United States District Court, E.D. New York
THOMAS GESUALDI, ANTHONY D'AQUILA, LOUIS BISIGNANO, ANTHONY PIROZZI, DOMINICK MARROCCO, JOSEPH FERRARA, FRANK FINKEL, MARC HERBST, DENISE RICHARDSON, and THOMAS CORBETT, as Trustees and Fiduciaries of the Local 282 Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds, Plaintiffs,
BAYWOOD CONCRETE CORP., Defendant.
Julie A. Ortiz, Esq., Trivella & Forte, LLP, White Plains, New York, Attorneys for Plaintiffs.
Richard B. Ziskin, Esq., The Ziskin Law Firm, LLP, Commack, New York, Attorneys for Defendant.
MEMORANDUM & ORDER
DENIS R. HURLEY, District Judge.
Plaintiffs Thomas Gesualdi, Anthony D'Aquila, Louis Bisignano, Anthony Pirozzi, Dominick Marrocco, Joseph Ferrara, Frank Finkel, Marc Herbst, Denise Richardson, and Thomas Corbett (collectively, "Plaintiffs"), as Trustees and Fiduciaries of the Local 282 Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds, (collectively, the "Funds") brought this action against defendant Baywood Concrete Corp. ("Baywood" or "Defendant"), pursuant to sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§ 1132(a)(3) and 1145, for Baywood's alleged failure to submit to an audit of its books and records, and to make required fringe benefit contributions to Plaintiffs' Taft-Hartley Trust Funds.
Presently before the Court is Plaintiffs' motion to amend the Complaint pursuant to Federal Rule of Civil Procedure ("Rule") 15 to name Bohemia Concrete Corp. ("Bohemia") as a defendant, and to add an alter ego and/or single employer cause of action against Bohemia. For the reasons set forth below, Plaintiffs' motion is granted.
Plaintiffs, as fiduciaries and Trustees of the Funds, have control and discretion over the administration and assets of the Funds. (Compl. ¶ 3.) Each of the Funds is a "multiemployer plan" and "employee benefit plan." ( Id. ¶ 4.) Various collective bargaining agreements between several employers (the "Employers"), including Baywood, and Local 282, International Brotherhood of Teamsters ("Local 282" or the "Union"), required the Employers to contribute to the Funds on behalf of workers who were covered by the terms of the collective bargaining agreements. ( Id. ¶ 5.)
Baywood is "engaged in the trucking business" in New York. ( Id. ¶ 8.) Its president is Joseph Cunha. ( Id. ¶ 9.) Baywood and Building Material Teamsters Local 282 were parties to a Building Material Contractors Agreement for the period of July 1, 2005 through June 30, 2008 (the "2005 CBA"). ( Id. ¶ 10.) In addition, through the course of its conduct, Baywood evidenced an intent to be bound to a Building Material Contractors Agreement for the period of July 1, 2008 through June 30, 2011 (the "2008 CBA"). ( Id. ) The 2005 CBA and 2008 CBA (collectively, the "CBAs") bound the Employers that were parties thereto to a Restated Agreement and Declaration of Trust ("Trust Agreement"), which required the Employers to submit remittance reports with each payment to the Funds. (Compl. ¶¶ 6, 12-13.) The reports consisted of the Employers' self-reported statements, which identified the Employers' covered workers, "the number of hours worked by [the] covered workers, and the Employer[s'] contribution obligation[s] to the Funds." ( Id. ¶ 13.) The Trust Agreement further required the Employers to submit to periodic audits of their books and records for verification that all of the contributions required by the CBAs had been paid to the Funds. ( Id. ¶¶ 14, 17.)
In the Complaint, Plaintiffs requested that the Court order Baywood to submit to an audit "by providing the Funds with all pertinent books and records for the period December 28, 2009 through the date of the audit." (Comp. Prayer for Relief at 9.) Additionally, the Plaintiffs sought, inter alia, recovery of "any delinquencies identified by the audit, " interest on the delinquent contributions, attorneys' fees, and costs. ( Id. )
According to Plaintiffs, in December 2011, they sought a default judgment against Baywood for its failure to answer the Complaint or otherwise appear in the matter. (Decl. of Julie A. Ortiz, dated February 12, 2013 ("Ortiz Decl.") at ¶ 10.) However, during the pendency of Plaintiff's motion for a default judgment, Baywood retained counsel and made arrangements to submit to an audit. ( Id. ) Plaintiffs assert that, in January 2012, Baywood presented Plaintiff's auditors with certain limited records. ( Id. at ¶ 11.) During the review of those records, the "auditors discovered a possible connection with Bohemia, " namely, "that... Baywood and Bohemia shared common office space, " and there was a prior "money transfer between Baywood and Bohemia." ( Id. ) In order to further explore the connection, Plaintiffs served a judicial subpoena duces tecum upon Bohemia in March 2012. ( Id. ) Bohemia ultimately complied with the subpoena and submitted a portion of its books and records to Plaintiffs' auditors in June 2012. ( Id. at ¶ 12.)
On June 29, 2012, Magistrate Judge Tomlinson held an evidentiary hearing. (Ortiz Decl. at ¶ 13.) During the proceeding, Baywood's principal, Joseph Cunha, appeared and testified about both Bohemia's and Baywood's business operations. ( Id. ) Subsequent to the hearing, Bohemia provided additional records to Plaintiffs' auditors, and, on October 22, 2012, the audits of Bohemia and Baywood were completed. ( Id. at ¶ 14.) The audit of Bohemia identified that $38, 092.84 in fringe benefit contributions were owed to the Funds. ( Id. ) Furthermore, the audit revealed a "strong connection" between Bohemia and Baywood in that: "there were significant money transfers between both entities, " "Bohemia issued a W-2 wage and earnings statement to Baywood's principal, Joseph Cunha, " and "both Bohemia and Baywood had at least one common employee." ( Id. ¶ 15.)
I. Legal Standard
Under Rule 15(a)(2), "leave to amend shall be freely given [by the court] when justice so requires.'" Foman v. Davis, 371 U.S. 178, 182 (1962) (quoting Fed.R.Civ.P. 15(a)(2)). "If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits." Id. Indeed, "amendments are generally favored because they tend to facilitate a proper decision on the merits." Manigaulte v. C.W. Post of Long Island Univ., 659 F.Supp.2d 367, 376 (E.D.N.Y. 2009) (citation and internal quotation marks omitted). Therefore, leave to amend is to be freely given, in the District Court's discretion, absent an "apparent or declared reason[, ] such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment." Foman, 371 U.S. at 182; see also Am. Med. Ass'n v. United Healthcare Corp., 2006 WL 3833440, at *3 (S.D.N.Y. Dec. 29, 2006) ("Under Rule 15(a), leave to amend a pleading shall be given freely when justice so ...