of each such person only to the extent such
ownership is identical with respect to each such organization, such persons are in
effective control of each organization. The five or fewer persons whose ownership
is considered for purposes of the controlling interest requirement for each
organization must be the same persons whose ownership is considered for purposes
of the effective control requirement.
26 C.F.R. § 414(c)(1).
Plaintiff explains that Lukacs, who was the sole proprietor of Aerodynamics at the time of its
withdrawal, was in “effective control” over it. See 26 C.F.R. § 1.414(c)(2)(iv) (defining a person
in “effective control” of an organization if the person “owns such sole proprietorship.”). Lukacs’
deposition testimony, personal tax returns, and tax returns for Aerodynamics confirm this.
In sum, I agree with Plaintiff that Lukacs is liable for Aerodynamics’ withdrawal obligations
under the control group liability theory.
I reject Lukacs’ arguments against liability, such as that he shares a name with his son and that
he made a mistake on this tax returns. Lukacs provides no evidence of these “mistakes.”6 He
merely states his arguments in his briefs. I further reject any other arguments Lukacs may have
made that I have not addressed.
The Sixth Circuit has observed that “‘a party cannot create a genuine issue of fact sufficient to
survive summary judgment simply by contradicting his or her own previous sworn statement’ that
contradicts his or her litigating position without first explaining the contradiction or attempting to

6 Such as, for example, his filing of amended tax returns.
resolve the discrepancy.” Art Iron, supra, 114 F.4th at 932 (citing Cleveland v. Pol’y Mgmt. Sys.
Corp., 526 U.S. 795, 806-07 (1999)).
Lukacs’ arguments are “blatantly contradicted by the record” and I reject them. (Id. (citing
Scott v. Harris, 550 U.S. 372, 380 (2007)).

4. Liquidated Damages, Interest, Attorney Fees, and Costs of Enforcement
Plaintiff argues that I should find Lukacs liable for liquidated damages, interest, attorney fees,
and costs. The MPAA specifically authorizes the exact relief Plaintiff seeks here. See 29 U.S.C. §
1132(g)(2).
Additionally, the bargaining agreement that Lukacs signed also provides for, additionally,
reasonable attorney fees and costs, liquidated damages, and interest. (See Doc. 1-2, PgID. 88).
Plaintiff alleges that the agreement provides for a 20% liquidated damages award (see Doc.
42, PgID. 611), however, my review of the agreement indicates that the parties agreed to a 10%
liquidated damages amount. (See Doc. 1-2, PgID. 88).
Plaintiff requested leave to supplement the record with the amount if interest, attorney fees,

and costs owed. I grant leave. I also order Plaintiff to explain its liquidated damages calculation
with citations to the record.
Plaintiff shall, within ten (10) days of entry of this Order, so supplement the record. Defendant
shall file any opposition on or before January 10, 2025. However, Defendant is cautioned that the
scope of his opposition shall be limited to arithmetic-based arguments. This is not an opportunity
to re-litigate any issues that I have decided in this or a prior opinion in this case. His doing so may
result in an imposition of sanctions for improperly attempting further to prolong this litigation.
Plaintiff may file a reply, if necessary, on or before January 25, 2025.
Conclusion
It is, therefore, ORDERED THAT:
1. Plaintiff’s motion for summary judgment against Lukacs (Doc. 42) be, and the same
hereby is, granted; and

2. On or before ten days after entry of this Order, Plaintiff shall submit, as described
above, its supplemental statement.
SO ORDERED.
Date: 12/5/2024 /s/ James G. Carr
Sr. U.S. District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10755620. Public record. Not legal advice.