Opinion
No. 01 Civ. 0641 (LTS) (THK)
July 31, 2002
MEMORANDUM ORDER
This matter comes before the Court on the unopposed motion of plaintiffs Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, Training Fund, New York State Laborers-Employers Cooperation and Education Trust Fund, New York Laborers' Health and Safety Trust Fund and, Building Contractors Association Industry Advancement Program (collectively, the "Funds"), John L. Virga in his fiduciary capacity of Director, and Anthony Silveri, as Business Manager of the Mason Tenders District Council (together with the Funds, "Plaintiffs") for an order granting them a default judgment against defendant Bold Construction Co., Inc. ("Defendant"). Plaintiffs bring this action under sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974 as amended ( 29 U.S.C. § 1132 (a)(3), 1145) ("ERISA") and section 301 of the Labor-Management Relations Act of 1947 ( 29 U.S.C. § 185) (the "Taft-Hartley Act"), alleging that Defendant violated its collective bargaining agreement with plaintiff Mason Tenders District Council of Greater New York ("Union") and/or the respective trust agreement of the FUNDS, and/or ERISA by failing, refusing or neglecting to pay or submit required monetary contributions or reports to the pension funds and remit dues checkoffs and New York Laborers Political Action Commitee ("NYLPAC") contributions to the Union when due, and by failing to permit and cooperate in the conduct of audits. Defendant never appeared in this action, and Plaintiffs move for entry of a default judgment against Defendant, awarding them the contractual fee for failure to provide audit and litigation expenses (a total amount of $2,502.00), and ordering Defendant to permit and cooperate in the conduct of an audit of Defendant's books and records for the period of March 1, 1999 to March 15, 2001. See Pl.'s Statement for Judgment; Pl.'s Proposed Judgment by Default.)
The Court has considered thoroughly all submissions related to this motion and the decision to be rendered reflects such consideration. For the following reasons, Plaintiffs' motion is granted, and damages and costs are awarded to the extent set forth below.
The Complaint was filed on January 26, 2001. The record reflects that Plaintiff filed with the Court on February 14, 2001 an affidavit of service of the Summons and Complaint as to Defendant, which was delivered personally to Tammy Alexander, an agent of the Secretary of State of the State of New York, on January 31, 2001. On March 7, 2001, the Court issued an order giving Plaintiff leave to make a motion for a default judgment supported by evidentiary material sufficient to meet its burden of proof on its direct case had a trial been held in this action.
On March 15, 2001, Plaintiff's filed a motion for default judgment against Defendant. The record includes a certificate of mailing, indicating that a copy of the motion and supporting papers were served on Defendant. No opposition papers were received and Defendant failed to appear for a pre-trial conference on May 4, 2001, pursuant to an order dated February 1, 2001. The conference was adjourned until June 14, 2001, when Defendant again failed to appear.
On June 15, 2001, Plaintiffs filed a notice of renewal of motion for default judgment. Plaintiffs' affidavit of service indicates that the renewed motion was served on Defendant by mail on June 13, 2001. Plaintiffs obtained a certificate of the Clerk of the Court on June 15, 2001, noting Defendant's default. On March 26, 2002, the Court terminated the original motion for default judgment, filed on March 19, 2001, and took the renewed motion for default judgment under advisement.
The Federal Rules of Civil Procedure require that a defendant respond within 20 days after being served with the Summons and Complaint. See Fed.R.Civ.P. 12(a)(1)(A). Defendant has not responded to the Summons and Complaint, nor has it sought additional time to respond to the Complaint. Defendant has failed to appear before or contact the Court, despite having been served with the Summons and Complaint as well as a Preliminary Pre-Trial Order dated, February 1, 2001, directing the parties to appear at a pre-trial conference scheduled for May 4, 2001, and Plaintiffs' original default motion papers, in addition to the instant notice of motion and supporting documentation.
In deciding a motion for default judgment, the Court considers the following three factors: 1) whether the defendant's default was willful; 2) whether defendant has a meritorious defense to plaintiffs claims; and 3) the level of prejudice the non-defaulting party would suffer as a result of the denial of the motion for default judgment. See Mason Tenders District Council v. MM Contracting Consulting, 193 F.R.D. 112, 114-15 (S.D.N.Y. 2000). Dispositions of motions for default judgment are left to the sound discretion of the district court. See Shah v. New York State Dep't of Civil Service, 168 F.3d 610, 615 (2d Cir. 1999).
"[T]he core function of service is to supply notice of the pendency of a legal action, in a matter and a time that afford the defendant a fair opportunity to answer the complaint and present defenses and objections." Henderson v. United States, 517 U.S. 654, 672 (1996), quoted in Citadel Management, Inc. v. Telesis Trust. Inc., 123 F. Supp.2d 133, 145 (S.D.N.Y. 2000). An entry of default judgment should be made only where there was willful default, such that the failure to answer was more than mere negligence or carelessness. See SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998). In light of all the circumstances previously outlined, the Court finds that the Defendant, having failed to respond in any way to the Summons and Complaint or otherwise make any appearance in this action and having failed to provide any explanation for its failure to defend, have defaulted willfully. Since Defendant have failed to proffer any defense and are therefore deemed to have admitted the well-pleaded allegations of the Complaint, other than those as to the amount of damage (Fed.R.Civ.P. 8(d)), the second factor — of whether Defendant has a meritorious defense — need not be addressed.
In addition to documenting the proper service of its detailed Complaint, Plaintiff has, in response to the Court's March 7, 2001 order, served on Defendants and submitted to the Court affidavits setting forth the evidence it would have presented on its affirmative case had the matter gone to trial. This evidence includes relevant portions of the Union Agreement, which stipulates that Defendant pay a penalty of $400 in the event Defendant fails to produce records and books for an audit and must pay reasonable costs and attorney's fees incurred for bring an action for Defendant's failure to cooperate in an audit. (Kravitz Aff. ¶¶ 13, 14). The record also reflects that Defendant failed to cooperate with an audit as provided in the Union Agreement. (Id. ¶ 15.) In light of Defendants' failure to respond, there is no indication that requiring Plaintiff to take further steps prior to a determination on the merits would be effective in eliciting a response from Defendants. Under these circumstances, denial of this motion would be unfairly prejudicial to Plaintiff.
Plaintiff seeks to recover $2,502.00, which includes costs permitted under 29 U.S.C. § 1132 (g)(2)(D), a contractual fee for failure to provide an audit, and attorneys' fees. Plaintiffs have submitted affidavits with a detailed accounting of attorneys' fees. (See Ex.s C-H.) Plaintiffs also seek from the Court an injunction ordering Defendant to permit and cooperate in the conduct of an audit of Defendant's books and records for the period of March 1, 1999 to March 15, 2001. Pursuant to 29 U.S.C. § 1132 (G)(2)(E), a court shall award a fund which prevails in an action brought under Section 1145 "such other legal or equitable relief as the court deems appropriate." 29 U.S.C.A. section 1132(g)(2)(E) (West 1999). Accordingly, Plaintiff may seek an injunction in a successful ERISA action seeking nonpayment of contributions. See. e.g. Beck v. Levering 947 F.2d 639, 641 (2d Cir. 1991) (ERISA provides for injunctive remedies), cert. denied, 504 U.S. 909, 112 S.Ct. 1937, 118 L.Ed.2d 544 (1992); Mason Tenders Dist. Council Welfare Fund v. Logic Constr. Corp,. 7 F. Supp.2d 351, 359 n. 45 (S.D.N.Y. 1998).
29 U.S.C. § 1132 (g)(2)(D) provides:
(g) Attorney's fees and costs; awards in actions involving delinquent contributions. . .
(2) In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan — . . .
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, . . .29 U.S.C.A. § 1132(g)(2)(D) (West 1999).
The evidence proffered by Plaintiffs supports a granting of the equitable relief requested. In his affidavit, Lawrence A. Kravitz, an attorney for Plaintiffs, represents that production of books and records is necessary because Plaintiffs need them to compute the "principal amount of fringe benefit contributions" and "principal amount of dues checkoffs and NYLPAC contributions to be claimed" by Plaintiffs. (Kravitz Aff. ¶¶ 12, 19.) Based on the papers submitted by Plaintiffs in connection with the instant motion, and the express authorization contained in the various agreements requiring Defendant to produce books and records upon request of Plaintiffs for the purposes of conducting an audit, the Court finds that Plaintiffs have met their burden in seeking an injunction and, thus, are entitled to the production of records and injunctive relief requested. See I.B.E.W. Local No. 910 Welfare. Annuity. and Pension Funds ex rel. Love. Dexelectrics, Inc., 98 F. Supp.2d 265, 277 (N.D.N.Y. 2000).
Based on the allegations of the Complaint and the additional evidence presented to the Court, the Court finds willful Defendant's failure, refusal, or neglect to pay or submit required monetary contributions or reports to the Funds and remit dues checkoffs. The Court also finds that Defendant failed to make NYLPAC contributions to the Union when due and failed to permit and cooperate in the conduct of audits.
Judgment will be entered against Defendant for $2,502.00. The Court also hereby issues an injunction requiring Defendant to permit and cooperate in the conduct of an audit, as requested by Plaintiffs, of Defendant's books and records for the period of March 1, 1999 to March 15, 2001. Judgment will be entered accordingly.
SO ORDERED.