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Trustees of Pavers and Road Builders District Council Welfare, Pension, Annuity v. Tri State Construction & Masonry Corp.

United States District Court, E.D. New York

May 11, 2017

TRUSTEES OF THE PAVERS AND ROAD BUILDERS DISTRICT COUNCIL WELFARE, PENSION, ANNUITY AND APPRENTICESHIP, SKILL IMPROVEMENT AND SAFETY FUNDS AND THE HIGHWAY, ROAD AND STREET CONSTRUCTION LABORERS LOCAL UNION 1010, Plaintiffs,
v.
TRI STATE CONSTRUCTION & MASONRY CORP., HUDSON INSURANCE COMPANY, AND AMERICAN FIRE AND CASUALTY COMPANY, Defendants.

          REPORT & RECOMMENDATION

          Honorable Raymond J. Dearie, Senior United States District Judge

         Trustees of the Pavers and Road Builders District Council Welfare, Pension, Annuity and Apprenticeship, Skill Improvement and Safety Funds (collectively the "Funds"), and the Highway, Road, and Street Construction Laborers Local Union 10101 (the "Union") (collectively "Plaintiffs"), commenced this action against Defendant Tri State Construction & Masonry Corp. ("Tri State") on November 20, 2015. (Dkt. No. 1). Plaintiffs brought this action pursuant to Sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145, as well as Section 301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185. (Dkt. No. 1, Complaint ("Compl.") ¶ 1). Plaintiffs filed an Amended Complaint against Tri State and added claims against Hudson Insurance Company ("Hudson") and American Fire and Casualty Company ("American Fire") on February 18, 2016. (Dkt. No. 8, Amended Complaint, ("AC")). Plaintiffs have since voluntarily dismissed their claims against Hudson and American Fire. (Dkt. Nos. 35, 37). To date, Tri State has not filed an appearance or participated in this action. (Dkt. Nos. 7, 22).

         On September 27, 2016, Plaintiffs requested a certificate of default against Tri State. (Dkt. No. 21). On September 28, 2016, the Clerk of the Court entered default. (Dkt. No. 22). On September 30, 2016, Plaintiffs filed a motion for default judgment. (Dkt. No. 23). Plaintiffs seek $47, 268.22 in damages and $5, 787.21 in attorney's fees and costs from Tri State. (Dkt. No. 29, ("Plaintiffs' Memo") at 10). Your Honor has referred Plaintiffs motion to me for a report and recommendation. (See Dkt. Entry dated Oct. 27, 2016).

         For the reasons stated below, I respectfully recommend that Plaintiffs' motion for default judgment be granted. I further recommend that the Court award: $2, 190.41 in outstanding contributions from the April 2014 audit, interest on the sum of $1, 801.55 to be calculated by the Clerk of the Court at an annual rate of 10% from April 28, 2014 through the date of final judgment, and punitive damages in the amount of $438.08.1 also recommend that the Court award Plaintiffs interest on previous late payments in the amount of $2, 558.19 and $4, 667.21 in attorney's fees and costs.

         BACKGROUND

         The Funds are employee benefit plans within the meaning of 29 U.S.C. § 1002(3) and are "trustees of multiemployer labor-management trust funds organized and operated in accordance with section 302(c) of the LMRA, 29 U.S.C. § 186(c)." (AC ¶ 4). The Funds also act as collection agents for the Union. (Id. ¶ 10). Tri State is an employer that is a party to a collective bargaining agreement ("CBA") with the Union. (Id. ¶¶ 6, 9; Dkt. No. 24-1). The CBA incorporates and binds the parties to certain trust agreements as well as a Collection Policy. (AC ¶¶ 14-16; see also Dkt. Nos. 26-1, 26-2). Pursuant to the CBA, Tri State is required to remit certain moneys, including dues check-offs, to Plaintiffs for work performed on its behalf "within the trade and geographical jurisdiction of the Union." (AC ¶¶ 10, 11). The CBA establishes an annual interest rate of 10% for overdue fringe benefits. (Id. ¶ 12). The CBA also requires that Tri State make its books and records available for inspection. (Id. ¶ 19; see also Dkt. Nos. 24-1 at 28-29, 26-2 at 1).

         In April 2014, the Funds conducted an audit of Tri State's books and records for the time period from March 1, 2011 through December 31, 2013, which revealed that Tri State failed to make contributions in the amount of $16, 828.00 during that time. (AC ¶ 21; see also Dkt. No. 25, Declaration of Robert Castiglia, ("Castiglia Decl.") ¶¶ 3, 5). Plaintiffs claim that $2, 190.41 of that amount remains outstanding. (AC ¶ 21).[1] As a consequence, Plaintiffs seek the outstanding contributions along with interest owed based on an annual rate of 10% and liquidated damages at 20% of the principal amount of the delinquency. (Id. ¶ 21).

         Plaintiffs also claim that Tri State failed to remit contributions and dues checkoffs pursuant to the CBA totaling $25, 612.26 for a separate period from August 2014 through June 2015. (Id. ¶ 25).[2] The CBA also requires Tri State to report to the Funds on a monthly basis the number of hours of applicable work performed by each employee. (Id. ¶ 24). Plaintiffs allege that Tri State failed to do so for the month of December 2014, and the period of July 2015 through December 2015.[3] (Id. ¶ 25). Plaintiffs claim that Tri State therefore also owes the Funds unpaid contributions and dues check-offs in an unknown amount for this period. (Id.).

         Plaintiffs seek: (1) unpaid contributions and dues check-offs totaling $2, 190.41 along with interest and punitive damages; (2) $25, 612.26 in unpaid contributions and dues check-offs for August 2014 through June 2015 along with interest and punitive damages; (3) an unknown amount of unpaid contributions and dues check-offs for December 2014 and the period from July through December of 2015; (4) interest on previous late payments in the amount of $2, 558.19; and (5) the attorney's fees, expenses and costs incurred in prosecuting this suit. (Id. ¶¶ 23-49).

         DISCUSSION

         The Federal Rules of Civil Procedure provide "a two-step process for obtaining a default judgment." Priestley v. Headminder, Inc. 647 F.3d 497, 504 (2d. Cir. 2011). First, the clerk of the court must enter a party's default upon being advised that the party has "failed to plead or otherwise defend" against an action. Fed.R.Civ.P. 55(a). Then, in cases where the relief sought is not "a sum certain or a sum that can be made certain by computation, " the party seeking relief "must apply to the court for a default judgment." Fed.R.Civ.P. 55(b)(1), (b)(2); see also Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993).

         Tri State has failed to appear in this action, respond to the Complaint, or otherwise challenge the default. (See Dkt. No. 22). The clerk has therefore appropriately entered default. Further, Plaintiffs have applied to this Court for default judgment in accordance with Fed.R.Civ.P. 55(b). (Dkt. No. 23). Accordingly, Plaintiffs have satisfied the two-step process for obtaining a default judgment.

         I. LIABILTIY

         After the clerk enters the default of a party, the Court accepts all the well-pleaded allegations in the complaint as true. Greyhound Exhibitgroup Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158-59 (2d Cir. 1992). However, the Court must decide whether those pleadings are sufficient to establish liability as a matter of law. Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d61, 65(2dCir.l981)).

         Section 515 of ERISA states:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145 (2012). ERISA "does not require employers to provide any particular benefits, but once an employer does elect to provide benefits, ERISA regulates the terms of administration . . . [and requires the employer to] do so in accordance with the relevant multi-employer plan or collective bargaining agreement." Finkel v. Metro Elec. Control Systems Ltd., No. lO-cv-2012 (CBA) (JO), 2012 WL 4049803, at *4 (E.D.N.Y. 2012). Further, Section 301 of the LMRA authorizes this Court to enforce valid CBAs.

         The CBA here requires Tri State to remit contributions and dues check-offs to the Funds as well as submit to the Funds a record of the number of hours worked by each employee. (AC ¶¶ 23, 24; see also Dkt. No. 24-1). Plaintiffs adequately allege that: (1) they are owed any unpaid contributions and dues check-offs along with interest and punitive damages that remain outstanding from the April 2014 audit; (2) they are entitled to known unpaid contributions and dues check-offs for August 2014 through June 2015; (3) under the CBA, Tri State is liable for whatever unknown amount of dues check-offs and other contributions are owed from December 2014 and July 2015 through December 2015; (4) under New York law, Tri State is liable for interest on late payments of dues check-offs and contributions; and (5) Tri State is liable for the attorney's fees, expenses, and costs that Plaintiffs have incurred in prosecuting this suit. In defaulting, Tri State admits its liability for violating the CBA, LMRA, and ERISA with regards to the claims stated above. Greyhound, 973 F.2d at 158-59.

         II. DAMAGES

         While the Court accepts all well-pleaded allegations as to liability, it must determine on its own the extent of damages. Id. The burden rests with the plaintiff "to establish its entitlement to recovery. Trustees of Plumbers & Pipefitters Nat. Pension Fund v. Daniel Weintraub & Assocs., Inc. No. 04-CV-2611 (FB) (CLP), 2007 WL 4125453, at *3 (E.D.N.Y. Nov. 16, 2007). In addition, "Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that on the matter of damages 'the court may conduct such hearings or order such references as it deems necessary and proper.' The rule 'allows but does not require ...


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