Anderson et al v. Savage Decorating, Inc. et al
Filing
66
MEMORANDUM Opinion and Order. Signed by the Honorable Arlander Keys on 6/26/2013. Mailed notice(ac, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHARLES E. ANDERSON, Trustee, )
et al.,
)
)
Plaintiffs,
)
)
v.
)
)
SAVAGE DECORATING, INC.,
)
et al.,
)
)
Defendants.
)
Case No. 11 C 3474
Magistrate Judge Arlander Keys
MEMORANDUM OPINION AND ORDER
In this case, the Painters’ District Council No. 30 Pension
Fund; the Painters’ District Council No. 30 Health and Welfare
Fund; the Painters’ and Allied Trades District Council No. 30
Joint Apprenticeship and Training Fund; the Northern Illinois
Painting and Drywall Institute; the Painters’ District Council
No. 30, International Union of Painters and Allied Trades, AFLCIO; Charles E. Anderson (fiduciary and Trustee of the ERISA
Funds); and Rick Vandegraft (fiduciary and Trustee of the
NIPDI)(hereinafter, “plaintiffs”), sued Savage Decorating under
the Employee Retirement Income Security Act of 1974 (“ERISA”) to
recover unpaid and delinquent contributions and dues.
The
plaintiffs filed a three-count complaint: count 1 sought damages
from Savage under certain Collective Bargaining Agreements and
Trust Agreements for unpaid contributions, dues and assessments;
count 2 sought to hold Savage’s president, Walter Glowicki,
personally liable for those same contributions, dues and
assessments; and count 3 sought damages based upon a Promissory
Note executed by Mr. Glowicki in 2010.
On March 22, 2013, the Court issued a memorandum opinion and
order granting summary judgment in favor of the plaintiffs on
counts 1 and 2, but denying summary judgment as to count 3.
The
Court determined that “Savage is liable to the plaintiffs for
unpaid contributions, dues and assessments totaling $20,380.65,
plus interest on that amount calculated at the rate of 1.5% per
month, and liquidated damages as provided in the Agreements.”
Memorandum Opinion and Order dated March 22, 2013, p. 21 [Docket
#57].
The Court determined that Savage is “also liable, under
the CBA and the Trust Agreements, for reasonable attorneys’ fees
and costs incurred in pursuing these delinquent contributions,”
and that “Mr. Glowicki is personally liable for Savage’s unpaid
contributions as well.”
Id., pp. 21-22.
The Funds later dismissed count 3, and subsequently filed a
motion concerning the amount of damages and, more specifically,
their entitlement to double interest.
In their motion, the
plaintiffs ask the Court to enter judgment in the amount of
$63,792.99.
This amount consists of $20,380.65 in delinquent
contributions, dues and assessments; $21,706.17 in interest on
those contributions, calculated at the rate of 1.5% per month,
and $21,706.17 in additional interest pursuant to 29 U.S.C.
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§1132(g).
The plaintiffs also seek judgment in their favor
against Mr. Glowicki, jointly and severally with Savage for the
delinquent contributions.
They also seek attorneys’ fees and
costs.
The Court’s earlier decision makes clear that the plaintiffs
are entitled to all of these.
And, indeed, Savage does not deny
that the plaintiffs are entitled to all of the damages set forth
above.
Nor does it dispute the plaintiffs’ interest calculation.
But Savage asks the Court to deny the request for double interest
on fairness grounds.
Savage argues that, despite what the
agreements say, the Court should award liquidated damages in the
amount of $3,622.90, not in the greater amount of $21,706.17.
The lesser amount is appropriate, Savage argues, given that the
company has gone under and Mr. Glowicki is on the brink of
bankruptcy.
Under the circumstances, Savage argues, awarding the
higher amount would be unconscionable.
ERISA provides that,
[i]n any action under this subchapter by a
fiduciary for or on behalf of a plan to enforce section
1145 of this title [delinquent contributions] in which
a judgment in favor of the plan is awarded, the court
shall award the 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
plan in an amount not in excess of 20 percent (or such
higher percentage as may be permitted under Federal or
State law) of the amount determined by the court under
subparagraph (A),
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(D) reasonable attorney's fees and costs of the action,
to be paid by the defendant, and
(E) such other legal or equitable relief as the court
deems appropriate.
29 U.S.C. §1132(g)(emphasis added).
“The Seventh Circuit has
made clear that the payment of liquidated damages is a mandatory
rather than a discretionary determination on the part of the
court.”
Central States, Southeast and Southwest Areas Pension
Fund v. Allied Systems, Ltd., 795 F.Supp.2d 740, 744 (N.D. Ill.
2011)(citing Central States, Southeast and Southwest Areas
Pension Fund v. Slotky, 956 F.2d 1369, 1377 (7th Cir. 1992);
Laborers’ Pension Fund v. RES Environmental Services, Inc., 377
F.3d 735, 739 (7th Cir. 2004)).
In Slotky, the court held that
interest, liquidated damages, and attorneys’ fees “are mandatory
add-ons in (successful) suits to enforce section 1145.” 956 F.2d
at 1377 (citing Central States, Southeast & Southwest Areas
Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1156
(7th Cir. 1989)(en banc)).
Thus, the liquidated damages sought
by plaintiffs, in accordance with the terms of the Trust
Agreements, are mandatory.
Savage’s request to award a lower
amount, in contradiction of the statute, is denied.
Savage argues that, given its dire financial situation, the
Court should award the lesser option under the liquidated damages
section; it argues that the higher award is appropriate only
where the defendant acts in bad faith.
to the law.
First, that is contrary
And, second, that position is not entirely supported
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by the record before the Court.
Though Savage may not have acted
to harass the plaintiffs, its failure to pay contributions was
hardly done in good faith.
Savage knew it owed the money; it
simply didn’t pay it – whether because it didn’t have the money
or because it prioritized other creditors over the funds.
The
fact that it had financial problems doesn’t make its failure to
pay reasonable.
Conclusion
For the reasons set forth above, the Court finds that, in
addition to the $20,380.65 in unpaid contributions, dues and
assessments, the plaintiffs are entitled to an award of double
interest – that is, they are entitled to recover interest on the
unpaid or delinquent contributions, plus that amount again under
the liquidated damages provision of 29 U.S.C. §1132(g).
They are
entitled to $21,706.17 in interest, plus $21,706.17 in liquidated
damages.
Savage and Mr. Glowicki are jointly and severally
liable to the extent of the delinquent contributions.
The
plaintiffs are also entitled to reasonable attorneys’ fees and
costs, the specific amount of which shall be determined at a
later date.
Date: June 26, 2013
E N T E R E D:
______________________________
MAGISTRATE JUDGE ARLANDER KEYS
UNITED STATES DISTRICT COURT
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