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Trustees of the International Union of Operating Engineers Local 30 Benefit Funds v. Trans Island Lock & Safe

January 5, 2006

TRUSTEES OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 30 BENEFIT FUNDS, PLAINTIFF
v.
TRANS ISLAND LOCK & SAFE, INC., DEFENDANT.



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

DECISION AND ORDER

INTRODUCTION

Plaintiff, Trustees of the International Union of Operating Engineers Local 30 Benefit Funds ("Funds" or "plaintiff") sued Trans Island Lock & Safe, Inc. ("Trans Island" or "defendant") to compel payment of unpaid ERISA benefit contributions, together with interest, attorneys' fees, statutory damages, and costs.

Affidavits of service indicate that the original, and amended summons and complaints were served on Trans Island. Trans Island never filed an answer or otherwise appeared in the action. Accordingly, this Court granted a default judgment in favor of the Funds on October 5, 2004, and referred the matter to Magistrate Judge William D. Wall for a Report and Recommendation on the issue of damages. By Report and Recommendation dated November 17, 2005, Judge Wall recommended that the monetary relief sought by the Funds be denied in toto given the inadequacy of their submissions. In an effort to cure the deficiencies cited by Judge Wall, the Funds submitted additional documents to me, to wit, the affirmation of Danielle M. Carney, Esq., dated November 21, 2005, and the affidavit of Kristen A. Borruso, identified as the "Fund Manager," dated November 22, 2005.

COURT'S ROLE IN ESTABLISHING DAMAGES

The Court has discretion in determining what proofs are necessary to establish the amount due following a default. Trans Island's non-appearance in the action was sufficient to establish its liability to the Funds but not the amount thereof. Given the failure of the Amended Complaint to detail the number of employees, hours worked, and other variables underlying the plaintiff's unpaid contributions demand of $25,563.50 for the period from October 2003 through February 2004, coupled with the request in the "Third Claim for Relief" for such additional sums as may accrue after February 2004 to the date of judgment, the amount sought is not a sum certain. Indeed, as noted by counsel for the Funds, the amount sought is an estimate based on earlier remittance reports filed by Trans Island. (Carney Nov. 21, 2005 Aff., ¶ 4.) Under such circumstances, an effort by the Court must be made to assure that the damages demanded are consistent with the underlying facts.

INADEQUACIES IN PROOF PRESENTED TO JUDGE WALL

Inadequate information was provided to Judge Wall to permit the realization of the above mentioned goal. By way of example, Fund Manager Borruso in her September 21, 2005 affidavit identified the amount of delinquent contributions for the period from "October 2003 through August 2004" as $49,363.50. (Borruso Sept. 21, 2000 Aff., ¶ 5.) But the derivation of that sum was not decipherable from the materials furnished. We know it was not simply the product of extrapolation based on the $25,563.50 demanded in the complaint for the then five months of unpaid contributions (i.e., from October 2003 through February 2004) because the corresponding figure for the eleven month period, i.e., from October 2003 through August 2004, would be considerably in excess of $49,363.50.

By way of another example of the inadequate information provided to Judge Wall, consider the Funds' claim for interest. By document entitled "STATEMENT OF DAMAGES" filed on September 28, 2004, the Funds sought "10%" of the purported delinquent contributions of $49,363.50 as interest. Yet, in Fund Manager Borruso's affidavit submitted a year later, the applicable interest rate is reported to be 4%, devoid of any reference to the earlier, apparently erroneously provided, 10% figure. And the Funds' methodology in computing the interest due is likewise troubling. As explained by Fund Manager Borruso to Judge Wall:

As a result of the failure of Trans Island Lock & Safe, Inc. to pay the contributions due the Benefit Funds for the months of October, 2003 through August, 2004, Trans Island Lock & Safe, Inc. owes interest from the Due Date in total amount of $3,949.08 ($1,974.54 is 4% of contributions owed [i.e. $49,263.50] x 2 years [i.e. from October 2003]). (Borruso Sept. 20, 2005 Aff., ¶ 6.)

The delinquent payments accumulated over eleven months beginning in October 2003. Therefore, it would seem that the interest should run on each delinquent payment as it became due rather than on the total of all of the delinquencies measured from the date of the first missed payment. The Funds offer no explanation for their counterintuitive approach.

ADDITIONAL MATERIALS SUBMITTED TO THIS COURT*fn1

In Borruso's current affidavit, unlike the earlier one presented to Judge Wall, the methodology used to compute the amount of the delinquent contributions is explained. That explanation reads as follows:

In reviewing the Employer's records, I found that the Employer stopped submitting contributions and reports in September 2003. There is no written communication in our files from the Employer terminating the Collective Bargaining Agreement. According to the Trust Document page 34 Article VI sec 6.03 an Employer shall continue to pay contributions as long as the Employer [is] so obligated pursuant to the Collective Bargaining Agreement. The Collective ...


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