Opinion
No. 03 Civ. 3578 (RLC) (KNF).
February 3, 2006
REPORT AND RECOMMENDATION
TO THE HONORABLE ROBERT L. CARTER, UNITED STATES DISTRICT JUDGE.
I. INTRODUCTION
Plaintiffs, the New York City District Council of Carpenters Pension Fund, New York City District Council of Carpenters Welfare Fund, New York City District Council of Carpenters Vacation Fund, New York City District Council of Carpenters Annuity Fund, New York City District Council of Carpenters Apprenticeship, Journeyman Retraining, Educational and Industry Fund, New York City District Council of Carpenters Charity Fund, and the New York City and Vicinity Carpenters Labor Management Cooperation Fund, by Michael J. Forde ("Forde") and Joseph Olivieri ("Olivieri"), as Trustees (collectively "Benefit Funds" or "plaintiffs"), brought this action against FPC Contracting Development Corp. ("FPC Contracting" or "defendant") pursuant to section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, to compel compliance with the parties' collective bargaining agreement ("Agreement") and the decision of an arbitrator designated, pursuant to dispute resolution provisions in the Agreement, to hear and determine disputes arising out of the Agreement.
Upon FPC Contracting's failure to file an answer or otherwise respond to the Complaint, the Benefit Funds requested that a default judgment be entered against FPC Contracting and that the plaintiffs have judgment against the defendant in the amount of $170,264.39, together with interest, attorney's fees and costs. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded against FPC Contracting.
The Court directed the Benefit Funds to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and its attorney's fees. The Court also directed FPC Contracting to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law it deemed appropriate. FPC Contracting did not file any papers in opposition to the Benefit Funds' submissions.
The Benefit Funds' submissions aver that it is entitled to $170,264.39, together with interest, attorney's fees in the amount of $851.00, and costs in the amount of $96.75. For the reasons that follow, I recommend that the Benefit Funds be awarded $170,264.39, pre-judgment interest, post-judgment interest, and costs in the amount of $96.75.
II. BACKGROUND AND FACTS
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc., et al., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the following findings of fact are made:
The plaintiffs are jointly administered, multi-employer, Taft-Hartley Benefit Funds administered by trustees designated by a union and by employers, established and maintained pursuant to section 302(c)(5) of the LMRA, 29 U.S.C. § 186(c)(5). See Complaint, ¶ 4. Plaintiffs Forde and Olivieri are fiduciaries of the Benefit Funds within the meaning of sections 3(21) and 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1002(21) and 1132. Id. The Benefit Funds are employee benefit plans within the meaning of ERISA sections 3(1) and (3), 29 U.S.C. § 1002(1) and (3), and are maintained for the purpose of providing health, medical and related welfare benefits, pension and other benefits to eligible participants and beneficiaries, on whose behalf they receive contributions from employers, pursuant to collective bargaining agreements between the employers and the District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America, AFL-CIO ("Union"). Id., ¶ 5. Defendant FPC Contracting is a corporation organized and existing under the laws of New York, with its principal place of business at 1174 Commerce Avenue, Suite 201, Bronx, New York. The defendant is an employer within the meaning of section 3(5) of ERISA, 29 U.S.C. § 1002(5).Id., ¶¶ 6 7.
During the relevant period, the defendant and the Union were bound by the Agreement, which became effective on July 1, 1999.Id., ¶ 8. The Agreement provided that the defendant shall make monetary contributions to the Benefit Funds on behalf of covered employees, and that any disputes will be settled by means of binding arbitration. Id. A dispute arose between the parties when the defendant failed to comply with its obligations under the Agreement to pay contributions owed for employees in the bargaining unit. Id., ¶ 9. Pursuant to the arbitration clause of the Agreement, the dispute was submitted to Robert E. Maher ("Maher"), the designated impartial arbitrator. Id., ¶ 10.
Thereafter, upon a notice of intention to arbitrate to all parties, Maher scheduled a hearing for October 15, 2002. See Notice of Motion, Exhibit A, at 1. The defendant did not appear at the hearing. Id., at 2. On October 23, 2002, Maher issued an opinion finding that the defendant was required by the terms of the Agreement to make certain payments to the Benefit Funds on behalf of its carpenter employees. Id. Maher also found that the Agreement authorized the Benefit Funds to conduct an audit of the defendant's financial records. In accordance with this provision, the Benefit Funds, with the defendant's consent, performed such an audit. The audit revealed that, during the period July 18, 2000, through December 31, 2001, FPC Contracting had failed to make certain requisite payments to the Benefit Funds and was delinquent in the amount of $170,264.39. Id., at 3.
Specifically, Maher calculated the award as follows:
Amount Owed to Welfare Fund .............. $50,440.36 Amount Owed to Pension Fund .............. $25,853.50 Amount Owed to Annuity Fund .............. $23,144.33 Amount Owed to Vacation Fund ............. $23,104.88 Amount Owed to AJREI Fund ................ $ 1,496.18 Amount Owed to School Fund ............... $ 85.98 Amount Owed to Labor Management Fund ..... $ 573.33 Amount Owed to IBC Fund .................. $ 343.91 Amount Owed to Charity Fund .............. $ 143.30 Interest ................................. $42,928.77 Court Costs .............................. $ 150.00 Attorney's Fee ........................... $ 1,500.00 Arbitrator's Fee ......................... $ 500.00 ____________ Total $170,264.39Id., at 3-4. The arbitrator directed the defendant to pay the amount due and owing, plus interest at the rate of 10% per annum from the date of the award.
The Benefit Funds filed this action seeking an order confirming the arbitration award. The defendant has failed to seek to vacate or otherwise challenge judicially the decision of the arbitrator, or to comply with that decision, or to answer the instant complaint.
III. CONCLUSIONS OF LAW
Review of Arbitration Awards
The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., permits federal courts to confirm arbitration awards. In pertinent part, FAA provides the following:
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected. . . . If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding.9 U.S.C. § 9.
"The confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court." Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984) (citation omitted). Thus, "the showing required to avoid summary confirmation is high." Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d. Cir. 1987) (citing National Bulk Carriers, Inc. v. Princess Mgmt. Co., 597 F.2d 819, 825 (2d Cir. 1979) ("only 'clear evidence of impropriety' justifies denial of summary confirmation") (quotingAndros Compania Maritima, S.A. v. Marc Rich Co., A.G., 579 F.2d 691, 702 [2d Cir. 1978]).
Under FAA, an arbitration award may only be vacated in four circumstances. 9 U.S.C. § 10 explains that:
[T]he United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration — (1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.9 U.S.C. § 10(a).
Additionally, arbitration awards made in manifest disregard of law may not be confirmed by the courts. See Duferco Int'l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003).
The Benefit Funds and FPC Contracting agreed to settle any disputes arising under the Agreement through arbitration. In compliance with the provisions of the Agreement, upon the defendant's failure to make the required payments to the Benefit Funds, the matter was presented to an arbitrator. FPC Contracting did not attend the arbitration hearing, or request an adjournment or extension of time to appear, or challenge the arbitrator's decision. Moreover, FPC Contracting has not appeared in this action and has not paid any portion of the arbitration award to the Benefit Funds.
No evidence is before the Court that supports vacating the arbitrator's determination. Therefore, the decision of the arbitrator should be confirmed and the Benefit Funds should be permitted to recover damages in the amount of $170,264.39.
Interest
"Under federal law, a confirmed arbitration award . . . bears interest from the date of the award not from the date of the judgment confirming it." Moran v. Arcano, No. 89 Civ. 6717, 1990 WL 113121, at *3 (S.D.N.Y. July 27, 1990) (quoting Sun Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 63 [3rd Cir. 1986]) (internal quotation marks omitted). Therefore, the Benefit Funds are entitled to interest on the award at the rate of 10% per annum from October 23, 2002, to the date of judgment.
New York law also provides that interest on an arbitration award should be computed from the date of the award. See id. (citing Board of Educ. of Central School District No. 1 v. Niagara-Wheatfield Teachers Ass'n, 46 N.Y.2d 553, 558, 415 N.Y.S.2d 790, 793 [1979]).
Once a federal court confirms an arbitration award, the judgment has the same effect as any judgment rendered by the court and is "'governed by statutory post-judgment interest rates.'" Carte Blanche (Singapore) Pte., Ltd. v. Carte Blanche Int'l, Ltd., 888 F.2d 260, 269 (2d Cir. 1989) (quoting Parsons Whittemore Ala. Mach. and Servs. Corp. v. Yeargin Constr. Co., 744 F.2d 1482 (11th Cir. 1984). Under 28 U.S.C. § 1961, "interest shall be allowed on any money judgment in a civil case recovered in a district court." 28 U.S.C. § 1961(a). Interest is calculated from the date of the entry of judgment, at a rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment.See id. Therefore, the Benefit Funds are entitled to post-judgment interest at the rate prescribed by statute. See In re Arbitration at New York Under the Rules of Society of Maritime Arbitrators, Inc. Between IMC Maritime Group, Inc. and Russian Farm Community Project, No. 04 Civ. 3154, 2004 WL 2914099, at *6 (S.D.N.Y. Dec. 14, 2004) (granting post-award, pre-judgment interest at rate set forth in arbitrator's decision and post-judgment interest pursuant to statute); Fairfield Towers v. Fishman, No. 02 Civ. 6402, 2003 WL 21738976 at *3 (S.D.N.Y. July 28, 2003) (same).
Attorney's Fees
Generally, attorney's fees are not recoverable in an action to confirm an arbitration award. However, a court, in the exercise of its inherent equitable powers, may award attorney's fees when a party to an arbitration has, without justification, refused to abide by an arbitrator's decision. See International Chemical Workers Union (AFL-CIO), Local No. 227 v. BASF Wyandotte Corp., 774 F.2d 43, 47 (2d Cir. 1985). Since FPC Contracting has failed to comply with the decision of the arbitrator, without justification, and has failed to appear in this action, without justification, the Benefit Funds are entitled to recover their reasonable attorney's fees and costs.
In determining appropriate attorneys' fees, a court may apply a "lodestar" method, through which the court multiplies "the 'number of hours reasonably expended on the litigation' by 'a reasonable hourly rate.'" Mtr. of Arbitration Between P.M.I. Trading Ltd. v. Farstad Oil, Inc., 160 F. Supp. 2d 613, 614-15 (S.D.N.Y. 2001) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939). "The court must consider the normal hourly rate for an attorney in the same community with the same experience and training, as well as the number of hours which reasonably should be required to prosecute the claim."Id. at 615. Moreover, a party seeking an award of attorney's fees must support the request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney fee applications that do not contain such supporting data "should normally be disallowed."Id. at 1154.
In prosecuting this action against FPC Contracting, the Benefit Funds engaged the services of the law firm O'Dwyer Bernstein, LLP. The plaintiffs seek attorney's fees in the amount of $851.00. An employee of the law firm, Raul Garcia ("Garcia"), submitted an affidavit setting forth: (a) a summary of the number of hours he, an associate and two paralegals devoted to this action, and the nature of the work they performed; and (b) the billing rate at which each performed legal services for the Benefit Funds. See Notice of Motion, Exhibit E. However, Garcia failed to submit to the Court contemporaneous time records that support the plaintiffs' request for attorney's fees. Garcia's affidavit also fails to provide the Court with any information about the professional experience of the attorneys and paralegals employed by the firm who performed legal services in connection with this litigation, so that the Court might assess whether such experience supports the rates of compensation the firm commanded. Since the Benefit Funds did not provide the requisite supporting data that would permit its attorney fee application to be evaluated thoroughly, it should be disallowed.See New York State Ass'n for Retarded Children, 711 F.2d at 1154.
The attorney's fees in the amount of $1500.00, provided as part of the arbitration award, are distinct and separate from the attorney's fees in the amount of $851.00 sought by the plaintiffs in connection with the instant litigation.
Garcia's affidavit indicates that the Benefit Funds incurred $96.75 in costs for serving process. The Court finds that it is reasonable and appropriate for the Benefit Funds to recover their costs.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends an award to the Benefit Funds of: (a) $170,264.39 plus interest at the rate of 10% per annum from October 23, 2002, to the date of judgment, and post-judgment interest in an amount to be calculated by the Clerk of Court in accordance with 28 U.S.C. § 1961; and (b) costs in the amount of $96.75.
* * *
Plaintiffs shall serve defendant with a copy of this Report and Recommendation and submit proof of service to the court.
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Robert L. Carter, United States District Judge, 500 Pearl St., Room 2220, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Carter. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993);Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).