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Engineers Joint Welfare, Pension, Supplemental Unemployment Benefit and Training Funds v. Catone Construction Co.

December 4, 2009

ENGINEERS JOINT WELFARE, PENSION, SUPPLEMENTAL UNEMPLOYMENT BENEFIT AND TRAINING FUNDS, BY DANIEL P. HARRIGAN, AS ADMINISTRATOR; CENTRAL PENSION FUND OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS AND PARTICIPATING EMPLOYERS, BY MICHAEL R. FANNING, AS CHIEF EXECUTIVE OFFICER; AND INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL UNION NO. 832, BY THOMAS E. CHARLES, AS BUSINESS MANAGER, PLAINTIFFS,
v.
CATONE CONSTRUCTION COMPANY, INC. AND JOHN J. CATONE, INDIVIDUALLY AND AS AN OFFICER OF CATONE CONSTRUCTION COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: Scullin, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs commenced this action on October 2, 2008. See Dkt. No. 1. On November 26, 2008, Plaintiffs served the summons and complaint in this action on Defendant Catone Construction Company, Inc. ("Catone Construction"); and, on December 29, 2008, Plaintiffs served the summons and complaint in this action on Defendant John Catone. See Affidavit of Jennifer A. Clark, sworn to August 21, 2009 ("Clark Aff."), at ¶ 5 & Exhibit "B" attached thereto. The time within which Defendants could answer or otherwise move as to the complaint expired, at the latest, on January 28, 2009. See id. at ¶ 6. On February 11, 2009, Plaintiffs filed a request for entry of default, see Dkt. No. 10; and, on February 12, 2009, the Clerk of the Court entered a Notice of Default against Defendants for failure to plead or otherwise respond to the complaint, see Dkt. No. 12; see also Clark Aff. at ¶ 8 & Exhibit "C" attached thereto.

Defendant Catone Construction is a party to a collective bargaining agreement with the International Union of Operating Engineers, Local No. 832 ("Agreement"). See Affidavit of Thomas E. Charles, sworn to August 11, 2009 ("Charles Aff."), at ¶ 3 & Exhibit "A" attached thereto. Pursuant to the provisions of the Agreement, Defendant Catone Construction must remit fringe benefit contributions and deductions to Plaintiffs for all hours that any of its covered employees work. Defendant John Catone owned, controlled and dominated the affairs of Defendant Catone Construction and determined when, and if, to remit fringe benefit contributions to Plaintiffs. See Clark Aff. at ¶¶ 12-13. Furthermore, Defendant John Catone, as a corporate officer and fiduciary, is individually liable for failing to deliver contributions, i.e., plan assets, to Plaintiffs. See Affidavit of Daniel P. Harrigan, sworn to August 12, 2009 ("Harrigan Aff."), at ¶ 8; Clark Aff. at Exhibit "A" at ¶¶ 34-44, 45-66.

The rules and regulations of Plaintiff Funds' Board of Trustees and the terms and conditions of Plaintiff Funds' Agreements and Declarations of Trust and the Collection Policy bind Defendants and, together with Sections 515 and 502(g) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1145, 1132(g)(2), require Defendants, if they are delinquent in remitting contributions and deductions, to pay interest, the greater of interest or liquidated damages, costs and fees of collection and attorney's fees. See Harrigan Aff. at ¶ 13.

During the period from September 2007 through April 2008, Defendants failed timely to remit fringe benefit contributions and deductions to Plaintiffs. Therefore, Plaintiffs commenced this action to collect the delinquent fringe benefit contributions and deductions together with interest, liquidated damages, costs and fees of collection, and attorney's fees. According to Plaintiffs, Defendants owe $27,113.67 in contributions and deductions, $13,614.71 in interest through November 13, 2009, and $13,555.36 in liquidated damages. See Clark Aff. at ¶ 16; Harrigan Aff. at ¶¶ 19-20; Charles Aff. at ¶ 9; Affidavit of Linda DeMacy, sworn to August 7, 2009 ("Demacy Aff."), at ¶¶ 8-9 and Exhibit "A" attached thereto.

Currently before the Court is Plaintiffs' motion for entry of a final default judgment, pursuant to Rules 54(b) and 55(b) of the Federal Rules of Civil Procedure, against Defendants with respect to Plaintiffs' First, Third and Fourth causes of action and entry of an Order with respect to Plaintiffs' Second and Fifth causes of action directing Defendants to produce their books and records for a payroll audit and retaining jurisdiction to enter judgment for any additional fringe benefit contributions and deductions that the audit uncovers.

II. DISCUSSION

A. Standard of Review

When a court considers a motion for the entry of a default judgment, it must "accept[] as true all of the factual allegations of the complaint . . . ." Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (citations omitted). However, the court cannot construe the damages alleged in the complaint as true. See Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (citations omitted). Rather, the court must "conduct an inquiry in order to ascertain the amount of damages with reasonable certainty." Id. (citation omitted). This inquiry "involves two tasks: [1] determining the proper rule for calculating damages on such a claim, and [2] assessing plaintiff's evidence supporting the damages to be determined under this rule." Id. Finally, in calculating damages, the court "need not agree that the alleged facts constitute a valid cause of action . . . ." Au Bon Pain, 653 F.2d at 65 (citation omitted).

Section 1145 of Title 29 of the United States Code provides that

[e]very 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 extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145.

If an employer violates § 1145, 29 U.S.C. § 1132(g)(2) provides that,

[i]n any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan --

(A) the unpaid contributions,

(B) interest on the unpaid contributions,

(C) an amount equal to the greater of --

(i) interest on the unpaid ...


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