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July 9, 2004.

THEODORE KING and GARY LA BARBERA, as Trustees and Fiduciaries of the Local 282 Pension Trust Fund, the Local 282 Welfare Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund and the Local 282 Vacation and Sick Leave Trust Fund, Plaintiffs,

The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge


This motion to vacate the default judgment arises out of a claim by plaintiffs, Theodore King and Gary LaBarbera, in their capacity as trustees for various trust funds of Local 282, International Brotherhood of Teamsters ("Local 282"), alleging that defendants Galluzzo Equipment & Excavating ("Galluzzo Equipment"), BTS Construction Corp. ("BTS"), and Dominick Galluzzo ("Galluzzo"), failed to make required contributions to the Local 282 trusts. Plaintiffs brought this claim pursuant to the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. ("ERISA"), and Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 ("LMRA"). A default judgment was entered against defendants on May 9, 2003. Almost one year later, on March 24, 2004, defendants brought this motion to vacate the default judgment. For the reasons set forth below, this motion is denied. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On or about September 9, 1998, Galluzzo Equipment executed a New York City Heavy Construction & Excavating Contract with Local 282 ("1998 contract"), which was to be in effect through June 20, 1999. The 1998 contract was later extended through June 30, 2002. Around the time that the 1998 contract was extended, Galluzzo Equipment was provided with a copy of a contract between it and Local 282 for the period 1999-2002 ("1999 contract"). According to defendants, the 1999 contract was not signed by Galluzzo or by any representative of Galluzzo Equipment or BTS. On or about March 31, 2000, Local 282 commenced an ERISA action against defendants for unpaid contributions, King, et al. v. Galluzzo Equipment & Excavating, Inc., No. CV 00 1889 ("Prior Action"). Galluzzo Equipment failed to answer the complaint or appear in the Prior Action; plaintiffs moved for a default judgment, which was entered against Galluzzo Equipment on June 29, 2000. A satisfaction of judgment in the Prior Action was filed by the plaintiffs on April 18, 2001.

  Plaintiffs filed this action on October 18, 2000, alleging that Galluzzo Equipment and its controlling officer, Galluzzo, engaged in a scheme in which an alter-ego corporation (BTS) was used to employ and pay a number of employees covered by the 1998 Contract. The complaint further alleges that, as a result of this scheme, the Remittance Reports submitted to the Funds for each month from September 1998 through July 2000 misrepresented the number of hours worked by employees covered by the 1998 Contract. According to plaintiffs, as a result of the misrepresentations, the contributions to the Funds for these months were substantially lower than what was actually owed.

  Defendants were originally represented in this action by Herrick Feinstein, LLP ("Herrick Feinstein"). Defendants filed an answer and later moved for partial summary judgment on the grounds of insufficient service of process and res judicata. Their motion was denied in its entirety. See King v. Galluzzo Equipment & Excavating, Inc., 2001 WL 1402996, at *1 (E.D.N.Y. Nov. 8, 2001). According to plaintiffs, following the denial of summary judgment, plaintiffs attempted to proceed with discovery but defendants refused to respond to discovery requests.

  When defendants fell behind in payment of their legal bills, Herrick Feinstein moved to be relieved as counsel and their motion was granted on July 9, 2002. In granting that motion, this Court warned that the corporate defendants had to retain new counsel by August 6, 2002, that Galluzzo would be deemed to be appearing pro se if he did not retain new counsel, and that all defendants risked default judgment. Defendants did not retain new counsel did nor did they request an extension of time to do so. Plaintiffs subsequently filed a default application with the Court on April 3, 2003, copies of which were served on all defendants who had not even by then retained new counsel. By letter dated April 16, 2003, copies of which were also sent to defendants, plaintiffs confirmed with the court that a hearing on the default application would take place on May 9, 2003. Defendants did not attend the default hearing and on May 9, 2003, a default judgment was entered against them, jointly and severally, in the amount of $338,711.80. According to plaintiffs, this amount was based on an estimated audit and on the trust agreements, and included interest, liquidated damages, audit fees, and attorney's fees and costs. All defendants were served with the default judgment on September 12, 2003.

  According to plaintiffs, defendants failed to respond to plaintiffs' post-judgment discovery requests until plaintiffs sought judicial intervention in a New Jersey state court. Defendants eventually retained new counsel and filed this motion to vacate the default judgment on March 24, 2004.


  I. Legal Standard

  Rule 60(b) of the Federal Rules of Civil Procedure provides, in pertinent part, that "[o]n motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment . . . [because of] mistake, inadvertence, surprise or excusable neglect." In the Second Circuit, courts evaluate whether to grant such motions by weighing three criteria: "(1) whether the default was willful; (2) whether defendant has a meritorious defense; and (3) the level of prejudice that may occur to the non-defaulting party if relief is granted." Davis v. Musler, 713 F.2d 907, 915 (2d Cir. 1983). "An application for relief under 60(b) `shall be made within a reasonable time . . . not more than one year after the judgment . . . was entered or taken.'" Sasso v. M. Fine Lumber Co., Inc., 144 F.R.D. 185, 188 (E.D.N.Y. 1992) (quoting F.R.C.P. 60(b)). "Proper application of the rule strikes a balance between serving the ends of justice and preserving the finality of judgments." Id. (quoting House v. Sec'y of Health & Human Servs., 688 F.2d 7, 9 (2d Cir. 1982)).

  A motion under Rule 60(b) is addressed to the sound discretion of the trial court. Velez v. Vassallo, 203 F. Supp.2d 312, 333 (S.D.N.Y. 2002). On a motion to set aside a default judgment, the defaulting party bears the burden of proof, see In re Martin-Trigona, 763 F.2d 503, 505 n. 2 (2d Cir. 1985), but doubts should be resolved in favor of the party seeking relief. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). Because Rule 60(b) allows extraordinary relief, it should be invoked only if the moving party meets its burden of demonstrating "exceptional circumstances." Paddington Partners v. Bouchard, 34 F.3d 1132, 1142 (2d Cir. 1994); see also Artmatic USA Cosmetics v. Maybelline Co., 906 F. Supp. 850, 853 (E.D.N.Y. 1995) (Glasser, J.).

  II. Willfulness

  Defendants argue that their default was not willful but was a result of their inability to retain new counsel and Galluzzo's mistaken belief that defendants were unable to oppose the application for a default judgment. Plaintiffs, however, point to four facts that demonstrate that defendants were acting willfully and with knowledge of the default and its consequences: (1) this Court's order dated July 9, 2002 requiring the corporate defendants to obtain counsel by August 6, 2002 or risk default; (2) plaintiffs' default application of April 3, 2003, copies of which were sent to defendants; (3) defendants' absence at the default hearing; and (4) defendants' failure to respond to plaintiffs' pre- and post-judgment discovery requests. "The boundary of willfulness lies somewhere between a case involving a negligent filing error, which is normally considered an excusable failure to respond, and a deliberate decision to default, which is generally not excusable." Int'l Painters and Allied Trades Union and Indus. Pension Fund v. H.W. Ellis Painting Co., Inc., 288 F. Supp.2d 22, 26 (D.D.C. 2003) (citing Gucci Am., Inc. v. Gold Ctr. Jewelry, 158 F.3d 631, 634 (2d Cir. 1998), cert. denied, 525 U.S. 1106 (1998)); see also Am. Alliance Ins. Co., Ltd. v. Eagle Ins. Co., 92 F.3d 57 (2d Cir. 1996) (filing mistake by clerk for defendant's in-house counsel not willful but weighs somewhat against granting relief). Defendants' actions here bespeak a deliberate decision to default, rather than excusable neglect.

  Defendants contend first that Galluzzo's lack of sophistication resulted in their failure to respond to plaintiffs' default application. Lack of sophistication, however, is no excuse for a defendants' default. Original Appalachian Artworks, Inc. v. Yuil Int'l Trading Corp., 105 F.R.D. 113, 116 (S.D.N.Y. 1985) ("the lack of legal sophistication on the part of a corporation and its principal simply cannot form the basis of a claim of excusable neglect or fraud for purposes of Rule 60(b)"); ILGWU Nat'l Retirement Fund v. Empire State Mills Corp., 696 F. Supp. 885, 887-88 (S.D.N.Y. 1988) (same). Moreover, defendants' claim of ignorance about the consequences of a default judgment is belied by the fact that the Prior Action also ended with the entry of a default judgment against defendants. In addition, Galluzzo had the opportunity in this action to consult with highly ...

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