DeLange et al v. Uptown Painting & Decorating Inc et al
Filing
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OPINION AND ORDER granting in part and denying in part 40 Plaintiffs Second Amended Verified Motion for Entry of an Order and Default Judgment; denying as moot 37 Motion for Default Judgment. Plaintiffs motion for Default Judgment against Defe ndant Armando Guerra is DENIED. Plaintiffs have until February 28, 2014 to file a memorandum addressing whether the conversion claims against Guerra are preempted by the LMRA. The claims against Defendant Benjamin Ramos are DISMISSED WITHOUT PREJUDI CE. Defendant Uptown Painting is ORDERED to pay: (1) $379,664.98 in delinquent contributions, late payment assessments, audit fees and liquidated damages to Plaintiff Northwest Indiana Welfare Fund for the period January 1, 2006 to September 30, 2012; (2) $20,808.21 in delinquent contributions and interest to Plaintiff Northwest Indiana Painters Joint Apprenticeship & Training Trust Fund for the same period; (3) $39,057.12 in delinquent contributions and interest to Plaintiff Nort hwest Indiana Local 460, District Council 91, IUPAT, AFL-CIO for the same period; (4) Statutory post-judgment interest at the current legal rate on all monies owed pursuant to (1)-(3) supra; and (5) $9,368.75 and $361.80 to Plaintiffs for attorneys fees and costs, respectively. Signed by Chief Judge Philip P Simon on 01/29/2014. (rmn)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
Allen DeLange, Board of Trustees Chairman,
on behalf of NORTHWEST INDIANA
PAINTERS WELFARE FUND, et al.,
Plaintiffs,
v.
UPTOWN PAINTING & DECORATING, INC.,
et al.,
Defendants.
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NO. 2:11-cv-181-PPS
OPINION AND ORDER
This matter is before the Court on Plaintiffs’ second amended verified motion for entry of
an order and default judgment against Defendants Uptown Painting & Decorating, Inc. and
Armando Guerra [DE 40]. For the reasons discussed below, the motion is GRANTED in part
and DENIED in part.
BACKGROUND
The Plaintiffs are the Northwest Indiana Local 460, District Council 91, IUPAT, AFLCIO (the “Union” ), and two trustee-fiduciaries who are suing on behalf of their respective trust
funds (the “Trustee Plaintiffs”) to collect delinquent employment contributions owed by Uptown
Painting under a collective bargaining agreement between it and the Union [DE 21]. In Count I,
the Trustee Plaintiffs allege a claim against Uptown Painting under Sections 502 and 515 of
ERISA. See 29 U.S.C. §§ 1332 and 1145. In Count II, the Union alleges a claim against
Uptown Painting under Section 301 of the Labor-Management Relations Act (“LMRA”). See 29
U.S.C. § 185. In Counts III through VI, the Union alleges state law conversion claims against
Armando Guerra and Benjamin Ramos.
Plaintiffs served the original complaint and summons by certified mail on July 8, 2011
[DE 5-6]. The original complaint named Uptown Painting and Benjamin Ramos as defendants.
These Defendants failed to appear, plead, or otherwise defend the lawsuit as required by the
Federal Rules of Civil Procedure. Accordingly, in July 27, 2011, the clerk entered an order of
default under Rule 55(a) [DE 8]. Plaintiffs then spent about a year attempting to get these
Defendants to appear before the court or submit to an audit. This effort was to no avail. In June
2012, Plaintiffs amended their complaint to add two conversion claims against Armando Guerra
[DE 21]. Guerra also failed to appear, plead, or otherwise defend the suit, and the clerk entered a
default against Guerra in July 2012 [DE 27].
Plaintiffs then moved for default judgment against Uptown Painting and Guerra in
September 2013 [DE 37]. The motion did not adequately address the issue of Guerra’s personal
liability under the state law claims, so I ordered Plaintiffs to file a memorandum explaining their
position [DE 39]. I also noted that Plaintiffs were not pursuing judgment against Defendant
Ramos, and let the Plaintiffs know that I would dismiss the claim against Ramos if they did not
pursue it. The Plaintiffs chose not to pursue the claim against Ramos, but did file the instant
amended motion for default judgment [DE 40] addressing the issues I raised in my order.
Plaintiffs seek a judgment against Uptown Painting for (1) $400,473.19 in delinquent
contributions and interest for the period of January 1, 2006 to December 31, 2009; (2)
$39,057.12 in delinquent deductions and interest for that same period; (3) $9,368.75 in
attorneys’ fees, and $361.80 in court costs and (4) statutory post-judgment interest [Id.]. Against
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Armando Guerra individually, Plaintiffs seek a judgment of $39,057.12 in delinquent deductions
and/or treble damages of $117,171.36.
DISCUSSION
Federal Rule of Civil Procedure 55(b) governs the entry of default and default judgments.
Lowe v. McGraw-Hill Cos., Inc., 361 F.3d 335, 339 (7th Cir. 2004). Prior to obtaining a default
judgment under Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a). See
Wolf Lake Terminals, Inc. v. Mut. Marine Ins. Co., 433 F. Supp. 2d 933, 941 (N.D. Ind. 2005).
Under Rule 55(a), the clerk is to enter the default of a party against whom a judgment is sought
when that party has failed to plead or otherwise defend. Fed.R.Civ.P. 55(a).
I.
Default Judgment Against Uptown Painting is Appropriate
Because the clerk has already entered a default, I may now enter a default judgment
under Rule 55(b)(2). But I exercise discretion in doing so. See O’Brien v. R.J. O’Brien &
Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1991). A default judgment establishes, as a matter
of law, that the defendant is liable to the plaintiffs for each cause of action in the complaint.
E360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007). Moreover, all wellpleaded allegations of the complaint will be taken as true. Id. at 605.
Courts may consider a number of factors when deciding a motion for default judgment.
These factors include the amount of money potentially involved, whether material issues of fact
or issues of substantial public importance are at issue, whether the default is largely technical,
whether plaintiff has been substantially prejudiced by the delay involved, and whether the
grounds for default are clearly established or are in doubt. 10A C. Wright, A. Miller & M. Kane,
Federal Practices and Procedure: Civil §2685 (3d ed. 1998).
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In this case, the factors weigh in favor of default judgment against Uptown Painting for
Counts I and II. There are very few material issues of fact and the grounds for default are clearly
established. There are no issues of substantial public importance here. This default is also the
furthest thing from a technicality. This lawsuit was filed back in May 2011. In all this time,
Uptown Painting has not pleaded nor appeared in this matter despite several show cause orders
issued by the magistrate judge. Plaintiffs seek a large amount of money, which weighs against
default judgment. But this is offset by the Defendant’s steadfast refusal to respond this
litigation. Defendant’s refusal to respond prejudices the Plaintiffs by delaying their receipt of
the money at issue. Thus the Court finds that a weighing of these competing factors comes out
in favor of the Plaintiffs, and default judgment against Uptown Painting is appropriate.
II.
Default Judgment Against Armando Guerra is Not Proper
A default has also been entered against Armando Guerra individually [DE 9]. After
Plaintiffs’ first motion for default judgment, I asked for additional briefing, suspecting there
might be issues regarding preemption and corporate officer liability that were not addressed in
Plaintiffs’ first motion [DE 11]. Plaintiffs ably addressed the issue of ERISA preemption in the
amended motion, clarifying that the claims against Guerra involve delinquent union dues and not
ERISA “plan assets.” Unfortunately, they did not address LMRA preemption, and that is where
their trouble lies.
Section 301 of the Labor Management Relations Act preempts state law claims that
require the interpretation of a collective bargaining agreement. In re Bentz Metal Products Co.,
253 F.3d 283, 289 (7th Cir. 2001). Although the preemptive effect is broad, “not every dispute
concerning employment or tangentially involving a provision of a CBA is preempted by § 301.”
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Allis-Chalmers v. Lueck, 471 U.S. 202, 211 (1985). For example, claims that merely require
reference to the CBA are not preempted. In re Bentz, 253 F.3d at 289. Preemption is triggered,
however, when a claim is founded directly on rights created by collective bargaining agreements
and when the resolution of a state law claim depends on the meaning of, or requires the
interpretation of, a collective bargaining agreement. Caterpillar, Inc. v. Williams, 482 U.S. 386,
394 (U.S. 1987); Atchley v. Heritage Cable Vision Associates, 101 F.3d 495, 499 (7th Cir. 1996).
Put another way, a claim is preempted if it is substantially dependent on an analysis of the terms
of the CBA. Atchley, 101 F.3d at 499.
As it stands right now, I cannot enter a default judgment against Armando Guerra
because, as pled, the Union’s claims are preempted by the LMRA. According to the Amended
Complaint, the Union’s conversion claims against Guerra are based exclusively on the CBA
between Uptown Painting and the Union. The Union alleges that, “among the obligations
created by the collective bargaining agreement,” was the requirement that Guerra withhold
deductions from employee paychecks and remit those deductions to the Union [DE 21 ¶ 5]. By
failing to do so, the Union alleges Guerra converted those funds for his own personal gain. As
far as I can tell, these conversion claims are founded directly on the rights created in the CBA.
In order to resolve them, I would have to interpret the CBA and determine what was owed the
union and what duties Uptown Painting undertook to perform. This is the reason that conversion
claims based on obligations set out in CBAs are usually preempted by the LMRA . See Leu v.
Norfolk & Western Ry. Co., 820 F.2d 825 (7th Cir. 1987) (holding the Railway Labor Act
preempted a state law conversion claim for failure to remit employee benefits); Shales v. Asphalt
Maintenance, Inc., No. 03 C 8250, 2004 WL 2191609 (N.D. Ill. Sept. 28, 2004) (holding state
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law conversion claim for failure to remit union dues was preempted by § 301); International
Assoc. of Heat & Frost Insulators & Allied Workers Local No. 24 v. Chesapeake Firestop
Products, Inc., 1376-AW, 2012 WL 3137424 (D. Md. July 31, 2012) (same).
On the other hand, I hesitate to completely dismiss the Union’s claims against Guerra.
Section 301 preemption requires a case-by-case factual analysis. In re Bentz, 253 F.3d at 285. It
is difficult to perform that kind of analysis, where, as here, the facts of the case have not been
developed and the issue of preemption has not been briefed. It is possible that an exception to
LMRA preemption applies in this case. See, for example, Construction & General Laborers’
District Council of Chicago and Vicinity v. Roth’s Reliable Construction Co., No. 03 C 7417,
2004 WL 1470269 (N.D. Ill. June 29, 2004) (holding conversion claim for failing to remit union
dues was not preempted by § 301 when the duty to remit dues was founded in employee wage
assignments, not the CBA). Although, as I noted above, the Complaint suggests the conversion
claims are preempted, I am going to give the Plaintiffs an opportunity to make the case that the
conversion claims are not preempted by the LMRA before I dismiss Guerra.
III.
The Claims Against Benjamin Ramos are Dismissed
In my order requesting supplemental briefing [DE 39], I noted that Plaintiffs had not
moved for default judgment against Defendant Ramos. I informed Plaintiffs that I would
consider their claims against Ramos abandoned if they did not inform me otherwise within seven
days of that order. Plaintiffs chose not to pursue Ramos, and now, in the memorandum
accompanying their amended motion for default judgment, Plaintiffs have indicated that they
have no objection to my dismissal of the claims against Ramos [DE 41 at 3 n.1]. Accordingly,
the claims against Ramos are dismissed.
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IV.
Damages
Ordinarily, upon considering a motion for default judgment, a court must have a hearing
to determine damages. See Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722
F.2d 1319, 1323 (7th Cir. 1983). In cases where damages are capable of ascertainment from
definite figures contained in the documentary evidence or in detailed affidavits, however, such a
hearing is unnecessary. Id. In this case, I have the necessary information to calculate the
damages without a hearing. The Plaintiffs have attached the affidavits of Arlene David, Jim
Loftis, and Paul Berkowitz to establish the amount of damages owed by Defendant Uptown
Painting. The affidavits are detailed and supported by documentary evidence.
Arlene David is an auditor who conducted an audit of Trustee Plaintiff Northwest Indiana
Welfare Fund. David attests Uptown Painting owes the Welfare Fund $379,664.98 in delinquent
contributions, late payment assessments, audit fees and liquidated damages for the period of
January 1, 2006 to September 30, 2012 [DE 41-2].
Jim Loftis is the Business Representative for the Union and monitors contractors’
submission of their monthly reporting forms and payments owed pursuant to their collective
bargaining agreements with the Union. Lofits attests that Uptown Painting owes the Union
$39,057.12 in delinquent payments and interest for the period of January 1, 2006 through
September 30, 2012 [DE 41-3]. In addition, Loftis attests that Uptown Painting owes Trustee
Plaintiff Northwest Indiana Painters Joint Apprenticeship & Training Trust Fund $20,808.21 in
delinquent contributions and interest for the same period.
Finally, under 29 U.S.C. § 1132(g)(2)(D), Plaintiffs are entitled to reasonable attorneys’
fees as well as costs of the action to be paid by the Defendant. Plaintiffs have attached the
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affidavit of attorney Paul Berkowitz [DE 41-4]. Berkowitz attests that Plaintiffs have incurred
$9,368.75 and $361.80 in attorneys’ fees and costs, respectively, in pursuit of this claim.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Second Amended Verified Motion for Entry of an
Order and Default Judgment [DE 40] is GRANTED IN PART and DENIED IN PART.
Plaintiffs’ first Motion for Default Judgment [DE 37] is DENIED as moot.
Plaintiffs’ motion for Default Judgement against Defendant Armando Guerra is
DENIED. Plaintiffs have until February 28, 2014 to file a memorandum addressing whether
the conversion claims against Guerra are preempted by the LMRA.
The claims against Defendant Benjamin Ramos are DISMISSED WITHOUT
PREJUDICE.
Defendant Uptown Painting is ORDERED to pay:
(1) $379,664.98 in delinquent contributions, late payment assessments, audit fees and
liquidated damages to Plaintiff Northwest Indiana Welfare Fund for the period January 1, 2006
to September 30, 2012;
(2) $20,808.21 in delinquent contributions and interest to Plaintiff Northwest Indiana
Painters Joint Apprenticeship & Training Trust Fund for the same period;
(3) $39,057.12 in delinquent contributions and interest to Plaintiff Northwest Indiana
Local 460, District Council 91, IUPAT, AFL-CIO for the same period;
(4) Statutory post-judgment interest at the current legal rate on all monies owed pursuant
to (1)-(3) supra; and
(5) $9,368.75 and $361.80 to Plaintiffs for attorneys’ fees and costs, respectively.
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SO ORDERED.
ENTERED: January 29, 2014
s/ Philip P. Simon
PHILIP P. SIMON, JUDGE
UNITED STATES DISTRICT COURT
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