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Harris v. David J. Hardy Construction Co. Inc.

United States District Court, N.D. New York

January 27, 2014

SETH D. HARRIS, Acting Secretary of Labor, United States Department of Labor, Plaintiff,
v.
DAVID J. HARDY CONSTRUCTION CO. INC. 401(K) PLAN, Defendant.

UNITED STATES DEPARTMENT OF LABOR, M. PATRICIA SMITH, ESQ., PATRICIA M. RODENHAUSEN, ESQ., STACY M. GOLDBERG, ESQ., New York, New York, Attorneys for Plaintiff.

DAVID J. HARDY CONSTRUCTION CO., INC. 401(K) PLAN NO APPEARANCE.

MEMORANDUM-DECISION AND ORDER

FREDERICK J. SCULLIN, Jr., Senior District Judge.

I. INTRODUCTION

Currently before the Court is Plaintiff's motion for a default judgment against Defendant 401(K) Plan ("Defendant Plan") and for the appointment of an independent fiduciary to Defendant Plan. See Dkt. No. 7.

II. BACKGROUND

Plaintiff filed his complaint in this action on May 8, 2013, seeking to enjoin acts and practices that violate the provisions of Title I of Employee Retirement Income Security Act ("ERISA") and to obtain appropriate equitable relief to redress these violations and enforce the provisions of Title I pursuant to 29 U.S.C. § 1132(a)(5). See Complaint at ¶ 1.

According to Plaintiff's complaint, David J. Hardy Construction Co., Inc. (the "Company") sponsored Defendant Plan. See id. at ¶ 2. The Company established Defendant Plan in 1992. See id. at ¶ 6. David J. Hardy was the sole Trustee of Defendant Plan and owner of the Company at all relevant times. See id. at ¶ 7. The Company ceased operations in June 2008, and all of the Company's assets were sold in a bank auction in August 2008. See id. at ¶ 8. Since 2008, no individual or entity has taken steps to wind down Defendant Plan or to distribute Defendant Plan's assets to Defendant Plan's nineteen participants. See Declaration of Stacy M. Golderg dated July 12, 2013 ("Goldberg Declaration") at ¶6; Complaint at ¶ 13.

Without a duly appointed Trustee or other fiduciary of Defendant Plan to instruct an asset custodian to distribute Defendant Plan's assets, Defendant Plan's participants have been unable to obtain distributions of funds from Defendant Plan. See Complaint at ¶ 8. Benefit Plan Administration Systems Utica ("BPAS"), located at 6 Rhoads Drive, Utica, New York 13502, is the custodian of Defendant Plan assets. See Goldberg Declaration at ¶ 10; Complaint at ¶ 12. As of December 31, 2011, BPAS held $270, 631.00 in Defendant Plan's assets, including a forfeiture account containing $6, 141.00 of Defendant Plan's assets. See Goldberg Declaration at ¶ 10; Complaint at ¶ 12. Finally, Plaintiff alleges that, because Defendant Plan exists without a named fiduciary and without its assets being held in trust by a trustee, Defendant Plan is in violation of ERISA §§ 402, 403, 29 U.S.C. §§ 1102, 1105. See Complaint at ¶ 15.

Pursuant to 29 U.S.C. § 1132(a)(5), Plaintiff seeks the appointment of an independent fiduciary with authority to administer Defendant Plan and, if necessary, to implement its orderly termination.

Plaintiff effected service on David J. Hardy, the last known fiduciary of Defendant Plan on May 31, 2013, by means of personal service. See Notice of Motion at ¶ 2; Goldberg Declaration at ¶ 8. Defendant Plan has not answered or otherwise appeared in this action. See Goldberg Declaration at ¶ 11. Plaintiff requested an Entry of Notice of Default on June 26, 2013, which the Clerk of the Court entered on June 27, 2013. See Dkt. Nos. 5, 6. Plaintiff now requests that the Court enter a default judgment against Defendant Plan and appoint M. Larry Lefoldt as the independent fiduciary of Defendant Plan.[1]

III. DISCUSSION

Rule 55 of the Federal Rules of Civil Procedure provides that when a party fails to defend itself the Clerk of the Court shall enter that party's default. See Fed.R.Civ.P. 55(a). The plaintiff may then seek a default judgment. See Fed.R.Civ.P. 55(b).

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 ...


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