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Tenders District Council Welfare Fund v. City Stone

January 9, 2006

TENDERS DISTRICT COUNCIL \ WELFARE FUND, ET AL., PLAINTIFFS,
v.
CITY STONE, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Andrew J. Peck, United States Chief Magistrate Judge:

REPORT AND RECOMMENDATION

To the Honorable Michael B. Mukasey, United States Chief District Judge:

On November 10, 2005, Chief Judge Mukasey granted plaintiffs a default judgment against defendants City Stone and Charles Emslie. (Dkt. No. 19: 11/10/05 Order.)*fn1 On November 22, 2005, Chief Judge Mukasey referred the case to me for an inquest, and I set a schedule for written submissions. (Dkt. No. 20: 11/22/05 Reference Order; Dkt. No. 21: 12/2/05 Peck Order.) The scheduling order required defendants to submit their papers on the inquest by December 23, 2005. (12/2/05 Peck Order.) Not surprisingly, defendants did not file any submissions.

For the reasons set forth below, the Court should enter judgment for plaintiffs against defendants City Stone and Emslie for $101,820.77.

FACTS

"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, and that the plaintiff Union is a labor organization pursuant to the Taft-Hartley Act. (Dkt. No. 1: Compl. ¶¶ 4-10.) Defendant City Stone, Inc. was an employer which executed a collective bargaining agreement with the plaintiff Union and was obligated to submit monetary contributions including dues checkoffs, and make reports, to plaintiffs. (Compl. ¶ 11.) Defendant Emslie is President of City Stone with authority and control of City Stone's contributions to the Funds and the Union. (Compl. ¶ 16.)

The complaint alleges that defendant City Stone owes plaintiffs fringe benefit contributions (Compl. ¶¶ 18-27), plus statutory damages, interest and attorney fees (Compl. ¶¶ 28-40); dues checkoff amounts (Compl. ¶¶ 49-57) and NYLPAC deductions (Compl. ¶¶ 58-66). The complaint also seeks contractual penalty amounts and costs and attorneys fees. (Compl. ¶ 67-84.) The complaint also seeks an audit and injunctive relief. (Compl. ¶¶ 41-48, 85-95.)

ANALYSIS

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 summarized their damage claim as follows:

In the instant action, and pursuant to their right under Article VI, § 17 of the Agreement, plaintiffs Funds audited the books and records of defendant City Stone. After a series of payments were made, the remaining balance due and owing by defendants City Stone and Emslie and for the period January 27, 1998 through June 30, 2001 was $35,487.00 in fringe benefit principal, $2,875.90 in dues checkoff principal, and $245.05 in PAC principal. Plaintiffs also claim that defendants City Stone and Emslie owe $13,495.75 in interest on fringe benefits principal, $13,495.75 in statutory damages, $1,368.39 in interest on dues checkoff principal, $114.52 in interest on PAC principal, $190.00 in costs, $28,077.50 in attorneys' fees, and $14,558.41 in imputed audit costs. Said interest calculations are calculated through October 1, 2005, and do not include interest paid by the Settling Defendants. Said attorneys' fees were calculated through August 31, 2005 and include a reduction in the amount of $8,141.00 from the actual amount expended in this case. Said reduction was based upon the amount paid by the Settling Defendants. (Dkt. No. 17: Pls. Br. at 11.)

Plaintiffs conducted audits of City Stone's books and records for the period January 27, 1988 through December 31, 1999 and January 1, 2000 through June 30, 2001. (Dkt. No. 16: Pls. Rule 56.1 Stmt. ¶ 22; Dkt. No. 16: Giammona Aff. ¶ 11. The audit results showed a deficiency in fringe benefit payments of $22,386.58 and $94,275.92 for the two periods. (Pls. Rule 56.1 Stmt. Exs. C-D: Audit Reports; see Pls. Rule 56.1 Stmt. ¶¶ 22-23; Giammona Aff. ¶¶ 11-12.) Payments to plaintiffs by the Settling Defendants reduced defendants City Stone and Emslie's liability for fringe benefits to $35,487 for the period January 27, 1988 to June 30, 2001. (Giammona Aff. ¶¶ 13-14; Pls. Rule 56.1 Stmt. ¶ 31.)

Dominick Giammona, the "Deficiency Coordinator" for the plaintiff Funds, has sworn that defendants City Stone and Emslie owe the Funds $2,875.90 in dues checkoffs and $245.05 in PAC contributions for the period January 27, 1998 through June 30, 2001. (Giammona Aff. ΒΆ 14; Pls. Rule ...


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