SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Date of Report (Date of earliest event reported) December 7, 1995.
TENNEY ENGINEERING, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-4142 22-1323920
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1090 Springfield Road
Union, New Jersey 07083
(Address of Principal
Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (908) 686-7870
<PAGE>
Item 5. Other Events:
Tenney Engineering, Inc. (the "Company") formerly had
employees who were members of a union and the Company contributed
to a multi-employer pension plan for such employees in accordance
with a collective bargaining agreement based on monthly hours
worked. Due to the cessation of manufacturing operations at the
Company's Union, New Jersey manufacturing plant, the Company ceased
being a participant in the multi-employer pension plan in February
1993. Under the Multi-Employer Pension Plan Amendments Act of
1980, the Company may, under certain circumstances, become subject
to liabilities in excess of contributions made under its collective
bargaining agreement. A liability may be incurred upon the
termination, withdrawal or partial withdrawal from an underfunded
plan which would be based upon a formula specified by the plan.
During the fourth quarter 1993, the Company received a letter
from the Trustees of the Sheet Metal Workers National Pension Fund
("Plan Trustees") alleging $529,743.28, principal, due as
withdrawal liability. Payments may be made in installments and the
Plan Trustees demanded eighteen (18) quarterly payments of
$33,879.28 and a final payment of $32,797.59, with the initial
payment to be made by January 19, 1994. The Company made a
provision for this liability in its 1993 Consolidated Financial
Statements. The Plan Trustees' demand also stated that the amount
due was subject to adjustment for performance of the Plan during
1992.
The Company did not make the January 19, 1994 payment.
In December 1994 the Company received from the Plan Trustees
a modified calculation reducing the withdrawal liability to
$502,665 principal amount. The Plan Trustees demanded payment of
sixteen (16) quarterly installments of $33,879.28 commencing
January 19, 1994 and a seventeenth payment of $29,151.09.
On June 5, 1995 the Company received a letter from the Plan
Trustees demanding payment of the first six installments totalling
$203,275.68 within 60 days from the receipt of the notice, an
additional ten (10) quarterly installment payments of $33,879.28,
and a final payment of $29,151.09. The Company did not make the
payment demanded in the time period specified. The Company,
through its counsel, has been negotiating to obtain more favorable
installment payment terms.
On December 7, 1995 the Company was served with a Summons and
Complaint in an action filed in the U.S. District Court for the
Eastern District of Virginia, Alexandria Division (Case Number 95-
1609A) by the Plan Trustees ("Plaintiff"). A copy of the Complaint
is filed as Exhibit 99 to this report and reference is made to the
Complaint itself for the terms thereof and the relief demanded by
the Plaintiff.
Qualified by the provisions of the Complaint the Plaintiff is
(a) demanding payment of past-due installments of withdrawal
liability (eight installments aggregating $271,034.24) plus
interest on delinquent quarterly withdrawal payments plus statutory
liquidated damages plus attorneys' fees of the action, (b)
injunctive relief requiring payment of future quarterly withdrawal
installments and (c) immediate payment of the entire amount of the
withdrawal liability plus accrued interest plus statutory
liquidated damages plus attorneys' fees.
The Company has not yet responded to the Complaint. It has
engaged the services of counsel to advise it and will attempt to
negotiate with the Plaintiff the amount of the liability and an
installment payment schedule.
The Company is not in a position to make immediate payment of
the entire amount which may be due to the Plan Trustees and if a
judgment is entered against it for the amount demanded or if the
Company is unable to negotiate payment terms more favorable to it
than those demanded, it may have to seek relief from creditors
under the Federal Bankruptcy laws.
Item 7. Financial Statements and Exhibits:
(c) Exhibits
(99) Complaint in action in the United States District
Court for the Eastern District of Virginia, Alexandria Division
entitled The Board of Trustees Sheet Metal Workers National Pension
Fund, Plaintiff, v. Tenney Engineering, Inc., Defendant, Civil
Action No. 95-1609A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
TENNEY ENGINEERING, INC.
(Registrant)
By: s/Martin Pelman
Name: Martin Pelman
Title: Vice President, Finance/
Treasurer
(Principal Financial
Officer)
Dated: December 14, 1995
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
The Board of Trustees,
SHEET METAL WORKERS' NATIONAL
PENSION FUND,
Edward F. Carlough Plaza
601 North Fairfax Street
Alexandria, Virginia 22314
Civil Action No. 95-1609-A
Plaintiff,
v. COMPLAINT
TENNEY ENGINEERING, INC.,
A Corporation
1090 Springfield Road
Union, New Jersey 07083
Defendant.
Plaintiff, the Board of Trustees ("Trustees") of the Sheet
Metal Workers' National Pension Fund, ("Fund"), through their
undersigned counsel, alleges as follows:
Introduction
1. This action arises under the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended by the Multiemployer
Pension Plan Amendments Act of 1980, 29 U.S.C 1001-1461 (1982).
Plaintiff seeks a money judgment awarding delinquent quarterly
withdrawal liability payments and damages and interest thereon,
injunctive relief, and a judgment for immediate full payment of the
withdrawal liability as a result of the withdrawal by the
defendant, Tenney Engineering, Inc. ("Tenney" or "Company"), from
the Fund.
Parties
2. Plaintiff Trustees are "fiduciaries" with respect to the
Fund as defined in 3(21)(A) of ERISA, 29 U.S.C. 1002(21)(A), and
are collectively the "plan sponsor" within the meaning of
3(16)(B)(iii) and 4001(a)(10)(A) of ERISA, 29 U.S.C.
1002(16)(B)(iii) and 1301(a)(10)(A). The Plaintiff is empowered
to bring this action on behalf of the Fund pursuant to 4301(a)(1)
and (b) and 502(a)(3) of ERISA, 29 U.S.C. 1451(a)(1) and (b) and
1132(a)(3). The Fund is a jointly administered trust fund created
and maintained pursuant to 302(c) of the Labor Management
Relations Act, 29 U.S.C. 186(c), a "multiemployer plan" as defined
in 3(37) and 4001(a)(3) of ERISA, 29 U.S.C. 1002(37) and
1301(a)(3), and an "employee benefit pension plan" as defined in
3(2) of ERISA, 29 U.S.C. 1002(2).
3. Defendant Tenney is an employer within the meaning of
3(5) of ERISA, 29 U.S.C. 1002(5), and is engaged in commerce, in
an industry affecting commerce, within the meanings of 3(11) and
(12) of ERISA, 29 U.S.C. 1002(11) and (12). Defendant employed
employees up through and including February 16, 1993, who were
represented for the purposes of collective bargaining by Sheet
Metal Workers' International Association Local Union No. 28, a
labor organization representing employees in an industry affecting
interstate commerce. Defendant's principal place of business is
reflected in the caption of this case.
4. Defendant was a party to a collective bargaining
agreement with Sheet Metal Workers' International Association Local
Union No. 28, was a participating employer in the Fund under the
terms of the collective bargaining agreement, and was obligated to
and did make contributions to the Fund on behalf of its employees
covered under the collective bargaining agreement.
Jurisdiction and Venue
5. Jurisdiction is conferred upon this Court by 4301(c)
and 502(e)(1) and (f) of ERISA, 29 U.S.C. 1451(c) and 1132(e)(1)
and (f). Venue is conferred upon this Court by 4301(d) and
502(e)(2), 29 U.S.C. 1451(d) and 1132(e)(2). Where an action is
brought under 4301 and 502 of ERISA, 29 U.S.C. 1451 and 1132,
in a district court of the United States, it may be brought, at
plaintiff's discretion, in the district where the plan is
administered, where the breach took place, or where a defendant
resides or may be found, and process may be served in any other
district where a defendant resides or may be found. The Fund, on
whose behalf Plaintiff brings this action, is administered in this
district from its principal place of business in Alexandria,
Virginia. Thus, jurisdiction and venue are properly grounded with
this Court.
Factual Background and Allegations
6. On or about February 16, 1993, Defendant permanently
ceased to have an obligation to contribute to the Fund and effected
a complete withdrawal from the Fund within the meaning of 4203(a)
of ERISA, 29 U.S.C. 1383(a).
7. By reasons of the premises aforesaid and 4201 of ERISA,
29 U.S.C. 1381, the Defendant is indebted to the Fund for the
"withdrawal liability" as determined by methods set forth in 4211
of ERISA, 29 U.S.C. 1391.
8. On or about November 19, 1993, pursuant to 4202(2) and
4219(b)(1) of ERISA, 29 U.S.C. 1382(2) and 1399(b)(1), the Fund
sent a "Demand for Payment of Withdrawal Liability" to counsel for
Tenney, advising that the Fund had determined that the Company had
effected a complete withdrawal from the Fund as of February 16,
1993, and requesting Tenney to pay a withdrawal liability of
$529,743.28. The letter also notified Tenney that the statute
requires payment of quarterly installments to begin within 60 days
of receipt of the letter, notwithstanding any request for review
and that its first quarterly payment, in the amount of $33,879.28,
was due on January 19, 1994.
9. The Fund subsequently revised the total amount of
Tenney's withdrawal liability assessment to $502,665.64 and
notified the Company, through its counsel, by letter dated December
5, 1994.
10. The Fund made the assessment of withdrawal liability
pursuant to 4201 et seq. of ERISA, 29 U.S.C. 1381 et seq.
11. On or about February 17, 1994, the Defendant requested
a review of the Trustees' demand for withdrawal liability pursuant
to 4219(b)(2)(A) of ERISA, 29 U.S.C. 1399(b)(2)(A).
12. After careful consideration of the issues raised,
pursuant to 4219(b)(2)(B) of ERISA, 29 U.S.C. 1399(b)(2)(B), the
Trustees responded to each issue raised by the Defendant by letter
dated July 21, 1994 to counsel for the Defendant. The Trustees did
not revise or rescind the demand for withdrawal liability as stated
in the November 19, 1993 demand letter.
13. By letter dated May 19, 1994, Defendant sent a Notice of
Initiation of Arbitration to the Fund. On or about August 3, 1994,
counsel for Tenney submitted this matter for arbitration to the
American Arbitration Association pursuant to 4221(a) of ERISA, 29
U.S.C. 1401(a). However, by letter dated August 24, 1994,
Tenney's counsel notified the American Arbitration Association that
the company was withdrawing its request for arbitration.
COUNT ONE
Failure to Make Timely Quarterly Withdrawal Liability Payments
14. Plaintiff realleges Paragraphs 1-13 and incorporates
those paragraphs herein by reference.
15. By letter dated February 3, 1994, the Fund notified
Tenney, through its counsel, that failure to commence making
quarterly withdrawal liability payments within 10 days from the
date of the letter would result in the Fund pursuing Tenney as a
defaulting employer.
16. By letter dated March 16, 1994, the Fund notified Tenney,
through its counsel, that it was delinquent in making its first
withdrawal liability payment of $33,879.29 to the Fund, due January
19, 1994, and that failure to correct the delinquency within sixty
(60) days of receipt of the letter would constitute a default. The
letter further informed the Defendant that if it defaulted, the
Fund can bring suit to collect the full amount of the withdrawal
liability due.
17. By letter dated May 11, 1994, the Fund notified Tenney
through its counsel, that it was delinquent in its quarterly
withdrawal liability payments and therefore subject to suit.
18. By letter dated July 21, 1994, the Fund notified Tenney,
through its counsel, that it was delinquent to the Fund for three
quarterly withdrawal liability payments and therefore subject to
suit for the delinquent withdrawal liability payments as well as
the full amount of withdrawal liability due, notwithstanding its
then-pending request to the Fund for arbitration.
19. By letter dated November 7, 1994, the Fund notified
Tenney, through its counsel, that four quarterly withdrawal
liability payments, totalling $135,517.12, were delinquent, and
that the Fund would file suit should Tenney fail to make the
required payments.
20. By letter dated May 31, 1995, the Fund notified Tenney,
through its counsel, that it was delinquent to the Fund for its
first through sixth quarterly withdrawal liability payments, and
that failure to correct the delinquency within sixty (60) days of
receipt of the Fund's letter would constitute a default. The
letter further informed the Defendant that if it defaulted, the
Fund can bring suit to collect the full amount of the withdrawal
liability due.
21. Section 4219(c)(2) of ERISA, 29 U.S.C. 1399(c)(2),
requires withdrawal liability payments to be:
payable in accordance with the schedule set
forth by the plan sponsor under subsection
(b)(1) beginning no later than 60 days after
the date of the demand notwithstanding any
request for review or appeal of determinations
of the amount of such liability or of the
schedule.
22. Section 4301(b) of ERISA, 29 U.S.C. 1451(b), provides
that in any action under 4301(b) of ERISA, 29 U.S.C. 1451(b), to
compel an employer to pay withdrawal liability, any failure of the
employer to make any withdrawal liability payment within the time
prescribed shall be treated in the same manner as a delinquent
contribution (within the meaning of 515 of ERISA, 29 U.S.C.
1145).
23. Despite the foregoing, Defendant has failed to pay any
of the required quarterly withdrawal liability payments towards
liquidation of its withdrawal liability.
24. As of the date of the filing of this Complaint, Defendant
is in arrears for quarterly withdrawal liability payments during
the period of January 1994 through October 1995. The total amount
in arrears is $271,034.24.
WHEREFORE, Plaintiff respectfully requests the following
relief on Count One:
(a) Entry of judgment requiring Defendant to pay Plaintiff
all unpaid quarterly withdrawal liability payments due at the time
of the judgment;
(b) Entry of judgment requiring Defendant to pay interest to
Plaintiff on the delinquent quarterly withdrawal liability payments
not paid when due at the rates prescribed under 6621 of the
Internal Revenue Code of 1986, as amended, 26 U.S.C. 6621 and/or
the rates pursuant to 4219(c)(5) and (6), 29 U.S.C. 1399(c)(5)
and (6), at the time of judgment;
(c) Entry of judgment requiring Defendant to pay to Plaintiff
liquidated damages, pursuant to 502(g)(2) and 4301(b) of ERISA,
29 U.S.C. 1132(g)(2) and 1451(b), equal to the greater of:
(i) the accrued interest on the delinquent quarterly
withdrawal liability payments not paid when due at the time of
judgment, or
(ii) an amount equal to twenty percent (20%) of the
amount of delinquent quarterly withdrawal payments not paid when
due at the time of judgment;
(d) Entry of judgment requiring the Defendant to pay
Plaintiff's reasonable attorneys' fees and costs of this action as
permitted by 502(g) and 4301(e) of ERISA, as amended, 29 U.S.C.
1132(g) and 1451(e); and
(e) Such other relief as this Court may deem proper.
COUNT TWO
Injunctive Relief
25. Plaintiff realleges Paragraphs 1-24 and incorporates
those paragraphs herein by reference.
26. The failure of the Defendant to make the quarterly
withdrawal liability payments in accordance with 4219(c)(2) of
ERISA, 29 U.S.C. 1399(c)(2), has caused the Fund to sustain loss
of investment income and has further caused the Fund to incur
administrative and legal expenses.
27. The Defendant has failed to discharge its statutory
obligations and has caused the Fund to suffer immediate,
continuing, and irreparable injury, and Plaintiff is without an
adequate remedy at law.
WHEREFORE, Plaintiff respectfully requests the following
relief on Count Two:
(a) Entry of injunctive relief requiring the defendant to
make timely payment of all future quarterly withdrawal liability
payments; and
(b) Such other relief as this Court may deem proper.
COUNT THREE
Defendant is in Default
Under 4219(c)(5) of ERISA, 29 U.S.C. 1399(c)(5)
28. Plaintiff realleges Paragraphs 1-27 and incorporates
those paragraphs herein by reference.
29. Defendant is in default under 4219(c)(5) of ERISA, 29
U.S.C. 1399(c)(5). Section 4219(c)(5) provides that a default of
payment of withdrawal liability occurs upon an employer's failure
to make any payment when due and not cured by the employer within
sixty (60) days after the employer receives written notification
from the plan sponsor of such failure.
30. The Fund forwarded the requisite Notice of Default to the
Defendant advising that unless its delinquency was cured within
sixty (60) days, the entire amount of withdrawal liability would
be accelerated and due and payable pursuant to 4219(c)(5) of
ERISA, 29 U.S.C. 1399(c)(5).
31. To date, no curing payment has been received from the
Defendant, and the sixty (60) day period for cure has elapsed.
32. Since the sixty (60) day period elapsed prior to the date
of this Complaint and Defendant failed to cure the default,
Plaintiff seeks Judgment for the entire amount of outstanding
withdrawal liability due under its demand, plus accrued interest
pursuant to 4219(c)(5) of ERISA, 29 U.S.C. 1399(c)(5)
33. A copy of this complaint will be served upon the Pension
Benefit Guaranty Corporation by certified mail as required by
4301(g) of ERISA, 29 U.S.C. 1451(g).
WHEREFORE, Plaintiff respectfully requests the following
relief on Count Three:
(a) Entry of judgment requiring Defendant to make immediate
payment of the entire amount of the assessed withdrawal liability
to Plaintiff, pursuant to 4219(c)(5) of ERISA, 29 U.S.C.
1399(c)(5), less any quarterly payments received from Defendant;
(b) Entry of judgment requiring Defendant to pay to Plaintiff
interest on the delinquent quarterly withdrawal liability payments
not paid when due at rates prescribed under 6621 of the Internal
Revenue Code of 1986, as amended, 26 U.S.C. 6621 and/or the rates
pursuant to 4219(c)(5) and (6), 29 U.S.C. 1399(c)(5) and (6);
(c) Entry of judgment requiring Defendant to pay to Plaintiff
liquidated damages, pursuant to 502(g)(2) and 4301(b) of ERISA,
29 U.S.C. 1132(g)(2) and 1451(b), equal to the greater of:
(i) the accrued interest on the delinquent quarterly
withdrawal liability payments not paid when due at the time of
judgment, or
(ii) an amount equal to twenty percent (20%) of the
amount of delinquent quarterly withdrawal liability payments not
paid when due at the time of judgment;
(d) Entry of judgment requiring Defendant to pay the
Plaintiff's reasonable attorneys' fees and costs of this action as
permitted by 502(g) and 4301(e) of ERISA, 29 U.S.C. 1132(g) and
1451(e); and
(e) Such other relief as this Court deems proper.
Respectfully submitted,
s/Angela M. Kyper
Angela M. Kyper, Bar No. 37402
Robert M. Wilansky, D.C. Bar No. 319343
Janet A. Penz, D.C. Bar No. 421962
Office of General Counsel
Sheet Metal Workers' National Pension Fund
601 N. Fairfax Street, Suite 425
Alexandria, Virginia 22314
(703) 739-7000
Dated November 21, 1995 Counsel for Plaintiff
