Lommen Abdo Prevails in Shorted Fringe Fund Claims Trial

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Federal Judge Patrick Schiltz completely vindicated Lommen Abdo’s client, Frana Companies, in a decision filed in March 2017.* Keith Broady was the lead defense attorney for Frana, a general contractor, in a case that spanned over three and half years, including nine trial days.

The plaintiffs were trustees of union pension, health and welfare and other fringe benefit funds. Plaintiffs claimed two drywall subcontractors of Frana had shorted hours to their union workers, and therefore had shorted payments owed to the union fringe funds, which are based on the hours worked and are paid monthly.  The largest subcontractor reported to the union fringe funds that its drywall finishing workers worked a total of 126,000 hours over a five year period.  An expert forensic accountant for plaintiffs opined the subcontractor failed to report 60,000 hours.  The expert calculated damages in the millions of dollars.  Plaintiffs claimed Frana was the alter ego of the subcontractors and, therefore, was also liable for millions of dollars.

After hearing testimony of many witnesses over nine days of trial, Judge Schiltz found “the evidence makes clear; however; that plaintiffs’ conspiracy theory [RICO, fraud and other claims] bears no resemblance to reality.” Judge Schiltz found there were no shorted hours by the subcontractors and excluded the opinions of the plaintiffs’ forensic accountant under Daubert, stating the shorted hours and damages opinions were “absurd” and “preposterous.”

On the alter ego claim, Judge Schiltz found Frana trusted its subcontractor, valued the high quality of the subcontractor’s work, and stated: “It also reflects Frana’s business philosophy, which is to cultivate long‐term relationships with good subcontractors and good customers.”  The alter ego claim against Frana was also dismissed.

Judge Schiltz heard the testimony of many witnesses from Frana and its subcontractors. The business philosophy and integrity of witnesses from both Frana and its subcontractors came through in that testimony and were key elements to the successful result.

For more information about this case or other commercial litigation matters, contact Keith Broady at 612.336.9346 / kbroady@lommen.com. Keith is the President of Lommen Abdo and litigates commercial disputes and professional liability matters.  He also handles transactional matters for business clients.

 

* Nelson et al. v. Frana Companies et al., United States District Court for the District of Minnesota Case No. 13-CV-02219, Findings of Fact and Conclusions of Law filed March 30, 2017.