Trustees of the Mid-Atlantic Reginal Council of Carpenters Pension Fund et al v. Design Surfaces, Inc.

Filing 16

REPORT AND RECOMMENDATIONS re 9 MOTION for Default Judgment as to Defendant filed by Trustees of the Mid-Atlantic Council of Carpenters Training Centers, Trustees of the Mid-Atlantic Regional Council of Carpenters Health Fund, Tr ustees of the Mid-Atlantic Regional Council of Carpenters Annuity Fund, UBCJA National Training Fund, Trustees of the Mid-Atlantic Reginal Council of Carpenters Pension Fund, Trustees of the Industry Promotional Trust Fund, Mid-Atlantic Regional Council of Carpenters Signed by: Judge Magistrate Judge Beth P. Gesner Objections to R&R due by 1/6/2014. Signed by Magistrate Judge Beth P. Gesner on 12/18/2013. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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TRUSTEES OF THE MID-ATLANTIC
REGIONAL COUNCIL OF
CARPENTERS PENSION FUND, et al.

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Plaintiffs,

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v.

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DESIGN SURFACES, INC.,

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Defendant.
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Case No. ELH-13-1727

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REPORT AND RECOMMENDATION
The above-referenced case was referred to the undersigned for review of plaintiffs’
motion for default judgment and to make recommendations concerning damages, pursuant to 28
U.S.C. § 636 and Local Rules 301 and 302. (ECF No. 11.) Currently pending is plaintiffs’
Motion for Entry of Default Judgment (“Motion”). (ECF No. 9.) By Letter Order on December
4, 2013, I requested supplemental affidavits from plaintiffs to further explain plaintiffs’ damages
calculations and claim for attorneys’ fees.1 (ECF No. 12.) I have reviewed plaintiffs’ Motion,
the Supplemental Affidavit of Aileen Williams (ECF No. 13), and the Supplemental Declaration
of John R. Harney Regarding Attorneys’ Fees and Costs (ECF No. 14). Defendant has not filed
any response to plaintiffs’ filings. No hearing is deemed necessary. See Fed. R. Civ. P.
55(b)(2); Loc. R. 105.6. For the reasons discussed herein, I respectfully recommend that
plaintiffs’ Motion (ECF No. 9) be GRANTED and that relief be awarded as set forth herein.

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A copy of this Letter Order was mailed to defendant on 12/4/13, but was returned as undeliverable.

I.

STANDARD FOR ENTRY OF DEFAULT JUDGMENT
In reviewing a motion for 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 remains for the court, however, to determine whether these
unchallenged factual allegations constitute a legitimate cause of action. Id. If the court
determines that liability is established, the court must then determine the appropriate amount of
damages. Id. The court does not accept factual allegations regarding damages as true, but rather
must make an independent determination regarding such allegations. See, e.g., Credit Lyonnais
Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 154-155 (2d Cir. 1999). The court may make a
determination of damages without a hearing, so long as there is adequate evidence in the record,
such as detailed affidavits or documentary evidence, for the award. See, e.g., Adkins v. Teseo,
180 F. Supp. 2d 15, 17 (D.D.C. 2001).
II.

DISCUSSION
A. Defendant’s Liability
I have reviewed plaintiffs’ Complaint (ECF No. 3), and find that plaintiffs have stated

causes of action based on a breach of a collective bargaining agreement (“CBA”) and a breach of
a settlement agreement between the plaintiffs and defendant resolving a dispute arising out of the
CBA. Plaintiff Mid-Atlantic Regional Council of Carpenters is an unincorporated labor
organization as defined by 29 U.S.C. § 152(5). (ECF No. 3 at ¶ 3.) Plaintiffs Mid-Atlantic
Regional Council of Carpenters Pension Fund, Mid-Atlantic Regional Council of Carpenters
Health Fund, Mid-Atlantic Regional Counsel of Carpenters Annuity Fund, and Mid-Atlantic

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Council of Carpenters Training Centers2 (collectively referred to as the “MARCC Funds”) are
employee benefit plans as defined in the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1002(3). (ECF No. 3 at ¶ 1.) Plaintiffs Industry Promotional Trust
Fund and the United Brotherhood of Carpenters and Joiners of America National Training Fund3
(collectively referred to as the “Industry Funds”) are funds that provide benefits to employees
and employers of the carpet industry. (ECF No. 3 at ¶ 4.) Both the MARCC Funds and the
Industry Funds (collectively, “plaintiffs”) are established by CBAs and the Restated Agreements
and Declarations of Trusts (“Trust Agreements”). (ECF No. 3 at ¶¶ 1-2, 4.) The Trustees of the
MARCC Funds are fiduciaries as defined in ERISA, 29 U.S.C. § 1002(21). (ECF No. 3 at ¶ 2.)
An employer who fails to make required contributions to an employee benefit plan, such as the
MARCC Funds or the Industry Funds, is liable for the unpaid contributions, interest, liquidated
damages, reasonable attorneys’ fees, and costs, pursuant to ERISA. 29 U.S.C. § 1132(g).
Defendant Design Surfaces, Inc., (“defendant”) is a Maryland corporation that engages in
business as a contractor or subcontractor in the carpet industry. (ECF No. 3 at ¶ 5.) Defendant is
an “employer in an industry affecting commerce” as defined in 29 U.S.C. §§ 142, 152, 1001(a)
and 1002. (Id.) Defendant entered into a CBA with the Construction Contractors Council, Inc. –
A.G.C. Labor Division, and the Mid-Atlantic Regional Council of Carpenters. (ECF No. 3 at ¶
7.) This CBA defined the amount of money defendant would pay into the MARCC Funds and
Industry Funds based on the hours worked by each of its employees who were journeymen and
apprentice carpenters. (ECF No. 3 at ¶¶ 7-8.)

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The Mid-Atlantic Council of Carpenters Training Centers was formerly known as the Joint Carpentry
Apprenticeship Committee of Washington, D.C. and Vicinity. (ECF No. 3 at 1.)

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The UBCJA National Training Fund was formerly known as the U.B.C. Health, Safety and National Apprentice
Fund. (ECF No. 3 at 1.)

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In 2009, defendant was unable to make the required benefit contributions and, in
September 2009, entered into a Letter of Settlement with the MARCC Funds to make payments
over time. (ECF No. 3 at ¶ 15; ECF No. 9-24 at 9.) This agreement permitted defendant to pay a
principal of $47,817.33 in unpaid contributions plus interest at a 12% annual rate by making
sixty-five monthly payments of $1,000.00 and a sixty-sixth payment of $367.80. (ECF No. 3 at
¶ 15.) This agreement waived liquidated damages and accrued interest totaling $11,872.34 on
the condition that defendant timely paid all future settlement payments and monthly
contributions. (Id.) Subsequently, defendant defaulted on the settlement agreement by failing to
make payments between February 25, 2012 and May 23, 2013, thereby making a balance of
$49,454.17 immediately due and payable. (ECF No. 3 at ¶ 16; ECF No. 13 at ¶ 6.) Plaintiffs
filed this suit seeking recovery of these funds and other damages.
Plaintiffs served defendant with a Summons and copy of the Complaint on June 21, 2013.
(ECF No. 6.) After defendant failed to answer the Complaint or otherwise defend within twentyone days, plaintiffs properly moved, pursuant to Federal Rule of Civil Procedure 55(a), for an
entry of default. (ECF No. 8.) The Clerk of this court entered an Order of Default on October
30, 2013. (ECF No. 10.) On October 8, 2013, plaintiffs filed the pending Motion (ECF No. 9),
to which defendant has not responded. Plaintiffs seek damages in the amount of $53,221.78,
which includes: (1) $49,454.17 for the breach of the settlement agreement; (2) $1,142.22 for
unpaid contributions for July and August 2013; (3) $639.195 in liquidated damages for late
payments between October 2012 and June 2013 and unpaid contributions for July and August

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All page numbers cited within ECF No. 9-2 refer to the consecutive page number as docketed, not to the individual
page numbers on each separate document and exhibit.
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Plaintiff requested $639.20 in its Motion (ECF No. 9 at 1), but $524.97 for late payments between October 2012
through June 2013 and $114.22 for unpaid contributions between July 2013 and August 2013 results in a total
liquidated damages request of $639.19 (ECF No. 9-2 at 7).

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2013; (4) $238.70 in interest for late and unpaid contributions between October 2012 and August
2013; (5) $1,237.50 in attorneys’ fees; and (6) $510.00 in costs. (ECF No. 9 at ¶¶ 1-4.) In
support thereof, plaintiffs submitted the affidavit and supplemental affidavit of Aileen Williams,
Account Executive of the MARCC Funds, the Industry Funds, and the Mid-Atlantic Regional
Council of Carpenters, and the declaration and supplemental declaration of John R. Harney,
plaintiffs’ attorney. (Ex. A & B of Pl.’s Mot., ECF No. 9-2; ECF Nos. 13 and 14.) Based upon
my review of the record in this case, I conclude that plaintiffs have demonstrated defendant is
liable to plaintiffs for damages and that plaintiffs are entitled to a default judgment against
defendant.
B. Damages
Having determined that plaintiffs have proven liability, the undersigned now undertakes
an independent determination of the damages to which they are entitled. Pursuant to ERISA, the
terms of the CBA, the Trust Agreements, and the settlement agreement, plaintiffs seek to recover
a total sum of the $53,221.78 from defendant. (ECF No. 9.)
1. Breach of Settlement Agreement
Plaintiffs seek to recover $49,454.17 arising from defendant’s breach of the settlement
agreement. (Pls.’ Memo., ECF No. 9-2 at 2.) Plaintiffs present the affidavit and supplemental
affidavit of Aileen Williams, Account Executive for the MARCC Funds, the Industry Funds, and
the Mid-Atlantic Regional Council of Carpenters, as well as the Letter of Settlement and its
associated documents. (Ex. A, ECF No. 9-2; ECF No. 13.) According to the September 2009
Letter of Settlement, defendant agreed to pay a principal of $47,817.33 in unpaid contributions
plus interest at a 12% annual rate by making sixty-five monthly payments of $1,000.00 and a
sixty-sixth payment of $367.80. (ECF No. 13 at 7.) The agreement waived liquidated damages

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and accrued interest totaling $11,872.34 on the condition that defendant timely paid all future
settlement payments and monthly contributions. (Id.) Defendant made eighteen monthly
payments of $1,000 each before defaulting on the settlement agreement and failing to make
payments between February 25, 2012 and May 23, 2013. (ECF No. 13 at ¶ 6.) As outlined in
the settlement agreement’s payment schedule (ECF No. 13 at 10), after eighteen monthly
payments, a balance of $37,581.83 in contributions and attorneys’ fees remained. (ECF No. 13
at ¶ 6.) As a result of defendant’s breach of the settlement agreement, the conditionally waived
$4,998.98 in liquidated damages and $6,873.36 in accrued interest, together with the unpaid
amount of $37,581.83 for a total of $49,454.17 became immediately due and payable. (Id.)
After review of the affidavits and documents submitted, I find that plaintiffs have presented
sufficient evidence to establish that defendant breached the settlement agreement and, as a result,
owes the sum of $49,454.17. Accordingly, I recommend granting plaintiffs’ request for damages
for defendant’s breach of the settlement agreement in the amount of $49,454.17.
2. Unpaid Contributions for July and August 2013
Plaintiffs seek to recover unpaid contributions for July and August 2013 totaling
$1,142.22. (ECF No. 9 at ¶ 2.) Defendant failed to provide the MARCC Funds with reports
outlining the amounts owed in July and August 2013, so plaintiffs are permitted to estimate the
amount owed in the manner established by the Trust Agreements. (ECF No. 9-2 at 6.) Plaintiffs
properly calculated an estimated monthly contribution amount of $571.11 per month by
averaging defendant’s previous twelve monthly payments. (ECF No. 9-2 at 6-7.) Accordingly, I
recommend granting plaintiffs’ request to recover unpaid contributions for the months of July
and August 2013 in the amount of $1,142.22.

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3. Liquidated Damages
Plaintiffs seek to recover a total sum of $639.19 in liquidated damages from defendant
based on late and unpaid contributions from October 2012 through August 2013. (ECF No. 9 at
¶ 3.) ERISA provides that a plaintiff who wins a judgment for unpaid contributions pursuant to
an employee benefit plan is entitled to collect liquidated damages, as outlined in the plan, not to
exceed 20% of the amount of unpaid contributions. 29 U.S.C. § 1132(g)(2)(C)(ii). Here, the
Trust Agreements provide for liquidated damages of 10% of all late or unpaid contributions.
(ECF No. 9-2 at 7.) Plaintiffs have provided calculations establishing that they are entitled to
$524.97 in liquidated damages arising from late payments for October 2012 through June 2013
and $114.22 in liquidated damages for unpaid contributions for July and August 2013. (App. 2,
ECF No. 9-2 at 13.) Accordingly, I recommend granting plaintiffs’ request for a total of $639.19
in liquidated damages.
4. Interest
Plaintiffs also seek to recover interest in the amount of $238.70 related to late and unpaid
contributions from October 2012 through August 2013. (ECF No. 9 at ¶ 3.) ERISA provides
that an employer is liable for interest on unpaid contributions to an employee benefit plan. 29
U.S.C. § 1132(g)(2)(B). Under the Trust Agreements, the annual interest rate is set at 12% on
unpaid contributions, beginning on the date due and accruing until paid. (ECF No. 9-2 at 7.)
Plaintiffs have detailed calculations establishing that they are entitled to interest accrued from
October 2012 to August 2013 in the amount of $238.70. (App. 2, ECF No. 9-2 at 13.)
Accordingly, I recommend granting plaintiffs’ request for interest in the amount of $238.70,
representing interest on late and unpaid contributions for the period of October 2012 through
August 2013.

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C. Attorneys’ Fees and Costs
Plaintiffs request $1,237.50 in attorneys’ fees and $510.00 in costs. (ECF No. 14 at ¶ 7.)
The CBA, the Trust Agreements, and ERISA provide for an award of attorneys’ fees and costs.
29 U.S.C. § 502(g)(2)(D); § 1132(g)(2)(D); (ECF No. 9-2 at 2). In order to properly determine
an award of reasonable attorneys’ fees, the court must calculate the “lodestar amount” by
multiplying the number of hours reasonably expended times a reasonable hourly rate. Blum v.
Stenson, 465 U.S. 886, 888 (1984); Grissom v. Mills Corp., 549 F.3d 313, 320-21 (4th Cir.
2008). The plaintiff must demonstrate that “the number of hours for which [it] seeks
reimbursement is reasonable and does not include hours that are excessive, redundant, or
otherwise unnecessary.” Victor Stanley, Inc. v. Creative Pipe, Inc., No. MJG-06-2662, 2011 WL
2552472, at *3 (D. Md. Jan. 24, 2011) (internal quotation marks omitted).
In support of their request for attorneys’ fees and costs, plaintiffs submit the declaration
and supplemental declaration of John R. Harney, a partner with the law firm retained by
plaintiffs in the instant action. (Ex. B, ECF No. 9-2; ECF No. 14.) Mr. Harney stated that his
firm performed 9.00 hours of work in this case at an hourly rate of $210.00 for attorneys and
$120.00 for paralegals. (ECF No. 14 at ¶¶ 2; 5.) Mr. Harney, a partner, billed 1.75 hours at
$210.00 per hour for a total of $367.50 and paralegal Donna Spell billed 7.25 hours at $120.00
per hour for a total of $870.00.6 (ECF No. 9-2 at 16; ECF No. 14 at 4.) Given Mr. Harney’s
twenty four years of experience (ECF No. 14 at ¶ 1), I find that $210.00 is a reasonable hourly
attorney rate. Loc. R. App. B.3. Although the paralegal hourly rate of $120.00 is slightly higher
than the maximum rate of $115.00 noted in the Local Rules, I find that rate to be reasonable

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In the Supplemental Declaration of John R. Harney Regarding Attorneys’ Fees and Costs (ECF No. 14), Mr.
Harney reported that the firm expended 9.00 hours of work, consisting of 0.75 hours in attorney time and 8.25 hours
in paralegal time. (ECF No. 14 at ¶ 2.) Attached to both declarations, however, Mr. Harney submitted timesheets
billing 1.75 hours of attorney time and 7.25 hours of paralegal time. (ECF No. 9-2 at 16; ECF No. 14 at 4.)

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given that the majority of the work in this case was completed by a paralegal with over thirty
years of experience, rather than an attorney billing at a higher rate. (ECF No. 14 at ¶ 3.)
Accordingly, I recommend granting plaintiffs’ request for attorneys’ fees in the amount of
$1,237.50.
Finally, I find that plaintiffs’ litigation costs of $510.00 ($400.00 filing fee and $110.00
private process server fee) are reasonable and documented in the record (ECF No. 9-2 at 16-17);
See also Schedule of Fees, http://www.mdd.uscourts.gov/publications/Forms/ScheduleofFees.pdf
(May 1, 2013) (cost of filing a civil action in this court is $400.00). Accordingly, I recommend
granting plaintiffs’ request for $510.00 in costs.
III.

CONCLUSION
In sum, I recommend that:

1. The court grant plaintiffs’ Motion for Entry of Default Judgment (ECF No. 9); and
2. The court enter judgment in favor of plaintiffs in the amount of $53,221.78, consisting of (1)
$49,454.17 for the breach of the settlement agreement, (2) $1,142.22 for unpaid contributions
for July and August 2013, (3) $639.19 in liquidated damages, (4) $238.70 in interest, (5)
$1,237.50 in attorneys’ fees, and (6) $510.00 in costs.
I also direct the Clerk to mail a copy of this Report and Recommendation to defendant at
the address listed on plaintiffs’ Complaint. (ECF No. 3.)
Any objections to this Report and Recommendation must be served and filed within
fourteen (14) days, pursuant to Fed. R. Civ. P. 72(b) and Local Rule 301.5.b.

Date:

12/18/13

/s/
Beth P. Gesner
United States Magistrate Judge
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