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Upstate New York Engineers Health Fund v. South Buffalo Electric, Inc.

United States District Court, N.D. New York

March 29, 2017

UPSTATE NEW YORK ENGINEERS HEALTH FUND, et al ., Plaintiffs,
v.
SOUTH BUFFALO ELECTRIC, INC., et al., Defendants.

          MEMORANDUM-DECISION AND ORDER

          Lawrence E. Kahn, U.S. District Judge

         I. INTRODUCTION

         On July 23, 2015, Plaintiffs Upstate New York Engineers Health Fund, Upstate New York Engineers Pension Fund, Upstate New York Engineers S.U.B. Fund, Upstate New York Engineers Training Fund, Operating Engineers Local 17 Training Fund, Central Pension Fund of the International Union of Operating Engineers and Participating Employers (collectively, the “Funds”), and the International Union of Operating Engineers, Local Union No. 17 (the “Union”) filed this action seeking monetary and injunctive relief under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185. Dkt. No. 1 (“Complaint”). Presently before the Court are two separate motions for default judgment submitted by Plaintiffs. Dkt. Nos. 20 (“First Default Motion”), 20-1 (“First Memorandum”), 24 (“Second Default Motion”), 24-1 (“Second Memorandum”).[1] For the following reasons, the motions are granted in part and denied in part.

         II. BACKGROUND

         Defendant South Buffalo Electric, Inc., is a New York corporation, and defendants Arnold A. and Arnold J. Paolini (the “Paolinis”) are officers and shareholders of South Buffalo. Compl. ¶¶ 15-16. Plaintiffs allege that South Buffalo failed to pay contributions and deductions as required by three collective bargaining agreements (“CBAs”). Id. ¶¶ 23-25, 30. Plaintiffs filed their Complaint on July 23, 2015, and Defendants did not answer or otherwise move with respect to the Complaint. On October 6, 2015, Plaintiffs requested entry of default as to all Defendants, Dkt. No. 7, which the Clerk of the Court granted on October 7, 2015, Dkt. No. 9. After submitting a series of extension requests, Dkt. Nos. 10, 12, 14, 16, 18, that were granted by the Court, Dkt. Nos. 11, 13, 15, 17, 19, Plantiffs filed a motion for default judgment under Rule 55 of the Federal Rules of Civil Procedure on August 26, 2016. First Default Mot.

         Plaintiffs' First Default Motion was filed against the Paolinis but not South Buffalo, but Plaintiffs filed a second motion for default judgment as to South Buffalo on November 1, 2016. Second Default Mot. Defendants have not opposed either of the motions for default judgment or otherwise appeared in this action.

         III. LEGAL STANDARD

         “Federal Rule of Civil Procedure 55 provides a two-step process that the Court must follow before it may enter a default judgment against a defendant.” Elec. Creations Corp. v. Gigahertz, Inc., No. 12-CV-1423, 2013 WL 3229125, at *3 (N.D.N.Y. June 25, 2013) (quoting Robertson v. Doe, No. 05-CV-7046, 2008 WL 2519894, at *3 (S.D.N.Y. June 19, 2008)). “First, under Rule 55(a), when a party fails to plead or otherwise defend . . . the clerk must enter the party's default.” Id. Second, under Federal Rule of Civil Procedure 55(b)(2), “the party seeking default judgment is required to present its application for entry of judgment to the court.” Id.

         “When a default is entered, the defendant is deemed to have admitted all of the well-pleaded factual allegations in the complaint pertaining to liability.” Bravado Int'l Grp. Merch. Servs., Inc. v. Ninna, Inc., 655 F.Supp.2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.” Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974); accord Bravado Int'l, 655 F.Supp.2d at 189. “[E]ven upon default, a court may not rubber-stamp the non-defaulting party's damages calculation, but rather must ensure that there is a basis for the damages that are sought.” Robertson, 2008 WL 2519894, at *3. “The burden is on the plaintiff to establish its entitlement to recovery.” Bravado Int'l, 655 F.Supp.2d at 189. “While ‘the court must ensure that there is a basis for the damages specified in a default judgment, it may, but need not, make the determination through a hearing.'” Id. at 190.

         Under Local Rule 55.2(b), the moving party must submit with its motion for default judgment: (1) a clerk's certificate of entry of default, (2) a proposed form of default judgment, (3) a copy of the pleading to which no response has been made, and (4) an affidavit. L.R. 55.2(b). The affidavit must set forth that: (1) the party against whom judgment is sought is not an infant, incompetent, or in military service; (2) the party against whom judgment is sought has defaulted in appearance in the action; (3) service was properly effected under Federal Rule of Civil Procedure 4; (4) the amount sought is justly due and owing, and no part has been paid; and (5) the disbursements sought to be taxed have been made in the action or will necessarily be made or incurred. L.R. 55.2(a).

         IV. DISCUSSION

         Defendants have failed to appear in this action or to answer Plaintiffs' Complaint, despite having been duly served. Dkt. No. 8. Because Defendants have failed to appear, and because the Clerk has made an entry of default, all relevant and well-pleaded factual allegations in Plaintiffs' Complaint are presumed to be accurate.

         Under ERISA, employers that are obligated to make contributions to multiemployer benefit plans must do so under the terms of such plans. 29 U.S.C. § 1145. Here, Plaintiffs have sufficiently alleged that South Buffalo is an employer required to make contributions to the employee benefit plans under the terms of three CBAs, and that it has failed to do so. Compl. ¶¶ 23, 25, 30-32. Under the CBAs, South Buffalo was also required to deduct stipulated amounts from employees' wages and pay those deductions to the Union. Id. ¶ 27. If an employer fails to make the required contributions and deductions, ERISA provides for statutory damages as follows:

(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of -
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorneys' fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.

29 U.S.C. ยง 1132(g)(2). Here, Plaintiffs request contributions, deductions, interest, liquidated damages, audit fees, and attorneys' fees for a total amount of $351, 563.06 against South Buffalo. Second Mem. at 9. Plaintiffs also request contributions, interest, audit fees, and attorneys fees and ...


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