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United States District Court, S.D. New York

July 30, 2004.


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


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.)


  "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.


  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 fringe benefit contributions.*fn4

  In addition to the principal amount, ERISA entitles the plaintiff Funds to interest, liquidated damages and attorneys' fees:

(2) In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan — (A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of —
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.
For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26.
29 U.S.C. § 1132(g)(2).

  Plaintiffs have supplied detailed interest calculations. (Vollbrecht 7/15/04 Aff. at 3-4 & Ex. A.) Thus, plaintiffs should be awarded interest of $134,778.03 on the fringe benefit principal amount.

  Plaintiffs also should be awarded statutory damages of an additional $134,778.03 as liquidated damages under the "double interest" provision of 29 U.S.C. § 1132(g)(2)(C). (See also Dkt. No. 22: Def. Br. at 6-7.)

  Plaintiffs are entitled to reasonable attorneys fees and costs. Plaintiffs' request of legal fees of $46,015 is supported by computerized billing records (Vollbrecht 7/7/04 Aff. ¶ 16 & Ex. H) and information about the experience level and regular billing rates of the lawyers involved (Vollbrecht 7/15/04 Aff. at 5-7). Plaintiffs also are entitled to court and service costs of $190.00.

  Finally, plaintiffs originally sought audit fees pursuant to the formula in the Collective Bargaining Agreement, of $91,531.91. (E.g., Vollbrecht 7/7/04 Aff. ¶¶ 17-18.) In response to the Court's inquiry as to whether that amount was "excessive" (Dkt. No. 23: 7/13/04 Order ¶ 1), plaintiffs reduced the amount sought for audit fees to the actual cost of $26,833.39. (Vollbrecht 7/15/04 Aff. at 2.) Plaintiffs should receive that amount.


  For the reasons stated above, the Court should enter judgment for plaintiffs against defendant I.M.I. Construction Corp. as follows:

Principal Amount (Fringe Benefit Contributions) $450,156.97
Interest 134,778.03
Liquidated Damages 134,778.03
Attorneys Fees 46,015.00
Costs 190.00
Audit Fees 26,833.39 =========== Total $792,751.42
  Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Louis L. Stanton, 500 Pearl Street, Room 2250, and to my chambers, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Stanton. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 So. Ct. 466 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993), cert. denied, 513 U.S. 822, 115 So. Ct. 86 (1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825 (1992); Small v. Secretary of Health & Human Servs., 892 F.2d 15, 16 (2d Cir. 1989); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).

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