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United States District Court, W.D. New York

October 25, 2004.

TOM TOPORCZYK d/b/a Earthwatch Remediation, Defendant.

The opinion of the court was delivered by: JOHN T. ELFVIN, Senior District Judge


Plaintiffs commenced this action on November 26, 2003 alleging, inter alia, that defendant employer Tom Toporczyk d/b/a Earthwatch Remediation*fn2 did not comply with specific contractual and statutory obligations, which violated their collective bargaining agreement ("the CBA") and ERISA, 29 U.S.C. §§ 1132(g)(2), 1145 (2004).*fn3 Plaintiffs served the Summons and Complaint upon defendant on December 11, 2003.*fn4 After defendant failed to appear in this action, plaintiffs obtained an Entry of Default from the Clerk of this Court on March 15, 2004. Plaintiffs subsequently filed a March 18, 2004 Motion for Default Judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure ("FRCvP") seeking an order directing defendant (1) to permit and cooperate in the conduct of audits of defendant's books and records for the purpose of confirming that, inter alia, contributions*fn5 owed are paid in full, (2) to pay plaintiffs owed contributions and deducted dues checkoffs, (3) to pay prejudgment interest on said contributions and dues and (4) to pay reasonable attorneys' fees and costs associated with this action. For the reasons set forth below, plaintiffs' Motion for Default Judgment will be denied without prejudice.

Under FRCvP 55, district courts may grant default judgment against a party that has failed to plead or otherwise defend. See Enron Oil Corp. v. Masonori Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). First, a party moving for default judgment must obtain an Entry of Default from the Clerk of the Court pursuant to FRCvP 55(a) and, second, the moving party must seek a default judgment from the Clerk of the Court or the Court, depending on the circumstances, as set forth in FRCvP 55(b).*fn6

  Where the moving party seeks default judgment from the district court, FRCvP 55(b)(2) governs and provides that "[i]f, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper[.]" This language indicates that judgment against a defaulting party should be granted only after careful examination of the moving party's claim by the district court. Enron Oil Corp., at 96. Indeed, "a defendant's default does not in itself warrant a court in entering a default judgment [because] [t]here must be a sufficient basis in the pleadings for the judgment entered." Am. Centennial Ins. Co. v. Seguros La Republica, S.A., 1996 WL 304436, at *18 (S.D.N.Y. 1996) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)); see also Ghartey v. Chrysler Credit Corp., 1992 WL 373479, at *4 (E.D.N.Y. 1992) (citing Nishimatsu). The district court has the sound discretion to ascertain whether sufficient grounds exist for granting default judgment. Enron Oil Corp., at 95. In exercising this discretion, the district court may evaluate the underlying merits of the substantive claim and should resolve doubt in favor of the defaulting defendant. Enron Oil Corp., at 96; Wagstaff-El v. Carlton Press Co., 913 F.2d 56, 57 (2d Cir. 1990), cert. denied, 499 U.S. 929 (1991). A district court may also consider, inter alia, the possibility of prejudice to the plaintiffs if default judgment is not granted, the sufficiency of the complaint, the possibility of disputed material facts, whether the defendant's default was due to neglect and the strong federal policy favoring decisions on the merits. Ironworkers Local 6 Health Care Fund v. Stumm-Western Const., Corp., 1996 WL 528613, *1 (W.D.N.Y. 1996) (denying motion for default judgment to the extent that the record was insufficient to ascertain the amount of damages owed in ERISA action involving collective bargaining agreements).

  Once a court concludes that a defendant is in default, the well-pleaded factual allegations against that defendant are taken as true except as to the amount of damages claimed. Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981); see also Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993). ("While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages."). This does not mean that liability is established merely because of the default, as a defendant cannot be said to "admit" conclusions of law through default. W.A.W. Van Limburg Stirum v. Whalen, 1993 WL 241464, *4 (N.D.N.Y. June 29, 1993) (citation omitted). In other words, "a default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover." Id. ((quoting Nishimatsu Constr. Co., at 1206) (finding plaintiff's motion for default judgment inadequate where its pleading failed to demonstrate that defendant was liable under the contract)). Before judgment can be entered, the court must determine whether plaintiff's factual allegations are sufficient to state a claim for relief on each of the causes of action for which the plaintiff seeks judgment by default. Id. In so doing, the court may exercise its discretion to "require some proof of the facts that must be established in order to determine liability." Id. (citation omitted).

  Turning to the facts of this case, plaintiffs allege that defendant executed on his own behalf the CBA with plaintiffs for the period June 1, 1999 through June 30, 2002, which obligated him (1) to permit plaintiffs to conduct audits of defendant's books and records, (2) to pay the required monetary contributions and to submit the reports to plaintiffs and (3) to remit dues checkoffs and NYLPAC contributions deducted from the wages paid to defendant's employees who authorized such deductions. Plaintiffs claim that, despite their repeated requests, defendant has not permitted or cooperated with such audits and that defendant has not paid the contributions and dues checkoffs owed to plaintiffs. At this time, plaintiffs do not know the amounts defendant owes them because they claim they have been unable to audit defendant's books and records. Plaintiffs assert that an audit would determine the amount of defendant's obligations and request from this Court a default judgment requiring defendant to submit to an audit of his books and records and to pay all amounts found due and owing as a result of the audit. However, in requesting a default judgment, plaintiffs have failed to introduce into evidence the CBA showing that defendant was party to the CBA and that, in accordance with the CBA, defendant was required, inter alia, to allow plaintiffs to conduct audits and to make monetary contributions and remit dues to plaintiffs. See Bianco v. Seaway Indus. Serv., Inc., 2004 WL 912916, *2 (W.D.N.Y. Apr. 1, 2004); Journeyman Plumbers & Apprentices UA Local Union No. 22 v. Boyd Mech. Inc., 2003 WL 23350132, *2 (W.D.N.Y. Nov. 13, 2003). Without such evidence, this Court cannot evaluate the underlying merits of the substantive claim. It is within this Court's discretion to require some proof of the facts necessary to determine liability — to wit, the CBA and proof that defendant is liable under the CBA. See Bianco, at *2; Journeyman Plumbers & Apprentices UA Local Union No. 22, at *2; Nishimatsu Constr. Co., at 1206.

  Without evidentiary proof that, inter alia, the CBA is signed by defendant and obligates defendant to that which plaintiffs claim, this Court declines to grant plaintiffs' Motion for Default Judgment. These insufficiencies prevent plaintiffs from setting forth "a sufficient basis in the pleadings for [default] judgment." Am. Centennial Ins., at *18. Plaintiffs' Motion will be denied without prejudice to a renewal of their Motion if and when they produce supplemental documentation establishing that defendant was party to the CBA and the CBA did in fact create the alleged obligations. Absent such a showing, default judgment is of doubtful propriety and the interests of justice compel this Court, in its sound discretion, to resolve such doubt in favor of defendant. Enron Oil Corp., at 96. Accordingly, it is hereby ORDERED that plaintiff's Motion for Default Judgment is denied without prejudice.

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