Southeastern Carpenters and Millwrights Health Trust et al v. M & M Construction

Filing 15

MEMORANDUM OPINION AND ORDER granting plaintiffs' 8 Motion for Default Judgment; entering Judgment in favor of the Plaintiffs and against Defendant M & M Construction; advising that a hearing to establish the amount of damages due to Plaintiffs will be set by separate order. Signed by Judge Mark E. Fuller on 6/2/2005. (Attachments: # 1 Civil Appeals Checklist)(cc, )

Southeastern Carpenters and Millwrights Health Trust et al v. M & M Construction

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I N THE UNITED STATES DISTRICT COURT FOR T H E MIDDLE DISTRICT OF ALABAMA N O R T H E RN DIVISION S O U T H EA S T E RN CARPENTERS AND ) M ILL W RIG HT S HEALTH TRUST, et al., ) ) Plaintiffs, ) ) v. ) ) M & M Construction, ) ) De fend ant. )

C A S E NO. 2:04-cv-483-F WO

M E M O R A N D U M OPINION AND ORDER This case arises out of unpaid employer contributions and interest to employee benefit plans. Plaintiffs filed a Complaint (Doc. #1) on May 18, 2004, seeking the unpaid

c o n t r i b u t i o n s , interest, liquidated damages, attorneys fees and costs and expenses under the E m p l o y e e Retirement Income Security Act of 1974 ("ERISA"). This Court has jurisdiction pur sua nt to 28 U.S.C. § 1331 (federal question jurisdiction). On July, 30, 2004, plaintiff applied to the Clerk for entry of default against M & M C o n s t r u c ti o n for failure to plead, answer, or otherwise defend, pursuant to Federal Rule of Civil Procedure 55(a). The Clerk issued an Entry of Default (Doc. #7) against M & M C o r p o r a t io n on August 12, 2004. This cause is presently before the Court on plaintiffs' M otio n for Default Judgment (Doc. #8), filed December 21, 2004. I. DEFAULT JUDGMENT STANDARD Ru le 55(a) of the Federal Rules of Civil Procedure states that "[w]hen a party against 1

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w h o m a judgment for affirmative relief is sought has failed to plead or otherwise defend as p r o v i d e d by these rules . . . the clerk shall enter the party's default." Once this has occurred, "the party entitled to a judgment by default shall apply to the court therefor." Fed. R. Civ. P. 55(b)(2). The clerk's entry of default causes all well-pleaded allegations of facts to be deemed adm itted . See Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987). The Court must a c c e p t these facts as true and determine whether they state a claim upon which relief may be gra nted . See Anheuser-Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003). If the Court determines that default judgment can be granted, the Court then turns to t h e issue of damages. See Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1364 n.27 (11th Cir. 1997). "If, in order to enable the court to enter judgment . . . it is necessary to take a n account or to determine the amount of damages . . . the court may conduct such hearings o r order such references as it deems necessary and proper . . . ." Fed. R. Civ. P. 55(b)(2). How ever, the Court may award damages without a hearing where the "amount claimed is a l i q u id a t e d sum or one capable of mathematical calculation," and there is "a demonstration b y detailed affidavits establishing the necessary facts." Adolph Coors Co. V. Movement A g a i n s t Racism & the Klan, 777 F.2d 1538, 1543 (11th Cir. 1985). I I. FACTS T h e allegations in the Complaint, which the Court accepts as true, are as follows. P l a i n ti f f s are or represent three employee benefit plans: the "Health Trust," the "Pension

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Tru st," and the "Training Trust."

Pursuant to a participation agreement, M & M

C o n s t r u c ti o n , an Alabama corporation, agreed to submit amounts to each fund monthly based o n the monthly amounts earned by its employees. M & M Construction must submit reports r e g a r d in g work performed during the previous month along with all contributions due by the 1 5 th of each month. M & M Construction defaulted on this obligation by failing to pay con tribu tion s owed in February of 2004 and following. According to rules and regulations adopted by the trustees of each trust, M & M C o r p o r a t io n is also liable for liquidated damages on "delinquent contributions," or those not r e c e iv e d by the twentieth day of each month, with regard to the Health Trust and the Pension Trus t. These liquidated damages are equal to the greater of $100 or ten percent of the amount o f contributions overdue. If M & M Corporation has not submitted the necessary reports and c o n t r ib u t i o n s by the last day of each month, an additional late charge of five percent is a s s e s se d for each additional month or portion thereof that the employer remains delinquent. P l a n documents governing the Training Trust do not provide for liquidated damages. A l t h o u g h not specifically stated in the Complaint, M & M Corporation was delinquent o n contributions from October 2002 through November 2003 and contributions for January 2004. P l a i n ti f f s filed a Complaint on May 18, 2004, seeking unpaid employer contributions, interest, liquidated damages, attorneys fees and costs and expenses. According to the Return R e c e i p t Card, Chris Hutcherson signed for receipt of the summons and the complaint on

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beha lf of M & M Construction on June 1, 2004. However, M & M Construction has not ans we red or otherwise defended this action. Plaintiffs filed this Motion on December 21, 2004, asking for default judgment in the a m o u n t of $16,468.85, plus attorneys' fees and costs. This number represents interest and l i q u id a t e d damages on contributions owed from October 2002 to January 2004, which were paid late but prior to the filing of this suit. The Motion for Default Judgment does not seek a n y money for unpaid contributions themselves or any interest or liquidated damages on the unp aid contributions for February 2004 and following, which remained unpaid at the time of filing suit. After filing the Motion for Default Judgment, plaintiffs received a check from M & M Construction, dated December 20, 2004, in the amount of $11,421.63 for "interest due." O n January 10, 2005, plaintiffs filed Supplemental Documentation, which included a request that their original amount sought be reduced by the $11,421.63. IV. DISCUSSION 2 9 U.S.C. § 1145 states in pertinent part that E v ery employer who is obligated to make contributions to a m u l t i- e m p l o ye r plan under the terms of the plan or under the t er m s of a collectively bargained agreement shall, to the extent n o t inconsistent with law, make such contributions in a c c o r d a n c e with the terms and condition of such plan or such agree men t. T h e facts of this case indicate that M & M Construction has failed to make contributions to t h e plans at issue according to the terms of the participation agreement. Therefore, the 4

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p l a i n ti f f s are entitled to a default judgment in their favor. The only remaining question for the Court is the amount of such judgment. P l a i n ti f f s request interest, liquidated damages, and attorneys' fees and costs, relying o n 29 U.S.C. § 1132(g)(2) , which states that in a suit brought on behalf of a plan pursuant to section 1145, if j u d g m e n t in favor of the plan is awarded, the court shall award th e plan -( A ) the unpaid contributions, ( B ) interest on the unpaid contributions, (C ) an amount equal to the greater of -( i ) interest on the unpaid contributions, or (ii) liquidated damages provided for under the p l a n in an amount not in excess of 20 percent (or s u c h higher percentage as may be permitted under F e d e r a l or State law) of the amount determined by th e court under subparagraph (A), ( D ) reasonable attorney's fees and costs of the action, to b e paid by the defendant, and ( E ) such other legal or equitable relief as the court deems a p p r o p r ia t e . F o r purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, o r , if none, the rate prescribed under section 6621 of Title 26. T h e question of whether 29 U.S.C. § 1132(g)(2) applies to situations where, as here, the P l a i n ti f f s are seeking interest, liquidated damages, and attorney fees for contributions that were not paid when they were due but were paid prior to the filing of the suit is one of first i m p r e s s io n within the Eleventh Circuit. However, the courts that have addressed this issue h a v e found 29 U.S.C. § 1132(g)(2) to be inapplicable in such a case; if there are no "unpaid c o n tr i b u t i o n s " under subsection (A), no interest or liquidated damages "on the unpaid 5

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c o n t r i b u t i o n s " can be awarded under subsections (B) and (C). See Operating Eng'rs Local 1 3 9 Health Benefit Fund v. Gustafson Constr. Corp., 258 F.3d 645, 654 (7th Cir. 2001) (Posner, J.) ("interest and liquidated-damages provision of ERISA apply . . . only to c o n t r ib u t i o n s that are unpaid at the date of suit."); Idaho Plumbers & Pipefitters Health & W e l f a r e Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215 (9th Cir. 1989) ( " B e c a u s e no contributions were `unpaid' at the time of this suit, § 1132(g)(2) does not apply."); Carpenters & Joiners Welfare Fund v. Gittleman Corp., 857 F.2d 476, 478 (8th Cir. 198 8) ("the term `unpaid contributions' has been interpreted to mean contributions unpaid a t the time suit was filed . . . . We agree that this is the correct interpretation . . . ."); C a r p e n t e r s Health & Welfare Fund of Philadelphia & Vicinity v. Bldg. Tech, Inc., 747 F . S u p p . 288, 296 (E.D. Pa. 1990) ("contributions [that] were all paid late, but before the c o m p l a i n t was filed . . . are not "unpaid" within the meaning of § 1132(g)(2), and are thus not e n t i tl e d to ERISA interest, liquidated damages, and attorney's fees and costs."); Trs. of the G l a z i e r s Local 963 Pension, Welfare, & Apprentice Funds v. Walker & Laberge Co., 619 F . S u p p . 1402, 1405 (D.C.Md. 1985) ("these delinquent contributions . . . , although they were untimely, . . . were tendered prior to the commencement of this suit and therefore do n o t qualified as "unpaid contributions"). See also Farrell v. Metro. Relocations, Inc., 1996 W L 19223 (E.D.N.Y 1996).1 Therefore, because Plaintiffs request relief on default judgment
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To the extent that there is any disagreement with this position, it is only as to whether, to be allowed relief pursuant to § 1132(g)(2), contributions must be unpaid not only as of the time of filing suit but also as of the time of entry of judgment. See In re Mich. Carpenters Council Health and Welfare Fund v. C.J. Rogers, Inc., 933 F.2d 376, 388 (6th Cir 1991). This 6

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only as to contributions that were paid prior to suit, they are clearly not entitled to damages p u r s u a n t to § 1132(g)(2) as requested. How ev er, Plaintiffs' complaint also offers the terms of the participation agreement e x e c u t e d with Defendant as grounds for award of damages. (Compl. 3, 5.) Although, again, t h e question has not been reached by the Eleventh Circuit, a majority of courts have held that E R I S A does not preempt traditional contractual remedies in situations where § 1132(g)(2) d o e s not apply. See Operating Eng'rs Local 139, 258 F.3d at 654 (stating that as to "the late c o n t r ib u t i o n s the defendant finally paid before the suit was brought, . . . their lateness v i o l a te d the terms of the plans, thus entitling the fund to enforce the plan's provisions i m p o s i n g interest and liquidated damages on delinquent contributions" even where § 1 1 3 2 ( g ) ( 2 ) did not apply); Mich. Carpenters Council Health & Welfare Fund v. C.J. Rogers, I n c., 933 F.2d 376, 390 (6th Cir. 1991) (holding that "a fund has a valid claim for late p a y m e n t and/or audit damages pursuant to its collective bargaining agreements with d e f e n d a n t s , not covered by section 1132(g)"); Idaho Plumbers, 875 F.2d at 215 (9th Cir. 1 9 8 9 ) (holding that "the MPPAA does not preempt the federal common law of liquidated d a m a g e s when § 1132(g)(2) does not apply"); Tr. of the Glaziers Local 963, 619 F.Supp. at 1 8 0 5 (finding that the "late contributions are subject to liquidated damages provided in the t r u s t agreements," even where § 1132(g)(2) did not apply); Bd. of Trs. of Local 41, Intern. B r o t h . of Elec. Workers Health Fund v. Zacher, 171 F.Supp. 1323, 1336 (W.D.N.Y.,1991).

distinction, however, is not relevant to the facts of this case. 7

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S e e also Farrell, 1996 WL 19223, *4 (permitting an award of interest pursuant to an a g r e e m e n t when § 1132(g)(2) did not apply). Contra, Gittleman, 857 F.2d at 478-79 ( h o l d in g that "[t]he detail and comprehensiveness of the section 1132(g)(2) remedy supports t h e conclusion that it was meant to supplant any remedy that otherwise would be available. W e are convinced that section 1132(g)(2) is an exclusive remedy."); Teamsters Local N. 429 H e a l t h & Welfare Fund v. Chain Bike Corp, 643 F.Supp. 1337, 1334-44 (E.D.Pa. 1986). T h e majority position is consistent with the plain language of section 1132(g)(2), w h i c h does not specify preemption, and is supported by legislative history, which tends to s h o w that the enactment of § 1132(g)(2) was not intended to preempt alternative contractual r e m e d i e s . See Idaho Plumbers, 875 F.2d at 216-17 (reproducing relevant committee report p r o v i s io n s ) . Moreover, as the Seventh Circuit stated, "the harm to the fund is not affected b y the happenstance of when suit is brought in relation to the payment of the delinquent con tribu tion s." Operating Eng'rs Local 139, 258 F.3d at 656. Therefore, this Court will f o l l o w the majority position and permit Plaintiffs to recover the contractual damages upon w h i c h they have agreed in regard to the untimely payments. How ev er, Plaintiffs in this matter have failed to provide sufficient information for the Cou rt to reach an accurate determination of the damages as agreed upon.2 Therefore, it is h e r e b y ORDERED that

The Plaintiffs have not chosen to provide a copy of any such agreement to the Court. Additionally, possibly conflicting statements between the Complaint and Plaintiffs' brief make the Court hesitant to proceed without the agreement before it. 8

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( 1 ) the Plaintiffs' Motion for Default Judgment (Doc. #8), filed December 21, 2004, i s GRANTED; ( 2 ) Default judgment is hereby ENTERED in favor of the Plaintiffs and against D e f e n d a n t M & M Construction; and ( 3 ) a hearing to establish the amount of damages due to Plaintiffs under their agree men t with M & M Construction will be set by separate Order of this Court. 3 DONE this 2 n d day of June, 2005.

/s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE

Plaintiffs shall be prepared to present evidence and argument as to damages to which they are entitled under the agreement. Additionally, the Court acknowledges that, although § 1132(g)(2) does not apply in this case, it may in its discretion award "all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney's fees, to the prevailing party" pursuant to 29 U.S.C.A. § 1451. See, e.g. Jefferson Title Co. v. Colorado Tile, Marble & Terrazzo Workers Health, Welfare & Pension Funds, 797 F.Supp. 857, 861 (D.Col. 1992). Therefore, the Plaintiffs should come prepared to address any costs or attorney fees that they have accrued since their January 10, 2005 Response to Order (Doc. #12), including those in relat ion to the hearing. 9

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