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MINGOIA v. SANTA FE DRYWALL CORP.

June 9, 2005.

CARMINE MINGOIA, JOSEPH OLIVIERI and GEORGE NICKOLETOS, as TRUSTEES of the OPERATIVE PLASTERERS' AND THE CEMENT MASONS' INTERNATIONAL ASSOCIATION, LOCAL 530 WELFARE FUND, INSURANCE FUND, ANNUITY FUND, VACATION FUND, TRAINING FUND AND APPRENTICESHIP FUND, and the OPERATIVE PLASTERERS' AND THE CEMENT MASONS' INTERNATIONAL ASSOCIATION, LOCAL 530, AFL-CIO, Plaintiffs,
v.
SANTA FE DRYWALL CORP. and XERCHES FRECHIANI, individually and jointly and severally, Defendants.



The opinion of the court was delivered by: RICHARD BERMAN, District Judge

DECISION AND ORDER

I. Introduction

On March 2, 2004, the Operative Plasterers' and the Cement Masons' International Association, Local 530 Welfare Fund, Insurance Fund, Annuity Fund, Vacation Fund, Training Fund and Apprenticeship Fund (the "Funds"), and the Operative Plasterers' and the Cement Masons' International Association, Local 530, AFL-CIO (the "Union") (collectively, "Plaintiffs") filed a complaint ("Complaint") against Santa Fe Drywall Corp. ("Santa Fe"), an employer with whom the Union had entered into a collective bargaining agreement, dated February 2, 2000, governing the rates of pay and working conditions of individuals employed by Santa Fe, and Santa Fe's principal, Xerches Frechiani ("Frechiani") (collectively, "Defendants"), pursuant to Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and Sections 515 and 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1145 and 1132(a)(3). (See "Collective Bargaining Agreement" dated Feb. 2, 2000, Ex. A to Plaintiffs' Statement of Undisputed Material Facts pursuant to Local Civil Rule 56.1 dated Dec. 3, 2004 ("Pl. 56.1 Stmt.") ("CBA" or "Agreement").) Plaintiffs allege that, among other things, Defendants breached the collective bargaining agreement by failing to "produce to the Fund's auditors all books and records to conduct a payroll audit" for the period July 1, 2001 through June 30, 2003 and, as a result, is required to pay (the amount calculated by the Funds' auditor to be delinquent) no less than $369,784.94 in outstanding fund contributions and no less than $37,601.04 in outstanding union dues. (Complaint ¶¶ 13, 18, 22-23, 25.)*fn1 Plaintiffs also seek liquidated and statutory damages, interest, attorneys' fees and costs. (Id. at 6-7.)

  On December 3, 2004, Plaintiffs moved for summary judgment ("Pl. Mot.") pursuant to Federal Rule of Civil Procedure (" Fed.R.Civ.P.") 56. In support of their motion, Plaintiffs submitted a Rule 56.1 Statement and several affidavits. On or around February 15, 2005, Defendants opposed Plaintiffs' Motion ("Def. Opp'n") and submitted supporting affidavits, but did not respond to Plaintiffs' Rule 56.1 Statement, or submit its own Rule 56.1 Statement. Plaintiffs filed a Reply Memorandum of Law in Further Support of the Plaintiffs' Motion for Summary Judgment, with supporting affidavits, on March 1, 2005 ("Pl. Reply"). The parties waived oral argument at a conference before the Court on January 27, 2005. For the reasons below, Plaintiffs' motion for summary judgment is granted in part and denied in part.

  II. Background

  The following facts are undisputed, except where noted: Santa Fe was incorporated in the State of New York and engaged in the business of drywalling, skim-coating and finishing walls. (Pl. 56.1 Stmt. ¶ 10; Def. Opp'n at 1.) Frechiani is the president and principal of Santa Fe. (Frechiani Aff. ¶ 2; Pl. 56.1 Stmt. ¶ 11; CBA at 45.) Since on or about February 2, 2000, Santa Fe and the Union have been parties to the CBA which, among other things, provides for "jointly administered labor-management trust funds" whose purpose is "to receive and collect required fringe benefit contributions and to provide various fringe benefits to eligible employees on whose behalf employers contribute to the Funds pursuant to Collective Bargaining Agreements." (See CBA at 1; Pl. 56.1 Stmt. ¶¶ 5, 7.) Pursuant to the CBA, Defendants "are required to remit monthly contributions to the Funds in agreed amounts per hour of the wages of [Santa Fe] employees engaged in covered employment within the jurisdiction of the Union." (Pl. 56.1 Stmt. ¶ 14.) The Agreement also states, among other things:
The Employer shall retain, for a minimum period of six (6) years, payroll and related records for the conduct of a proper audit in order that a duly designated representative of the Trustees may make periodic review to confirm that contributions owed pursuant to this Agreement are paid in full. In the event, after the Trustees have made a reasonable request, the Employer fails to produce its books and records necessary for a proper audit, the Trustees, in their sole discretion, may determine that the Employer's monthly hours subject to contributions for each month of the requested audit period are the highest number of employee hours for any month during the twelve preceding months audited, or during the last twelve (12) months for which reports were filed, whichever monthly number of hours is greater.
(CBA, Art. X, § 7 (emphasis added).) The Agreement also states: "The person signing on behalf of the Employer also agrees to be personally bound by and to assume all obligations of the Employer provided in the Agreement . . ." (CBA, Art. XX.) Frechiani, as President, signed the CBA on behalf of Santa Fe. (Pl. 56.1 Stmt. ¶ 11; CBA at 45.) The Agreement expired on February 4, 2003. (CBA, Art. XIX.)

  Defendants claim that in or around the Spring of 2002, after experiencing financial difficulty, Frechiani determined that he "could no longer maintain Santa Fe" and made plans to "shut it down by the summer." (Affidavit of Xerches Frechiani dated Feb. 4, 2005 ("Frechiani Aff."), ¶ 19.) According to Defendants, Santa Fe "was effectively out of business by July 2002." (Id. ¶ 22.) Plaintiffs dispute that Santa Fe ceased business operations in July 2002. (See Affidavit of Charles Farinella dated March 1, 2005 ("Farinella Reply Aff."), ¶¶ 31-47.)

  "In or around October, 2003 the Funds performed an audit of the defendants' payroll records for the period of July 1, 2001 through to September 30, 2003." (Pl. 56.1 Stmt. ¶ 15; Affidavit of Charles Farinella dated Dec. 2, 2004 ("Farinella Aff."), ¶ 10.) Plaintiffs' auditor determined a delinquency "in fringe benefit funds . . . in the aggregate amount of $371,658.04 and $37,193.87 in dues owed to [the Union]." (Farinella Aff. ¶ 10; "Local 530 Payroll Audit" dated Dec. 3, 2004, Ex. B to Farinella Reply Aff. ("Plaintiffs' Audit").) Because Santa Fe did not provide "to the Plaintiffs, to Plaintiffs' counsel or to [Plaintiffs' auditor], the required documentation . . . to complete the payroll audit" for the period August, 2002 to September, 2003, the "$371,658.04 audit amount . . . includes an assessment made by the auditors for [that period]" pursuant to Article X, Section 7 of the CBA. (Farinella Aff. ¶¶ 14-15; CBA, Art. X, § 7.)

  Defendants maintain that "all the documents, payroll records, tax returns and canceled checks made payable to the union demonstrates Santa Fe did not continue operations after July 2002 and the monies it received [after July 2002] was for work previously performed." (Affidavit in Opposition of Pablo F. Sanchez dated Feb. 4, 2005 ("Sanchez Aff."), ¶ 24; see also Frechiani Aff. ¶ 31 ("The plaintiffs' contention that Santa Fe continued in business into 2003 is incorrect and not true.").) According to the calculations of Defendants' auditor, for the period of July 1, 2001 to June 30, 2003, "the amount due to Local 530, Welfare Fund and other benefits [was] $198,633.18." (Sanchez Aff. ¶¶ 9-11.) The amount "paid to Local 530 or [the] General Benefits Fund Local 530 for the period February 6, 2001 to July 1, 2002" was $197,039.50, and thus, the amount currently outstanding and owed to "Local 530, Welfare Fund and other benefits" is $1,593.68. (Id. ¶¶ 11, 14.) Plaintiffs dispute that they were provided with "documents proving that this money was retainage and not for actual work performed by Santa Fe after the defendant alleges that Santa Fe ceased business operations." (Farinella Reply Aff. ¶¶ 36-37.)

  III. Legal Standard

  Federal Rule of Civil Procedure 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material issue of fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 228 (2d Cir. 1995). A district judge "must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor." Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund & Annuity Fund v. Lollo, 35 F.3d 29, 32 (2d Cir. 1994) (internal quotations omitted) ("Lollo").

  Once a party moves for summary judgment, in order to avoid the granting of the motion, the non-movant must come forward with specific facts showing that a genuine issue for trial exists. Tri-State Employment Servs., Inc. v. Mountbatten Sur. Co., 295 F.3d 256, 260 (2d Cir. 2002). A genuine issue of material fact exists if "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Converse v. Gen. Motors Corp., 893 F.2d 513, 514 (2d Cir. 1990). "If there is evidence in the record as to any material fact from which an inference could be drawn in favor of the non-movant, summary judgment is unavailable." Brown v. Dominic Prisco Transp., Inc., No. 95 Civ. 1121, 1997 WL 1093463, at *2 (E.D.N.Y. Aug. 16, 1997); see Rattner v. Netburn, 930 F.2d 204, 209 (2d Cir. 1991).

  Rule 56.1 of the Local Rules of the United States District Courts for the Southern and Eastern Districts of New York ("Rule 56.1") requires that any motion for summary judgment be accompanied by "a separate, short and concise statement . . . of the material facts as to which the moving party contends there is no genuine issue to be tried," Rule 56.1(a), and that "papers opposing a motion for summary judgment shall include a correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party, and if necessary, additional paragraphs containing a separate, short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried," Rule 56.1(b). "If the opposing party ? fails to controvert a fact so set forth in the moving party's Rule 56.1 statement, that fact will be deemed admitted. However, . . . `the local rule does not absolve the party seeking summary judgment of the burden of showing that it is entitled to judgment as a matter of law . . .'" Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003) (internal citations omitted).

  Section 301 of the LMRA ("Section 301") governs labor disputes and states, in relevant part:
Suits for violation of contracts between an employer and a labor organization . . . may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.
29 U.S.C. § 185. Section 515 of ERISA applies to this action and states:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the ...

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