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Gesualdi v. Fortunata Carting, Inc.

United States District Court, E.D. New York

March 19, 2014

THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY PIROZZI, ANTHONY D'AQUILA, MICHAEL O'TOOLE, JOSEPH A. FERRARA, SR., FRANK H. FINKEL, MARC HERBST, DENISE RICHARDSON, and THOMAS F. CORBETT, as Trustees and Fiduciaries of the Local 282 Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund, and the Local 282 Vacation and Sick Leave Trust Fund, Plaintiffs,
v.
FORTUNATA CARTING INC., Defendant

Order Filed: February 4, 2014

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[Copyrighted Material Omitted]

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For Thomas Gesualdi, Louis Bisignano, Anthony Pirozzi, Anthony D'Aquila, Michael O'Toole, Joseph A. Ferrara, Sr., Frank H. Finkel, Marc Herbst, Denise Richardson, Thomas F. Corbett, as Trustees and Fiduciaries of the Local 282 Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund, and the Local 282 Vacation and Sick Leave Trust Fund, Plaintiffs: Michael S. Adler, LEAD ATTORNEY, Michael Seth Adler, Cohen, Weiss and Simon LLP, New York, NY.

OPINION

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ORDER

HON. WILLIAM F. KUNTZ, II, United States District Judge.

This action was filed on February 3, 2012. (Dkt. 1). On April 12, 2012, Plaintiffs brought a motion for default judgment. (Dkt. 7). This Court subsequently granted Plaintiffs' motion and referred the issue of damages to United States Magistrate Judge Marilyn Go for a Report and Recommendation. (Dkt. Entry re: Dkt. 7, entered 5/17/12).

On February 4, 2014, Magistrate Judge Go filed a Report and Recommendation recommending " that the Court award ... judgment against defendant Fortunata Carting Inc. in the amount of $382,381.41[.]" (Dkt. 24 at 42-43). The Report and Recommendation recounted the parties'

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history; analyzed Plaintiffs' damages submissions; calculated the appropriate interest, fees, and costs; and ultimately concluded that Plaintiffs were entitled to $382,381.41 in damages. ( Id.). Objections to the Report and Recommendation were required to be filed by February 21, 2014. ( Id. at 43); Fed.R.Civ.P. 72(b)(2). No objections have been filed and the time to do so has passed.

The Court reviews a Report and Recommendation for clear error when no objections have been filed, see Covey v. Simonton, 481 F.Supp.2d 224, 226 (E.D.N.Y. 2007) (Garaufis, J.), and we find no such error here. The Court therefore adopts the Decision of Magistrate Judge Go in its entirety. Accordingly, it is hereby ordered that Plaintiffs be awarded damages in accordance with the Report and Recommendation. (Dkt. 24).

The Clerk of Court is directed to enter judgment in the amount of $382,381.41 and close the case.

SO ORDERED.

REPORT AND RECOMMENDATION

MARILYN D. GO, UNITED STATES MAGISTRATE JUDGE.

Plaintiffs brought this action against defendant Fortunata Carting Inc. (" Fortunata" ) to recover unpaid benefit contributions pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § § 1001 et seq. (" ERISA" ), as amended by the Multiemployer Pension Plan Amendment Act of 1980, 29 U.S.C. § § 1381 et seq. (" MPPAA" ), and the Labor Management Relations Act, 29 U.S.C. § 185 (" LMRA" ). The Honorable William F. Kuntz, II granted plaintiffs' motion for default judgment and referred to me for report and recommendation the amount of damages to be awarded. See electronic order dated May 17, 2012.

PRIOR PROCEEDINGS

Plaintiffs commenced this action on February 3, 2012 to collect sums owed by defendant for contributions and other sums owed under ERISA and the LMRA. After entry of default against defendant, plaintiffs moved for default judgment, which Judge Kuntz granted and referred to me to determine damages at a hearing held on May 16, 2012. This Court subsequently held two hearings and plaintiffs supplemented their default submissions, as directed. Defendant has neither filed an answer nor responded to any of plaintiffs' submissions in support of their motion for default judgment.

Plaintiffs brought an earlier action on July 14, 2009 to collect unpaid contributions. See Gesualdi and Finkel v. Fortuna Carting, Inc. and Mascia, 09-cv-3001 (the " Prior Action" ). Although the defendants did not appear in the action, plaintiffs filed a letter dated January 15, 2010 to notify the Court that the parties had reached an agreement to settle. See ct. doc. 10 in 09-cv-3001. In the January 15th letter, which was signed by counsel for plaintiffs and Vincent Mascia, as President of Fortunata, the defendants agreed to pay $57,000 in satisfaction of contributions owed for the periods of November 2008, January 2009 through August 2009, October 2009 and the weekly periods of November 20, 2009 and November 27, 2009. Id. The defendants also agreed in the letter agreement that plaintiffs would be entitled to conduct an audit for these periods and collect additional contributions due and owing for those periods. Id. Plaintiffs subsequently filed a notice of voluntary dismissal. See ct. doc. 11 in 09-cv-3001.

FACTUAL BACKGROUND

The pertinent facts are undisputed and are set forth in the Complaint (" Compl." )

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(ct. doc. 1), the Declaration of Theresa Cody (" Cody Decl." ) (ct. doc. 8), the Supplemental Declaration of Theresa Cody (" Cody Supp. Decl." ) (ct. doc. 18), the Declaration of Angelos Poulos (" Poulos Decl." ) (ct. doc. 9), the Declaration of Michael S. Adler (" Adler Decl." ) (ct. doc. 10), and the Supplemental Declaration of Michael S. Adler (" Adler Supp. Decl." ) (ct. doc. 23).

Plaintiffs are the trustees of the Local 282 Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust Fund, the Local 282 Job Training Trust Fund and the Local 282 Vacation and Sick Leave Trust Fund (the " Funds" ), which are multi-employer benefit plans within the meaning of ERISA. See Compl. at ¶ ¶ 3, 4. The Funds are governed by a Restated Agreement and Declaration of Trust, effective as of July 1, 1999, as amended (the " Trust Agreement" ). Cody Decl. at ¶ 8 and Exh. B.

Defendant is a signatory to the New York City Heavy Construction & Excavating Contract (the " CBA" ) with the Building Material Teamsters Local 282, International Brotherhood of Teamsters (" the Union" ) covering the period from July 1, 2006 to June 30, 2009. See Compl. at ¶ 8. The CBA incorporates the Trust Agreement governing the Funds and provides that the Union and employers that are signatories to the CBA are deemed to be parties and subject to the Trust Agreement. Id. at ¶ ¶ 5, 9; Cody Decl., Exh. B (CBA at § 13(G)).

Under the CBA, employers are required to submit remittance reports and pay benefit contributions to the Funds according to rate schedules set forth in the CBA for all work performed by their employees. Compl. at ¶ 8; CBA at § 13. An employer is also required to make contributions on behalf of the employees of third-party trucking companies who do covered work. Cody Decl. at ¶ 22; CBA at § 7. Employers that do not post a surety bond, as here, are required to submit contributions on a weekly basis. Cody Decl. at ¶ 17; CBA at § 14. Employers are also required to submit to periodic audits of their books and records to verify that all required contributions have been made to the Funds. Compl. at ¶ 16; Cody Decl., Exh. A (Trust Agreement at art. IX, § 1(d)).

The Trust Agreement provides that if an employer does not sign a current collective bargaining agreement, the employer remains obligated to make timely contributions to the Funds unless the employer gives notice that the employer does not intend to sign a new collective bargaining agreement at least 60 days prior to expiration of the most recent collective bargaining agreement. Trust Agreement at art. IX, § 1(a). If the employer makes contributions at the rates provided for in the current collective bargaining agreement, the employer is deemed to be a party to that collective bargaining agreement. Id. Defendant failed to notify the Trustees of its intent not to sign a new collective bargaining agreement within 60 days of the expiration of the 2006-2009 agreement and continued to submit remittance reports in 2010 and 2011 to the Funds using the rates prescribed by the 2009-2013 CBA. See Cody Decl. at ¶ ¶ 12, 13, Exh. D (remittance reports); Adler Supp. Decl., Exh. C (remittance reports). Each remittance report was signed by a representative of defendant and included a statement immediately above the signature line that: " BY SIGNING THIS REPORT YOU AGREE TO ACCEPT THE TERMS OF THE CURRENT LOCAL 282 INDUSTRY COLLECTIVE BARGAINING AGREEMENT COVERING THE WORK PERFORMED BY YOUR EMPLOYEES." See Cody Decl. at ¶ 14, Exh. D; Adler Supp. Decl., Exh. C.

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In their motion for default judgment, plaintiffs seek damages for unpaid contributions which they calculate in three different ways: using the amounts reflected in remittance reports submitted by defendant; using a formula provided in the Trust Agreement for certain periods for which no remittance reports were submitted; or relying on the results of an audit conducted. Plaintiffs also seek recoupment of benefits paid to Vincent Mascia; amounts not paid in accordance with the settlement of the Prior Action; and interest, liquidated damages and attorneys' fees, including interest on contributions that were not timely paid.

Specifically, plaintiffs allege that although defendant submitted remittance reports for January 2010, February 2010 and the weeks ending July 30, 2010, October 29, 2010, November 5, 2010, April 8, 2011, April 15, 2011 and April 29, 2011, it failed to pay the contributions owed for these periods. Cody Decl. at ¶ 42. Defendant also submitted remittance reports for the weeks ending December 25, 2009 and January 1, 2010, but was late in paying contributions owed. Id. at ¶ 47.

In addition, defendant neither submitted remittance reports, nor paid any contributions for the weeks ending March 25, 2011, December 16, 2011, December 23, 2011, December 30, 2011 and the months of January 2012 and February 2012. Id. at ¶ 43; Adler Decl. at ¶ 27. By letter to defendant dated October 4, 2011, plaintiff's counsel stated that a remittance report was not submitted for the week ending March 25, 2011. See Adler Decl., Exh. C. By letter to defendant dated January 11, 2012, plaintiff's counsel stated that defendant had not provided all documentation necessary to conduct an audit and that if the documentation was not promptly provided, the Funds would estimate the contributions due. Id.

Plaintiffs also seek the remaining balance due on an agreement to settle the Prior Action in which the defendants agreed to pay $57,000 over the course of 19 months, commencing on January 30, 2010. Id. at ¶ ¶ 33-35. The settlement agreement provides that if defendant defaults on its obligations and fails to cure within 7 days, plaintiffs are entitled to judgment on the amount due, plus interest and additional attorneys' fees, less any payments made. Id. at ¶ 37; Cody Decl., Exh. E. Defendant failed to pay any of the installment payments due from August 30, 2010 through July 30, 2011. Adler Decl. at ¶ 38.

Plaintiffs also performed an audit and allege based on audit results that defendant failed to report hours and pay all contributions due for the period from July 24, 2008 through June 25, 2010 resulting in a balance due of $83,360.97. Id. at ¶ 27. Among the hours that were found to be unreported were those for Fortunata's drivers as reflected in its own payroll records and the hours of work performed by subcontractors' drivers based on Fortunata's subcontractor reports. Poulos Decl. at ¶ 23.

The auditors also discovered that Fortunata submitted remittance reports from December 1, 2008 to June 30, 2009 reflecting that Vincent Mascia was a covered employee. However, Mr. Mascia did not qualify for benefits under the terms of the CBA as a 100% owner of Fortunata. Id. at ¶ ¶ 49-55. As a result, plaintiff seeks to recover $7,197.95 for benefits the Funds paid on Mascia's behalf to which he was not entitled. Id. at ¶ 57.

DISCUSSION

I. Default Judgment Standard

A default constitutes an admission of all well-pleaded factual allegations in the

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complaint, except for those relating to damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Only " in very narrow, exceptional circumstances" may a court find an allegation not " well pleaded." TWA, Inc. v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973).

A default also effectively constitutes an admission that damages were proximately caused by the defaulting party's conduct; that is, the acts pleaded in the complaint violated the laws upon which the claim is based and caused injuries as alleged. See Greyhound, 973 F.2d at 159. The movant need prove " only that the compensation sought relate[s] to the damages that naturally flow from the injuries pleaded." Id.

The court must also ensure that there is a reasonable basis for the damages specified in a default judgment. Actual damages or statutory damages may be assessed. In determining damages not susceptible to simple mathematical calculations, Fed.R.Civ.P. 55(b)(2) gives a court the discretion to determine whether an evidentiary hearing is necessary or whether to rely on detailed affidavits or documentary evidence. Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991). The moving party is entitled to all reasonable inferences from the evidence it offers. Au Bon Pain, 653 F.2d at 65.

In granting plaintiffs' motion for default judgment, the issue of defendant's liability has been determined. However, this Court briefly discusses the claims alleged in the Complaint to ...


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