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Mason Tenders District Council Welfare Fund v. Gibraltar Contracting, Inc.

United States District Court, S.D. New York

January 14, 2020

MASON TENDERS DISTRICT COUNCIL WELFARE FUND; MASON TENDERS DISTRICT COUNCIL PENSION FUND; MASON TENDERS DISTRICT COUNCIL ANNUITY FUND; MASON TENDERS DISTRICT COUNCIL TRAINING FUND; MASON TENDERS DISTRICT COUNCIL HEALTH AND SAFETY FUND; and DOMINICK GIAMMONA, as FUNDS' CONTRIBUTIONS/DEFICIENCY MANAGER, Plaintiffs,
v.
GIBRALTAR CONTRACTING, INC.; and CHRISTIAN VARELA, in his Personal Capacity, Defendants.

          AMENDED ORDER [1]

          ANALISA TORRES UNITED STATES DISTRICT JUDGE

         Plaintiffs, Mason Tenders District Council Welfare Fund, Mason Tenders District Council Pension Fund, Mason Tenders District Council Annuity Fund, Mason Tenders District Council Training Fund, Mason Tenders District Council Health and Safety Fund (the “Funds”), and Dominick Giammona, in his fiduciary capacity as the Funds' contributions and deficiency manager, bring this action pursuant to, inter alia, the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132(a)(3), 1145, and the Taft-Hartley Act, 29 U.S.C. § 185. Plaintiffs allege that Defendants, Gibraltar Contracting, Inc. (“Gibraltar”) and Christian Varela, breached the parties' collective bargaining agreement (the “Agreement”) by, among other things, failing to pay the full amounts due to the Funds. Plaintiffs move for summary judgment pursuant to Federal Rule of Civil Procedure 56, seeking damages as well as injunctive and other equitable relief under ERISA and the Agreement. ECF No. 55. For the reasons stated below, Plaintiffs' motion is GRANTED.

         BACKGROUND[2]

         The facts discussed in this opinion are undisputed except where otherwise noted. The Court has drawn all reasonable inferences in favor of Defendants, as the nonmovants. See Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir. 2011).

         The Funds are jointly administered, multi-employer, labor management trust funds established and maintained pursuant to various collective bargaining agreements and trust agreements in accordance with Sections 302(c)(5) and (c)(6) of the Taft-Hartley Act, 29 U.S.C. §§ 186(c)(5) and (c)(6). Pl. 56.1 ¶ 1, ECF No. 60-1. The Funds provide fringe benefits to eligible employees on whose behalf employers in the construction industry contribute to the Funds pursuant to collective bargaining agreements with the Mason Tenders District Council of Greater New York (“Union”) to which such employers are bound. Id. ¶ 3. Plaintiff Mason Tenders District Council Welfare Fund is also the duly authorized collection agent for the Union and the Mason Tenders District Council Political Action Committee (“PAC”). Id. ¶ 5.

         At all times relevant to the action, Gibraltar, the employer, was a party to the Agreement with the Union. Id. ¶¶ 9-12.[3] The Agreement requires that Gibraltar make fringe benefit contributions to the Funds for every hour of “covered work”-that is, work performed by its employees within the trade and geographic jurisdiction of the Agreement. Id. ¶ 16. The Agreement also requires Gibraltar to deduct and remit dues checkoffs and PAC contributions from the wages of all authorized employees performing covered work. Id. ¶ 17.

         Gibraltar paid to the Funds at least $931, 468.30 in fringe benefit contributions from May 27, 2015 through December 27, 2016. Id. ¶ 41.

         The Agreement requires Gibraltar to permit the Funds or their designated representatives to inspect and audit Gibraltar's books and records to confirm payment of all contributions owed. Id. ¶ 18. Pursuant to a 2017 engagement letter, the Funds directed Schultheis & Panettieri, LLP (“S&P”) to inspect Gibraltar's books and records for the period of May 27, 2015 through December 27, 2016, and to identify whether Gibraltar had made all contributions to the Funds required under the Agreement, and to issue reports of any findings. Pl. Supp. 56.1 ¶ 4, ECF No. 54.[4]

         As part of the audit, S&P requested access to documents Gibraltar is required to maintain and provide the Funds and their representatives access to pursuant to the Agreement and the Funds' trust agreements, including to payroll records, certified payroll records, time sheets, job contracts, bank statements and cancelled checks, and payroll reports to all benefit funds. Id. ¶ 13. Because Gibraltar did not provide full documentation showing the scope of work performed by several of its employees, S&P requested additional documents. Id. ¶¶ 15-16.

         S&P completed review of Gibraltar's books and records on September 1, 2017, id. ¶ 22, and sent preliminary findings of the audit to Gibraltar by letter dated October 26, 2017, id. ¶ 24. Gibraltar neither responded to nor provided documentation disputing the preliminary findings. Id. ¶ 27. The audit was submitted to the Funds on December 6, 2017. Id. ¶ 28.

         The Independent Accountants' Report on Applying Agreed-Upon Procedures, dated November 29, 2017 (the “11/29/17 Report”), describes the procedures performed and the findings. Id. ¶ 29. The 11/29/17 Report found that Gibraltar failed to make fringe benefit contributions, and remit dues checkoffs, and PAC contributions in the principal amount of $1, 894, 698.89. Id. ¶ 31. The 11/29/17 Report also found Gibraltar to be substantially delinquent and that Gibraltar owed the Funds $235, 290.36 in imputed audit costs. Id. ¶ 32. Gibraltar disputed the 11/27/17 Report and provided the Funds with additional documentation. Id. ¶¶ 33, 35. S&P issued a revised report on April 11, 2018 (the “4/11/18 Report”), which found that Gibraltar failed to make fringe benefit contributions, and remit dues checkoffs, and PAC contributions in the principal amount of $1, 630, 003.71. Id. ¶ 37. The 4/11/18 Report also found that Gibraltar owed the Funds imputed audit costs in the amount of $202, 415.76. Id. ¶ 38.

         On April 26, 2018, Plaintiffs commenced this action against Defendants for delinquent fringe benefit contributions, dues checkoffs, and PAC contributions pursuant to the 4/11/18 Report. ECF No. 7. Based on documents received in discovery, S&P further adjusted the audit results. Pl. Supp. 56.1 ¶¶ 53-54. On December 12, 2018, S&P issued a revised report which stated that Gibraltar failed to pay fringe benefit contributions (the “12/12/18 Report”), and remit dues checkoffs and PAC contributions in the principal amount of $1, 239, 273.69. Id. ¶ 54. The 12/12/18 Report also found that Gibraltar owed the Funds imputed audit costs in the amount of $153, 862.12. Id. ¶ 55.

         Following additional discovery, S&P issued yet another revised report on April 2, 2019 (“4/2/19 Report”), which found that Gibraltar failed to pay $566, 555.67 in fringe benefit contributions, dues checkoffs, and PAC contributions. Id. ¶ 74. The 4/2/19 Report found that Gibraltar owed the Funds imputed audit costs in the amount of $70, 292.87. Id. ¶ 75.

         On April 17, 2019, the parties entered into a stipulation in which Defendants admitted, inter alia, that they are jointly and severally liable to the Funds for the 4/2/19 Report findings, including the dates, individuals, and hours for which contributions are due, and that they owe $527, 196.43 in principal fringe benefit contributions, and $39, 359.13 in principal dues checkoffs, and PAC contributions to the Funds for a total delinquency of $566, 555.67 for the audit period. Pl. 56.1 ¶¶ 19-22. In subsequent submissions, Defendants affirmed their liability to the Funds in the amount of $566, 555.67, and that they are liable to the Funds for all contractual and statutory damages including interest, liquidated damages, and attorney's fees and costs. Id. ¶¶ 25, 28-39, 44-45, 48-49; Def. Opp. at 1-2, ECF No. 62. Defendants further admit that Gibraltar is “substantially delinquent” in its payment of fringe benefit contributions, as the term is defined in the Agreement. Pl. 56.1 ¶ 42.

         Article VI § 17(f) of the Agreement provides that if an audit determines an employer to be delinquent in the payment of fringe benefit contributions to the Funds, an employer shall also pay interest on the unpaid amounts from the date due until the date of judgment at the rate prescribed under 26 U.S.C. § 6621, as well as reasonable costs and attorney's fees incurred. Id. ¶ 26.

         Additionally, the Agreement sets forth the Fund's entitlement to certain relief upon an entry judgment for the Fund by a court of competent jurisdiction, including the unpaid contributions, interest on unpaid contributions, reasonable attorney's fees and costs, and other legal or equitable relief as deemed appropriate by the court. Id. ¶ 27. The Agreement also sets forth a formula to calculate the imputed audit costs owed by an employer who is found to be “substantially delinquent” after an audit. Id. ¶ 40.

         DISCUSSION

         I. Le ...


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