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Trustees of New York City District Council of Carpenters Pension Fund v. Dependable Office Installation LLC

United States District Court, S.D. New York

March 9, 2017

TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS PENSION FUND, WELFARE FUND, ANNUITY FUND AND APPRENTICESHIP, JOURNEYMAN RETRAINING, EDUCATIONAL AND INDUSTRY FUND, TRUSTEES OF THE NEW YORK CITY CARPENTERS RELIEF AND CHARITY FUND, THE NEW YORK CITY AND VICINITY CARPENTERS LABOR-MANAGEMENT CORPORATION, and THE NEW YORK CITY DISTRICT COUNCIL CARPENTERS, Plaintiffs,
v.
DEPENDABLE OFFICE INSTALLATION LLC, Defendant.

          TO THE HONORABLE JOHN G. KOELTL, United States District Judge,

          REPORT AND RECOMMENDATION

          HENRY PITMAN, United States Magistrate Judge

         I. Introduction

         Plaintiffs, employer and employee trustees of multi-employer labor-management trust funds, the trustees of a charitable organization and a labor organization that represents employees and a not-for-profit corporation commenced this action to enforce an arbitration award. The arbitration award was entered as a result of defendant's breach of a collective bargaining agreement that required defendant to make contributions to the funds and the charitable organization. Defendant defaulted in the arbitration proceeding, and the arbitrator awarded plaintiffs a total of $1, 042, 943.46, comprised of unpaid contributions, interest, liquidated damages, attorneys' fees, arbitrator's fees and other items.

         After being duly served with the summons and complaint, defendant failed to answer or move with respect to the complaint, and on April 2, 2015, the Honorable John G. Koeltl, United States District Judge, determined that plaintiffs were entitled to a default judgment and referred the matter to me to conduct an inquest. Pursuant to that Order of reference, I issued an order on April 17, 2015 directing plaintiffs to make their inquest submissions by June 16, 2015 and directing defendant to submit any responsive materials by July 16, 2015. My April 17, 2015 scheduling Order further provided:

IF DEFENDANT (1) FAILS TO RESPOND TO PLAINTIFFS' SUBMISSIONS, OR (2) FAILS TO CONTACT MY CHAMBERS BY July 16, 2015 AND REQUEST AN IN-COURT HEARING, IT IS MY INTENTION TO ISSUE A REPORT AND RECOMMENDATION CONCERNING DAMAGES ON THE BASIS OF PLAINTIFFS' WRITTEN SUBMISSIONS ALONE WITHOUT AN IN-COURT HEARING. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Services Inc., 873 F.2d 38, 40 (2d Cir. 1989) ("[I]t [is] not necessary for the District Court to hold a hearing, as long as it ensured that there was a basis for the damages specified in a default judgment.")

(Emphasis in original.) Although plaintiff made timely submissions in accordance with my Order, defendant has not made any submissions, nor has it contacted my chambers in any way. Accordingly, I make the following report and recommendation on the basis of plaintiffs' submissions alone.

         An initial issue which is not addressed in plaintiffs' submissions is whether proceeding by way of inquest is appropriate. The Court of Appeals has stated that:

[D]efault judgments in confirmation/vacatur proceedings are generally inappropriate. A motion to confirm or vacate an award is generally accompanied by a record, such as an agreement to arbitrate and the arbitration award decision itself, that may resolve many of the merits or at least command judicial deference. When a court has before it such a record, rather than only the allegations of one party found in complaints, the judgment the court enters should be based on the record. It does not follow, of course, that the non--movant can simply ignore such a motion.

D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 109 (2d Cir. 2006); accord 1199/SEIU United Healthcare Workers East v. South Bronx Mental Health Council, Inc., 13 Civ. 2608 (JGK), 2014 WL 840965 at *5-*6 (S.D.N.Y. Mar. 4, 2014) (Koeltl, D.J., adopting the Report & Recommendation of Freeman, M.J.). The Court of Appeals went on to conclude that unopposed actions to confirm or vacate an arbitration award should be treated as unopposed motions for summary judgment. D.H. Blair & Co. v. Gottdiener, supra, 462 F.3d at 109-10; accord Trustees of the New York City Dist. Council of Carpenters Pension Fund v. Coastal Envtl. Grp., Inc., 16 Civ. 6004 (GHW), 2016 WL 7335672 at *3 (S.D.N.Y. Dec. 16, 2016) (Woods, D.J.); GE Transportation (Shenyang) Co. v. A-Power Energy Generation Sys., Ltd., 15 Civ. 6194 (PAE), 2016 WL 3525358 at *4 (S.D.N.Y. June 22, 2016) (Engelmayer, D.J.); Trustees for The Mason Tenders Dist. Council Welfare Fund v. Earth Constr. Corp., 15 Civ. 3967 (RA), 2016 WL 1064625 at *3 (S.D.N.Y. Mar. 15, 2016) (Abrams, D.J.)

         However, given defendant's default in both the arbitration proceeding and this proceeding, treating the inquest as an uncontested motion for summary judgment has little practical difference. Where a defendant defaults in both the arbitration and confirmation proceedings,

the distinction between moving for default judgment and moving for summary judgment in confirmation of an arbitration proceeding is purely academic. Defendant did not contest plaintiffs' claims during the arbitration hearing. Therefore, the arbitrator found defendant in default, and awarded plaintiffs damages accordingly. For the Court's purposes, defendant never put forward a case in either the arbitration or judicial phases of this dispute. . . . As such, a more stringent review of plaintiffs' case under the summary judgment standard does not improve defendant's posi- tion; plaintiffs' claims, from the beginning, have gone uncontested.

Trs. of Unite Here Nat. Health Fund v. New Age Intimates, Inc., Nos. 07-CV-2892 (RRM)(CLP), 07-CV-2892 (RRM)(CLP), 2008 WL 3833841 at *4 (E.D.N.Y. Aug. 14, 2008); accord D.H. Blair & Co. v. Gottdiener, supra, 462 F.3d at 109 ("If the non-movant does not respond [to an action seeking confirmation of an arbitration award], its failure to contest issues not resolved by the record will weigh against it."); see Trustees of the Building Trades Annuity Fund v. Professional Plumbing of Staten Island Corp., No. CV-09-3812 (ADS)(ART), 2010 WL 6230530 at *2 (E.D.N.Y. Nov. 17, 2010); Laundry, Dry Cleaning Workers & Allied Indus. Health Fund, United Here! v. Jung Sun Laundry Group Corp., No. 08-CV-2771 (DLI)(RLM), 2009 WL 704723 at *3 (E.D.N.Y. Mar. 16, 2009). Accordingly, the issue to be resolved here is whether, based on the uncontested submissions before me, there is a genuine issue of material fact.

         Viewing the facts "in the light most favorable" to defendant, Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014), and "resolv[ing] all ambiguities and draw[ing] all permissible factual inferences in favor of" defendant, Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012), I find that there is no genuine issue as to the facts set forth below.

         In addition, after applying the law to the facts, I respectfully recommend that (1) judgment be entered in favor of plaintiffs in the amount of $1, 042, 943.46 with interest at the rate of 5.25% from October 28, 2014 to the present; (2) plaintiffs be awarded attorneys' fees in the amount of $8, 115.00 and (3) that plaintiffs be awarded costs in the amount of $125.46.

         II. Findings of Fact

          1. Plaintiffs Trustees of the New York City District Council of Carpenters Pension, Welfare Annuity, Apprenticeship, Journeyman retraining and Educational Industry Funds (the "ERISA Funds") are employer and employee trustees of multiemployer labor-management trust finds organized and operated in accordance with the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). The Trustees are fiduciaries within the meaning of Section 2(21) of ERISA, 29 U.S.C. § 1002(21). The ERISA Funds maintain their principal place of business at 395 Hudson Street, New York, New York 10014 (Declaration of Luke Powers, dated June 16, 2015 (Docket Item ("D.I.") 19) ("Powers Decl.") ¶ 3).

         2. Plaintiffs Trustees of the New York City District Council of Carpenters Relief and Charity Fund ("Charity Fund") (the ERISA Funds and the Charity Fund collectively are referred to herein as the "Funds") are Trustees of a charitable organization established under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). The Charity Fund maintains its principal place of business at 395 Hudson Street, New York, New York 10014 (Powers Decl. ¶ 4).

         3. Plaintiff the New York City District Council Carpenters (the "Union") is a labor organization that represents employees in an industry affecting commerce within the meaning of section 501 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 142, and is the certified bargaining representative for certain employees of the Defendant (Powers Decl. ¶ 5).

         4. Plaintiff New York City and Vicinity Carpenters Labor-Management Corporation is a New York not-for-profit corporation (Powers Decl. ¶ 6).

         5. Dependable Office Installation LLC ("Dependable") is a corporation organized under the laws of New Jersey. Dependable is an employer within the meaning of Section 3(5) and 515 of ERISA, 29 U.S.C. §§ 1002(5) and 1145, and is an employer in an industry affecting commerce within the meaning of Sections 301 and 501 of the LMRA, 29 U.S.C. §§ 185, 142. Dependable maintains its principal place of business at 55 Elm Hill Road, Clifton, New Jersey 07055 (Powers Decl. ¶ 7).

         6. On March 15, 2011, Dependable executed an Independent Building Agreement (the "CBA") with the Union (Powers Decl. ¶ 8 & Ex. A thereto).

         7. The CBA required Dependable to make specified contributions to the Funds in connection with all work performed within the trade and geographical jurisdiction of the Union (Powers Decl. ¶ 9 and Ex. A thereto at Art XV, § 1). The contributions were based on the number of hours that workers spent performing work within the trade and geographical jurisdiction of the Union.

         8. The CBA required Dependable to submit to audits of its books and records to verify that it made all required contributions to the Funds (Powers Decl. ¶¶ 9, 10 and Ex. A thereto at Art XV, § 1).

         9. The CBA provided that "[i]t shall be a violation of this Agreement for any signatory Employer to fail to furnish proper records when requested, for the purpose of completing an audit" (Powers Decl. Ex. A at Art XV, § 1).

         10. The CBA provided that if the Funds commence proceedings before an arbitrator to collect delinquent contributions, and the arbitrator renders an award in favor of the Funds, the arbitrator shall be empowered to award such interest, liquidated damages and/or costs as may be applicable under the CBA and the Declaration of Trust establishing the Funds (Powers Decl. Ex. A at Art XV, § 6).

         11. If the Funds are required to institute litigation to recover delinquent contributions, the CBA provides that the Funds are entitled to recover: (1) the unpaid contributions; (2) interest from the due dates of the unpaid contributions through the date of judgment, calculated at Citibank's prime rate plus 2%; (3) liquidated damages; (4) reasonable attorneys' fees and (5) such other legal or equitable relief as the Court deems appropriate (Declaration of Christopher Ozard, dated June 15, 2015 (D.I. 20) ("Ozard Decl.") Ex. B thereto at § V).

         12. The CBA further bound Dependable to the terms and conditions of the Collection Policy promulgated by the Funds (Powers Decl. Ex. A at Art XV, § 3).

         13. The Collection Policy provides that if Dependable refused to make its books and records available for audit, the Funds could determine the existence and amount of a delinquency through a prescribed method (Ozard Decl. ¶ 4 & Ex. B thereto at § V, ¶ 12).

         14. The Collection Policy provides that the Funds may estimate a delinquency by comparing the average of the four highest consecutive weeks to each week within the requested audit period. If Dependable's actual contributions were less than the contributions that would have been due based on the average of the four highest consecutive weeks, the difference constituted a delinquency (Ozard Decl. Ex. B § IV, ¶ 12).

         15. The Collection Policy further provides that "[a] determination [of estimated principal] under [the Collection Policy] shall constitute presumptive evidence of ...


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