Cavey et al v. Anderson et al

Filing 20

REPORT AND RECOMMENDATIONS re 1 Complaint, filed by Asbestos Workers Local 24 Apprenticeship Fund, R. Steve Shegogue, Thomas Haun, Alan Stortzum, Forrest Warman, Ken Graves, Brian Cavey, Michael Moneymaker, Rick Pumphrey, Charles Powe rs, Rick Schmid, Asbestos Workers Local 24 Pension Fund, Lino Cressotti, Robert McCourt, James Shaw, Asbestos Workers Local 24 Medical Fund Signed by: Judge Magistrate Judge Susan K. Gauvey Objections to R&R due by 2/25/2013 Responses due by 2/25/2013. Signed by Magistrate Judge Susan K. Gauvey on 2/7/13. (apls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BRIAN CAVEY ET AL.

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V.

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CIVIL NO. WDQ-12-00559

ANDERSON., ET AL.
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REPORT AND RECOMMENDATION
This is an action brought under Employee Retirement Income
Security Act (“ERISA”). (ECF. No. 1).

Plaintiffs are Asbestos

Workers Local 24 Medical Fund and associated trustees, Asbestos
Workers Local 24 Pension Fund and associated trustees, and
Asbestos Workers Local 24 Apprenticeship Fund and associated
trustees.

Defendants are Craig Anderson and Tina Anderson, who

are alleged to do business as RCT Enterprise, and were
signatories to the 2009 Joint Trade Agreement.

Plaintiffs move

for an entry of default judgment pursuant to Federal Rule of
Civil Procedure 55(b)(2) against the defendants for failure to
appear or otherwise defend in this matter.

(ECF No. 13).

This case has been referred to the undersigned magistrate
judge in accordance with 28 U.S.C. § 636 and Local Rule 301 and
302. (ECF No. 14).

The Court has requested and received

additional supporting materials and held a hearing on January

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15, 2013, to fully understand the damages evidence and
methodology.

For the reasons set forth below, the undersigned

recommends that plaintiffs’ motion be GRANTED and that damages
be awarded as set forth herein.

I.

Default Judgment Standard
Federal Rule of Civil Procedure 55(b)(2) authorizes courts

to enter a default judgment against a properly served defendant
who fails to file a timely responsive pleading.
In deciding whether to grant a motion for default judgment,
the Court must first consider the following three factors: (1)
whether the plaintiff will be prejudiced if default is not
granted, (2) whether the defendant has a meritorious defense,
and (3) whether the defendant’s delay was the result of culpable
misconduct.

Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3rd

Cir. 1987); see also Smith v. Bounds, 813 F.2d 1299 (4th Cir.
1987)(relying on these factors in determining whether a default
judgment merited reconsideration).
The Court must also determine whether plaintiff has alleged
legitimate causes of action.

In reviewing plaintiffs’ Motion

for Entry of a Default Judgment, the Court accepts as true the
well-pleaded factual allegations in the complaint as to
liability.

Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-

81 (4th Cir. 2001).

It, however, remains for the Court to

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determine whether these unchallenged factual allegations
constitute a legitimate cause of action.
WRIGHT, MILLER & KANE, FEDERAL PRACTICE

AND

Id.; see also 10A

PROCEDURE § 2688 (3rd ed.

Supp. 2010) (“[L]iability is not deemed established simply
because of the default . . . and the Court, in its discretion,
may require some proof of the facts that must be established in
order to determine liability.”).
If the Court determines that liability is established, it
must then determine the appropriate amount of damages.
253 F.3d at 780-81.

Ryan,

Unlike factual allegations as to liability,

the Court does not accept factual allegations regarding damages
as true, but rather must make an independent determination
regarding such allegations.

Credit Lyonnais Secs. (USA), Inc.

v. Alcantara, 183 F.3d 151, 154 (2nd Cir. 1999).
the Court may conduct an evidentiary hearing.
55(b)(2).

In so doing,

FED. R. CIV. P.

The Court can also make a determination of damages

without a hearing so long as there is an adequate evidentiary
basis in the record for the award.

See, e.g., Stephenson v. El-

Batrawi, 524 F.3d 907, 917 n.11 (8th Cir. 2008) (“Foregoing an
evidentiary hearing may constitute an abuse of discretion when
the existing record is insufficient to make the necessary
findings in support of a default judgment.”); Adkins v. Teseo,
180 F. Supp. 2d 15, 17 (D.D.C. 2001)(finding that a court need
not make determination of damages following entry of default
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through hearing, but rather may rely on detailed affidavits or
documentary evidence to determine the appropriate sum).

II.

Preliminary Factors

The Clerk of Court having filed entry of default on May 8,
2012 (ECF No. 9; ECF No. 10), the undersigned concludes that the
procedural requirements for entry of default judgment have been
met.

Moreover, because the defendants have failed to file any

responsive pleadings or otherwise show cause as to why default
should not be granted, the Court is “not in a position to judge
whether any delay was the result of culpable misconduct.”
Sambrick, 834 F.2d at 73.

Further, defendants’ failure to

appear deprived plaintiffs of any other means of vindicating
their claim and plaintiffs would be prejudiced if default is not
granted.

III. Discussion
A. ERISA Claims
Plaintiff employee benefit plans and trustees bring the
instant action under Sections 502(a)(3),(d)(1),(g), and 515 of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), 29 U.S.C. §§ 1132(a)(3),(d)(1),(g), and 1145.
No. 1, ¶ 1).

(ECF

They move to collect “unpaid contributions,

interest on the delinquent and unpaid contributions, and
liquidated damages” that they allege are “owed to the employee
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benefit plans as a result of the defendant’s violation of the
applicable collective bargaining agreements and applicable trust
agreements.”

(ECF No. 13-1, 6).

1. Standing
ERISA Section 502(a)(3) provides that a civil action may be
brought by a “participant, beneficiary or fiduciary” to “obtain
appropriate equitable relief

. . . to redress . . . violations

or . . . to enforce any provisions” of the statute or terms of
the plan.

29 U.S.C. § 1132(a)(3).

An individual is a fiduciary

under ERISA to the extent the person “exercises any
discretionary authority or control respecting management of [a]
plan or control respecting management or disposition of its
assets.” 29 U.S.C. § 1002 (21)(A).

In addition, ERISA Section

502(d)(1) provides that “[a]n employee benefit plan may sue or
be sued under this subchapter as an entity.”
1132(d)(1).

29 U.S.C. §

This action is brought by the trustees of three

employee benefit plans who administer the funds for the benefit
of the participants and beneficiaries of the funds.
¶ 5, 7, 9,).

(ECF No. 1,

As such, they are empowered to bring an action on

behalf of the plan under ERISA § 502(a)(3) and (d)(1).
Plaintiffs allege that defendants Tina and Craig Anderson
were the director-trustees of RCT Enterprise (“RTC”), a now
defunct corporation operating in Maryland and the District of

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Columbia.

(ECF No. 1, ¶ 10-11).

The correctly argue that under

MD. Code Ann., Corps & Ass'ns 9 3-515, “[w]hen the charter of a
Maryland corporation has been forfeited, until a court appoints
a receiver, the directors of the corporation become the trustees
of its assets,” and may be “sued in their own names as
trustees.”

Plaintiffs allege that RCT’s corporate status was

forfeited and its existence was ended by the State of Maryland
for a failure to file a personal property return on October 6,
1998.

(ECF No. 1, ¶ 10).

As such, plaintiffs have standing to

sue defendants individually.

2. ERISA § 515
ERISA § 515 provides that:
Every employer who is obligated to make contributions
to a multiemployer plan under the terms of the plan or
under the terms of a collectively bargained agreement
shall, to the extent not inconsistent with law, make
such contributions in accordance with the terms and
conditions of such plan or such agreement. 29 U.S.C.
§ 1145.
In a collection action based on section 515, a multiemployer
plan can enforce, as written, the contribution requirements
found in the controlling documents.

Bakery & Confectionery

Union & Indus. Int'l Pension Fund v. Ralph's Grocery Co., 118
F.3d 1018, 1021 (4th Cir. 1997).
The relevant controlling document here is the “Joint Trade
Agreement,” a collective bargaining agreement between the

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Asbestos Workers Local 24 Union and the Insulation Contractors’
Association of Washington, D.C., Inc.

(ECF No. 1, ¶ 14).

The

Agreement establishes the terms and conditions of employment for
employees of signatory employers.

(ECF No. 13-1, 3).

The

current agreement covers the period from October 1, 2009 through
September 30, 2012; a prior agreement covered the period from
October 1, 2006 through September 30, 2009.

(ECF No. 1, ¶ 14).

Defendants, doing business as RCT Enterprise, are signatories to
both agreements.

(ECF No. 1-1, 19; ECF No. 1-2, 19).

Under the current Joint Trade Agreement, defendants must
contribute a specified amount for each hour defendant is
obligated to pay compensation to its employees.
Art. X(A)(3), (B)(3), (C)(3)).

(ECF No. 1-1,

These amounts differ for each of

the funds represented by plaintiffs.

Defendants are obligated

to pay $5.74 per hour to the Medical Fund for each hour
defendants were obligated to pay compensation to a mechanic
covered by the 2009 Joint Trade Agreement.
X(A)(3).

(ECF No. 1-1, Art.

Defendants are obligated to pay $7.77 per hour to the

Pension Fund for each hour defendants were obligated to pay
compensation to all employees covered by the Joint Trade
Agreement, with the exception of entry level apprentices.
at Art. X(B)(3)).

(Id.

Defendants are obligated to pay to the

apprenticeship fund $.30 for each hour worked by Journeymen, of
which $.15 is an employer contribution and $.15 as a deduction
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from the employee’s pay, and $.55 for each hour worked by
Apprentices, of which defendants were responsible for $.40 and
$.15 was deducted from the employees pay.
b).

(Id. at Art. X(C)(3a-

Finally, defendants are obligated under the Agreements to

furnish, on demand, all reports on contributions deemed
necessary.

(Id. at Art. X(A)).

To support their factual allegations, plaintiffs rely on
the declaration of Renee Parenti, an account executive at Carday
Associates.

Carday Associates administers the above named funds

under the direction of the Boards of Trustees of the Local 24
funds.

(Parenti Supp. Dec., ECF No. 19-1, ¶ 1).

Ms. Parenti

was responsible for the custody and control of the Funds’
records.

(Id.).

Based on Ms. Parenti’s account of the records, plaintiffs
assert that “[d]efendants have failed to meet its obligations
under the Joint Trade Agreements and the Medical Trust, Pension
Trust and Apprenticeship Trust in that it has repeatedly and
habitually failed to remit its contributions and submit its
contribution reports on a timely basis.”

(ECF No. 1, ¶ 28).

Specifically, Ms. Parenti states that “[t]he Funds’ records show
that Defendants have underpaid certain contributions,” and have
“failed to pay certain liquidated damages and interest charges
for late paid contributions.”
1, ¶ 6).

(Parenti Supp. Dec., ECF No. 19-

Ms. Parenti states that defendants “owe a total of
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$6,051.74 in unpaid contributions, interest, and liquidated
damages to the Funds for the period February 2009 to present.”
(Id.).

In addition, Ms. Parenti documents that the Funds’

records show that defendants “have failed to submit reports or
contributions to the Funds for the work months of October 2011
through the present.”

(Id. at ¶ 8.).

These unchallenged

assertions of fact constitute a legitimate cause of action under
ERISA § 515.

3. Damages
Plaintiffs base their claim for damages on ERISA Section
502(g)(2), 29 U.S.C. § 1132(g)(2), which provides:
(2) In any action under this title by a fiduciary for or on
behalf of a plan to enforce section 515 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),
(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.
Relying on the declaration of Ms. Parenti, Plaintiffs state that
they are entitled to a total of $6,051.74 in underpaid

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contributions, liquidated damages, and interest for work months
between February 2009 October 2011.1
Ms. Parenti has provided the Court with a chart breaking
down the amounts owed to each fund.
No. 19-1, 8).

(Parenti Supp. Dec., ECF

The chart is based on the funds records.

Liquidated damages and interest were assessed based on the
methodology in the Agreements and Declarations of Trust of the
Pension Fund, the Medical Fund, and the Apprenticeship Fund.
(Id. at ¶ 11).

Ms. Parenti’s declaration indicates that

liquidated damages for late payments were assessed at 20%, (Id.
at ¶ 10), and interest was calculated based on a two-step
process using an 18% per annum interest rate provided for in the
Agreements.

(Id. at ¶ 11).

The first step in the two-step

process involves an initial calculation of the interest owed as
a result of the late payment of contributions.

The second

interest calculation, which occurs after the payment is made, is
based on the liquidated damages and unpaid interest outstanding.
(Id. at ¶ 12).
The undersigned has reviewed Ms. Parenti’s declaration and
the attached chart, and held a hearing with plaintiffs on
January 15 to review and confirm the information and
calculation.

Plaintiffs have submitted additional documentation

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 Plaintiffs initially sought damages beginning from November 2, 2002, but have
amended their request to include only damages within the 3 year statute of
limitations for this claim. (ECF No. 19-1).

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at the Court’s request.

(ECF No. 19).

The Court finds that the

damages were properly calculated in the chart provided by
plaintiffs.

This Court therefore recommends that damages be

awarded in the amount of $6,051.74.

4. Attorney’s Fees
In an ERISA action, a district court has discretionary
authority to award costs and reasonable attorneys' fees to
either party under 29 U.S.C. § 1132(g)(1), so long as that party
has achieved “some degree of success on the merits.” Williams v.
Metropolitan Life Ins. Co., 609 F.3d 622, 634 (4th Cir. 2010)
(citations omitted).

The court may employ a five-factor test as

a general guideline in exercise of its discretion in determining
whether to grant a request for attorneys' fees.

Quesinberry v.

Life Ins. Co. of North America, 987 F.2d 1017, 1029 (4th Cir.
1993). The five factors include: “(1) degree of opposing
parties' culpability or bad faith; (2) ability of opposing
parties to satisfy an award of attorneys' fees; (3) whether an
award of attorneys' fees against the opposing parties would
deter other persons acting under similar circumstances; (4)
whether the parties requesting attorneys' fees sought to benefit
all participants and beneficiaries of an ERISA plan or to
resolve a significant legal question regarding ERISA itself; and
(5) the relative merits of the parties' positions.”

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Id.

In order to properly determine an award of reasonable
attorneys' fees, the court must calculate the “lodestar amount”
defined as a “reasonable hourly rate multiplied by hours
reasonably expended.”

Grissom v. Mills Corp., 549 F.3d 313,

320–21 (4th Cir. 2008).

The Court determines if fees are

appropriate by assessing whether the hours worked were
reasonable or include hours that were unnecessary or
duplicative.

The Fourth Circuit has adopted the 12 factors set

forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714
(1974) to consider when determining the reasonableness of
attorney’s fees.
(4th Cir. 1978).

Barber v. Kimbrell's, Inc., 577 F.2d 216, 226
These include:

the time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill
required to properly perform the legal services
rendered; (4) the attorney's opportunity costs in
pressing the instant litigation; (5) the customary fee
for like work; (6) the attorney's expectations at the
outset of the litigation; (7) the time limitations
imposed by the client or circumstances; (8) the amount
in controversy and the results obtained; (9) the
experience, reputation and ability of the attorney;
(10) the undesirability of the case within the legal
community in which the suit arose; (11) the nature and
length of the professional relationship between
attorney and client; and (12) attorneys' fees awards
in similar cases. Id.
Plaintiffs have provided an affidavit from Mark J. Murphy,
a partner at the firm of Mooney, Green, Saindon, Murphy & Welch,
P.C., and lead attorney on this case, detailing the billing
records generated in the case.

(ECF No. 13-2).
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Mr. Murphy

states that 2 partners billed a total of 1.3 hours on the case,
2 associates billed a total of 17.3 hours, and one law clerk
billed 3.2 hours.

(Id. at ¶ 4).

He notes that services

included drafting and filing the complaint and exhibits, legal
research, drafting the affidavit for default, drafting the
motion for default judgment, and communicating with the Funds’
administrators.

(Id.).

Associates billed at $150.00 per hour,

partners were billed at $200.00 per hour, and law clerks were
billed at $75.00 per an hour.
fees were $3,096.50.

(Id. at ¶ 5).

(Id. at ¶ 7).

Total attorney’s

In addition to attorney’s

fees, plaintiff’s incurred a filing fee of $350.00 and a process
server fee of $101.25.

(Id. ¶ 6).

These fees fall within the

lower ranges of this Court’s guidelines for hourly rates for
lawyers of their experience.

See Local Rules, App. B(3)(d).

Accordingly, the undersigned finds that attorney’s fees of
$3,096.50 and costs of $451.25 are reasonable and due and
recommends that a total of $3547.75 be awarded in costs and
fees.2
Conclusion
For the reasons set forth above, the undersigned recommends
that:

2

 Although Mr. Murphy in his declaration lists $3,096.50 for attorney’s fees
and $451.25 for costs, (ECF No. 13-2, ¶ 7), his total for these two numbers
is $3,817.25. The Court has corrected this miscalculation.  

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1. The Court GRANT plaintiff’s Amended Motion for Default
Judgment.

(ECF No. 19).

2. The Court award plaintiff $6,051.74 for all delinquent
contributions, liquidated damages and interest for the
months February 2009 through September 2011;
3. The Court award plaintiff’s attorney’s fees and costs of
$3,547.75.
4. That defendants be ordered to submit all reports and
contributions owed for the months of October 2011 through
present, as well as all resulting liquidated damages and
interest;
5. That the Court retain jurisdiction to enter supplemental
judgment based on the outstanding reports.

Date: 2/7/2013 _______

/s/
Susan K. Gauvey
United States Magistrate Judge

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