TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY PENSION, HEALTH BENEFIT, EDUCATIONAL, ELEVATOR INDUSTRY WORK PRESERVATION FUNDS et al v. UNIVERSAL ELEVATOR CORP. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE BERLE M. SCHILLER ON 11/3/11. 11/4/11 ENTERED AND COPIES MAILED TO UNREPS, EMAILED..(rf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
TRUSTEES OF THE
NATIONAL ELEVATOR INDUSTRY
PENSION PLAN, et al.
UNIVERSAL ELEVATOR CORP.
ELEVATOR COMPANY, et al.,
November 3, 2011
Plaintiffs bring this case under the Employee Retirement Income Security Act (“ERISA”).
They claim that Defendants have failed to timely remit contributions to various employee benefit
funds as required by a collective bargaining agreement signed by the parties. Defendants have not
responded to the Complaint, and the Clerk of Court entered a default. Now before the Court is
Plaintiffs’ motion for a default judgment. For the reasons below, the Court grants the motion.
Plaintiffs are the Boards of Trustees of the National Elevator Industry Pension, Health
Benefit, Educational, Elevator Industry Work Preservation, Elevator Constructors Annuity and
401(k) Retirement Plan Funds (the “NEI Trust Funds”). The NEI Trust Funds are multi-employer
employee benefit plans under ERISA. (Compl. ¶ 1.)
Defendant Universal Elevator Corporation (“Universal”) is a contractor and subcontractor
in the elevator industry. (Id. ¶ 2.) Universal entered into a collective bargaining agreement (“CBA”)
with the International Union of Elevator Constructors on July 15, 2002 and continues to be bound
by the terms of the CBA to this day. (Id. ¶¶ 5-6.)
Pursuant to the CBA, Universal agreed to pay to the NEI Funds certain sums of money for
each hour worked by employees of Defendants who were covered by the CBA. (Id. ¶ 7.) During an
audit, it was discovered that Universal owed $10,886.66 for incorrectly reported contributions and
interest. (Id. ¶ 11.) Additional interest of $4,562.96 and auditing fees of $2,345.00 have accrued on
the account. (Id.) According to calculations performed in accordance with certain trust agreements
to which Universal is bound, Universal also has a projected delinquency for November 2009 through
February 2011 of $94,539.52. (Id. ¶ 12.) Furthermore, an employer who fails to pay the amounts due
under the CBA “shall be obligated to pay interest at the rate currently charged by the Internal
Revenue Service from five days after the date of the delinquency to the date of payment and
liquidated damages of 20%, as well as necessary costs of collection incurred by the Funds, including,
but not limited to, reasonable attorneys’ fees, audit fees and court costs.” (Id. ¶ 13.) Plaintiffs claim
that the liquidated damages total $20,883.16. (Id. ¶ 14.)
Defendant Greg Regalado owns and is an officer of Universal. (Id. ¶ 4.) Pursuant to ERISA,
Plaintiffs claims that Regalado is a fiduciary of the NEI Trust Funds. (Id.) According to Plaintiffs,
Regaldo retained and used a portion of the employer’s payment that should have gone to Defendants’
funds on behalf of his employees. (Id. ¶¶ 21-22, 29.)
Plaintiffs seek a judgment against Defendants for: (1) $10,886.66 in contributions and
interest; (2) $2,345.00 in audit fees; (3) $94,539.52 in estimated contributions; (4) $20,883.16 in
liquidated damages; (5) reasonable attorneys’ fees and costs; (6) interest due on the unpaid audit
contributions; (7) all contributions and liquidated damages that become due or owing subsequent to
the filing of this lawsuit through the date of judgment; and (8) such further relief as the Court may
Universal was served on June 8, 2011, and Regalado was served on June 25, 2011. A default
was entered on September 15, 2011. The motion for entry of default judgment was filed on
September 26, 2011. To date, neither Defendant has responded to any of the filings in this matter.
STANDARD OF REVIEW
A district court faced with a motion for default judgment should consider: (1) prejudice to
the plaintiff if default is denied; (2) whether the defendant appears to have a litigable defense; and
(3) whether the defendant’s delay is due to culpable conduct. Chamberlain v. Giampapa, 210 F.3d
154, 164 (3d Cir. 2000). The Court accepts as true any factual allegations, other than those as to
damages, contained in the complaint. DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 n.6 (3d Cir. 2005)
Courts in this District have considered the liability of a company and an individual alleged
to be a fiduciary pursuant to ERISA under circumstances similar to those presented here, including
in the context of a motion for a default judgment. See, e.g., Trs. of the Nat’l Elevator Indus. Pension,
Health Benefit, Educ., Elevator Indus. Work Pres. Funds v. Century Elevator, Inc., Civ. A. No. 113792, 2011 WL 4807914 (E.D. Pa. Oct. 11, 2011). ERISA demands that an employer who makes
contributions under a CBA do so in accordance with the agreement. 29 U.S.C. § 1145. ERISA also
permits a plan to collect from delinquent employers the unpaid contributions with interest; liquidated
damages provided for under the plan in an amount not in excess of 20% of the unpaid contributions;
reasonable attorneys’ fees and costs; and such other legal or equitable relief as the court deems
appropriate. 29 U.S.C. § 1132(g)(2).
The facts alleged in the Complaint, including the result of an audit conducted by the Trustees’
auditor, demonstrate that Universal failed to make contributions it was obligated to make, and as a
result of this failure, it is obligated to pay the unpaid contributions and interest, liquidated damages,
reasonable attorneys’ fees and costs.
To determine whether ERISA imposes fiduciary liability against an individual, such as
Regalado, unpaid contributions must be “plan assets” and the individual must either exercise
discretion in the management of the plan or exercise any authority or control over the plan assets.
See Trs. of the Nat’l Elevator Indus. Pension, Health Benefit, Educ., Elevator Indus. Work Pres.
Funds v. Gateway Elevator, Inc., Civ. A. No. 09-4206, 2011 WL 2462027, at *5 n.6 (E.D. Pa. June
Based upon the Complaint and Plaintiffs’ submissions in this case, Regalado is liable as a
fiduciary under ERISA. First, the contributions due to the NEI Trust Funds are plan assets under
ERISA. Universal agreed to be bound by the CBA, and signed a successor agreement evincing its
intention to remain bound. (Mem. in Support of Mot. for Entry of J. at 6-7.) The CBA makes clear
that the delinquent contributions are plan assets. See Century Elevator, 2011 WL 4807914, at *4
(noting language similar to that of CBA in this case supported finding that unpaid employee
contributions were plan assets).
The filings before this Court also support a finding that Regalado exercised authority or
control over the disposition of plan assets. Plaintiffs point out that Regalado “calculated the amounts
owed in contributions based on the hours his employees worked and forwarded monthly remittance
forms calculating the employer’s and employee’s portion of the monies due to the Plaintiffs’ Funds,
yet failed to remit those amounts to the Plaintiffs’ Funds.” (Mem. in Support of Mot. for Entry of
J. at 7-8.) Plaintiffs allege that Regalado incorrectly reported hours to the NEI Trust Funds and
commingled plan assets with general assets to pay creditors. (Id. at 8.) Regalado exercised control
over his company’s assets yet consistently failed to report and pay contributions as required. (Id. at
8-9.) Regalado’s behavior renders him, an officer and owner of Universal, liable as a fiduciary under
ERISA. See Century Elevator, 2011 WL 4807914, at *4-5. And because Plaintiffs have alleged that
Regalado has failed to timely report and remit contributions, he has breached his fiduciary duties.
See id.; see also Gateway Elevator, 2011 WL 2462027, at *7.
Clearly, Plaintiffs will suffer prejudice if this Court denies their motion for default judgment;
Plaintiffs are not receiving payments owed them. See Trs. & Fiduciaries of the Iron Workers Dist.
Council (Phila. & Vicinity) Benefit & Pension Plans v. McGinny Ironworks, Inc., Civ. A. No. 111463, 2011 WL 5025310, at *2 (E.D. Pa. Oct. 20, 2011). The Court will also interpret Defendants’
silence as proof that they have no litigable defense. See id. Finally, while Defendants have failed to
engage in this litigation, the docket indicates that they were properly served. Therefore, the onus is
on Defendants to respond, and the Court will lay their failure to do so at their elevator door.
The Court has also reviewed Plaintiffs’ request for reasonable attorneys’ fees and costs.
Plaintiffs have documented their hourly rates and hours worked and the Court concludes that their
request for attorneys’ fees is reasonable and their requests for costs for the filing fee and service of
process is reasonable and recoverable.
Plaintiffs are entitled to a default judgment. An Order consistent with this Memorandum will
be docketed separately.