Trustees of the Pipe Industry Health and Welfare Fund of Colorado et al v. Expert Mechanical Services, Inc. et al
ORDER granting Plaintiff's 26 Motion for Default Judgment Against Expert Mechanical Services, Inc. Default judgment SHALL ENTER on behalf plaintiffs, the Trustees of the Pipe Industry Health and Welfare Fund of Colorado; Trustees of the Color ado Pipe Industry Annuity and Salary Deferral Trust Fund; Trustees of the Denver Plumbers Joint Apprenticeship and Training Fund; Trustees of the Plumbers and Pipefitters National Pension Fund. Journeymen Plumbers and Gas Fitters Local Union No. 3; and the Mechanical Contractors Association of Northern Colorado, against defendant, Expert Mechanical Services, Inc., on plaintiffs' claim for relief against Expert under ERISA section 515. By Judge Robert E. Blackburn on 7/9/2014.(klyon, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 13-cv-00911-REB-KLM
TRUSTEES OF THE PIPE INDUSTRY HEALTH AND WELFARE FUND OF
COLORADO, an express trust, et al.,
EXPERT MECHANICAL SERVICES, INC., a Colorado corporation, and
EMPLOYERS MUTUAL CASUALTY COMPANY, an Iowa corporation,
ORDER GRANTING PLAINTIFFS' MOTION FOR
DEFAULT JUDGMENT AGAINST EXPERT MECHANICAL SERVICES, INC.
The matter before me is plaintiffs' Revised Motion for Default Judgment
Against Expert Mechanical Services, Inc. [#26],1 filed July 1, 2014. Having been
advised of the premises and having considered the arguments advanced, authorities
cited, and evidence submitted with the revised motion, I find and conclude that the
motion should be granted, and enter the following findings of fact, conclusions of law,
I. FINDINGS OF FACT
1. Plaintiffs are the Trustees of the Pipe Industry Health and Welfare Fund of
Colorado; Trustees of the Colorado Pipe Industry Annuity and Salary Deferral Trust
“[#26]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.
Fund; Trustees of the Denver Plumbers Joint Apprenticeship and Training Fund;
Trustees of the Plumbers and Pipefitters National Pension Fund, Journeymen Plumbers
and Gas Fitters Local Union No. 3 ("Plumbers Local 3"); and the Mechanical
Contractors Association of Northern Colorado ("MCA"). The first four listed plaintiffs are
employee benefit trust funds governed by the Employee Retirement Income Security
Act (ERISA), 29 U.S.C. § 1001 et seq. (collectively called the "Benefit Funds").
(Complaint ¶ 5.)
2. Plumbers Local 3 is a labor organization as defined in the National Labor
Relations Act ("NLRA"), 29 U.S.C. § 152(5), and the Labor-Management Relations Act
("LMRA"), 29 U.S.C. § 142(3). (Complaint ¶ 8.) MCA, a Colorado corporation, is an
association of mechanical contractors that acts as a collective bargaining representative
for contractors who have assigned their collective bargaining rights to MCA. (Complaint
3. At all times material herein, defendant, Expert Mechanical Services, Inc.
(“Expert”), a Colorado corporation, was a mechanical contractor engaged in commerce,
which employed workers covered by the collective bargaining agreement ("CBA")
negotiated by the MCA, as Expert's designated collective bargaining representative, and
Plumbers Local 3. (Complaint ¶¶ 9, 11, 14.)
4. On April 9, 2013, plaintiffs filed the Complaint, alleging claims under ERISA,
specifically 29 U.S.C. § 1145, against Expert because of its failure to pay employee
benefit contributions required by the CBA between Plumbers Local 3 and the MCA, to
which Expert agreed to be bound.
5. Expert was served with the Summons and Complaint on April 15, 2013 (see
[#8], filed April 18, 2013), but has not answered or otherwise responded to the
Complaint. On plaintiffs’ motion, the clerk entered default pursuant to Fed. R. Civ. P.
55(a) against Expert on May 9, 2013. (See Clerk’s Entry of Default [#11], filed May 9,
6. The CBA, along with applicable trust agreements incorporated therein by
reference, required Expert to submit monthly reports or "remittance forms" with
contributions for employee health, pension, and other benefits for each hour worked by
Expert's employees covered by the CBA. The CBA also required Expert to deduct
union dues from employees' paychecks and submit the dues monthly to Plumbers Local
3. (Complaint ¶¶ 14, 15.)
7. If a signatory contractor such as Expert fails to make the monthly
contributions for employee benefits, the CBA and trust agreements provide that the
signatory contractor is liable for interest at the rate of 1.5 percent (1.5%) per month on
the unpaid contributions, in addition to costs of collection, including attorney fees. The
rate for delinquent contributions to the National Pension Fund is 12 percent (12%) per
annum. In addition, the CBA and trust agreements – in accordance with ERISA, 29
U.S.C. § 1132(g)(2) – provide for liquidated damages at specified rates. (Complaint ¶¶
16, 18, 19.)
8. Expert filed monthly remittance forms for October, November, and December,
2012, without accompanying contributions. According to the remittance forms, which
are subject to verification by audit, Expert owed $3,406.60 for that period. (Complaint ¶
9. The Trustees of the Benefit Funds authorized the Funds' auditor to conduct a
payroll audit of Expert for the period June, 2009, through December, 2012. Initially,
Expert produced only partial records, which were not sufficient to do a thorough audit.
Nevertheless, the auditor determined preliminarily that Expert owed $11,296.67 for
under-reported hours and contributions. (Complaint ¶¶ 22-24.)
10. In November, 2013, the auditor for the Benefit Funds did a complete audit of
Expert's payroll records, which Expert provided as part of the discovery in this action.
The auditor determined that Expert owes contributions of $277,401.73, interest of
$128,406.57, and liquidated damages of $46,532.11, for a total of $452,340.41 owed to
the Benefit Funds for the period from June 2009 through January 2013, including union
dues owed to Plumbers Local 3 and a related local. (See Motion App., Exh. 1 ¶ 6 &
11. Expert has not paid any of the contributions or interest owed. Employers
Mutual Casualty Company, the surety on a payment bond obtained by Expert, paid the
$40,000 face value of the bond to the Benefit Funds. As a result, Expert owes a net of
$412,340.41 to the Benefit Funds, including union dues owed to Plumbers Local 3 and
the related local union. (Motion App., Exh. 1 ¶ 7.)
II. CONCLUSIONS OF LAW
12. The court has jurisdiction over this action under ERISA, 29 U.S.C. §§
1132(e)(1) and (f), and the LMRA, 29 U.S.C. § 185(a). The Trustees are fiduciaries of
the Benefit Funds, who seek to enforce the provisions of the CBA and applicable trust
agreements under 29 U.S.C. § 1132(a)(3)(B) and, specifically, an employer's duty to
make contractually required contributions to the Benefit Funds under 29 U.S.C. § 1145,
ERISA § 515.
13. ERISA section 515 is intended to simplify the collection of delinquent
contributions from employers, in part by limiting the available defenses:
Congress added § 515 to ERISA in 1980 to "simplify actions
to collect delinquent contributions, avoid costly litigation, and
enhance the actuarial planning necessary to the
administration of multiemployer pension plans." Though this
circuit has not yet had cause to interpret and apply § 515, we
agree with all of the circuits who have, that it makes it easier
for multiemployer plans to collect delinquent contributions
and limits the defenses available to employers.
The circuits generally recognize only two defenses to a
collection action: the pension contributions themselves are
illegal or the collective bargaining agreement is void and not
Trustees of Colorado Tile, Marble & Terrazo Workers Pension Fund v. Wilkinson
& Co., 1998 WL 43172 at *5 (10th Cir. Feb. 3 1998) (citations omitted).
14. The CBA required Expert to make contributions for employee benefits based
on the number of hours worked by employees who did covered work, i.e., plumbing and
pipefitting work. (Complaint ¶ 14.) The terms of the CBA required Expert to make such
contributions, thus in turn establishing Expert's obligation under ERISA section 515 to
make the contributions to the Benefit Funds. Trustees of Colorado Tile, Marble &
Terrazo Workers Pension Fund, 1998 WL 43172 at *5
15. The CBA authorizes the Benefit Funds to conduct an audit of an employer to
determine accurately whether an employer has complied with the fringe benefit
reporting requirements of the CBA. (Complaint ¶ 20.) Federal courts have recognized
the right of ERISA employee benefit plans to compel such audits. McDonald v. Beko
Associates, Inc., 2009 WL 1456754 at *4 (D. Utah May 21, 2009).
16. Pursuant to an audit conducted in November, 2013, after the filing of this
suit, the auditor determined that Expert under-reported hours and failed to make
contractually required contributions of $277,401.73 during the period from June, 2009,
to January, 2013. He determined that with interest and liquidated damages, Expert
owes $452,340.41 in total. Subtracting the $40,000 paid by the surety on the payment
bond, the net amount owed by Expert is $412,340.41.
17. Expert has failed to answer or otherwise respond to the complaint, and thus
has admitted the factual allegations of the complaint other than those relating to
damages. Fed. R. Civ. P. 8(d); see also Burlington Northern Railroad Co. v.
Huddleston, 94 F.3d 1413, 1415 (10th Cir. 1996).
18. Through the allegations of the complaint, along with the affidavit submitted in
support of the revised motion for default judgment, plaintiffs have established that
Expert is obligated under ERISA section 515 to pay the delinquent contributions
determined by the auditor, along with interest and liquidated damages. Plaintiffs have
established that the amount of damages is $277,401.73 in employee benefit
contributions owed for the period from June, 2009, to January, 2013, along with interest
of $128,406.57, and liquidated damages of $46,532.11, for an initial total of
$452,340.41. Subtracting the amount of $40,000 paid by the surety results in net
damages of $412,340.41.
THEREFORE, IT IS ORDERED as follows:
1. That plaintiffs' Revised Motion for Default Judgment Against Expert
Mechanical Services, Inc. [#26], filed July 1, 2014, is GRANTED;
2. That default judgment SHALL ENTER on behalf plaintiffs, the Trustees of the
Pipe Industry Health and Welfare Fund of Colorado; Trustees of the Colorado Pipe
Industry Annuity and Salary Deferral Trust Fund; Trustees of the Denver Plumbers Joint
Apprenticeship and Training Fund; Trustees of the Plumbers and Pipefitters National
Pension Fund. Journeymen Plumbers and Gas Fitters Local Union No. 3; and the
Mechanical Contractors Association of Northern Colorado, against defendant, Expert
Mechanical Services, Inc., on plaintiffs’ claim for relief against Expert under ERISA
3. That plaintiffs are AWARDED damages in the principal amount of
$412,340.41 as against Expert;
4. That post-judgment interest SHALL ACCRUE from the date of entry of
judgment at the rate permitted by law under 28 U.S.C. § 1961;
5. That plaintiffs are AWARDED their costs, to be taxed by the clerk of the court
under Fed. R. Civ. P. 54(d)(1) and D.C.COLO.LCivR 54.1;
6. That pursuant to 29 U.S.C. § 1132(g)(2)(D), plaintiffs are ENTITLED TO
RECOVER from Expert their reasonable attorney fees incurred in this action; provided
that plaintiffs SHALL SUBMIT a motion proving up their reasonable attorney fees within
fourteen (14) days of the date of this Order; and
7. That defendant, Expert Mechanical Services, Inc., is DROPPED as a named
party to this action, and the case caption AMENDED accordingly.
Dated July 9, 2014, at Denver, Colorado.
BY THE COURT:
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