International Painters and Allied Trades Industry Pension Fund v. Zak Architectural Metal & Glass LLC ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
INTERNATIONAL PAINTERS & :
ALLIED TRADES INDUSTRY PENSION :
FUND :
:
and :
:
GARY J. MEYERS, in his official capacity :
as a fiduciary, :
:
Plaintiffs, : Civil Action No.: 08-0968 (RMU)
:
v. : Re Document No.: 5
:
ZAK ARCHITECTURAL METAL & :
GLASS LLC, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING THE PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT
I. INTRODUCTION
This matter is before the court on the plaintiffs’ motion for default judgment. The
plaintiffs, International Painters and Allied Trades Industry Pension Fund and Gary J. Meyers,
the fiduciary of the fund, filed this action on June 5, 2008, alleging that the defendant, Zak
Architectural Metal and Glass LLC, failed to make contributions to an employee pension fund as
required by collective bargaining agreements and the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1145. The plaintiffs seek an order directing the defendant to comply
with the terms of the collective bargaining agreements. The defendant was served on July 8,
2008, and to date it has not responded to the complaint. Accordingly, the court grants the
plaintiffs’ motion for default judgment and awards $50,661.73 in monetary relief. Additionally,
the court grants the plaintiff’s request for injunctive relief.
II. FACTUAL & PROCEDURAL BACKGROUND
On June 5, 2008, the plaintiffs initiated this action to recover delinquent contributions to
the pension fund from the defendant. Compl. ¶¶ 16-17. The plaintiffs also sought interest on the
delinquent contributions, late charges, liquidated damages, attorneys’ fees and an audit of the
defendant’s records. Id. ¶¶ 17, 25, 28, 31, 33. The plaintiffs assert that the defendant agreed to
abide by the Collective Bargaining Agreements (“Labor Contracts”), the Agreement and
Declaration of Trust of the Fund (“Trust Agreement”) and the International Painters and Allied
Trades Industry Pension Plan (“Pension Plan”). Id. ¶¶ 11-13. The plaintiffs allege that in
violation of these agreements, the defendant has failed to make monthly payments to the
plaintiffs, file remittance reports or submit to requested audits, entitling the plaintiffs to various
penalties for the defendant’s non-performance. Id. ¶ 13. Finally, the plaintiffs contend that the
defendant’s failure to comply with the terms of the Labor Contracts and the Trust Agreement
violates ERISA. Id. ¶ 16.
The defendant was served with the complaint and summons on July 8, 2008. Pls.’ Req.
for Entry of Default, Ex. 1 (“Cprek Decl.”) ¶ 2. On August 5, 2008, the plaintiffs requested that
the Clerk of the Court enter default against the defendant for failure to plead or otherwise defend
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against this action and forwarded a copy of the request to the defendant.1 See Pls.’ Req. for Entry
of Default. The Clerk of the Court entered default against the defendant on August 6, 2008. See
Entry of Default. Finally, on September 4, 2008, the plaintiffs filed the instant motion.2 See
generally Pls.’ Mot. Throughout this period, the defendant has not pleaded or otherwise
defendant against the action.
III. ANALYSIS
A. Legal Standard for Entry of Default Judgment Under Rule 55(b)(2)
A court has the power to enter default judgment when a defendant fails to defend its case
appropriately or otherwise engages in dilatory tactics. Keegel v. Key W. & Caribbean Trading
Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980). Rule 55(a) of the Federal Rules of Civil Procedure
provides for entry of default “[w]hen a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend as provided by these rules.” FED . R. CIV . P. 55(a).
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Federal Rule of Civil Procedure 55 sets forth a two-step process for a party seeking default
judgment: entry of default, followed by entry of default judgment. FED . R. CIV . P. 55; Eitel
v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986); Meehan v. Snow, 652 F.2d 274, 276 (2d
Cir. 1981); see also 10A FED . PRAC . & PROC . CIV . 3d § 2682 (stating that “[p]rior to
obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an
entry of default as provided by Rule 55(a)”). First, after a defendant has failed to plead or
otherwise defend against an action, the plaintiff may request that the Clerk of the Court enter
default against that defendant. FED . R. CIV . P. 55(a). Second, following the clerk’s entry of
default, if the plaintiff’s claim is not for a sum certain, the plaintiff may apply to the court for
entry of default judgment. Id. 55(b)(2). By providing for a two-step process, Rule 55 allows
the defendant the opportunity to move the court to set aside the default before the court
enters default judgment. Id. 55(b), (c); see also Meehan, 652 F.2d at 276 (noting that
“pursuant to Rule 55(c), the defendant has an opportunity to seek to have the default set
aside”).
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Despite the fact that Rule 55(b)(2) does not require the moving party to notify the non-
responsive party of a motion for default judgment if the non-responsive party has made no
appearance, the plaintiffs here forwarded a copy of the instant motion to the defendant. See
Pls.’ Mot. at 12.
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Upon request of the party entitled to default, Rule 55(b)(2) authorizes the court to enter against
the defendant a default judgment for the amount claimed and costs. FED . R. CIV . P. 55(b)(2).
Because courts strongly favor resolution of disputes on their merits, and because “it
seems inherently unfair” to use the court’s power to enter judgment as a penalty for filing delays,
modern courts do not favor default judgments. Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir.
1980). Accordingly, default judgment usually is available “only when the adversary process has
been halted because of an essentially unresponsive party . . . [as] the diligent party must be
protected lest he be faced with interminable delay and continued uncertainty as to his rights.” Id.
at 836 (quoting H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691
(D.C. Cir. 1970)).
Default establishes the defaulting party’s liability for the well-pleaded allegations of the
complaint. Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001); Avianca, Inc. v. Corriea,
1992 WL 102999, at *1 (D.D.C. Apr. 13, 1992); see also Brock v. Unique Racquetball & Health
Clubs, Inc., 786 F.2d 61, 65 (2d Cir. 1986) (noting that “default concludes the liability phase of
the trial”). Default does not, however, establish liability for the amount of damage that the
plaintiff claims. Shepherd v. Am. Broad. Cos., Inc., 862 F. Supp. 486, 491 (D.D.C. 1994),
vacated on other grounds, 62 F.3d 1469 (D.C. Cir. 1995). Instead, “unless the amount of
damages is certain, the court is required to make an independent determination of the sum to be
awarded.” Adkins, 180 F. Supp. 2d at 17; see also Credit Lyonnais Secs. (USA), Inc. v.
Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (stating that the court must conduct an inquiry to
ascertain the amount of damages with reasonable certainty). The court has considerable latitude
in determining the amount of damages. Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir.
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1993). To fix the amount, the court may conduct a hearing. FED . R. CIV . P. 55(b)(2). The court
is not required to do so, however, “as long as it ensure[s] that there [is] a basis for the damages
specified in the default judgment.” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping
Corp., Div. of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997).
B. The Court Grants the Plaintiffs’ Motion for Entry of Default Judgment
1. The Defendant is Liable to the Plaintiffs
The plaintiffs argue that default judgment is appropriate in the instant case given the
“defendant’s default and . . . continuing failure to appear or otherwise defend [against] this
action.” Pls.’ Mot. at 3. Contending that all factual allegations in the complaint are deemed
admitted and that the entry of default establishes the defendant’s liability, the plaintiffs seek an
order awarding them the unpaid contributions, interest on those contributions, late charges,
liquidated damages and attorneys’ fees. Id. They also seek an order requiring the defendant to
submit to an audit and remit any outstanding contributions discovered as a result of the audit.
Id.; see generally Compl.
As noted above, the defendant was served with the plaintiffs’ complaint on July 8, 2008
and has not pleaded or otherwise defended against the action. Likewise, the defendant has not
responded to either the plaintiffs’ request to the Clerk for entry of default or the instant motion
for default judgment, despite being properly served with both. This is precisely the situation in
which the entry of default judgment is appropriate. See, e.g., H.F. Livermore Corp., 432 F.2d at
691 (holding that default judgment is appropriate when “the adversary process has been halted
because of an essentially unresponsive party”). As a result of the entry of default, the court
deems the defendant to have admitted all of the well-pleaded allegations in the complaint. See
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Carpenters Labor-Mgmt. Pension Fund v. Freeman-Carder LLC, 498 F. Supp. 2d 237, 241
(D.D.C. 2007) (citing Adkins, 180 F. Supp. 2d at 17).
The plaintiffs allege that the defendant failed to make pension contributions for a period
of seven months in 2008 as required by ERISA and § 10.07 of the Pension Plan. Compl. ¶ 16;
Pls.’ Mot. at 4-5. Section 10.07 states that the “employer will pay contributions to the Plan . . .
as required by the [Labor Contracts].” Pls.’ Mot., Ex. 4. ERISA also requires “every employer
who is obligated to make contributions . . . [to] make such contributions in accordance with the
terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. The court accepts
these well-pleaded allegations as admitted and now turns to the issue of the appropriate relief.
2. The Plaintiffs Are Entitled to Monetary Relief in the Amount of $50,661.73
The plaintiffs request $51,833.18 in monetary relief, itemized as follows: 1) $37,428.97
in unpaid contributions from January 2008 through July 2008; 2) $1,047.42 in late charges; 3)
$611.32 in interest on the unpaid contributions; 4) $8,657.25 in liquidated damages; and 5)
$4,088.22 in attorneys’ fees. Pls.’ Proposed Order at 2. ERISA governs the award of damages in
this action, stating that the court shall award the unpaid contributions, interest on the unpaid
contributions, liquidated damages specified in the plan but not in excess of twenty percent of the
unpaid contributions, reasonable attorneys’ fees and any other appropriate equitable relief. 29
U.S.C. § 1132(g).
Having made an independent determination of the amount to which the plaintiffs are
entitled in unpaid contributions, interest thereon and late charges, see Adkins, 180 F. Supp. 2d at
17, the court awards the plaintiffs $37,428.97 in unpaid contributions, $611.32 in interest and
$1,047.42 in late charges. The court also concludes that the plaintiffs’ request for $4,088.22 in
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attorneys’ fees is reasonable based on the declaration and itemized billing report submitted by
Jennifer Hope. See Pls.’ Mot., Ex. 2 (“Hope Decl.”). Finally, the court awards the plaintiffs
$7,485.80 in liquidated damages.3 In sum, the court awards the plaintiffs $50,661.73.
3. The Plaintiffs Are Entitled to Injunctive Relief
The plaintiffs also request injunctive relief requiring the defendant to “permit an audit of
all records under the actual or constructive control of the [defendant] . . . and to cooperate in
alternative methods for the determination of work for which contributions are due.” Compl. ¶
25(1). Additionally, the plaintiffs request a judgment for the outstanding contributions
discovered after the audit, together with late charges, interest, liquidated damages, the cost of the
audit and any remaining costs incurred in connection with this action. Id. ¶ 28(1).
ERISA authorizes the court to grant “other legal or equitable relief as the court deems
appropriate.” 29 U.S.C. § 1132(g)(2)(E). Equitable relief in this context includes “an injunction
requiring a defendant to permit, and cooperate with, an audit of its books and records.” Flynn v.
Mastro Masonry Contractors, 237 F. Supp. 2d 66, 70 (D.D.C. 2002) (quoting Mason Tenders
Dist. Council Welfare Fund v. Bold Contsr. Co., 2002 WL 1788024, at *3 (S.D.N.Y. Aug. 1,
2002)); see also Carpenters Labor-Mgmt. Pension Fund, 498 F. Supp. 2d at 242 (granting the
plaintiffs’ request for injunctive relief). Further, article VI § 6 of the Trust Agreement requires
the defendant to cooperate with requests for audits. See Pls.’ Mot., Ex. 3. The court grants the
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Although the plaintiffs requested $8,657.25 in liquidated damages, § 10.07(b)(3)(B) of the
Pension Plan states that the liquidated damages should equal “20 percent of the unpaid
contributions.” Additionally, ERISA requires liquidated damages to be calculated pursuant
to the Pension Plan, but limits the damages to no more than twenty percent of the unpaid
contributions. 29 U.S.C. § 1132(g)(2)(C)(ii). The liquidated damages requested by the
plaintiffs, $8,657.25, equal approximately twenty-three percent of the unpaid contributions.
Accordingly, the court has adjusted the amount of liquidated damages downward to comply
with both the Pension Plan and ERISA.
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plaintiffs’ request for injunctive relief in the form of an audit “because the defendant has
demonstrated no willingness to comply with either its contractual or statutory obligations or to
participate in the judicial process.” See Carpenters Labor-Mgmt. Pension Fund, 498 F. Supp. 2d
at 242 (citing Int’l Painters & Allied Trades Indus. Pension Fund v. Newburgh, 468 F. Supp. 2d
215, 218 (D.D.C. 2007)). Consequently, the defendant shall comply with the plaintiffs’ request
for an audit, remit any outstanding contributions discovered as a result of that audit and pay any
late charges, interest and liquidated damages consistent with this Memorandum Opinion as well
as the cost of the audit. See Carpenters Labor-Mgmt. Pension Fund, 498 F. Supp. 2d at 242
(citing Int’l Painters & Allied Trades Indus. Pension Fund, 468 F. Supp. 2d at 218).
IV. CONCLUSION
For the foregoing reasons, the court grants the plaintiffs’ motion for default judgment and
orders the defendant to pay $50,661.73 in monetary relief for unpaid contributions, interest, late
charges, liquidated damages and attorneys’ fees. The defendant shall also submit all relevant
records for the requested time periods for an audit and remit any outstanding contributions and
additional penalties or costs. An Order consistent with this Memorandum Opinion is separately
and contemporaneously issued this 22nd day of July, 2009.
RICARDO M. URBINA
United States District Court
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