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MASON TENDERS DISTRICT COUNCIL v. I.M.I. CONSTRUCTION CORP.

July 30, 2004.

MASON TENDERS DISTRICT COUNCIL WELFARE FUND, et al., Plaintiffs,
v.
I.M.I. CONSTRUCTION CORP., Defendant.



The opinion of the court was delivered by: ANDREW PECK, Magistrate Judge

REPORT AND RECOMMENDATION

To the Honorable Louis L. Stanton, United States District Judge:

On June 22, 2004, Judge Stanton granted judgment for plaintiffs on default and referred the matter to me for an inquest on damages. (Dkt. No. 19: Order for Judgment.)*fn1 I directed plaintiffs to provide proof of its inquest damages by July 12, 2004, which they did, and defendant to file opposition papers by July 19, 2004, which it did not. (See Dkt. No. 20: 6/29/04 Order; Dkt. No. 22: Plfs.' Inquest Br.) On my brief review of plaintiffs' inquest damage papers, I advised plaintiffs to respond to four issues, which plaintiffs did. (See Dkt. No. 23: 7/13/04 Order; Dkt. Nos. 24-25: Vollbrecht Affs.)

  FACTS

  "Where, as here, `the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp.2d 622, 623 (S.D.N.Y. 1998) (Carter, D.J. & Peck, M.J.) (quoting 10A C. Wright, A. Miller & M. Kane, Federal Practice & Procedure: Civil 3d § 2688 at 58-59 (3d ed. 1998)).

  The complaint in this case alleges that plaintiffs, inter alia, "are jointly-administered, multi-employer, labor-management trust funds" organized under the labor laws and considered employee benefit plans within the meaning of ERISA. (Dkt. No. 1: Compl. ¶¶ 4-10.) Defendant I.M.I. Construction Corp. was obligated to submit monetary contributions including dues checkoffs, and make reports, to plaintiffs. (Compl. ¶ 11.)

  The complaint alleges that defendant I.M.I. owes plaintiffs fringe benefit contributions (Compl. ¶¶ 14-17), plus statutory damages, interest and attorney fees (Compl. ¶¶ 26-27); dues checkoff amounts (Compl. ¶¶ 43-46) and NYLPAC deductions (Compl. ¶¶ 52-55). The complaint seeks damages of "at least $73,458.55" for fringe benefit contributions plus the amount found on audit (Compl. ¶¶ 14-15, 17), "at least $5,721.50" plus the amount found on audit for dues checkoffs (Compl. ¶¶ 45-46), and "at least $572.15" plus the amount found on audit for NYLPAC contributions (Compl. ¶¶ 53-55). The complaint also seeks an audit and injunctive relief. (Compl. ¶¶ 37-38, 61-66, 72-83.)

  An audit was performed after the complaint was filed. (Vollbrecht 7/7/04 Aff. ¶ 11.) The audit report shows unpaid fringe benefit contributions of $450,156.97. (Vollbrecht 7/7/04 Aff. ¶ 11 & Exs. E-F.)*fn2

  Plaintiffs also seek $34,372.85 for unremitted dues checkoffs, and $3,338.52 for unremitted NYCPAC contributions (see Vollbrecht 7/7/04 Aff. ¶¶ 24(d), 24(f)), but other than an ipse dixit in an affidavit reciting those amounts, they do not provide any evidence as to how those amounts were arrived at.

  ANALYSIS

  The Second Circuit has approved the holding of an inquest by affidavit, without an in-person court hearing, "`as long as [the Court has] ensured that there was a basis for the damages specified in the default judgment.'" Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)).

  Plaintiffs have provided sufficient proof of the principal amount of unpaid fringe benefit contributions, in the form of the audit reports. (See Vollbrecht 7/7/04 Aff. ¶ 11 & Exs. E-F.) That amount, however, significantly exceeds the specific figure sought in the complaint. (Compl. ¶¶ 14-15: "at least $73,458.55.") The Court asked plaintiffs to address "[w]hether the amount sought in the inquest can exceed the amounts sought in the (a) complaint. . . ." (Dkt. No. 23: 7/13/04 Order.) Plaintiffs only response was to point to section 502(g)(2) of ERISA, 29 U.S.C. § 1132(g)(2), which, according to plaintiffs, "indicates that the date to be considered when calculating damages is the date of judgment." (Vollbrecht 7/15/04 Aff. at 2.) That section does not support plaintiffs' interpretation, but even if it did, it does not deal with issues created by defendant's default.

  Rule 54(c) of the Federal Rules of Civil Procedure provides that a "judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment." As explained by Professors Wright and Miller:
The first sentence of Rule 54(c) states that a judgment by default is limited to the relief demanded in the complaint. The theory of this provision is that the defending party should be able to decide on the basis of the relief requested in the original pleading whether to expend the time, effort, and money necessary to defend the action. It would be fundamentally unfair to have the complaint lead defendant to believe that only a certain type and dimension of relief was being sought and then, should defendant attempt to limit the scope and size of the potential judgment by not appearing or otherwise defaulting, allow the court to give a different type of relief or a larger damage award. . . . In sum, then, a default judgment may not extend to matters outside the issues raised by the pleadings or beyond the scope of the relief demanded. A judgment in a default case that awards relief that either is more than or different in kind from that requested originally is null and void and defendant may attack it collaterally in another proceeding.
10 Wright, Miller & Kane, Federal Practice & Procedure: Civil 3d § 2663 (1998) (fns. omitted).*fn3 Plaintiffs here should not be limited to the dollar figures in the complaint because of the words surrounding the dollar figures: the amounts were stated as "at least . . ." (e.g., Compl. ¶¶ 15, 17) and the complaint also specifically refers to other (unquantified) amounts to be determined by subsequent audit (e.g., Compl. ¶ 17: defendant liable "for fringe benefit contributions in the amount of at least $73,458.55 for the period November 16, 1998 through October 4, 1999, plus the amount found due and owing from an audit of defendant Corporation's books and records for the period June 1, 1996 to present.").

  Accordingly, the Court should award plaintiff Funds $450,156.97 in principal amount for unpaid ...


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