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Trustees of Pavers and Road Builders District Council Welfare, Pension, Annuity, and Apprenticeship, and Skill Improvement and Safety Funds v. Intercounty Paving Associates of New York, LLC

United States District Court, E.D. New York

January 2, 2020

TRUSTEES OF PAVERS AND ROAD BUILDERS DISTRICT COUNCIL WELFARE, PENSION, ANNUITY, AND APPRENTICESHIP, AND SKILL IMPROVEMENT AND SAFETY FUNDS, Plaintiff,
v.
INTERCOUNTY PAVING ASSOCIATES OF NEW YORK, LLC, Defendant.

          MEMORANDUM DECISION AND ORDER

          Brian M. Cogan, U.S.D.J.

         This is an action brought by a union benefits fund for unpaid contributions against a participating employer. Before me are plaintiff's motion for a default judgment and defendant's cross-motion to vacate the Clerk's entry of default against it and to accept its untimely answer. There is no reason to delay entry of judgment in this case, and the motions are disposed of accordingly.

         BACKGROUND

         Defendant is a party to a collective bargaining agreement (“CBA”) with plaintiff's originator, the Highway, Road and Street Construction Laborers Local Union 1010. As is standard, the CBA required defendant to make monthly contributions to plaintiff as part of its obligations to union employees, and to file written reports showing on a monthly basis the number of union employees it had working and their hours. As is also standard, the CBA corresponds to certain trust agreements to which plaintiff and defendant are parties.

         The complaint alleges that defendant missed its monthly contribution for June 2016 and for the months of January 2019 through May 2019. In addition, defendant failed to submit employee reports for the same months in 2019 that would have allowed a precise calculation of its contributions. When that happens, under the trust agreements, plaintiff has the right to apply its policy for making a substitute calculation based on projections derived from prior reports.

         Plaintiff's complaint alleges claims under section 515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1145, and section 301 of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, to collect delinquent employer contributions. Defendant failed to respond to the summons and complaint despite valid service. Accordingly, the Clerk of Court noted its default upon the record, and thereafter, plaintiff moved for entry of a default judgment, containing detailed proof of its damage calculation.

         Defendant made no response for almost six weeks, and when it finally responded, it did not oppose the motion for default judgment; it simply filed an answer as if it were timely responding. I entered an Order requiring defendant to show cause as to why the answer should not be stricken as untimely and in light of the entry of default. Defendant responded to that Order by moving to vacate the entry of default and for acceptance of its untimely answer.

         DISCUSSION

         I. Defendant's Motion to Vacate Entry of Default

         Rule 55(c) of the Federal Rules of Civil Procedure provides that a court may set aside an entry of default for “good cause.” As this language suggests, “[t]he dispositions of motions for entries of defaults ... are left to the sound discretion of a district court because it is in the best position to assess the individual circumstances of a given case and to evaluate the credibility and good faith of the parties.” Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). The scope of this discretion, however, is limited by the Second Circuit's “oft-stated preference for resolving disputes on the merits.” Id. Nevertheless, the Second Circuit has recognized that default procedures “provide a useful remedy when a litigant is confronted by an obstructionist adversary. Under such circumstances those procedural rules play a constructive role in maintaining the orderly and efficient administration of justice.” Id. at 96.

         To maintain the balance between the two competing interests, the Second Circuit has instructed district courts to consider, along with other relevant factors, “(1) whether the default was willful; (2) whether setting aside the default would prejudice the adversary; and (3) whether a meritorious defense is presented.” Id.These factors are applied less leniently to a defendant after a default judgment has been entered. Id.

         Defendant's motion to vacate its default is denied for two principal reasons. First, no adequate excuse for the default has been offered. All I have been given is an attorney's affidavit stating that because defendant has been sued three other times by other pension funds for delinquent contributions, some unidentified person at defendant's office overlooked this case. Nothing has been offered as to the procedures defendant has in place to prevent this, let alone identifying why those procedures failed.

         Defendant's excuse is also unpersuasive because, just as it ignored the summons and complaint, it similarly ignored plaintiff's motion for a default judgment, despite being mailed a copy. Defendant only responded to the complaint, finally, by filing an untimely answer without leave of court well after entry of default against it and well after the time to respond to plaintiff's motion for a default judgment had passed. Defendant's failure to respond to either the summons and complaint or the motion for a default judgment compels the conclusion that its default was willful or in reckless disregard of its legal obligations.

         My finding of willfulness is buttressed by the second, and more important, reason that I am denying the motion to vacate, namely, that defendant has failed to articulate a meritorious defense. The only potential defense to which the attorney's affidavit alludes is that the CBA under which plaintiff is claiming delinquent contributions may have expired. However, as defendant acknowledges, the CBA continued by its express terms from year to year, unless terminated by timely notice. Defendant has not even suggested it gave notice, let alone annexing a copy of such notice, so its defense fails as a matter of law. It would make little sense for me to vacate the ...


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