San Mateo Electrical Workers Health Care Trust et al v. C&E Electric et al

Filing 18

ORDER FOR DEFAULT JUDGMENT by Hon. William Alsup granting in part and denying in part 13 Motion for Default Judgment.(whalc1, COURT STAFF) (Filed on 1/27/2012)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 SAN MATEO ELECTRICAL WORKERS HEALTH CARE TRUST; INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 617; SAN MATEO COUNTY ELECTRICAL CONSTRUCTION INDUSTRY RETIREMENT TRUST; SAN MATEO ELECTRICAL WORKERS EDUCATION AND TRAINING PLAN; Dominic Nolan, as Trustee of the above TRUSTS; and the NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, SAN MATEO CHAPTER, ORDER FOR DEFAULT JUDGMENT Plaintiffs, 18 19 No. C 11-04190 WHA v. 21 C&E ELECTRIC, a California sole proprietorship; and CARLOS ALBERTO GARCIA MANZANARES, an individual dba C&E ELECTRIC, 22 Defendants. 20 / 23 24 25 INTRODUCTION 26 In this ERISA collection action, plaintiffs seek default judgment against one of two 27 defendants. For the following reasons, the motion is GRANTED IN PART and DENIED IN PART 28 with leave to amend. 1 2 STATEMENT Defendant C&E Electric was an employer within the meaning of Section 3(5) of ERISA. 3 29 U.S.C. 1002(5). Defendant signed a letter of intent binding it to a collective bargaining 4 agreement between the San Mateo County Chapter of the National Electrical Contractors 5 Association and the International Brotherhood of Electrical Workers, Local 617. The agreement 6 required defendant to pay specific employer contributions, including fringe benefits, into trust 7 funds. The trusts provided benefits to defendant’s employees based on hours reported in 8 monthly transmittals (Compl. ¶¶ 5–9). the required contributions pursuant to the agreement (id. ¶ 10). Plaintiffs contend that defendant 11 For the Northern District of California Between June 2011 and September 2011, defendant repeatedly underpaid or failed to pay 10 United States District Court 9 owes $283,611.42 in principal for delinquent contributions, $28,361.14 in liquidated damages, 12 and $2,558.14 in attorney’s fees and costs. Plaintiffs also allege that the trusts require 12% 13 interest per annum on delinquent contributions such that defendant owes $22,519 in unpaid 14 interest on the principal, $15,711.16 in unpaid interest on the liquidated damages, and $93.24 15 per day after January 26, 2012, until judgment is entered (Stephenson Decl. ¶¶ 3–12; Quail Decl. 16 ¶¶ 5–10). At the motion hearing on January 26, 2011, plaintiffs presented a proposed order 17 showing that defendant had paid $34,643.85 into plaintiffs’ trusts. Total judgment sought is 18 therefore $318,117.01 plus $93.24 per day after January 26, 2012, until judgment is entered. 19 Plaintiffs filed a complaint on August 24, 2011. Plaintiffs’ proof of service indicates that 20 the summons and complaint were delivered to C&E’s place of business on September 2, and 21 a copy was mailed to C&E’s business address four days later. Motion for entry of default was 22 filed September 27. Default was entered as to Carlos Alberto Garcia Manzanares, an individual 23 dba C&E Electric, on September 29, while entry of default was declined as to C&E on the same 24 day. Default was then entered as to C&E on January 18, 2012, after the court clerk verified that 25 the address at which process was served was C&E’s business address. No response from C&E 26 has been received. 27 28 2 1 ANALYSIS 2 1. SUMMARY JUDGMENT. 3 Under FRCP 55(b)(2), a plaintiff can apply for a default judgment against a defendant 4 that has failed to plead or otherwise defend an action. The trial court must consider the 5 following factors when deciding whether or not to grant a motion for default judgment: (1) the 6 possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the 7 sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a 8 dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) 9 the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). All but one of these factors 11 For the Northern District of California United States District Court 10 favors entry of default judgment against C&E. 12 A. Merits and Sufficiency of the Complaint. 13 In determining liability and entry of default judgment, the general rule is that well- 14 pleaded allegations in the complaint regarding liability are deemed true, except as to the amount 15 of damages. Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Eitel factors 16 two, three, and five weigh in favor of a default judgment. There appears no possibility of dispute 17 concerning material facts. Plaintiffs have sufficiently supported their allegation that C&E 18 Electric was contractually obligated to pay contributions into plaintiffs’ trust funds, and would 19 pay liquidated damages at 10% for each month the payment was delinquent (Quail Exh. B). 20 They have provided monthly statements for the trust funds sent to C&E Electric that total 21 $283,611.42 for June through September (Quail Exh. C). They have also shown a billing 22 statement for attorney’s fees equal to the amount in the complaint (Quail Exh. D). At the motion 23 hearing, plaintiffs showed that defendant had paid $34,643.85 into plaintiffs trusts. This payment 24 is therefore subtracted from the amount previously owed. These statements have merit and are 25 sufficient, and default judgment as to these amounts, totaling $279,886.85, is GRANTED. 26 Yet plaintiffs have not provided sufficient support for the claim that they are entitled to 27 12% interest on the principal and liquidated damages of the unpaid contributions. While 28 plaintiffs are certainly entitled to interest, this figure represents around three times the amount 3 1 of interest dictated by federal statute. 15 U.S.C. 1640(e). Plaintiffs are entitled to the 12% 2 interest rate only if they can show that both parties agreed to this amount, which they have not 3 done. Accordingly, the amounts accounting for the interest owed ($38,230.16) and interest 4 per day until judgment is entered ($93.24) are DENIED with leave to amend. 5 6 B. Remaining Factors. All but one of the remaining Eitel factors likewise favor default judgment with respect 7 to the principal, liquidated damages, and attorney’s fees. First, the possibility of prejudice to 8 plaintiffs is great. Were the motion denied, the participants and beneficiaries of the health, 9 welfare, pension and fringe benefits plans would not receive their full benefits. Second, it is highly unlikely that default was the result of excusable neglect. Summons was hand delivered 11 For the Northern District of California United States District Court 10 to the secretary at C&E’s front desk on September 2, and four days later a copy was sent to 12 C&E’s business address. On September 29, entry of default was declined as to C&E but granted 13 as to Mr. Manzanares, C&E’s sole proprietor. The declination of default was not prejudicial, 14 and entry was granted as to C&E on January 18, 2012. Defendant therefore had sufficient notice 15 of plaintiffs’ claim. Third, although federal policy favors decisions on the merits, this factor 16 does not outweigh the other six factors that point towards summary judgment. 17 Fourth, the sum of money at stake in this action is not unreasonable. Default judgment 18 is generally disfavored where large sums of money are involved. Eitel, 782 F.2d at 1472. 19 Plaintiffs seek $318,117.01, and will currently be awarded $279,886.85, which pales in 20 comparison to the three million dollars at issue in Eitel. US v. Palomba, 2003 WL 21804813 21 (N.D. Cal. Feb. 20, 2003) (Alsup, J.) ($330,483.10 was a reasonable sum). This factor favors 22 entry of default judgment. 23 2. COURT’S DISCRETION WITH RESPECT TO DAMAGES. 24 Damages in this action are governed by 29 U.S.C. 1145, which states that employers 25 obligated under the terms of a collective bargaining agreement to make contributions into a 26 multi-employer plan shall do so. These payments are mandatory, and must be granted without 27 the court’s discretion. Operating Eng’rs Pension Trust v. Reed, 726 F.2d 513, 514–15 (9th Cir. 28 4 1 1984). Plaintiffs’ substantiated claims for the principal, liquidated damages, and attorney’s fees 2 owed are therefore automatically granted. 3 4 CONCLUSION For the foregoing reasons, plaintiffs’ motion for default judgment against defendant C&E 5 Electric is GRANTED IN PART and DENIED IN PART with leave to amend. Final judgment will 6 be held until plaintiffs have cured the deficiencies in their complaint with respect to the amount 7 of interest owed. 8 IT IS HEREBY ORDERED: 9 1. 11 For the Northern District of California United States District Court 10 GRANTED as to the principal, liquidated damages, and attorney’s fees. 2. 12 13 14 Plaintiffs’ motion for default judgment against defendant C&E Electric is Defendant shall pay $279,886.85 for unpaid contributions, liquidated damages, and attorney’s fees. 3. Plaintiffs’ motion for default judgment as to the interest on the principal and liquidated damages is DENIED with leave to amend. 15 16 IT IS SO ORDERED. 17 18 Dated: January 27, 2012. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 5

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