MEMORANDUM and ORDER

JOHN T. ELFVIN, Senior District Judge

Plaintiffs commenced this action January 31, 2003 alleging, inter alia, that defendants Seaway Industrial Services, Inc. ("Seaway") and Griffin Industrial Services, Inc. ("Griffin") violated a collective bargaining agreement (the "cba"), section 515 of the Employee Retirement Income Security Act, 29 U.S.C. § 1145 ("ERISA"), and section 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185 ("Taft-Hartley Act"), by failing to make monetary contributions to the Laborers International Union of North America Local Union 91 (the "Union") and its employee benefit plan. After defendants failed to appear in this action, plaintiffs obtained an Entry of Default from the Clerk of the Court on September 11, 2003. On December 29, 2003 plaintiffs filed the present motion for default judgment under Rule 55(b)(2) of the Federal Rules of Civil Procedure ("FRCvP"), seeking unpaid employee benefit contributions, interest, liquidated damages, attorney's fees and costs in the sum of $75,378.41. For the reasons set forth below, plaintiffs' motion will be denied.

Under FRCvP 55, district courts may grant default judgment against a party that has failed to plead or otherwise defend. See Enron Oil Corp. v. Masonori Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). First, a party moving for default judgment must obtain an Entry of Default from the Clerk of the Court pursuant to FRCvP 55(a) and, second, the moving party must seek a default judgment from the Clerk of the Court or the Court, depending on the circumstances, as set forth in FRCvP 55(b).

Where the moving party seeks default judgment from the district court, FRCvP 55(b)(2) governs and provides that "[i]f, in order to enable the court to enter judgment or to carry it into effect, it is necessary to * * * establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper * * *." This language indicates that judgment against a defaulting party should be granted only after careful examination of the moving party's claim by the district court. Enron Oil Corp., at 96. Indeed, "a defendant's default does not in itself warrant a court in entering a default judgment [because] [t]here must be a sufficient basis in the pleadings for the judgment entered."

Consequently, the district court has the sound discretion to ascertain whether sufficient grounds exist for granting default judgment. Enron Oil Corp., at 95. In exercising this discretion, the district court may evaluate the underlying merits of the substantive claim. A district court may also consider, inter alia, the possibility of prejudice to the plaintiffs if default judgment is not granted, the sufficiency of the complaint, the possibility of disputed material facts, whether the defendant's default was due to neglect and the strong federal policy favoring decisions on the merits. Ironworkers Local 6 Health Care Fund v. Stumm-Western Const, Corp., 1996 WL 528613 at *1 (W.D.N.Y. 1996) (denying motion for default judgment to the extent that the record was insufficient to ascertain the amount of damages owed in ERISA action involving collective bargaining agreements). Nonetheless, the Second Circuit Court of Appeals has cautioned that "defaults are generally disfavored and are reserved for rare occasions" and that, when there is doubt as to the propriety of default relief, "the doubt should be resolved in favor of the defaulting party." Enron Oil Corp., at 96.

Turning to the facts of this case, plaintiffs allege that defendants failed to make payments to the Union as third-party beneficiary as allegedly is required by the cba. The enforcement provisions of the cba allow plaintiffs to recover delinquent contributions to the various funds, liquidated damages, interest, attorney's fees and any court costs incurred in collecting the delinquent contributions from the employer, so long as the contributions have not been reimbursed by the Construction Industry Fund. The cba also requires employers to post a bond to guarantee contributions to the fringe benefits funds if they are not assured by the Construction Industry Fund. Plaintiffs have not presented any supporting documentation that would indicate whether or not the delinquent contributions were reimbursed by the Construction Industry Fund or whether a bond was posted by Seaway or Griffin in lieu of assurances by the Construction Industry Fund. Consequently, because there is no evidence whether the Construction Industry Fund reimbursed the Union or whether defendants had supplied a bond, default judgment against defendants is inappropriate at this time.

The parties to the cba were the Union and the Building Industry Employers Association of Niagara County. From a review of the cba, Seaway is a party to and is bound by the cba as evidenced by the signature of John R Griffin, the Vice President of Operations for Seaway. It is not apparent however, that Griffin was a party to, or is bound by, the cba. The documentation submitted suggests that Griffin was a subcontractor to Seaway. The cba provides that contractors are required to execute an agreement with all subcontractors, mandating that the subcontractor abides by the terms and conditions of the cba. Plaintiffs, however, have not presented any supporting documentation that would establish that Griffin was bound by the cba.

As this Court noted in Journeyman Plumbers

"[t]he Fifth Circuit Court of Appeals's decision in Nishimatsu is instructive. Nishimatsu, at 1206. Therein, plaintiff brought suit against defendant Houston Nat'l Bank for breach of contract. Ibid. The Fifth Circuit Court of Appeals vacated the district court's grant of default judgment against defendant because the contract only identified such defendant as an agent of one of the contracting parties. Ibid. The court held that such defendant could challenge entry of default judgment on appeal because he was not a party to the contract upon which default judgment was granted. Ibid. Accordingly, plaintiff's motion for default judgment was inadequate where-as here-its pleading failed to demonstrate that the defendant was liable under the contract, Ibid."

Likewise, Griffin is not identified in the cba as a party and no other document establishes that it is bound by the cba.

This Court has held that, "[o]nce a default judgment has been entered, the allegations of a complaint which establish a defendant's liability are to be accepted as true, except for those relating to the amount of damages." Plaintiffs, however, have not established that defendants are liable under the cba. A "default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover." Consequently, a district court, in its sound discretion, may require the moving party to present proof of facts necessary to establish liability because district courts may only grant a default judgment where a sufficient basis is pled in the complaint.

Without evidentiary proof that, inter alia, the Construction Industry Fund has not reimbursed the Union for defendants' delinquent contributions or linking Griffin to the cba, this Court declines to grant plaintiffs' motion for default judgment. These insufficiencies prevent plaintiffs from setting forth "a sufficient basis in the pleadings for [default] judgment." Am. Centennial Ins. Co., at*18. Plaintiffs' motion will be denied without prejudice to a renewal of their motion if and when they produce supplemental documentation establishing that the delinquent contributions were not reimbursed by the Construction Industry Fund or otherwise and that Griffin agreed to be bound by the terms of the cba. Absent such a showing, default judgment is of doubtful propriety and the interests of justice compel this Court, in its sound discretion, to resolve such doubt in favor of defendant. Enron Oil Corp., at 96.

Accordingly, it is hereby ORDERED that plaintiffs' motion for default judgment is denied without prejudice.