Mingoia v. Giamboi Bros

Full title: CARMINE MINGOIA, as Trustee of the Operative Plasterers' and Cement…

Court: United States District Court, S.D. New York

Date published: Sep 17, 2003

02 CIV. 6732 (DLC) (S.D.N.Y. Sep. 17, 2003)

Opinion

02 CIV. 6732 (DLC)

September 17, 2003

Christopher Smith, Trivella, Forte Smith, LLP, New York, New York, Attorneys for Plaintiffs.

John H. Hall, Jr., Shaw, Licitra, Esernio, Schwartz Pfluger, P.C., Garden City, New York, Attorneys for Defendant Joseph A. Giamboi.

MEMORANDUM OPINION AND ORDER

DENISE COTE, District JudgePage 2

Defendant Joseph A. Giamboi ("Giamboi") has brought this motion under Rules 55, 60(b) and 62, Fed.R.Civ.P., to vacate a default judgment entered against him on June 5, 2003. This action, which was filed on August 26, 2002, was brought pursuant to Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and Sections 515 and 502(a) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132, 1145, and involves deficiencies in the payment of employee benefit contributions by the defendants. Giamboi contends that he is not personally liable for any alleged deficiencies. Plaintiffs argue that Giamboi is liable under a collective bargaining agreement signed by his agent. For the reasons that follow, the motion to vacate is granted.

BACKGROUND

The following facts are as alleged in the complaint or undisputed. The plaintiffs include jointly administered employee labor-management trust funds (the "Funds"), which are administered on behalf of the Plasterers' and Cement Masons's International, Local 530 (the "Union"), and the trustees or fiduciaries (the "Trustees") of the Funds. The corporate defendants are New York corporations that have employed members of the Union. Giamboi is the president or a principal of Giamboi Brothers. Since at least July 1, 1999, the corporate defendants have been members of the multiemployer collective bargaining association known as the Plastering and Supply Fireproofing Contractors of Greater New York, Inc. (the "Association").

The Union and the Association have been parties to several collective bargaining agreements governing the rates of pay and working conditions of individuals employed by the corporate defendants. The most recent agreement is effective from July 1, 2002 through 2006 and the prior agreement was effective from July 1, 1999 through June 30, 2002 (collectively the "Agreement"). Pursuant to the Agreement the defendants were required to remit monthly payments to the Funds and to submit, upon request, to an audit by the Funds of the corporate defendants' books and records. The defendants have not paid fund contributions since April 2002, and have not agreed to permit the Funds to audit their books and records. The terms of the Agreement impose personal liability on all of the principals of the corporations that are members of the Association.

The Complaint was filed on August 26, 2002. Service of the Complaint and Summons was effected on Giamboi by personal delivery on September 19. Having not answered, he was served with a notice of motion for a default judgment by certified mail on December 6. Giamboi attended a court conference on this motion on January 13, 2003. Giamboi attended a second conference, at which he was represented by counsel, on February 13. At a third court conference on May 28, the Court, granted plaintiffs' motion for entry of a default judgment against all of the defendants but set a schedule for Giamboi to move by June 13 to vacate that judgment.¹ Giamboi served his motion June 20. It is not yet filed.

1 The default judgment was entered against the defendants on June 5, 2003.

DISCUSSION

Giamboi argues in support of his motion that (1) his default was inadvertent, (2) that he cannot be held personally liable since he did not sign the Agreement, and (3) that no prejudice will befall plaintiff if the judgment against him is vacated.

It is well established that default judgments are disfavored, and a clear preference exists for cases to be adjudicated on the merits.Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 174 (2d Cir. 2001). Because of this preference, when doubt exists as to whether a default should be granted or vacated, the doubt should be resolved in favor of the defaulting party. Id. at 172. When deciding whether to relieve a party from default or default judgment, a court should consider the willfulness of the default, the existence of a meritorious defense, and the level of prejudice that the non-defaulting party may suffer should relief be granted. Id. at 171. While a determination that the defendant acted in bad faith would certainly support a finding of "willfulness," it is sufficient that the defendant defaulted deliberately. Gucci Am., Inc. v. Gold Ctr. Jewelry, 158 F.3d 631, 635 (2d Cir. 1998). In connection with a motion to vacate a default judgment, a defendant must present more than conclusory denials when attempting to show the existence of a meritorious defense. Pecarsky, 249 F.3d at 173. The test of such a defense is measured not by whether there is a likelihood that it will carry the day, but whether the evidence submitted, if proven at trial, would constitute a complete defense. Id. While Giamboi's default was clearly willful, since he has not disputed that he was properly served with the Complaint and that he did not respond, he does have, a potentially complete defense to the plaintiffs' claims against him.

Federal law governs disputes arising under Section 301. Mason Tenders Dist. Council Welfare Fund v. Thomsen Constr. Co., 301 F.3d 50, 53 (2d Cir. 2002). State law, if compatible with the purpose of Section 301, may be resorted to in order to find the rule that will best effectuate the federal policy. Id. Accordingly, New York law guides the analysis in this case. New York law requires that there be "clear and explicit evidence" of the defendant's intent to add personal liability to the liability of the entity, where entity liability is established under the agreement.Id. (citation omitted). New York courts have found individual liability only in "rare cases", since there must be overwhelming evidence of the individual's intention to assume personal liability. Id. (citation omitted).

The facts of this case as currently presented do not reflect clear and explicit evidence of the defendant's intent to add personal liability to the liability of the defendant corporations. Giamboi did not himself sign the Agreement nor is there an indication that he authorized the agent of the Association to bind him personally under the Agreement. The mere presence of the liability clause in the Agreement is insufficient to establish individual liability for Giamboi under the contract. Id. at 53-54. Because Giamboi potentially has a complete defense in this action, the default judgment entered against him must be vacated.

This result is unaltered by the consideration of potential prejudice to the plaintiff. There is no indication that the plaintiff would be prejudiced by the vacatur of the default judgment against Giamboi. Indeed, the plaintiff has not even identified any prejudice it would suffer if the judgment were vacated.

Finally, plaintiffs' argument that Giamboi's motion should be denied on procedural grounds because the form of his motion did not follow the Local Rules of this district and because he served his motion papers a week past the Court's deadline for filing the motion also fails. Plaintiffs were not prejudiced by the late filing or form of the motion, since they were afforded additional time to respond. Giamboi's late service of the motion is construed as a request for an extension of time and is grantednunc pro tunc. Giamboi is ordered, however, to file his motion in accordance with the Local Rules of this district.

The plaintiff also requests that Giamboi pay its attorneys' fees and costs associated with all of the motions in this action.

This is a reasonable request as to fees and costs associated with the instant motion to vacate the default judgment. Had the defendant responded as he should have to the Complaint and the motion for a default judgment, it would not have been necessary for the plaintiffs to oppose the current motion. It is not, however, reasonable for Giamboi to pay the costs and fees associated with the previous motion for a default judgment, since the plaintiff would have had to bring that motion against the corporate defendants even if Giamboi had answered or moved. Thus, the vacatur of the default judgment against Giamboi is conditioned on the payment by Giamboi of the plaintiffs' reasonable attorneys' fees and costs associated with the instant motion to vacate.

CONCLUSION

For the reasons stated, the default judgment entered against defendant Joseph Giamboi is vacated on the condition that Giamboi pay the reasonable attorneys' fees and costs of the plaintiffs associated with this motion. Plaintiffs shall present evidence of those fees and costs to Giamboi within ten days. Payment is due ten days thereafter.

SO ORDERED.