Opinion
Civil Action No. 1:14-cv-161-LMB-TRJ
04-14-2015
BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, et al., Plaintiffs, v. CAMELOT CONSTRUCTION, INC., Defendant.
REPORT AND RECOMMENDATION
This matter is before the court on the plaintiffs' motion for default judgment (no. 36) against defendant Camelot Construction, Inc. ("Camelot") for failure to make contributions and pay withdrawal liability pursuant to a collective bargaining agreement in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1001 et seq., and the Labor Management Relations Act ("LMRA" or "Taft-Hartley Act") of 1947, 29 U.S.C. § 141 et seq. Defendant was served with the second amended complaint (no. 31) on November 18, 2014. No answer or other responsive pleading to the second amended complaint has been filed and the Clerk has entered the default of defendant. Based on plaintiffs' memorandum in support and exhibits attached thereto, the magistrate judge recommends that default judgment be entered against defendants in the total amount of $112,333.28.
The original complaint (no. 1) was filed on February 12, 2014, and the first amended complaint (no. 7) was filed on April 24, 2014, adding a delinquent contributions claim to the prior withdrawal liability claim. On October 3, 2014, defendant's answer (no. 11) to the first amended complaint was struck (no. 24) because the corporation was no longer represented by counsel. On October 21, 2014, the currently operative second amended complaint (no. 31) was filed correcting certain withdrawal liability amounts.
I. Standard
Default judgment is appropriate if the well-pled allegations of the complaint establish a plaintiff's entitlement to relief and the defendant has failed to plead or defend within the time frame contained in the rules. Fed. R. Civ. P. 55; Music City Music v. Alfa Foods, Ltd., 616 F. Supp.1001, 1002 (E.D. Va. 1985). By defaulting, a defendant admits plaintiff's well-pled allegations of fact, which then provide the basis for judgment. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (citing Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975); Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006) (default has the effect of admitting factual allegations in complaint). Here, as defendant has not answered or otherwise timely responded, defendant has admitted the well-pled allegations of fact contained in the second amended complaint.
II. Facts
The following facts are established by the complaint and by plaintiffs' motion and affidavits in support of default judgment.
Plaintiffs, separate and individual Boards of Trustees of the Sheet Metal Workers' National Pension Fund ("NPF"), the International Training Institute for the Sheet Metal and Air Conditioning Industry ("ITI"), the National Energy Management Institute Committee ("NEMI"), the Sheet Metal Occupational Health Institute Trust Fund ("SMOHIT"), and the National Stabilization Agreement of the Sheet Metal Industry ("SASMI") (collectively, the "Funds"), are the trustees of trust funds created and maintained pursuant to the LMRA, 29 U.S.C. § 186(c), and of multiemployer employee benefit plans as defined in ERISA, 29 U.S.C. § 1002(37). Compl. ¶ 6, No. 31. The trustees are "fiduciaries" within the meaning of 29 U.S.C. § 1002(21), and the Funds are administered in Fairfax, Virginia. Compl. ¶¶ 4, 6; Shaw Decl. ¶ 2, No. 38.
Defendant Camelot Construction, Inc., is a New Mexico corporation with a principal place of business in Albuquerque, New Mexico, and is an employer engaged in an industry affecting commerce as defined by 29 U.S.C. §§ 152(2), 1002(5), (11), & (12). Compl. ¶¶ 8-9. Until April 1, 2013, Camelot employed members of Sheet Metal Workers' International Association Local Union No. 49 ("Local Union No. 49"), a labor organization representing employees for the purpose of collective bargaining. Compl. ¶ 11; Shaw Decl ¶¶ 5, 7. Defendant was bound by a collective bargaining agreement ("Agreement"), with Local Union No. 49. Compl. ¶ 12; Shaw Decl. ¶ 5. The Agreement obligated Camelot to abide by the terms and conditions of the Agreement and Declaration of Trust establishing the Funds and any amendments thereto ("Trust Documents"), and to submit monthly remittance reports and contribution payments to the Funds on behalf of its employees who were covered by the Agreement. Compl. ¶¶ 14, 17; Shaw Decl. ¶¶ 6, 16.
On September 17, 2012, Anthony Pipito, Camelot's President, sent a letter to Local Union No. 49 stating that its collective bargaining agreement contract would terminate as of March 31, 2013. Shaw Decl. ¶ 7 & Ex. 3. The NPF determined that a "complete withdrawal," as defined by 29 U.S.C. § 1383, from the fund had occurred and that Camelot's withdrawal liability was $62,130.86, payable in seven quarterly payments of $9,123.98 and a final payment of $185.62. Compl. ¶¶ 30-31, 34; Shaw Decl. ¶¶ 8-9, 12 & Ex. 4. The next month, in October 2012, the Funds' auditor conducted a contribution compliance audit of Camelot's payroll records to determine whether all required contributions had been paid. Compl. ¶ 23; Shaw Decl. ¶ 18. The audit revealed that Camelot had failed to pay contributions to the Funds for the months of January 2009 through December 2011. Compl. ¶ 24; Shaw Decl., ¶ 20 & Ex. 8. Additionally, Camelot later failed to pay contributions to the Funds in a timely manner for the months of November 2012 and February 2013. Compl. ¶ 28; Shaw Decl. ¶ 21. To date, Camelot has made no withdrawal liability or delinquent contribution payments. Compl. ¶¶ 28, 39; Shaw Decl. ¶¶ 13, 20.
On or about May 17, 2013, Camelot received a notice and demand for payment of withdrawal liability from NPF, in accordance with 29 U.S.C. §§ 1382(2) and 1399(b)(1), informing it that its withdrawal liability was $13,425.91 and its first payment was due on or before June 14, 2013. Compl.¶¶ 32-33; Shaw Decl. ¶ 10 & Ex. 5. On or about December 9, 2013, Camelot received NPF's revised notice based on the actuarial valuation for the year ending December 31, 2012, indicating that Camelot's withdrawal liability was actually $62,130.86. Compl. ¶ 34; Shaw Decl. ¶ 12 & Ex. 6.
On October 15, 2014, the NPF's Trustees determined that there was a substantial likelihood that withdrawal liability payments would not be made due to Camelot's financial condition, including its representation that the company was likely to go out of business in the near future. Compl. ¶ 35; Shaw Decl. ¶ 14. Accordingly, the Trustees declared Camelot and all trades or businesses under common control to be in immediate default within the meaning of 29 U.S.C. § 1399(c)(5)(A). Id. Plaintiffs now seek a money judgment awarding NPF and the Funds all unpaid withdrawal liability and contribution payments plus accrued interest, liquidated damages, late fees, audit expenses, and attorneys' fees and costs pursuant to the collective bargaining agreement, the Trust Documents governing the Funds, the LMRA, and ERISA as amended by the MPPAA.
An employer is in default if it fails to make payments in accordance with the schedule set forth by the plan sponsor and does not cure this failure within sixty days of written notification. 29 U.S.C. § 1399(c)(5). In such a case, the plan sponsor may demand immediate payment in full of all outstanding withdrawal liability payments plus accrued interest. Id.
III. Jurisdiction and Venue
This court has subject matter jurisdiction over this action because it is brought under federal statute. Personal jurisdiction and venue are proper under 29 U.S.C. §§ 1132(e)(2) and 185(a) and 28 U.S.C. § 1391(b), as the Funds in question are administered within the Eastern District of Virginia. See also Bd. of Trs., Sheet Metal Workers Nat'l Pens. Fund v. McD Metals, Inc., 964 F. Supp. 1040, 1045 (E.D. Va. 1997).
IV. Discussion and Findings
Having examined the record, the magistrate judge finds that the well-pled allegations of fact in the complaint as well as plaintiffs' memorandum in support of default judgment and exhibits attached thereto establish that defendant failed to make interim withdrawal liability payments pursuant to the payment schedule set forth by the plan sponsor, the entire amount of which is now due and owing. The magistrate judge also finds that defendant failed to make contributions owed to the Funds on behalf of Local Union No. 49 members for the months of January 2009 through December 2011 and failed to timely make contributions for the months of November 2012 and February 2013.
Pursuant to ERISA, 29 U.S.C. § 1145, employers must comply with their obligations to make those fund contributions required by collective bargaining agreements or multiemployer plans. To enforce payment of delinquent contributions, ERISA, 29 U.S.C. § 1132, allows for the recovery of delinquent contribution in federal court along with accrued interest, liquidated damages, and attorneys' fees and costs. Under the MPPAA, an employer that withdraws from a multiemployer plan either completely or partially is also obligated to pay to that plan withdrawal liability, the allocable amount of unfunded vested benefits as determined by a statutory formula. 29 U.S.C. § 1381(a)-(b). An employer's failure to make a withdrawal liability payment within the time period prescribed by the plan schedule is treated "in the same manner as a delinquent contribution." 29 U.S.C. § 1451(b). In addition, the LMRA creates a federal cause of action for breach of a collective bargaining agreement without regard to the amount in controversy or citizenship of the parties. 29 U.S.C. § 185(a).
Defendant has failed to make any delinquent contribution and withdrawal liability payments to the Funds in violation of the collective bargaining agreement, Trust Documents, and 29 U.S.C. §§ 185, 1145 and 1381, and therefore plaintiffs are entitled to default judgment in their favor. Accordingly, the magistrate judge finds that plaintiffs are entitled to recover the total amount of $112,333.28, as set forth more fully below.
Delinquent Withdrawal Liability and Delinquent Contributions ,
Interest , Liquidated Damages, and Late Fees
The Trust Documents, Article V, Section 2 and Appendix A, Section 7, require delinquent employers to pay (1) interest at the rate of 0.0233% per day, compounded daily, from the date due until the date paid; (2) liquidated damages equal to the greater of interest or 20% of the delinquent contributions; and (3) late fees, for delinquent contributions paid prior to litigation but more than five days late, equal to the greater of 10% of the late contributions or $50.00. Shaw Decl. ¶ 22 & Ex. 2.
The Declarations of Walter Shaw, the Billing and Eligibility Manager of the NPF, and the exhibits attached thereto establish that defendant owes $62,130.86 and $3,667.76, respectively, in withdrawal liability and delinquent contribution payments as well as accrued interest, liquidated damages, and late fees as follows:
| Fund | WithdrawalLiability | Interest to1/2/15 | LiquidatedDamages | Total |
|---|---|---|---|---|
| NPF | $62,130.86 | $8,769.01 | $12,426.17 |
| Fund | Contributions | Interest to12/23/14 | LiquidatedDamages | LateFees | |
|---|---|---|---|---|---|
| NPF | $2,252.00 | $960.07 | $450.40 | $183.48 | $3,845.95 |
| ITI | $48.00 | $20.46 | $9.60 | $3.34 | $81.40 |
| NEMI | $12.00 | $5.12 | $2.40 | $0.93 | $20.45 |
| SMOHIT | $8.00 | $3.41 | $1.60 | $0.66 | $13.67 |
| SASMI | $485.49 | $269.56 | $33.58 | $2,136.39 | |
| Total | $3,667.76 | $1,474.55 | $733.56 | $221.99 | $6,097.86 |
Plaintiffs' motion for default judgment incorrectly calculates the sum of these three figures at $83,161.14. The undersigned relies instead on the amounts reported in the Declaration of Walter Shaw and supported by the attached exhibit 7.
In this column, the amounts are based on the magistrate judge's calculation of the total amount due each individual fund based on the amounts found in the preceding columns and supported by the record. Plaintiffs' motion for default judgment, the Declaration of Walter Shaw, and exhibit 9 incorrectly reflect the following totals: $3,796.22, $80.34, $20.18, $13.49, and $2,107.99. However, the total amount due to all of the funds, $6,097.86, is correctly reflected in these portions of the record.
The Payroll Audit Summary reflects $1,359.11 as the amount of delinquent contribution owed to SASMI and $3,679.11 as the total amount of delinquent contributions owed all Funds. Shaw Decl. Ex. 8. However, plaintiffs' complaint and motion for default judgment as well as the Declaration of Walter Shaw and attached exhibit 9 reflect the amounts $1,347.76 and $3,667.76, respectively. Based on the record before the court, there is no way to verify the correct amount of contributions due therefore the magistrate judge recommends a judgment based on the lesser amount reflected in the majority of the record. --------
Therefore, the magistrate judge finds that plaintiffs are collectively entitled to the following.
| Fund | DelinquentPayments | AccruedInterest | LiquidatedDamages | LateFees | Total |
|---|---|---|---|---|---|
| All | $65,798.62 | $10,243.56 | $13,159.73 | $221.99 | $89,423.90 |
Audit Expenses , Attorneys' Fees, and Costs
The Trust Documents, Article V, Section 2 and Appendix A, Section 7, require a delinquent employer to pay reasonable attorneys' fees and costs if legal counsel is engaged to assist in the collection of delinquent contributions and withdrawal liability, and Article V, Section 3, provides that an employer may also be required to pay auditor's fees and expenses as well as all attorneys' fees and costs incurred in collecting said fees or expenses. Shaw Decl. ¶ 19. Based on the Declaration of Christopher Leins, counsel to plaintiffs, and the exhibits attached thereto, plaintiffs have incurred attorneys' fees and costs in the amount of $19,959.00 and $1,480.38, respectively, in connection with this matter. Leins Decl. ¶¶ 5-6 & Ex. 1, No. 39 (providing a detailed account of hours billed, attorneys' fees and costs). Further, Walter Shaw avers under oath that $1,470.00 is an accurate total of the auditor's fees, expenses, and costs incurred by the NPF. Shaw Decl. ¶ 26 & Ex. 9. The magistrate judge has examined the record and finds that these amounts are reasonable compensation for work necessarily expended to enforce plaintiffs' rights.
In sum, upon review of the entire record, the magistrate judge finds that the submitted pleadings and affidavits establish that plaintiffs are entitled to default judgment and relief in accordance with the following:
| Award | Total |
|---|---|
| Delinquent Payments | $65,798.62 |
| Accrued Interest | $10,243.56 |
| Liquidated Damages | $13,159.73 |
| Audit & Late Fees | $1,691.99 |
| Attorneys' Fees & Costs | $21,439.38 |
| TOTAL Relief Due | $112,333.28 |
Recommendation
The magistrate judge recommends that default judgment be entered against defendant Camelot Construction, Inc., in favor of all plaintiffs, in the amounts of $112,333.28.
Notice
By means of the court's electronic filing system, and by mailing a copy of this report and recommendation to defendant at its address for service of process, the parties are notified as follows. Objections to this report and recommendation must be filed within fourteen (14) days of service on you of this report and recommendation. A failure to file timely objections to this report and recommendation waives appellate review of the substance of the report and recommendation and waives appellate review of a judgment based on this report and recommendation.
/s/_________
Thomas Rawles Jones, Jr.
United States Magistrate Judge April 14, 2015
Alexandria, Virginia