United States District Court, S.D. New York
May 24, 2004.
MASON TENDERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUTIY FUND, TRAINING PROGRAM FUND, NEW YORK STATE LABORERS EMPLOYERS CORPORATION AND EDUCATION TRUST FUND, NEW YORK LABORERS' HEALTH AND SAFETY TRUST FUND and BUILDING CONTRACTORS ASSOCIATION INDUSTRY ADVANCEMENT PROGRAM, and JOHN J. VIRGA, in his fiduciary capacity as Director, and ANTHONY SILVERI, as Business Manager of the MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, Plaintiffs, -against- CIRO RANDAZZO BUILDERS, INC. and CIRO RANDAZZO, Defendants
The opinion of the court was delivered by: JAMES FRANCIS, Magistrate Judge
REPORT AND RECOMMENDATION
This is an action brought pursuant to Sections 502 and 515 of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
29 U.S.C. § 1132 and 1145, and Section 301 of the Labor-Management
Relations Act of 1947 ("Taft-Hartley Act"), 29 U.S.C. § 185. The suit
was commenced by the Mason Tenders District Council Welfare Fund, Pension
Fund, Annuity Fund, Training Program Fund, New York State
Laborers-Employers Cooperation and Education Trust Fund, New York
Laborers' Health and Safety Trust Fund, Building Contractors Association
Industry Advancement Program, and John J. Virga in his capacity as
Director (collectively, the "Funds"), and by Anthony Silveri as Business Manager of the Mason Tenders
District Council of Greater New York (the "Union"). The plaintiffs seek
damages stemming from the failure of Giro Randazzo Builders ("Randazzo
Builders") to pay contributions to the plaintiffs and to permit an audit
of its books and records, as required under a collective bargaining
agreement between Randazzo Builders and the Union.*fn1
Following entry of a default judgment, the case was referred to me for
an inquest on damages, and a hearing was held on February 10, 2004.
Despite being afforded notice of the hearing, Randazzo Builders did not
appear. The following findings are therefore based on the evidence
presented at the hearing and on the information submitted by the
Randazzo Builders is a corporation that conducted business in New York
City at all relevant times. (Complaint ("Compl."), ¶ 11). Randazzo
Builders entered into a collective bargaining agreement (the "Labor
Contract") with the Union which, among other things, obligated Randazzo
Builders to pay fringe benefit contributions to the Funds based on work
performed for Randazzo Builders by Union members. (Compl., ¶ 11). The
Labor Contract also required Randazzo Builders to remit to the Union dues
checkoffs and Political Action Committee ("PAC") contributions that were based on
the work performed by Union members and were deducted from the wages of
those employees who authorized such deductions. (Compl., ¶ 11). In
furtherance of this program, the Labor Contract obligated Randazzo
Builders to make available its books and records for periodic audits by
the Funds. (Compl., ¶ 11).
Notwithstanding the Labor Contract, Randazzo Builders failed to pay
fringe benefit contributions to the Funds, as well as dues checkoffs and
PAC contributions to the Union, for the period April 1, 2001 through the
present. (Compl., ¶¶ 23-26, 46-49, 55-58). Randazzo Builders also
failed to permit the Funds to audit its books for the same period.
(Compl., ¶¶ 14-16).
The plaintiffs filed the instant action on April 23, 2003. When the
defendants failed to answer, the Honorable Richard M. Berman, U.S.D.J.,
entered a default judgment and referred the case to me for an inquest on
As this case arises under ERISA, the Court has jurisdiction pursuant to
29 U.S.C. § 1132 (e)(1) and (f), as well as federal question
jurisdiction under 28 U.S.C. § 1331. This Court also has jurisdiction
under Section 301 of the Taft-Hartley Act, 29 U.S.C. § 185, and under
28 U.S.C. § 1337, as this is a civil action arising under an act of
Congress regulating commerce. In addition, Randazzo Builders is subject
to personal jurisdiction in this Court since it was doing business in New
York at all relevant times. See New York Civil Practice Law and Rules ("CPLR") § 301.
All of the plaintiffs' factual allegations, except those relating to
damages, must be accepted as true where, as here, the defendant has
defaulted. See Transatlantic Marine Claims Agency, Inc. v. Ace
Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997); Cotton v.
Slone, 4 F.3d 176, 181 (2d Cir. 1993); Time Warner Cable of New
York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998). In
this case, the allegations of the Complaint establish ERISA violations
and breach of contract with respect to Randazzo Builders.
The Funds are employee benefit plans under ERISA,
29 U.S.C. § 1002(1), (2), (3) and 1132(d)(1) (Compl., ¶¶ 4-7), while Randazzo
Builders was an employer under the terms of that statute,
29 U.S.C. § 1002(5), 1145. (Compl., ¶ 11). Accordingly, Randazzo Builders'
obligations to the Funds under the Labor Contract are enforceable through
ERISA. 29 U.S.C. § 1132 (a)(3).
Randazzo Builders was required by the Labor Contract to pay fringe
benefit contributions to the Funds, and dues checkoffs and PAC
contributions to the Union. It failed to comply with this requirement for
the period April 1, 2001 through the present. Randazzo Builders also
failed to meet its obligation to permit an audit of its books and records
for the same period. Consequently, Randazzo Builders is liable to the
Funds under ERISA and for breach of contract and to the Union for breach
of contract. C. Damages
Because the plaintiffs have been unable to obtain an audit, they have
advanced a claim for unpaid contributions based on shop steward reports
for the period of April 1, 2001 to December 31, 2002. The Funds are
entitled to recover unpaid contributions as damages under the Labor
Contract and ERISA, 29 U.S.C. § 1132 (g)(2)(A), while the Union is
entitled to such damages under the Labor Contract.
The plaintiffs have presented evidence that Randazzo Builders owes an
outstanding balance of $180,434.98 in unpaid fringe benefit contributions
to the Funds. (Affidavit of Dominick Giammona dated Dec. 30, 2003
("Giammona Aff."), attached as Exh. C to Proposed Findings of Fact and
Conclusions of Law ("Proposed Findings"), 5 6). Pursuant to
29 U.S.C. § 1132 (g)(2)(B), the Funds are entitled to interest on this
deficiency at the rate prescribed by 26 U.S.C. § 6621. This comes to
$13,907.37 for the period through January 14, 2004. (Giammona Aff.,
¶ 7). In addition, the Funds are entitled to an additional award
equal to the amount of interest another $13,907.37 as
statutory damages. 29 U.S.C. § 1132(g)(2)(C)(i).
The plaintiffs also presented proof that Randazzo Builders failed to
pay $14,958.35 in required dues checkoffs to the Union. (Giammona Aff.,
¶ 9). With respect to this amount, the Union is entitled to interest
at the statutory rate in New York of nine percent, CPLR § 5001, which
equals $1,346.25 (Giammona Aff., ¶ 10).*fn2 Randazzo Builders also owes the Union $1,359.85 in unpaid
PAC contributions together with $156.75 in interest on that amount.
(Giammona Aff., ¶¶ 11-12).
In total, then, the plaintiffs are entitled to an award of $226,070.92
for unpaid contributions, interest, and statutory damages.
D. Attorneys' Fees and Costs
The Labor Contract provides that "[i]n the event that formal
proceedings are instituted . . . to collect delinquent
contributions . . . the Employer shall pay . . . reasonable attorneys'
fees and costs of the action." (Labor Contract, attached as Exh. A to
Proposed Findings, Art. VI, § 16(f)). ERISA also mandates an award
of "reasonable attorney's fees and costs of the action."
29 U.S.C. § 1132(g)(2)(D).
Here, the plaintiffs seek a total of $8,137.00 in attorneys' fees. This
application is based on 6.3 hours of work by a partner at the rate of
$225.00 per hour, 35.1 hours of work by two associates at $160.00 per
hour, 5.9 hours of work by another associate at $125.00 per hour, and 6.1
hours of work by three paralegals at $60.00 per hour. (Affidavit of
Michael J. Vollbrecht dated Jan. 12, 2004; Affidavit of Randall M.
Elfenbein dated Jan. 12, 2004, Affidavit of Mitchell S. Adler dated Jan.
12, 2004; Affidavit of Marcos Chaljub dated Jan. 12, 2004, all attached
as Exh. D to Proposed Findings). These requests were fully documented with contemporaneous time records. The time expended was
reasonable, and the rates requested are commensurate with those generally
charged for similar work in this district. Therefore, the request for
fees should be granted in full.
The plaintiffs also seek $190.00 in costs. This request is reasonable,
as $150.00 of this amount is attributable to the filing fee and $40.00 to
service of the Complaint. (Giammona Aff., ¶ 13). Accordingly, $190.00
should be awarded in costs.
E. Order to Permit Audit and Post a Bond
The Labor Contract provides that "[t]he books and records of [Randazzo
Builders] shall be made available at all reasonable times for inspection
and audit by the accountants and other representatives of the [Funds]."
(Labor Contract, Art. VI, § 16(a)). In this case, Randazzo Builders
failed to cooperate in permitting the necessary audit. (Compl., ¶¶ 14,
15). While the entry of judgment in this case holds Randazzo Builders
liable for unpaid contributions from April 1, 2001 to December 31, 2002,
the total amount of Randazzo Builders' liability is unknown, since it has
not permitted an audit of its records up to the present. This Court
should therefore issue an order directing Randazzo Builders to permit and
cooperate in an audit of its books and records for any period to the date
on which Randazzo Builders' obligations under the Labor Contract
Finally, the plaintiffs ask that Randazzo Builders be ordered to post a
bond to guarantee future contributions. The Labor Contract provides that
if any employer is found to have been substantially delinquent in payments, it must post a bond ranging
between $5,000 and $15,000 depending upon the number of employees. (Labor
Contract, Art. VI, § 13). The employer is considered substantially
delinquent if it has failed to pay ten percent or more of the
contributions owed. (Labor Contract, Art. VI, § 13). The plaintiffs
have not, however, submitted any proof of either the relative magnitude
of Randazzo Builders' delinquency or the number of workers that it
employed. Therefore, the request for an order directing the posting of a
bond should be denied.
For the reasons set forth above, I recommend that judgment be entered
against Randazzo Builders and in favor of the plaintiffs in the amount of
$226,070.92 for unpaid contributions, interest, and statutory damages,
$8,137.00 for attorneys' fees, and $190.00 for costs, for a total of
$234,397.92. The plaintiffs are entitled to post judgment interest under
28 U.S.C. § 1961 on all sums awarded. Finally, I recommend that this
Court issue an order directing Randazzo Builders to permit and cooperate
in an audit of its books and records for any period up to the date on
which Randazzo Builders' obligations under the Labor Contract terminate.
Pursuant to 28 U.S.C. § 636 (b)(1) and Rules 72, 6(a), and 6(e)
of the Federal Rules of Civil Procedure, the parties shall have ten (10)
days from this date to file written objections to this Report and
Recommendation. Such objections shall be filed with the Clerk of the
Court, with extra copies delivered to the chambers of the Honorable
Richard M. Berman, Room 201, 40 Foley Square, New York, N.Y. 10007, and to the chambers of the undersigned, Room 1960,
500 Pearl Street, New York, New York 10007. Failure to file timely
objections will preclude appellate review.