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Jacobson v. Peterbilt Electrical Contracting

April 10, 2008


The opinion of the court was delivered by: Charles P. Sifton (electronically signed) United States District Judge

SIFTON, Senior Judge.


Plaintiff Larry Jacobson ("Jacobson"), Chairman of the Joint Industry Board of the Electrical Industry ("Joint Board"), commenced this action on July 11, 2003 as a fiduciary of various employee benefit plans against defendants Peterbilt Electrical Contracting, Inc. ("Peterbilt") and Peter Gargiulo ("Gargiulo") to collect sums due to the Joint Board under the terms of a collective bargaining agreement and a stipulation and forbearance agreement between the parties. Plaintiff seeks relief under Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145;*fn1 and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185.*fn2 Presently before this Court is plaintiff's renewed motion for entry of judgment against defendants. For the reasons set forth below, plaintiff's motion is granted.


The following facts are drawn from the Complaint, plaintiff's submissions in connection with this motion, and the record of the prior proceedings before the undersigned. There are no factual disputes.

The Joint Board is the administrator and fiduciary of various employment benefit plans established and maintained pursuant to collective bargaining agreements between Local Union No. 3 of the International Brotherhood of Electrical Workers, AFL-CIO (the "Union"), and employer associations and independent or unaffiliated employers in the electrical and other related industries (collectively the "Employers"). Effective January 1, 2006, Dr. Gerald Finkel succeeded Larry Jacobson as the Joint Board Chairman. The Joint Board collects contributions required to be paid to the National Employees Benefit Fund (the "ERISA Plans"). The Joint Board also collects assessments payable to the Union by certain employees and employer contributions for Joint Board administered plans. Employers are required to submit summaries of their weekly payrolls to the Joint Board.

Defendant Peterbilt is a New York corporation that was engaged in the electrical contracting business at the time plaintiff commenced this action. Defendant Gargiulo is a principal of Peterbilt.

Peterbilt was bound by the May 10, 2001 to May 14, 2004 collective bargaining agreement ("CBA") between the Union and Employers. Pursuant to the CBA, Peterbilt was required to remit employee benefit contribution payments to the Joint Board for the benefit of its employees covered by the CBA in specified amounts. Peterbilt also agreed to participate in 401(k) plans for all employees covered by the CBA and was required to withhold and remit employee elective contributions and payroll summaries. Because Peterbilt is not a member of an employer association, defendant Gargiulo is personally liable for payments due under the terms of the CBA.

After the United States Department of Labor conducted an audit of the 401(k) plan administered by the Joint Board for the period January 1, 1999 through December 31, 2001, it was discovered that Peterbilt had failed to remit employee elective contributions to the 401(K) plan for 79 of the 156 weeks covered by the audit. In April 2002, the Joint Board informed Peterbilt that it had failed to remit employees' elective contributions in accordance with the DOL regulations and demanded payment of the applicable interest. According to plaintiff, defendants withheld employee elective contributions, which were 401(k) assets, and used the funds to pay creditors and for the general benefit of the company.

On or about May 1, 2003, the parties entered into a stipulation ("May 2003 Stipulation") under which defendants acknowledged that they owed delinquent contributions in the estimated amount of $72,939.32 plus interest on late paid contributions, and agreed that defendants would make all required ongoing weekly contribution payments to the Joint Board when and as they became due.

The Joint Board states that defendant defaulted under the May 2003 Stipulation by failing to remit required contributions or cure the default within three calendar days. Defendants were advised of their default on June 12, 2003. After defendants failed to cure the default, the Joint Board filed the instant action.

In August 2005, plaintiff's counsel informed Magistrate Judge Levy that the parties were in settlement discussions. See Letter from Plaintiff's Counsel to Magistrate Judge Levy, dated August 11, 2005. On September 29, 2005, I discontinued the action and afforded the parties sixty days to consummate the settlement. In November 2005, the parties entered into a Stipulation and Forbearance Agreement ("November 2005 Stipulation"), under which defendants acknowledged that they owed delinquent contributions to the Joint Board in the amount of $102,340.90. November 2005 Stipulation ¶ 1, Plaintiff Exhibit A. The November 2005 Stipulation constitutes an agreement within the meaning of Section 515 of ERISA, 29 U.S.C. § 1145, is enforceable in federal court, and is governed by federal law. Id. ¶ 10. Under the terms of the November 2005 Stipulation, defendants were required to make a down payment of $20,000 on December 15, 2005, followed by monthly payments of $1,500 commencing on January 20, 2006, and continuing thereafter each month until the balance was paid in full. Id. ¶ 2. Defendants agree[d] that their failure to tender any payment on the dates specified in this Agreement, shall constitute a Default under this Agreement. In the event of a Default, if Debtors [defendants] fail to cure such Default within five (5) calendar days after written notice of such Default is transmitted to Debtors by facsimile, the [Joint Board] shall be entitled to move the Court to have judgment entered against Debtors in the Court for breach of this Agreement in the full amount of any unpaid contributions, plus interest, liquidated damages, attorneys' fees and costs.*fn3

Id. ¶ 8.

The parties also entered into a consent judgment in November 2005, which was filed on June 28, 2007 ...

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