The opinion
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
:
GCIU-EMPLOYER RETIREMENT :
FUND; BOARD OF TRUSTEES OF :
THE GCIU-EMPLOYER :
RETIREMENT FUND, : Civil Action No. 16-1074 (MAH)
:
Plaintiffs, :
: OPINION
v. :
:
HARVARD PRESS, INC.; :
HARVARD PRINTING CO.; :
WILRICK, LLC, :
:
Defendant. :
____________________________________:
HAMMER, United States Magistrate Judge
I. INTRODUCTION
This matter comes before the Court on the claim of Plaintiffs, GCIU-Employer
Retirement Fund and Board of Trustees of the GCIU-Employer Retirement Fund, for withdrawal
liability pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., as amended by the Multi-Employer Pension Plan Amendment Act of 1980
(“MPPA”), 29 U.S.C. §§ 1381-1461. The Court conducted a bench trial on November 6, 2024.
See Trial Tr., D.E. 175. The parties have submitted post-trial briefs with proposed findings of
facts and conclusions of law, as well as responses to each other’s proposed findings of fact and
conclusions of law. D.E. 181, 182, 185, 186. The Court now issues its findings of fact and
conclusions of law in accordance with Federal Rule of Civil Procedure 52(a).
Having considered the evidence introduced at trial, evaluated the witnesses’ credibility,
and reviewed the parties’ submissions and the applicable law, the Court finds that Plaintiffs have
failed to carry their burden of proof and enters judgment in favor of Defendant.
II. BACKGROUND AND PROCEDURAL HISTORY
On February 25, 2016, Plaintiffs GCIU-Employer Retirement Fund (the “Fund”) and
Board of Trustees of the GCIU-Employer Retirement Fund (“Board of Trustees”) (together,
“Plaintiffs” or “GCIU”) filed a Complaint against Defendants Harvard Press, Inc. (“Harvard
Press”), Harvard Printing Co. (“Harvard Printing”) (together, the “Harvard Entities”), and
Wilrick, LLC (“Wilrick”) (together with the Harvard Entities, “Defendants”) for withdrawal
liability pursuant to ERISA, 29 U.S.C. § 1001 et seq., as amended by the MPPA, 29 U.S.C. §§
1381-1461. Compl., D.E. 1.
On December 22, 2016, the Honorable Madeline Cox Arleo entered default judgment
against Defendants. Op. & Order, D.E. 9-10. However, on July 28, 2017, the Court vacated its
Opinion and Order, finding insufficient service of process. Order, D.E. 17.
On September 12, 2017, Plaintiffs amended the Complaint. D.E. 26. Plaintiffs seek to
recover $1,079,200 in withdrawal liability principal, as well as interest, liquidated damages, and
attorneys’ fees from Defendants. Plaintiffs allege that when Harvard Press ceased operation on
December 1, 2009, that cessation triggered the Harvard Entities’ obligations for withdrawal
liability in accordance with their collective bargaining agreements with the Graphic
Communications Local 612M of the Graphics Communications Conference/International
Brotherhood of Teamsters, and the withdrawal provisions of ERISA. Plaintiffs also assert that
for purposes of withdrawal liability, the Harvard Entities and Wilrick constituted a single
employer because those entities were under common control.
After completing discovery, on September 13, 2019, Plaintiffs moved for summary
judgment. D.E. 69. Wilrick filed both a motion for summary judgment and a cross motion for
summary judgment. D.E. 70, 72. The Undersigned terminated Wilrick’s motions for failure to
comply with Local Civil Rule 7.1 and a previous Order of the Court, D.E. 66. D.E. 76. On
November 11, 2019, Wilrick filed one, fulsome summary judgment motion. D.E. 77. Judge
Arleo granted in part and denied in part Plaintiffs’ motion, and denied Wilrick’s motion.1 D.E.
80. Judge Arleo granted Plaintiffs’ summary judgment motion as to the Harvard Entities2 but
denied it as to Wilrick. Id.
Regarding Wilrick’s withdrawal liability as part of Harvard Press’s controlled group on
the Withdrawal Date, the District Court denied the parties’ cross-motions for summary judgment.
SJ Op., D.E. 80, at 8-15. The District Court identified genuine issues of material fact concerning
two prongs of the analysis. First, the Court determined that there were genuine issues of material
fact regarding whether Wilrick constituted a “trade or business” under 29 U.S.C. § 1301. Id. at
11. Second, the Court concluded that there were genuine issues of material fact concerning
whether Harvard Press and Wilrick “were under common control such that Wilrick was within
Harvard Press’s controlled group” as of the Withdrawal Date. Id. at 12. There is little dispute
1 Defendants Harvard Press, Inc. and Harvard Printing Co. (the “Harvard Entities”) did not join
in Wilrick’s motion and did not oppose Plaintiffs’ motion. D.E. 80. Accordingly, Judge Arleo
deemed Plaintiffs’ motion directed to the Harvard Entities as unopposed. Id.
2 Judge Arleo concluded that the Harvard Entities completely withdrew from the Fund on
December 1, 2009, when Harvard Press permanently ceased all operations. Op., D.E. 80, at 6.
Her Honor also concluded that Plaintiffs had satisfied the notice-and-calculation requirements of
ERISA, and that the Harvard Entities had not contested the amount of withdrawal liability. Id.
Therefore, the Court granted summary judgment in Plaintiffs’ favor as to the Harvard Entities in
the amount of $1,079,200 in withdrawal liability principal, $359,822.22 in interest, and
$359,822.22 in liquidated damages. Order, D.E. 81.
that on December 1, 2009, Richard and William each held a 50% share of Harvard Press. Id. at
13. But fact disputes precluded the District Court from determining whether William still held a
50% interest in Wilrick as of the Withdrawal Date. Id. The Court pointed out several potentially
conflicting pieces of evidence, including that William had offered inconsistent deposition
testimony concerning whether and when he had relinquished his interest in Wilrick to Richard.
Id. at 14-15. Therefore, the District Court “[could not] determine as a matter of law whether
Wilrick was a member of Harvard Press’s controlled group pursuant to 29 U.S.C. § 1301.” Id. at
15.
On December 27, 2021, the parties consented to the jurisdiction of the Undersigned.
D.E. 126. On September 19, 2022, Wilrick filed a motion seeking to preclude certain testimony
of William Barfuss (“William”).3 D.E. 140. Plaintiffs opposed the motion. D.E. 141. The
Undersigned denied Wilrick’s motion. D.E. 148-149.
On November 6, 2024, the Undersigned conducted a one-day bench trial, during which
the parties were provided the opportunity to be heard, examine and cross-examine witnesses, and
present evidence weighing on the issues. The parties each submitted proposed findings of fact
and conclusions of law on February 21, 2025. D.E. 181, 182. On May 1, 2025, the parties each
submitted responsive proposed findings of fact and conclusions of law. D.E. 185, 186. The
contested issues before the Court are: (1) whether Wilrick was under common control with the
Harvard Entities as of the December 1, 2009 withdrawal date; and (2) and whether Wilrick was a
trade or business.
3 Because C. Richard Barfuss and William Barfuss share a surname, the Undersigned refers to
them by their first names. The Undersigned does so solely for the sake of clarity and intends no
disrespect to any party.
III. FINDINGS OF FACT
The Court derives its findings of fact from the exhibits and deposition transcripts
admitted at trial or separately stipulated by the parties, and the trial testimony of Brian W. Fahey
(“Mr. Fahey”)4 and C. Richard Barfuss (“Richard”).5 The Court has also considered the parties’
proposed findings of fact and responsive proposed findings of fact. See D.E. 181, 182, 185, 186.
Finally, the Court relies on the facts as established in Judge Arleo’s Opinion of the parties’
summary judgment motions, since they are the law of the case in this matter.
4 During all times relevant to this action, Mr. Fahey was a general legal practitioner. Trial Tr.,
D.E. 175, 117:12-16. At trial, Mr. Fahey testified that he met Richard sometime between 2006
and 2008, when one of Richard’s sisters hired him in connection with the sale of their parents’
home. Id. at 118:9-11, 118:20-24. Mr. Fahey represented Richard in the purchase and sale of
various commercial properties via his limited liability companies. Id. at 121:1-3. He also
represented William in various matters from mid-2000 through late 2021. Id. at 119:9-120:17.
Mr. Fahey first represented Harvard Press in or around March 29, 2010, when he sent a response
to a letter from the Administrator of the GCIU Employer Retirement Fund concerning
withdrawal liability. Id. at 122:19-127:11; see also P 11, Ex. A, Mr. Fahey’s March 29, 2010
letter to Mr. Wenner. Mr. Fahey began representing Wilrick in connection with the sale of the
Property. Trial Tr., D.E. 175, 128:8-20. He also represented Harvard Press, Wilrick, and
Richard in a 2012 lawsuit brought against them by the 62B Fund. Id. at 50:25-53:19. In this
case, Mr. Fahey continues to represent the Harvard Entities and Wilrick. Order, D.E. 17; see
docket generally.
5 The Court finds that both Richard and Mr. Fahey were credible witnesses. In making a
credibility determination regarding the testimony of witnesses, the Court must consider:
demeanor and tone of voice, see Anderson v. Bessemer City, 470 U.S. 564, 575 (1985); basis of
knowledge, outside influence, bias, and extent to which testimony is self-servicing, see
Dardovitch v. Haltzman, 190 F.3d 125, 140-41 (3d Cir. 1999); evidentiary support for testimony,
see United States v. Kole, 164 F.3d 164, 177 (3d Cir. 1998); and whether the testimony is
coherent, plausible, and internally consistent, see Newark Branch, N.A.A.C.P. v. City of Bayonne,
134 F.3d 113, 120 (3d Cir. 1998). The testimony of Richard and Mr. Fahey was corroborated by
other evidence in the record. Moreover, the testimony of each witness was consistent with the
testimony of the other witness. Finally, as an officer of the Court, Mr. Fahey owes a duty of
candor to the tribunal. See N.J. Rules Prof’l Conduct R. 3.3.
A. The Parties
Plaintiffs serve as the Trustees and fiduciaries of the Fund within the meaning of ERISA
§ 3(21)(A), 29 U.S.C. § 1002(21)(A). Op., D.E. 80, at 2. The Fund qualifies as a multiemployer
pension plan under ERISA § 3(37), 29 U.S.C. § 1002(37), and as an employee pension benefit
plan under ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A). Id. The Fund is maintained in
accordance with the terms of its Trust Agreement. Id.
Harvard Press, a New Jersey corporation, operated a commercial printing business from
approximately 1976 until December 1, 2009. See id.; Trial Tr., D.E. 175, 14:1-2; JT 3, Richard’s
May 4, 2017 Dep. Tr., 6:20-23; JT 5, Richard’s Aug. 18, 2018 Dep. Tr., 7:21-24; JT 6, William’s
Aug. 18, 2018 Dep. Tr., 6:9-18. Harvard Press also conducted business under the name Harvard
Printing, a fictitious trade name. Op., D.E. 80, at 2 n.3.
From 2001 until it ceased operations, Harvard Press maintained its printing facility at 550
Central Avenue, Orange, New Jersey 07050 (the “Property”). Trial Tr., D.E. 175, 15:2-19; JT 3,
Richard’s May 4, 2017 Dep. Tr., 11:25-12:9, 12:21-24; JT 5, Richard’s Aug. 18, 2018 Dep. Tr.,
11:15-12:4; JT 6, William’s Aug. 18, 2018 Dep. Tr., 9:2-8.
From as early as 1987 until the date of withdrawal, brothers Richard and William each
owned a 50% interest in the Harvard Entities. Op., D.E. 80, at 2; Trial Tr., D.E. 175, 12:24-
13:25; JT 3, Richard’s May 4, 2017 Dep. Tr., 5:11-6:18, 32:21-35:16; JT 4, William’s May 4,
2017 Dep. Tr., 5:13-23; JT 6, William’s Aug. 18, 2018 Dep. Tr., 6:9-18. Beginning in 2001,
Richard and William were responsible for all management decisions at the Harvard Entities.
Op., D.E. 80, at 2; JT 3, Richard’s May 4, 2017 Dep. Tr., 32:21-35:16; JT 4, William’s May 4,
2017 Dep. Tr., 5:13–23; JT 5, Richard’s Aug. 18, 2018 Dep. Tr., 9:17-10:10. Richard and
William handled all tasks necessary to operate the business. Trial Tr., D.E. 175, 14:9-12. From
2001 through 2009, they alone held responsibility for Harvard Press’s operations, which they
shared. Id., 14:17-15:1.
Until his death in 2001, Carl Barfuss, the father of Richard and William, owned the
Property. Id., 16:23-17:1; JT 3, Richard’s May 4, 2017 Dep. Tr., 14:15-25. Upon Carl’s death,
the Property passed to Richard and William. Trial Tr., D.E. 175, 16:13-22. After the Property
passed to Richard and Carl, each brother held a 50% ownership interest in it. Op., D.E. 80, at 3;
Trial Tr., D.E. 175, 17:2-7, 19:17-20, 62:15-22; JT 8, 2003 Member Agreement.
On May 22, 2003, Richard and William entered into a Member Agreement forming
Wilrick, a limited liability company, “which owns and rents real property, in which they would
each hold a 50% share.” Op., D.E. 80, at 3; JT 8, 2003 Member Agreement. Wilrick’s Member
Agreement provides that Richard and William are Wilrick’s sole members and managers, vested
exclusively with “[a]ll powers to manage [Wilrick’s] affairs, in any and every respect.” Op.,
D.E. 80, at 3; JT 8, 2003 Member Agreement. The Member Agreement “may be amended,
altered or modified at any time” and there is no requirement therein that such modification be in
writing. JT 8, 2003 Member Agreement. At its formation, Richard and William each held a
50% ownership interest in Wilrick. Op., D.E. 80, at 3; JT 8, 2003 Member Agreement. Both
Richard and William executed the 2003 Member Agreement. Trial Tr., D.E. 175, 20:9-16; JT 8,
2003 Member Agreement.
Wilrick was established as a holding company for the purpose of holding title to the
Property, and to own and lease real property. Trial Tr., D.E. 175, 17:19-24, 18:15-17; JT 3,
Richard’s May 4, 2017 Dep. Tr., 11:30-12:2, 15:2-5; JT 6, William’s Aug. 27, 2018 Dep. Tr.,
8:20-25; JT 8, 2003 Member Agreement. The brothers formed Wilrick because they did not
want to “have personal liability on the [P]roperty because it was [not] the up-to-date, beautiful
property. So it was to limit our liability.” Trial Tr., D.E. 175, 16:16-19. In February 2004,
Richard and William transferred the Property to Wilrick. Id. at 16:13-22, 62:15-22; JT 3,
Richard’s May 4, 2017 Dep. Tr., 11:20-12:2, 21:3-5, 14:10-14; JT 8, 2003 Member Agreement.
From the formation of Wilrick until the property was sold in September 2008, Harvard
Press operated out of the Property and was a tenant there. Op., D.E. 80, at 3; Trial Tr., D.E. 175,
17:19-23, 96:14-18; JT 3, Richard’s May 4, 2017 Dep. Tr., 48:3-14. Between 2001 and 2008,
Richard and William were responsible for maintaining the Property. Trial Tr., D.E. 175, 19:5-8.
During that period, the brothers either performed necessary repairs themselves or arranged for
others to complete repairs. Trial Tr., D.E. 175, 90:5-12.
Bob Wyckoff served as Harvard Press’s bookkeeper. Trial Tr., D.E. 175, 74:12–16; JT 5,
Richard’s Aug. 18, 2018 Dep. Tr., 14:15-20. He was not employed by Wilrick and received no
compensation from Wilrick. Trial Tr., D.E. 175, 74:19-75:1. However, acting on Wilrick’s
behalf, Bob Wyckoff collected rent for the Property. Id. at 19:8-13. In addition, unrelated
businesses paid Wilrick to store vehicles at the Property. Id. at 97:2-12.
B. The Collective Bargaining Agreements
Harvard Press was party to a series of collective bargaining agreements and related
documents (the “CBAs”) with Graphic Communications Local 612M of the Graphics
Communications Conference/International Brotherhood of Teamsters (the “Union”). Op., D.E.
80, at 2; JT 3, Richard’s May 4, 2017 Dep. Tr., 7:21-8:17. Under the CBAs, Harvard Press was
required to make contributions to: (1) the Fund, located in California, and (2) the Graphic Arts
Local 62B Pension Fund (the “62B Fund”), located in New Jersey. Op., D.E. 80, at 2.
C. Withdrawal Liability
On or about December 1, 2009, Harvard Press permanently ceased all covered operations
under the Fund and/or permanently ceased its obligation to contribute to the Fund, thereby
effecting a complete withdrawal. Op., D.E. 80, at 2; JT 3, Richard’s May 4, 2017 Dep. Tr., 7:3-
6. On the date of withdrawal, William and Richard each held a 50% interest in Harvard Press.
By letter dated February 25, 2010 (the “Notice and Demand”), the Fund notified Harvard Press
that due to its withdrawal, it was liable for $1,079,200 in withdrawal liability principal, payable
in 240 installments. Op., D.E. 80, at 2. William provided the Notice and Demand to Mr. Fahey.
Trial Tr., D.E. 175, 123:20-124:18. After reviewing the Notice and Demand, Mr. Fahey spoke
with then-Fund Administrator Matthew Wenner. Id. at 125:18-25, 126:17-18. On March 29,
2010, Harvard Press, through Mr. Fahey, submitted an appeal of the withdrawal liability
assessment based on its cessation of operations. Id. at 126:6-18; P 11, Ex. A (attached to Mr.
Wenner’s declaration), Mr. Fahey’s March 29, 2010 letter to Mr. Wenner. Richard, William,
and Barbara Wyckoff6 were copied on that correspondence.7 P 11, Ex. A, Mr. Fahey’s March
29, 2010 letter to Mr. Wenner. However, Harvard Press did not identify any errors in the
6 Barbara was the wife of Bob Wyckoff, Harvard Press’s bookkeeper. Trial Tr., D.E. 175, 74:7-
8.
7 Plaintiffs provided no evidence at trial that written notice was served on Wilrick. See,
generally, Trial Tr., D.E. 175. The single piece of evidence on the subject of notice is Mr.
Fahey’s March 29, 2010 letter to the Fund. P 11, Exhibit A, Mr. Fahey’s March 29, 2010 letter
to Mr. Wenner. But this letter establishes only that Richard retained Mr. Fahey to respond to the
Notice and Demand to Harvard Press. Indeed, at trial, Mr. Fahey testified that he represented
Harvard Press when he responded to the Notice and Demand. Trial Tr., D.E. 175, 123:11-18,
127:8-11. It does not establish that Wilrick received any direct notice of the withdrawal liability.
Moreover, Mr. Fahey testified that he represented Wilrick only as regarded its real estate
transactions. Id. at 128:6-132:6.
calculation of the assessment, did not provide additional information to the Trustees, and did not
further pursue the appeal. Op., D.E. 80, at 2.
On August 6, 2010, the Fund issued a Notice of Failure to Pay Withdrawal Liability and
Demand for Cure. The notice and demand advised Harvard Press that it had failed to make the
required payments and that failure to cure within 60 days would result in default under the
applicable statute. Id. Harvard Press did not cure the default and made no withdrawal liability
payments. Id. at 2-3. At the time of default, Harvard Press neither disputed the accuracy of the
assessment nor initiated arbitration. Id. at 3. As a result, the withdrawal liability was
accelerated, and the full principal amount became immediately due. Id.
D. Sale of the Property
In September 2008, Wilrick entered a contract to sell the Property. Trial Tr., D.E. 175,
21:23-22:11; P2, Property Closing Statement. The agreed sale price was $4,556,585.18. Trial
Tr., D.E. 175, 21:23-22:11; P2, Property Closing Statement. Mr. Fahey served as Wilrick’s
counsel in connection with the sale. Trial Tr., D.E. 175, 33:3-6. Sometime after Wilrick entered
the contract for sale in September 2008, Richard and William, acting as Wilrick’s Managing
Members, executed an undated resolution (“the Resolution”) authorizing the sale. JT 9,
Resolution. Richard and William authorized Richard to execute documents relating to the sale of
the Property. JT 9, Resolution. Mr. Fahey testified that the Resolution was drafted after
execution of the contract for sale but before closing, i.e., prior to September 9, 2008. Trial Tr.,
D.E. 175, 133:16-134:7. The Resolution identified Richard and William as Managing Members
of Wilrick, and both signed the document. Id. at 35:15-22; JT 9, Resolution.
By agreement with the purchaser, Harvard Press remained at the Property after the sale
through December 2009. Op., D.E. 80, at 4; Trial Tr., D.E. 175, 25:11-26:6, 136:21-137:16.
According to Richard, Harvard Press was not conducting business after the sale of the Property
in September 2008, but the new owners of the Property asked Harvard Press to remain at the
Property to keep out looters. Trial Tr., D.E. 175, 26:2-21, 136:21-137:12. Following the closure
of Harvard Press, some of its equipment briefly remained stored at the Property. Id. at 15:20-
16:5.
Because the buyer agreed to pay the approximately $4.45 million purchase price in
installments, Wilrick retained a $2.45 million purchase money mortgage on the Property, plus
interest. Op., D.E. 80, at 3; Trial Tr., D.E. 175, 22:12-25:10; P 4, Mortgage. Mr. Fahey drafted
the Mortgage. Trial Tr., D.E. 175, 135:14-136:1. Wilrick received $1,939,079.18 in immediate
proceeds from the sale. Op., D.E. 80, at 3. Richard and William divided the approximately $1.9
million paid by the purchaser at closing. Trial Tr., D.E. 175, 27:10-16, 87:7-11; JT 10, Client
Trust Records. On September 10, 2008, William received a check for roughly 49% of the $1.9
million or $950,148.79. Op., D.E. 80, at 3; Trial Tr., D.E. 175, 29:12-30:3, 138:16-17; JT 10,
Client Trust Records. Richard’s share of the proceeds, roughly 51% or $988,930.39, was
deposited into Mr. Fahey’s attorney trust account for Wilrick. Op., D.E. 80, at 3; JT 10, Client
Trust Records. Richard’s share was then distributed through a Section 1031 (i.e., Section 1031
of the Internal Revenue Code) like-kind exchange, “for the purpose of transferring ownership of
one property to another without paying income tax.” Trial Tr., D.E. 175, 30:4-15, 65:7-11,
138:16-24; JT 10, Client Trust Records. The replacement properties acquired by Wilrick
through the Section 1031 like-kind exchange are in Bedminster, New Jersey (the “Bedminster
Property”) and Providence, Rhode Island (the “Rhode Island Property”). Op., D.E. 80, at 4; Trial
Tr., D.E. 175, 30:20-24. Wilrick purchased the Bedminster Property in February 2009 and the
Rhode Island Property in September 2009. Op., D.E. 80, at 4. Wilrick derives income from
leases on these properties. Id.
The purchaser of the Property made mortgage offset payments on February 25, 2010, and
August 4, 2010, through Mr. Fahey, who maintained the relevant records. JT 10, Client Trust
Records. Those records reflect that in addition to the immediate payment William received on
September 10, 2008, he also received the following payments as his share of Wilrick’s profits
from the Property sale: (a) $26,250 on December 14, 2010; and (b) $847,500 on March 2, 2011.
JT 10, Client Trust Records. Richard received $101,000 on August 4, 2010. Trial Tr., D.E. 175,
30:25-31:9. He also received $26,250 in December 2010 and $847,500 in March 2011. Id. at
139:20-24, 140:7-12; JT 10, Client Trust Records. These payments were made in consideration
for the sale of the Property. Trial Tr., D.E. 175, 140:7-12. On January 25, 2011, Wilrick
deemed the mortgage satisfied pursuant to an Accord and Satisfaction. Id. at 33:13-34:8; JT 11,
Accord and Satisfaction.
E. Wilrick Ownership Structure
William withdrew from Wilrick at the time of the sale of the Property on September 9,
2008.8 Trial Tr., D.E. 175, 38:9-20, 44:9-13, 44:18-25, 64:22-65:3, 67:18-20, 70:10-25, 145:7-
146:10, 149:2-9, 158:23-159:3; JT 3, Richard’s May 4, 2017 Dep. Tr. 48:22-49:19; JT 5,
8 At his May 4, 2017 deposition, William testified that he transferred his ownership interest in
Wilrick to his brother in or around 2010. See JT 4, William’s May 4, 2017 Dep. Tr., 8:17-19. In
response to a question asking when he transferred his interest in Wilrick to his brother, William
responded: “You know, I’m thinking right after 2010. We closed the business in December
2009 so I would think around 2010.” However, the Court affords it very little weight because it
is inconsistent with Richard’s testimony both during his depositions and at trial. Moreover, it is
inconsistent with William’s own testimony during the May 4, 2017 deposition and his
subsequent deposition taken on August 27, 2018. For example, William stated that he
transferred ownership in Wilrick to Richard because they sold the Property. See JT 4, William’s
May 4, 2017 Dep. Tr., 9:8-9; see also JT 6, William’s Aug. 27, 2018 Dep. Tr., 12:7. As
explained above, however, the Property was sold on September 9, 2008.
Richard’s Aug. 27, 2018 Dep. Tr. 12:5-13:23; JT 6, William’s Aug. 27, 2018 Dep. Tr. 12:7; D3,
Amended Response to RFA #3. This withdrawal was effectuated through an oral agreement,
which was subsequently memorialized, in part, in writing. Trial Tr., D.E. 175, 38:9-20; P 5,
September 3, 2009, Agreement.
Richard testified that he and William each executed a “quitclaim” document that
memorialized their oral agreement to divest William of his ownership interest in Wilrick. Trial
Tr., D.E. 175, 70:3-71:14, 145:11-23. Apparently, the purpose of that agreement was to shield
Richard from any potential claims that William’s wife could have asserted during their divorce
proceedings. Id. Richard testified that he was concerned William’s wife might seek to pursue
him for Wilrick-owned properties as part of William’s divorce proceedings. Id. at 70:3-8.
According to Richard, William therefore agreed to sign the Agreement. Id. at 70:3-11.9 Wilrick
did not produce the document because Richard could not locate it. Id. at 70:19-23. Richard
9 Plaintiffs contend in their proposed findings of fact that on February 9, 2004, the Superior
Court of New Jersey, Chancery Division, Family Part, Morris County (FM-1393-01), entered a
Supplemental Dual Judgment of Divorce (“Judgment of Divorce”) that dissolved the marriage of
William and Mary Ellen Barfuss. The parties divided their personal assets in that proceeding in
2004. Findings of Fact, D.E. 181, ¶ 107. The Judgment of Divorce expressly provided that “the
Court did not allow equitable distribution in regard to the asset known as Harvard Press Inc. or to
the underlying real estate upon which it operates.” Id. at ¶ 108 & Ex. A, at 7, ¶ 13.
Counsel for Wilrick filed a responsive letter that objected to what Wilrick characterized as an
improper attempt to introduce evidence of William’s divorce after the close of evidence at trial,
and urged the Court to preclude the Judgment of Divorce from consideration. D.E. 183.
Plaintiffs responded that judicial notice can be taken at any time, including post-trial and that the
Court’s consideration of the Judgment of Divorce in no way undermines that Court’s factfinding
authority. D.E. 184.
That the Judgment of Divorce was entered five years before the 2009 Agreement is not material
to the Court’s analysis. A clumsy attempt to protect assets or not does not move the needle. The
Court need not determine when or whether William divorced his wife. As the Court concludes
herein, there is ample evidence that William was no longer a member of Wilrick after the sale of
the Property.
testified that he obtained the quitclaim deed from the Internet and acknowledged that he did not
know what a quitclaim deed was. Id. at 78:13-16.
Mr. Fahey testified that Richard showed him the quitclaim deed shortly after the
September 9, 2008, closing. Id. at 146:6-10. Mr. Fahey corroborated Richard’s testimony that
Richard had sought written protection in the form of the quitclaim deed because William was
undergoing a divorce at the time. Id. at 147:9-12. Mr. Fahey informed Richard that the
quitclaim deed had the wrong title because that was not what the document was, but the
document itself would be fine for William to sign. Id., 146:11-16.
Richard and William agreed to split the proceeds from the sale of the Property equally.
Id., 159:19-22, 159:24-25; JT 10, Client Trust Records. Following the sale of the Property,
Richard and William went their separate ways as a business matter. Trial Tr., D.E. 175, 38:9-16,
69:15-70:2. Upon payoff of the mortgage, the funds were remitted to the trust account of Mr.
Fahey, with Richard’s portion directed to Wilrick, and William’s portion distributed directly to
William. Id. at 133:10-141:15; JT 10, Client Trust Records.
After the sale of the Property, Richard utilized Wilrick in order to acquire replacement
real estate through a Section 1031 exchange. Trial Tr., D.E. 175, 30:1-24, 65:7-68:18, 140:21-
24; JT 5, Richard’s Aug. 27, 2018 Dep. Tr. 40:8-11; JT 10, Client Trust Records. Richard used
his share of the Property proceeds to purchase the Bedminster property in February 2009. Trial
Tr., D.E. 175, 30:14-20, 65:12-13, 138:18-24, 140:21-24, 161:10-11. Richard did not consult
William regarding that acquisition. Id. at 65:1-68:18; JT 4, William’s May 4, 2017 Dep. Tr.,
24:18-25:6. William did not view the Bedminster property prior to Richard’s purchase of it.
Trial Tr., D.E. 175, 66:6-8; JT 4, William’s May 4, 2017 Dep. Tr., 24:18-25:6. In fact, William
played no role whatsoever in that transaction. Trial Tr., D.E. 175, 65:1-68:18; JT 4, William’s
May 4, 2017 Dep. Tr., 24:18-25:6.
Wilrick acquired the second property, in Providence, Rhode Island, in September 2009.
Like the acquisition of the Bedminster property, William was not involved and did not have
access to any aspect of that property. Trial Tr., D.E. 175, 67:21-68:18; JT 4, William’s May 4,
2017 Dep. Tr., 24:18-25:6.
On or about September 3, 2009, Richard and William agreed that Richard would serve as
Wilrick’s sole manager and member for the Bedminster and Providence properties held by
Wilrick. The Court hereinafter refers to this arrangement as the “2009 Agreement”. P 5, 2009
Agreement. Both parties signed the 2009 Agreement. Trial Tr., D.E. 175, 37:4-9; P 5, 2009
Agreement. The 2009 Agreement does not reference the Property because it had been sold in
September 2008. Trial Tr., D.E. 175, 144:7-11; P 5, 2009 Agreement. Mr. Fahey testified that
the 2009 Agreement was prepared and executed because the title insurance company required
documentation that William had no interest in the Rhode Island property. Trial Tr., D.E. 175,
142:12-24.
Following September 9, 2008, Richard held sole ownership of Wilrick. Id. at 38:9-20,
44:9-13, 44:18-25, 64:22-65:3, 67:18-20, 70:10-25, 145:7-146:10, 149:2-9, 158:23-159:3; JT 3,
Richard’s May 4, 2017 Dep. Tr., 48:22-49:19; JT 5, Richard’s Aug. 27, 2018 Dep. Tr. 12:5-
13:23; JT 6, William’s Aug. 27, 2018 Dep. Tr. 12:7; D3, Amended Response to RFA #3.
William’s ownership interest in Wilrick was extinguished upon the closing of the building sale.
Trial Tr., D.E. 175, 18:23-25, 36:5-8, 38:9-11, 64:22-65:3. Therefore, from approximately
September 9, 2008 and thereafter, William was, for all intents and purposes, disassociated from
Wilrick. Richard filed tax returns annually as the sole owner of Wilrick. Id. at 66:17-24; 76:4-
12. In each of those filings, Richard reported 100% of Wilrick’s income as his own. Id. After
the Property was sold, William never included Wilrick on his tax returns. JT 6, William’s Aug.
27, 2018 Dep. Tr., 19:12-15. Richard and William shared the same accountant for tax purposes.
Trial Tr., D.E. 175, 66:25-67:3. Following his disassociation from Wilrick, William had no
access to any of Wilrick’s financial records. Id. at 67:4-6. Wilrick has made no payments to
William since the sale of the Property. Id. at 77:17-25. Nor did William receive any rent rolls or
other revenue from Wilrick. Id. at 67:7-8; JT 6, William’s Aug. 27, 2018 Dep. Tr., 19:6-8.
William had no access to any Wilrick bank accounts following the disassociation, and wrote no
checks for liabilities for Wilrick. Trial Tr., D.E. 175, 67:9-15; JT 6, William’s Aug. 27, 2018
Dep. Tr., 19:9-11. Similarly, William’s name did not appear on any Wilrick checks, and it does
not appear that he took a role in managing any of the properties held by Wilrick. Id. at 67:18-20.
F. Trade or Business
Wilrick does nothing but own property. JT 5, Richard’s Aug. 27, 2018 Dep. Tr., 21:10-
12. It is a passive investment. Id. at 21:13-15. Richard has had no day-to-day responsibilities
for Wilrick since before the withdrawal date. Trial Tr., D.E. 175, 73:1-77:25. See also
Richard’s May 4, 2017 Dep. Tr., 45:9-11 (testifying that Richard does nothing for Wilrick on a
daily or weekly basis); id. at 73:1-11, 75:18-22 (testifying that Richard does not “have to do
anything” for Wilrick other than “file for and pay the income taxes” at year’s end.). Wilrick has
never had any employees or employed any staff. Id. at 75:6-17. All of Wilrick’s leases are
structured as triple net leases, placing full financial, operational, and maintenance responsibility
on the tenants. Id. at 73:4-11. Wilrick incurs no regular or recurring overhead expenses. Id. at
76:13-14. Wilrick’s office is Richard’s house. JT 3, Wilrick does not engage in marketing to
secure new tenants. Trial Tr., D.E. 175, 76:15-16. Wilrick exists solely to generate returns on
real estate investments through rental income. Id. at 73:1-77:25.
IV. CONCLUSIONS OF LAW
The issues before the Court are whether Wilrick was: (1) a trade or business; (2) under
common control with the Harvard Entities as of the withdrawal date, December 1, 2009. The
Court addresses each in turn.
A. Trade or Business
To hold a non-employer jointly and severally liable for withdrawal liability under 29
U.S.C. § 1301(b)(1), the entity must constitute a “trade or business” under common control at the
time of withdrawal. Gov’t Dev. Bank for P.R. v. Holt Marine Terminal, Inc., 765 F. Supp. 2d
710, 715 (E.D. Pa. 2011). To determine whether an entity qualifies as a trade or business under
ERISA, courts have relied on the definition of “trade or business” established by the Internal
Revenue Service and articulated by the United States Supreme Court in Comm’r v. Groetzinger,
480 U.S. 23, 35 (1987). Groetzinger established that a trade or business must be engaged in an
activity conducted with “continuity and regularity” and for the primary purpose of income or
profit. 480 U.S. at 35. The “activity” contemplated in Groetzinger refers to business activity,
not merely any activity. UFCW Loc. One Pension Fund v. Enivel Props. LLC, 791 F.3d 369,
375 (2d Cir. 2015). Courts have also considered “whether characterizing an entity as a trade or
business will fulfill the underlying purpose of the MPPAA: to prevent employers from avoiding
withdrawal liability by fractionalizing their operations.” N.J. Bldg. Laborers’ Statewide Benefit
Funds and Trs. Thereof v. Demza Masonry LLC, No. 18-9607, 2019 WL 6493944, at *7 (D.N.J.
Dec. 3, 2019) (quoting Gov’t Dev. Bank, 765 F. Supp. 2d at 715).
One purpose of the Groetzinger test is to distinguish active trades or businesses from
passive investments, which cannot support withdrawal liability. Cent. States Se. & Sw. Areas
Pension Fund v. Messina Prods., LLC, 706 F.3d 874, 878 (7th Cir. 2013). An “investment” is
the placement of capital with the expectation of generating income or profit. Enivel, 791 F.3d at
374. Passive investments do not constitute trades or businesses. Gov’t Dev. Bank, 765 F. Supp.
2d at 718; see also Cent. States, Se. & Sw. Areas Pension Fund v. White, 258 F.3d 636, 641-45
(7th Cir. 2001); Enivel, 791 F.3d at 375.
Similarly, “a mere investment made to make a profit, without more, does not itself make
an investor a trade or business.” Sun Cap. Partners III, LP v. New England Teamsters &
Trucking Indus. Pension Fund, 724 F.3d 129, 141-42 (1st Cir. 2013). A passive investment
therefore cannot serve as the basis for imputing withdrawal liability under § 1301(b)(1). Hotel
71 Mezz Lender LLC v. Nat’l Ret. Fund, 778 F.3d 593, 599-602 (7th Cir. 2015). In
distinguishing passive investments from activities rising to the level of a trade or business, courts
focus on the activities undertaken with respect to a particular property or holding, rather than
mere ownership of the property itself. Gov’t Dev. Bank, 765 F. Supp. 2d at 718. As courts have
observed, “the mere possession of property, ‘be it stocks, commodities, leases, or something else,
without more is the hallmark of an investment.’” Id. (quoting Cent. States Pension Fund v.
Fulkerson, 238 F.3d 881, 895 (7th Cir. 2001)). For example, the First Circuit has adopted an
“investment plus” standard: to impose MPAA withdrawal liability on an entity, that entity must
satisfy two conditions, it must: (a) hold an investment in property; and (b) exercise substantial
active management over those property holdings. Sun Cap. Partners III, 724 F.3d at 141-42.
Consistent with this principle, courts have generally found that merely owning and leasing real
estate to third parties without more constitutes a passive investment rather than a trade or
business. See, e.g., Gov’t Dev. Bank, 765 F. Supp. 2d at 718; Enivel, 791 F.3d at
375; Fulkerson, 238 F.3d at 895-96; White, 258 F.3d at 643-44; Auto. Indus. Pension Tr. Fund
v. Tractor Equip. Sales, Inc., 73 F. Supp. 3d 1173, 1188-89 (N.D. Cal. 2014), aff’d, 672 F. App’x
685 (9th Cir. 2016).
Finally, security interests do not constitute ownership interests. See Liberty Mut. Fire
Ins. Co. v. Alexander, 374 N.J. Super. 340, 349 (App. Div. 2005) (explaining that a mortgagee’s
interest expands to ownership only upon acquisition through foreclosure); see also Carrington
Mortg. Servs., LLC v. Moore, 464 N.J. Super. 59, 74-75 (App. Div. 2020) (noting that a
mortgage holder possesses only a security interest and lacks control over the property until
foreclosure and transfer of title are complete).
In this case, it is Plaintiffs’ burden to show that Wilrick was a trade or business. The
Court finds that Plaintiffs have not met that burden. There is insufficient evidence that Wilrick
was engaged in an activity conducted with “continuity and regularity” and for the primary
purpose of income or profit, such that it could have been considered a trade or business.
Groetzinger, 480 U.S. at 35.
First, Plaintiff has not established that Wilrick’s primary purpose was to turn a profit.
Richard testified at trial, and both William and Richard testified during their depositions, they
formed Wilrick as a holding company because the condition of the Property was deteriorating,
and the brothers wished to insulate themselves from personal liability. In short, the purpose of
forming Wilrick was more of a shield than a profit-making venture. But even when the Property
was sold and Richard attained 100% ownership of Wilrick, Wilrick constituted an investment.
Richard’s proceeds of the Property were put into a Section 1031 exchange, which was used to
buy the Bedminster and Rhode Island Properties. Richard testified that he did no marketing for
tenants at either the Bedminster or Rhode Island Properties. Trial Tr., D.E. 175, 76:15-16. And
since purchasing these two Properties, Wilrick has purchased no additional properties. Id. at
76:17-21. Therefore, it is reasonable to conclude that Richard used Wilrick to purchase
additional properties via the Section 1031 exchange so as to avoid paying any income tax on the
sale of the Property. Id. at 30:8-24. On this record, the Court must find that the primary purpose
of Wilrick was not to realize a profit. Instead, Richard and William had defensive reasons to
create Wilrick: To insulate themselves from personal liability for the aging property, and for
Richard to avoid paying income tax when the Property was sold. See Enivel, 791 F.3d at 374
(affirming the district court’s finding that the organization “made real estate investments not to
earn a living but for personal reasons or to further private wealth management objectives”
including long-term personal investments of property).
Plaintiffs also have not established that Wilrick has engaged in business activity with
continuity and regularity. Wilrick’s time, which is to say Richard’s time, devoted to managing
and leasing the Properties was negligible at best. See Cent. States, Se. & Sw. Areas Pension
Fund v. SCOFBP, LLC, 668 F.3d 873, 878-79 (7th Cir. 2011) (“Owning property can be
considered a personal investment, at least where the owner spends a negligible amount of time
managing the leases, . . . although a more substantial investment of time may be considered
regular and continuous enough to rise to the level of a ‘trade or business.’”); see also Gov’t Dev.
Bank, 765 F. Supp. 2d at 718 (noting that it was “not convinced that the provision of three loans
in 1998 [was] sufficiently continuous and regular to constitute a trade or business”). Since
September 2009, Wilrick has held two properties: the Rhode Island Property, which is occupied
by a Rite Aid pharmacy, and the Bedminster Property, which is occupied by a daycare facility.
Wilrick obtained the Bedminster Property from Rainbow Rascals Hills, LLC on February 27,
2009, through a Section 1031 exchange. Wilrick acquired the Rhode Island Property from
Sovereign RA II, LLC on September 3, 2009. The Rhode Island Property was also purchased
through a Section 1031 exchange. Since that time, Wilrick has maintained written leases with
the tenants at both locations. The Rhode Island Property lease is structured as a triple net
arrangement, under which the tenant pays base rent to Wilrick while also bearing responsibility
for property taxes, insurance procurement and payment, and all maintenance and repairs. The
Bedminster Property lease is also a triple net lease, with the tenant responsible for rent, taxes,
utilities, insurance, and all maintenance and repair obligations.
The Court’s inquiry must be anchored to the circumstances existing as of the withdrawal
date—i.e., December 1, 2009. From well before the withdrawal date through the present,
Wilrick’s activities have been limited to holding and leasing real property to third parties under
net lease agreements. Richard testified at trial that Wilrick never had employees and it did not
have a bookkeeper. At the time of withdrawal, Wilrick functioned exclusively as a passive
investment holding company, holding two long-term triple net leases with tenants entirely
unrelated to Harvard Press. There was no “investment plus” element, as the triple net structure
of both leases delegated virtually all property management responsibilities to the tenants.
Richard’s involvement was minimal as his primary activity consisted of confirming receipt of
monthly rent payments by logging into his computer. It is difficult to conceive of a more limited
form of business ownership. If active business operation and passive investment represent
opposite ends of a spectrum, Wilrick occupies the passive end.
Plaintiffs rely on United Food and Commercial Workers Union v. Progressive
Supermarkets, 644 F. Supp. 633, 638 (D.N.J. 1986) to contend that Wilrick was a trade or
business. In Progressive Supermarkets, a company leased its premises on U.S. Route 46 in
Rockaway, New Jersey to a supermarket it treated as a related party until approximately three
months before that supermarket withdrew from its ERISA pension plan. The court determined
that the leasing company qualified as a trade or business, notwithstanding its changed tenancy as
of the withdrawal date. The court reasoned that any other conclusion would shield assets from
ERISA liability, and frustrate the statute’s evident purpose of preventing the fragmentation of
business enterprises. But the landowner in Progressive Supermarkets continued to own the
property as of and after the withdrawal date, and had already entered a new lease with a
replacement tenant, ShopRite. Essentially, the landowner simply substituted a non-union
grocery tenant, ShopRite, for the prior union grocery tenant, with the new tenant even purchasing
the departing supermarket’s assets and inventory. From the landowner’s perspective, the
practical reality of the business conducted on the property remained unchanged because the only
meaningful difference was the identity and union status of the lessee grocery tenant. That
continuity-of-business use is precisely what gave rise to fractionalization concerns.
The facts here are readily distinguishable. First, it is undisputed that a September 3, 2009
resolution vested Richard with 100% ownership of all Wilrick properties at that time. P 5,
September 3, 2009 Agreement. Thus, the ownership structure differs materially from
Progressive Supermarkets. Second, unlike Progressive Supermarkets, it is undisputed that when
the Wilrick principals sold the Property in September 2008, Richard and William each took his
profits from the sale and used them very differently. Richard’s proceeds of the sale were rolled
into a Section 1031 exchange for the purchase of another property without paying taxes, while
William took his money. In short, there was no continuity-of-business use. Third, Progressive
Supermarkets involved a landlord who continued leasing the property after the withdrawal.
Wilrick, by contrast, did not even hold title to the relevant land for approximately fifteen months
prior to the withdrawal date. Although Progressive Supermarkets did involve a brief gap
between the termination of the union supermarket lease and the withdrawal date, that gap is
effectively neutralized by the fact that the owner retained the property throughout and beyond the
withdrawal. Here, as of the withdrawal date, Wilrick held only a security interest in the Property
- an interest that was never exercised because the purchaser of the Property never defaulted on
the purchase money mortgage. A security interest in property does not constitute an ownership
interest. See Liberty Mut. Fire Ins. Co., 374 N.J. Super. at 349 (recognizing that a mortgagee’s
interest ripens into ownership only upon purchase at foreclosure); see also Carrington Mortg.
Servs., 464 N.J. Super. at 74-75 (App. Div. 2020) (“[A] mortgage holder has only a security
interest in a property with no control over the land itself until a foreclosure and deed transfer is
completed.”).
The undisputed record reflects that Wilrick ultimately sold the property to unrelated third
parties in furtherance of a public interest in redeveloping a distressed neighborhood straddling
the Orange and West Orange border. That series of events was precipitated, at least in part, by
Harvard Press’s failure. Thus, the present case bears little resemblance to Progressive
Supermarkets, where the same parcel of land on a high-traffic commercial corridor was simply
redeployed from one grocery operation to another under a different banner. The transition in
Progressive Supermarkets amounted to little more than a name change where ShopRite occupied
the same land, purchased the prior tenant’s inventory and assets, and continued operating the
same type of retail grocery business. At bottom, there was an unbroken continuity of
commercial use. But no such continuity exists here. The property was sold to a third party for
an urban renewal initiative aimed at revitalizing a challenged, crime-affected neighborhood. No
printing company succeeded Harvard Press on the site. The purchaser acquired neither Harvard
Press’s assets nor its inventory. The factual difference between Progressive Supermarkets and
the instant case is substantial.
With respect to the Property, after Wilrick sold it in September 2008, it held a mortgage
on the Property. Thus, Wilrick held a security interest in the Property until the new owners
satisfied the mortgage in 2011. The leases on the Bedminster and Rhode Island Properties are
triple net leases. The tenants pay rent to Wilrick, are responsible for all maintenance and repairs
to the properties, maintain and pay insurance on the properties, and pay taxes and utilities. Thus,
Wilrick owns the properties and leases the property via triple net leases. The monthly rent
checks are deposited online so Richard need only confirm monthly payments by logging onto the
computer. With respect to Wilrick, Richard did nothing more than check his bank account each
month to make sure the leases were being paid. The Court can hardly fathom an instance where
a company does less in terms of day-to-day operations. Wilrick’s real-estate holdings are
passive investments. For those reasons, the Court finds that Wilrick was not a trade or business
and is not liable for withdrawal liability.
B. Common Control
The Court’s determination that Wilrick was not a trade or business for purposes of
ERISA itself is dispositive. However, in the interest of completeness, the Court considers
whether Wilrick was under common control with the Harvard Entities as of the withdrawal date.
For the reasons below, the Court finds Plaintiffs have not established that Wilrick and the
Harvard Entities were under common control.
Plaintiffs contend that Wilrick was a member of Harvard Press’s controlled group, and
that Harvard Press and Wilrick are a “brother-sister” group. Accordingly, Plaintiffs argue
Wilrick is jointly and severally liable for the amounts due in this litigation, including those for
which the Court has already determined the Harvard Entities’ liability. However, Plaintiffs have
failed to meet their burden of establishing that Wilrick was a member of Harvard Press’s
controlled group.
Under Section 4001(b)(1) of ERISA, 29 U.S.C. § 1301(b)(1), all employees of commonly
controlled trades or businesses, whether incorporated or not, are treated as working for a single
employer, and those trades and businesses are likewise treated as one. Entities meeting this
“common control” standard face joint and several liability for withdrawal liability. IUE AFL-
CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir. 1986).
To determine whether entities qualify as being under “common control,” ERISA
incorporates the Internal Revenue Code’s definition of “controlled group.” 29 U.S.C. §
1301(b)(1). Treasury regulations define “members of a controlled group” as two or more
corporations linked through stock ownership. 26 C.F.R. § 1.414(b)-1 (2024). The related
regulations at 26 C.F.R. § 1.414(c)-1 et seq. further define the “common control” standard by
examining two key concepts, “controlling interest” and “effective control,” which apply
differently depending on whether the relationship at issue involves a parent-subsidiary structure,
a brother-sister arrangement, or a combined group. 26 C.F.R. § 1.414(c)-2(c). A brother-sister
relationship exists among two or more corporations when: (a) the same five or fewer persons
own (b) a “controlling interest” in each entity, (c) those individuals exercise “effective control”
over each entity, and (d) each individual’s ownership is counted only to the extent it is identical
across all of the entities.10 26 C.F.R. § 1.414(c)-2(c). Limited liability companies are treated the
same as corporations under this framework. 26 C.F.R. § 1.414(c)-2(a).
10 Neither side argues that either the combined group or parent-subsidiary structure applies here.
“Controlling interest” requires ownership of stock representing at least 80% of the total
combined voting power across all voting share classes, or at least 80% of the total value of all
share classes. 26 C.F.R. § 1.414(c)-2(b)(2)(i)(A). On the other hand, “effective control”
requires ownership of stock representing more than 50% of the combined voting power or more
than 50% of the total value of all share classes. 26 C.F.R. § 1.414(c)-2(c)(2)(i). No operational
nexus between the two companies is required to impose withdrawal liability on an entity that did
not sign the collective bargaining agreement. See O’Connor v. DeBolt Transfer, Inc., 737 F.
Supp. 1430, 1444 (W.D. Pa. 1990) (holding that the presence or absence of inter-company
transactions is irrelevant to controlled group withdrawal liability). Membership in the same
controlled group is sufficient. Id. Finally, withdrawal liability attaches only to those trades and
businesses that were under common control with the withdrawing employer as of the date of
withdrawal. Teamsters Pension v. Brigadier Leasing Assocs., 880 F. Supp. 388, 396 (E.D. Pa.
1995); Bd. of Trs. of Trucking Emps. of N.J. Welfare Fund, Inc.-Pension Fund v. Centra, 983
F.2d 495, 502 (3d Cir. 1992).
It is undisputed that as of the withdrawal date, William and Richard each held a 50%
ownership interest in Harvard Press. Op., D.E. 80, at 2. The dispute is whether William
remained a member of Wilrick as of the withdrawal date such that William and Richard can be
considered to own a “controlling interest” in each entity and exercise “effective control” over
each entity. The Court concludes that William was not a member of Wilrick on the withdrawal
date. Thus, Wilrick cannot be considered part of Harvard Press’s control group.
At trial, both Richard and Mr. Fahey credibly testified that once Richard and William
sold the Property in September 2008, William was no longer an owner of Wilrick. William took
his money from the sale of the Property and dissociated from Wilrick, while Richard reinvested
his proceeds from the sale of the Property via Section 1031 exchanges. Taking ownership of
Wilrick, William used the Section 1031 exchanges to buy the Bedminster and Rhode Island
Properties. Richard and Mr. Fahey testified that the brothers orally agreed to go their separate
ways upon the sale of the Property and that the brothers, along with Mr. Fahey, had multiple
discussions to this effect.11 Richard’s and Mr. Fahey’s testimony at trial that the brothers
decided to go their separate ways upon the sale of the Property is consistent with both Richard’s
and Williams’s deposition testimony. See JT 3, Richard’s May 4, 2017 Dep. Tr., 49:7-16; JT 4,
William’s May 4, 2017 Dep. Tr., 8:23-9:9; JT 5, Richard’s Aug. 18, 2018 Dep. Tr., 20:3-5; JT 6,
William’s Aug. 18, 2018 Dep. Tr., 18:17-19:5.
Richard and William later reduced this oral agreement to writing. That Richard was
unable to locate and produce this document is of little consequence. The 2003 Member
Agreement allowed modifications by William and Richard, and did not contain a clause
requiring such modifications to be reduced to writing. 12 JT 8, 2003 Member Agreement; see
also Lewis v. Travelers Ins. Co., 51 N.J. 244, 253 (1968) (finding that unless there is a clause in a
contract limiting modifications to only those in writing, the parties to that contract have not
“disable[d] themselves from amending, supplementing or replacing the contract by a later
11 Moreover, Plaintiffs have not challenged the brothers’ oral agreement via a claim under the
MPPAA, 29 U.S.C. § 1392(c). Pursuant to § 1392(c), “[i]f a principal purpose of any transaction
is to evade or avoid liability under this part, this part shall be applied (and liability shall be
determined and collected) without regard to such transaction.” Thus, any challenge to the
brothers’ agreement that William would disassociate from Wilrick upon the sale of the Property
could and should have been brought via claim under § 1392(c).
12 Plaintiffs’ response to Wilrick’s proposed findings of fact and conclusions of law takes a
different tack. It does not contest Richard’s and William’s ability to orally modify the Member
Agreement. Instead, Plaintiffs now contend that the oral modification never happened.
Response, D.E. 185, at 4. However, for the reasons above, the Court disagrees.
agreement made orally or by conduct objectively manifesting a new understanding”); Wells Reit
II-80 Park Plaza, LLC v. Director, Div. of Taxation, 414 N.J. Super. 453, 466 (App. Div. 2010)
(“A modification can be proved by ‘an explicit agreement to modify or by the actions and
conduct of the parties as long as the intention to modify is mutual and clear.’”).
Prior to 2013, the 1993 Limited Liability Company Act, N.J.S.A. 42:2B-1, governed New
Jersey limited liability companies and did not require any written documentation to establish a
member’s ownership interest in a limited liability company. See N.J.S.A. 42:2B-44(c) (noting
that an operating agreement may, but need not, provide for a certificate evidencing a member’s
interest). The 1993 Limited Liability Company Act also permitted a member to resign from a
limited liability company. N.J.S.A. 42:2B-38. Upon resignation, the departing member was
entitled to receive the fair value of his or her limited liability interest as of the resignation date,
less applicable valuation discounts, within a reasonable time unless the operating agreement
specified a different distribution formula. N.J.S.A. 42:2B-39. Disassociation from the limited
liability company took effect immediately upon the member’s resignation even if a buyout
payment was made subsequently. N.J.S.A. 42:2B-24. Once disassociated, subject to N.J.S.A.
42:2B-39, a former member retained only the rights of an assignee of a membership interest.
N.J.S.A. 42:2B-24.1. Under N.J.S.A. 42:2B-44(a), an assignee has no right to participate in the
management or affairs of the limited liability company unless the operating agreement provides
otherwise and either: (1) all non-assigning members approve; or (2) the assignee complies with
any procedure set forth in the operating agreement.
Plaintiffs contend that a disassociated member retains the full distribution rights of an
active member under N.J.S.A. 42:2B-44(b)(1). The Court respectfully disagrees. The statute
expressly makes distributions to assignees “subject to” the buyout provision of N.J.S.A. 42:2B-
39, which governs the rights of members who have resigned and become disassociated.
Plaintiffs’ position that a resigned and disassociated member continues to participate in the
limited liability company, as though the resignation never occurred, is without support in the
statutory framework.
There is additional support for the Court’s conclusion that as of the sale of the Property
on September 9, 2008, William was no longer associated with Wilrick. No checks were written
from Wilrick to William after the sale of the Property, except those stemming from the mortgage
on the Property. JT 10, Client Trust Records. Richard testified that after the sale of the Property,
he filed taxes each year on behalf of Wilrick. Only Richard did so, not his brother, and Richard
and William shared an accountant. They further testified that on the withdrawal date Richard
was the 100% owner of Wilrick. Yet, on the date of withdrawal, William and Richard each held
a 50% interest in Harvard Press. Richard’s testimony that he was sole owner upon the sale of the
Property in September 2008 is further supported by William’s testimony, during the first
deposition, that he did not know anything about the two other properties Wilrick owned. Wilrick
purchased the Bedminster and Rhode Island Properties in 2009. Moreover, the Resolution the
brothers signed on September 3, 2009 indicates that Richard was the sole manager and member
of Wilrick as to the Bedminster and Rhode Island Properties. P 5, September 3, 2009
Agreement. Those were the only two properties owned by Wilrick at that time.
There are two pieces of evidence that, at first glance, might support Plaintiffs’ argument
that William was still a Member of Wilrick on the withdrawal date. First, in William’s first
deposition on May 4, 2017, he testified that he thought he transferred ownership of Wilrick to
Richard around 2010. When asked when he transferred ownership in Wilrick to Richard
exclusively, William stated: “I’m thinking right after 2010.” However, it is clear to the Court
that William was likely confused when suggesting a date, as the transfer happened much earlier,
and William was equally clear that the transfer of ownership in Wilrick happened
contemporaneously with the sale of the Property. William also stated that he stopped receiving
money from Wilrick because he had no longer had an interest in Wilrick and that he transferred
ownership in Wilrick to his brother when they sold the building. He testified that the sale of the
building was the reason for transferring ownership. He also testified that he did not know
anything about the two other buildings that Wilrick owned. The logical conclusion from
William’s deposition is that he misremembered the year he transferred his ownership in Wilrick
to Richard, but he was clear it was when the Property was sold—i.e., September 2008.
During William’s second deposition, he again confirmed that as of the sale of the
Property, he was no longer associated with Wilrick. This time, he remembered the Property was
sold and he was out of Wilrick in September 2008. Whether William remembered the date of the
sale of the Property is not significant because William consistently testified during both of his
depositions was that he was out of Wilrick contemporaneously with the sale of the Property.
The second piece of evidence concerns Defendants’ response to Plaintiffs’ Request for
Admission (“RFA”) #3. In answering RFA #3, Defendants initially confused the date the
Property was sold and the ownership in Wilrick changed. Richard testified at trial that RFA #3
was confusing, so he answered incorrectly but subsequently amended his response. On August
26, 2018, Plaintiffs served Defendants with Plaintiffs’ First Set of Requests for Admissions.
Plaintiffs’ RFA #3 stated: “Effective prior to December 1, 2009 and continuing past that date,
Richard . . . and William . . . each held 50% ownership and voting stock in Wilrick.” D3,
Amended Response to RFA #3. Wilrick responded: “Denied as Wilrick . . . is an “LLC” and
there is no “voting stock”. It is admitted that the Wilrick . . . was owned 50/50 by Richard . . .
and William . . . on December 1, 2009 and for a time thereafter. It is denied that the ownership
continues to this date.” Id. On August 27, 2018, the day after Plaintiffs first served the RFA,
during his deposition, Richard testified that his 50% ownership interest in Wilrick became a
100% ownership interest when Wilrick sold the Property on September 9, 2008. Id. On
December 21, 2018, counsel for Defendants sent the amended response to Plaintiffs. Id. The
amended responses stated: “Objection. This request for admission item is vague as to the time
period covered because the item sets forth no beginning or ending time. It merely seeks an
admission as to times before, on, and after December 1, 2009. Notwithstanding said objection,
Defendants deny this item as stated, as . . . Richard . . . owned 100% of Wilrick . . . as of
September 9, 2008.” Id.
The Court is not persuaded that this evidence moves the needle in Plaintiffs’ direction.
Richard’s response to the RFA occurred nearly a decade after the Property was sold. The parties
have consistently testified that Wilrick’s ownership structure changed when the Property was
sold. Moreover, Richard’s testimony at his deposition on August 27, 2018 occurred nearly
contemporaneously with Plaintiffs serving the RFA. Thus, Richard’s statement at trial that the
RFA was confusing simply makes the most sense. Accordingly, the Court is not persuaded that
either of these pieces of evidence demonstrates that William continued to be a member of
Wilrick as of the withdrawal date.
Plaintiff’s mortgage-ownership argument fares no better. The governing regulation, 26
C.F.R. § 1.414(c)-4(b)(2), concerns attribution of ownership of “an interest in an organization,” a
category that plainly does not encompass a debt security interest such as a purchase money
mortgage. Wilrick held a lien, not an ownership stake, and the two are qualitatively distinct.
Plaintiffs’ argument finds no foothold in 26 C.F.R. § 1.414(c)-4.
Section 1563(e)(2) of Title 26 also does not apply. Section 1563(e)(2) specifically deals
with partnerships while Wilrick was a limited liability corporation. But even assuming §
1563(e)(2) did apply, its partnership attribution rule reaches only corporate stock ownership and
not debt security interests. 26 U.S.C. § 1563(e)(1) & (2). The broader principle concerning
mortgages is equally fatal to Plaintiffs’ position. Secured debt does not equal ownership of the
encumbered property. United States v. Tana, 618 F. Supp. 1393, 1396 (S.D.N.Y. 1985). A
security interest confers nothing more than a claim against property, but it is not stock in a
corporation or an interest in an organization. Id. Therefore, a security interest in the Property
cannot constitute an ownership interest in Wilrick. Thus, this argument collapses on its own
terms.
Because William was no longer a member of Wilrick upon the sale of the Property in
September 2008, Wilrick cannot be considered “under common control” with Harvard Press as
of December 1, 2009. Plaintiffs have not identified five or fewer persons who simultaneously
held a controlling interest in both entities and exercised effective control over each as of that
date, “taking into account the ownership of each such person only to the extent such ownership is
identical with respect to each such organization.” 26 C.F.R. 1.414(c)-2(c)(1). As established,
William held no ownership interest in Wilrick after September 9, 2008. From that date forward,
Richard was the sole 100% owner of Wilrick. As of the withdrawal date, William and Richard
each held a 50% interest in Harvard Press.
With respect to the controlling-interest prong, Plaintiffs have failed to identify “five or
fewer persons . . . with . . . a controlling interest[] in each organization.” 26 C.F.R. 1.414(c)-
2(c)(1)(i). As of the withdrawal date, Richard and William each held a 50% ownership interest
in Harvard Press. As to Wilrick, Richard had a 100% ownership interest in Wilrick while
William had none as of the withdrawal date. Plaintiffs have failed to demonstrate that the
controlling interest prong of the subjective test is satisfied because only one person, Richard,
owned 100% of Wilrick on the withdrawal date. Thus, there are not five or fewer people who
had a controlling interest in each organization. See Loc. 478 Trucking & Allied Indus. Pension
Fund v. Jayne, 778 F. Supp. 1289, 1303 (D.N.J. 1991) (“Under the first of the two-part test for
common control, the same five or fewer individuals must own a controlling interest in each of
the organizations to be held liable.”).
The Court must evaluate the second prong of the common-control test—i.e., “effective
control”—by considering each owner’s interest only to the degree that it is identical across both
organizations. 26 C.F.R. § 1.414(c)-2(c)(1)(ii); see also Cent. States, Se. & Sw. Areas Pension
Fund v. Creative Dev. Co., 232 F.3d 406, 420-21 (5th Cir. 2000) (noting that “[o]ne need only
consider the relevant example set forth in the regulation to realize that the ‘effective control’
prong of the common control test is no simple arithmetic exercise” because “there is a tricky
factor lurking just beneath the surface of the facially murky phrase, ‘only to the extent such
ownership is identical with respect to each such organization.’”). “[T]aking into account the
ownership of each such person only to the extent such ownership is identical with respect to each
such organization,” under 26 C.F.R. § 1.4114(c)-2(c)(1), William’s ownership interest in
Harvard Press is treated as zero because William’s ownership percentage of Wilrick as of the
withdrawal date was zero. With the same framework in mind, as of the withdrawal date,
Richard’s ownership interest in Wilrick is treated as 50% because Richard held a 50% ownership
interest in Harvard Press as of the withdrawal date. Thus, Plaintiffs have failed to establish that
under the “effective control” prong Wilrick and Harvard Press were “under common control”
because two or more of the same people did not own more than 50% of Wilrick, and did not own
more than 50% of Harvard Press as of the withdrawal date. At bottom, Plaintiffs have failed to
satisfy their burden to establish that Wilrick and Harvard Press were under common control such
that Wilrick was a member of Harvard Press’s controlled group. Thus, Wilrick is not liable for
Harvard Press’s withdrawal liability.
V. CONCLUSION
For the reasons set forth above, the Court enters judgment in favor of Wilrick. An
appropriate Order accompanies this Opinion.
s/ Michael A. Hammer________
United States Magistrate Judge
Dated: April 10, 2026
APPENDIX
EXHIBITS ADMITTED INTO EVIDENCE
Ex. Description of Exhibit
JT 3 Richard’s May 4, 2017 Deposition Transcript - via stipulation
William’s May 4, 2017 Deposition Transcript - via Court’s 4/21/23 Ruling, D.E. 148-
JT 4
149
JT 5 Richard’s August 27th, 2018 Deposition Transcript - via stipulation
William’s August 27, 2018 Deposition Transcript - via Court’s 4/21/23 Ruling, D.E.
JT 6
148-149
JT 8 2003 Member Agreement - via stipulation
JT 9 Resolution - via stipulation
JT 10 Client Trust Records - via stipulation
JT 11 February 25, 2011 Accord and Satisfaction - via stipulation
JT 12 Discharge of Mortgage - via stipulation
P 2 Property Closing Statement - via stipulation
P 4 Mortgage - via stipulation
P 5 September 3, 2009 Agreement - via stipulation
P 7 Response to the RFA #3 - via stipulation
Exhibit A, Mr. Fahey’s March 29, 2010 letter to Mr. Wenner (attached to Mr.
P 11
Wenner’s declaration, which is not in evidence) - admitted at trial
D 3 Amended Response to RFA #3 - via stipulation