United States District Court, S.D. New York
July 30, 2004.
MASON TENDERS DISTRICT COUNCIL WELFARE FUND, et al., Plaintiffs,
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
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
"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
In addition to the principal amount, ERISA entitles the
plaintiff Funds to interest, liquidated damages and attorneys'
(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
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
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
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
(Fringe Benefit Contributions) $450,156.97
Liquidated Damages 134,778.03
Attorneys Fees 46,015.00
Audit Fees 26,833.39
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
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).