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MADONNA v. TUXEDO ENTERPRISES

August 22, 1997

THEODORE KING and ANIELLO MADONNA, as Trustees of Local 282 International Bortherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation/Sick Leave Trust Funds, Plaintiffs, against TUXEDO ENTERPRISES INC. and MAYRICH CONSTRUCTION CORP, Defendant.


The opinion of the court was delivered by: NICKERSON

 NICKERSON, District Judge:

 Plaintiffs, trustees of various trust funds for Local 282 of the International Brotherhood of Teamsters, brought this action against defendants Tuxedo Enterprises, Inc. (Tuxedo) and Mayrich Construction Corporation (Mayrich) to recover unpaid employee fringe benefit contributions. This court has jurisdiction pursuant to the Employee Retirement Income Security Act of 1974, see 29 U.S.C. §§ 1132 and 1145, the Labor Management Relations Act of 1947, see 29 U.S.C. § 185, and 28 U.S.C. § 1367.

 In an Order dated August 13, 1996, the court struck defendant Tuxedo's answer and directed entry of default against it. On October 15, 1996, judgment was entered against Tuxedo in the amount of $ 40,367.82, representing the amount outstanding as well as interest and attorneys' fees.

 Plaintiffs now move for summary judgment against defendant Mayrich.

 I.

 The following relevant facts are undisputed.

 On December 16, 1993, Tuxedo entered into a letter agreement with plaintiffs for payment of $ 73,038.71 in employee fringe benefit contributions (the Agreement).

 The Agreement provided that Tuxedo make an initial payment of $ 17,000, another payment of $ 21,500, and then ten equal monthly installments of $ 3,453.87 each. Payment of the monthly installments was to begin on February 20, 1994.

 Tuxedo promised in the Agreement to execute as security an assignment of accounts receivable from Mayrich, "together with appropriate security interests, UCC-1s." Tuxedo was to make payments to plaintiffs by joint check with Mayrich, or in the alternative by its own certified checks or money orders.

 On December 20, 1993 Tuxedo executed a UCC-1 financing statement indicating that plaintiffs had a security interest in Tuxedo's Mayrich account. The UCC-1 was filed and recorded in Bergen County, New Jersey on December 28, 1993 and with the New Jersey Department of State on January 7, 1994.

 Tuxedo made the $ 17,000 and the $ 21,000 payments as required, but failed to begin making the monthly payments provided for in the Agreement. Therefore, on March 11, 1994 plaintiffs notified Mayrich by letter that the Tuxedo account had been assigned to plaintiffs by Tuxedo and that all future payments should be made directly to them. The letter specified which account had been assigned and had attached a copy of the UCC-1 and notice of assignment.

 On March 15, 1994, following a telephone conversation with individuals at Mayrich, plaintiffs sent another letter to Mayrich, this time including copies of the UCC-1 and of the Agreement. The letter demanded again that Mayrich make all future payments directly to plaintiffs.

 Tuxedo then failed to make the March, April and May payments. Accordingly, after each missed payment, plaintiffs sent, return receipt requested, notification to Mayrich, advising it of the assignment and demanding payment. The notification dated May 31, 1994 summarized all the previous notices sent, requested a list of amounts due and owing by Mayrich to Tuxedo, and informed Mayrich that if it did not make the payment demanded within seven days, plaintiffs would commence suit.

 Around this time, Tuxedo paid plaintiffs four $ 3,453 installments for the months February through May. But Tuxedo did not pay the June installment. On July 12, 1994, plaintiffs once again notified Mayrich by letter about the assignment.

 On July 22, 1994 plaintiffs sent Mayrich an Information Subpoena with Restraining Notice. On August 11, 1994 plaintiffs advised Mayrich of its failure to respond to the Information Subpoena. Plaintiffs say that a few days later an attorney for Mayrich contacted plaintiffs and informed them that Mayrich intended to ...


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