Opinion
No. 02 Civ. 9044 (LTS)(GWG)
April 25, 2003
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 as Director, and Anthony Duce Silveri, as Business Manager, of the Mason Tenders District Council (together with the Funds, "Plaintiffs") for an order granting them a default judgment against defendants Duce Construction Corporation and Roy McCreesh, an officer of Duce ("Defendants"). Plaintiffs bring this action under sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") ( 29 U.S.C. § 1132(a)(3), 1145), and section 301 of the Labor-Management Relations Act of 1947 (the "Taft-Hartley Act") ( 29 U.S.C. § 185), alleging that Defendants violated their collective bargaining agreement with plaintiff Mason Tenders District Council of Greater New York ("Union") and/or the respective trust agreements 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 Committee ("NYLPAC") contributions to the Union when due, and by failing to permit and cooperate in the conduct of audits. Defendants never appeared in this action, and Plaintiffs move for entry of a default judgment against Defendants, awarding them the contractual fee for failure to provide audit and litigation expenses (a total amount of $1,235.50), ordering Defendants to permit and cooperate in the conduct of an audit of Defendant Duce Construction Corporation's books and records for the period of June 1, 1996 to the present, and ordering Defendants to post and maintain a $6,000.00 bond to guarantee payment to Plaintiffs of all fringe benefit contributions, dues checkoffs, and NYLPAC contributions that become due and owing. (See Pl.'s Proposed Judgment by Default; Pl.'s Statement for Judgment.)
The Court has considered thoroughly all submissions related to this motion. For the following reasons, Plaintiffs' motion is granted in part, and damages and costs are awarded to the extent set forth below.
Background
The Complaint was filed on November 13, 2002. The record reflects that Plaintiffs filed with the Court on December 6, 2002 an affidavit of service of the Summons and Complaint as to Defendant Duce Construction, attesting to personal service of the Summons and Complaint on Debra Wood, an agent of the Secretary of State of the State of New York, on November 26, 2002; Plaintiff also filed an affidavit of service attesting to service of the Summons and Complaint on Defendant Rory McCreesh by leaving the same with a person of suitable age and discretion at McCreesh's actual place of business, and mailing a copy to McCreesh's actual place of business in accordance with New York CPLR section 308(2). On December 3, 2002, the Court issued an order scheduling the initial pre-trial conference in the case for February 28, 2003. Plaintiffs served the December 3, 2002 order on Defendants. On January 9, 2003, 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. Plaintiffs obtained a certificate of the Clerk of the Court on January 15, 2003 noting Defendant's default.
On January 22, 2003, Plaintiffs filed a motion for default judgment against Defendants. The record includes a certificate of mailing, indicating that a copy of the motion and supporting papers were served on Defendants. No opposition papers were received and Defendants failed to appear for the pre-trial conference on February 28, 2003.
Discussion
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). Neither Defendant has responded to the Summons and Complaint, nor has either sought additional time to respond to the Complaint. Defendants have failed to appear before or contact the Court, despite having been served with the Summons and Complaint, a Preliminary Pre-Trial Order dated December 3, 2002, directing the parties to appear at a pre-trial conference scheduled for February 28, 2003, and the instant 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 plaintiff's 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 Defendants, 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 Defendants have failed to proffer any defense Duce 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 Defendants have a meritorious defense — need not be addressed.
In addition to documenting the proper service of its detailed Complaint, Plaintiffs have, in response to the Court's January 9, 2003 order and the further direction of the Court at the February conference, 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 a copy of the Collective Bargaining Agreement ("CBA") between Duce Construction and Plaintiff Mason Tenders District Council ("Union"), which stipulates that defendant Duce pay a penalty of $400 in the event it fails to produce records and books for an audit and must pay reasonable costs and attorney's fees incurred by the Funds in bringing an action to obtain an audit. (CBA, Ex. A to Giammona Aff., at 12.). Defendant McCreesh, who signed the agreement on behalf of Duce, also agreed "to be personally bound by and to assume all obligations of [Duce] provided in [the CBA]." (CBA at 18.)
Additionally, the record reflects that Defendants failed to cooperate with an audit as provided in the CBA. (Giammona Aff. ¶ 7.) In light of Defendants' failure to respond, there is no indication that requiring Plaintiffs 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 Plaintiffs.
Plaintiffs seek to recover $1,235.50, 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 Attorney and Paralegal Services Affs. attached to Proposed Judgment and Exs. B-E.) Plaintiffs also seek from the Court an injunction ordering Defendants to permit and cooperate in the conduct of an audit of Duce's books and records for the period of June 1, 1996 to the present.
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).
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, Plaintiffs may seek an injunction in a successful ERISA action for 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).
The evidence proffered by Plaintiffs supports a granting of the part of the equitable relief requested. In his affidavit, Michael Vollbrecht, 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. (Vollbrecht Aff. ¶¶ 12, 19.)
Based on the papers submitted by Plaintiffs in connection with the instant motion, and the express provision of the CBA requiring Defendants 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 requiring Defendants' cooperation. 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).
Plaintiffs' request for injunctive relief requiring the posting of a bond is granted to the extent that Defendants will be required to post a bond in the amount of $3,000 to guarantee payment to Plaintiffs of all fringe benefit contributions, dues checkoffs, and NYLPAC contributions that become due and owing. Under the CBA, the amount of the required bond depends on the number of hours of work performed for Defendants by Mason Tenders employees; $3,000 is the minimum amount required where employess have worked between 0 and 1,999 hours in the preceeding year. (CBA at 10.) Because Plaintiffs have presented no evidence as to the hours of work performed by Mason Tenders employees during the relevant time period this minimum amount is consistent with the CBA's provisions.
Conclusion
Based on the allegations of the Complaint and the additional evidence presented to the Court, the Court finds willful Defendants' 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 Defendants 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 Defendants for $1,235.50. The Court also hereby issues an injunction requiring Defendants immediately to permit and cooperate in the conduct of an audit, as requested by Plaintiffs, of Duce's books and records for the period of June 1, 1996 to the present and to post a bond in the amount of $3,000, in accordance with the CBA.
Judgment will be entered accordingly.
IT IS SO ORDERED.