Trustees of The National Automatic Sprinkler Industry Welfare Fund et al v. Sheehe et al
Filing
10
MEMORANDUM OPINION (c/m to Defendants 10/21/11 sat). Signed by Chief Judge Deborah K. Chasanow on 10/21/11. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
TRUSTEES OF THE NATIONAL
AUTOMATIC SPRINKLER INDUSTRY
WELFARE FUND, et al.
:
:
v.
:
Civil Action No. DKC 11-0365
:
BILL R. SHEEHE d/b/a
ALL STAR FIRE PROTECTION
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this action
arising under the Employee Retirement Income Security Act of
1974 (“ERISA”) is Plaintiffs’ motion for default judgment.
No. 8).
(ECF
The relevant issues have been briefed, and the court
now rules pursuant to Local Rule 105.6, no hearing being deemed
necessary.
For the reasons that follow, Plaintiffs will be
directed to supplement the motion for default judgment.
I.
Background
Plaintiffs are trustees of various trust funds associated
with Sprinkler Fitters Local Union No. 669 (“the Funds”).
The
Funds are employee benefit plans within the meaning of section
3(3) of ERISA.
Sheehe
is
Protection,
an
an
See 29 U.S.C. § 1002(3).
individual
doing
employer
engaged
commerce under ERISA.
business
in
an
Defendant Bill R.
as
All
industry
Star
Fire
affecting
See 29 U.S.C. §§ 1002(5), (12).
The
Funds
were
Restated
established
Agreements
agreements”)
and
and
a
and
are
maintained
Declarations
collective
of
pursuant
Trust
bargaining
(“the
agreement
to
the
trust
between
Sprinkler Fitters Local Union No. 669 and Defendant.1
On
February
10,
2011,
Plaintiffs
filed
a
complaint
on
behalf of the Funds alleging that Defendant breached the trust
agreements and the collective bargaining agreements by failing
to make contributions for certain months.
According to the
complaint, Defendant was required to make contributions to the
Funds
for
“each
hour
of
work
by
employees
installation of automatic sprinkler systems.”
performing
(ECF No. 1 ¶ 6).
The agreements further provide that if an employer fails to make
timely contributions, it must pay liquidated damages according
to a specified formula:
If payment is not received by the
fifteenth day of the month in which it is due, the employer must
pay
liquidated
damages
of
ten
percent
of
the
contribution
amount; if the payment is not received by the last working day
of the month, the employer must pay an additional five percent;
and if payment is not received by the fifteenth day of the
following
damages.
1
month,
another
five
percent
is
owed
as
liquidated
(Id. ¶ 11).
The Funds are administered in Landover, Maryland.
2
In their complaint, Plaintiffs allege that Defendant made
only partial payments during the 2009 to 2010 time period.
¶
9).
In
addition
to
the
outstanding
(Id.
contributions
of
$94,628.70, Plaintiffs seek liquidated damages of $13,789.74,
interest for late payments, attorneys’ fees, and costs.
Plaintiffs served the summons and complaint on February 26,
2011.
When Defendant failed to respond within the requisite
time period, Plaintiffs moved for entry of default and default
judgment.
(ECF Nos. 7, 8).
The clerk entered default against
Defendant on September 1, 2011.
default
judgment
$177,039.42,
for
unpaid
liquidated
(ECF No. 9).
contributions
damages
of
Plaintiffs seek a
in
the
$35,407.88,
amount
of
interest
of
$24,595.24, attorney’s fees of $787.50, and costs of $350.00.
(ECF No. 8).
II.
Standard of Review
A.
Default Judgment
Pursuant
to
Fed.R.Civ.P.
55(a),
“[w]hen
a
party
against
whom a judgment for affirmative relief is sought has failed to
plead
or
otherwise
affidavit
or
default.”
defend,
otherwise,
and
the
that
clerk
failure
must
enter
is
shown
the
by
party’s
Where a default has been previously entered by the
clerk and the complaint does not specify a certain amount of
damages,
the
plaintiff’s
court
may
application
enter
and
a
default
notice
to
3
judgment,
the
upon
defaulting
the
party,
pursuant
to
Rule
automatically
55(b)(2).
entitle
the
A
defendant’s
plaintiff
to
default
entry
of
does
a
not
default
judgment; rather, that decision is left to the discretion of the
court.
See Dow v. Jones, 232 F.Supp.2d 491, 494 (D.Md. 2002).
The United States Court of Appeals for the Fourth Circuit has a
“strong policy” that “cases be decided on their merits,” id.
(citing United States v. Shaffer Equip. Co., 11 F.3d 450, 453
(4th Cir. 1993)), but default judgment may be appropriate when
the adversary process has been halted because of an essentially
unresponsive party, see SEC v. Lawbaugh, 359 F.Supp.2d 418, 421
(D.Md. 2005) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C.
Cir. 1980)).
Upon
entry
of
default,
the
well-pled
allegations
in
a
complaint as to liability are taken as true, but the allegations
as to damages are not.
Lawbaugh, 359 F.Supp.2d at 422.
Rule
54(c) limits the type of judgment that may be entered based on a
party’s default:
“A default judgment must not differ in kind
from, or exceed in amount, what is demanded in the pleadings.”
Thus, where a complaint specifies the amount of damages sought,
the plaintiff is limited to entry of a default judgment in that
amount.
“[C]ourts have generally held that a default judgment
cannot award additional damages . . . because the defendant
could not reasonably have expected that his damages would exceed
that
amount.”
Meindl
v.
Genesys
4
Pac.
Techs.,
Inc.
(In
re
Genesys Data Techs., Inc.), 204 F.3d 124, 132 (4th Cir. 2000).
Where a complaint does not specify an amount, “the court is
required to make an independent determination of the sum to be
awarded.”
Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001)
(citing SEC v. Mgmt. Dynamics, Inc., 515 F.2d 801, 814 (2d Cir.
1975); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d
Cir.
1981)).
While
the
court
may
hold
a
hearing
to
prove
damages, it is not required to do so; it may rely instead on
“detailed affidavits or documentary evidence to determine the
appropriate sum.”
Adkins, 180 F.Supp.2d at 17 (citing United
Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)); see
also Laborers’ Dist. Council Pension v. E.G.S., Inc., No. WDQ09-3174, 2010 WL 1568595, at *3 (D.Md. Apr. 16, 2010) (“[O]n
default judgment, the Court may only award damages without a
hearing if the record supports the damages requested.”).
III. Analysis
In their motion for default judgment, Plaintiffs seek a
total
award
contributions
of
$238,180.04,
of
which
$177,039.42;
consists
(2)
of:
liquidated
(1)
unpaid
damages
of
$35,407.88; (3) interest of $24,595.24; (4) attorneys’ fees of
$787.50; and (5) costs of $350.00.
they
submit
the
declaration
of
In support of these amounts,
John
P.
Eger,
Assistant
Administrator of the Funds (ECF No. 8-4) and the declaration of
5
their attorney, Charles W. Gilligan, in support of their claim
for attorneys’ fees and costs (ECF No. 8-5).
A.
Unpaid Contributions
Plaintiffs seek $177,039.42 in unpaid contributions for the
relevant time period.
request,
Plaintiffs
(ECF No. 8, at 1).
submit
the
In support of this
Declaration
(ECF No. 8-4, Eger Decl., ¶ 5).
of
John
P.
Eger.
The amount specified in the
Eger Declaration corresponds with the amount requested in the
motion for default judgment, but it differs from the figure
requested in the complaint.
In the complaint, Plaintiffs sought
only $94,628.70 in unpaid contributions for the relevant time
period.
(ECF No. 1 ¶ 9).
The Eger Declaration explains that
“[s]ubsequent to the filing of this action, [Eger] was provided
with additional information from employees of the Defendant[]
which set forth additional hours worked during the same time
period covered by the Plaintiffs’ Complaint.”
5).
Plaintiffs
contributions
Complaint.”
contend
which
have
they
are
accrued
“entitled
since
the
(ECF No. 8-4 ¶
to
additional
filing
of
this
(ECF No. 8-1, at 1).
Plaintiffs’
argument
for
this
sought is of no avail, however.
higher
amount
of
damages
As noted, under Rule 54(c),
“[a] default judgment must not differ in kind from, or exceed in
amount, what is demanded in the pleadings.”
As explained in
Sheet Metal Workers’ National Pension Fund v. Frank Torrone &
6
Sons, Inc., No. Civ.A. 1:04CV1109, 2005 WL 1432786 (E.D.Va. June
1, 2005):
This Rule operates to protect a defendant
who chooses to default:
“The theory of this provision is that the
defending party should be able to decide on
the basis of the relief requested in the
original pleading whether to expend the
time, effort, and money necessary to defend
the action.
It would be fundamentally
unfair to have the complaint lead defendant
to believe that only a certain type and
dimension of relief was being sought and
then, should defendant attempt to limit the
scope and size of the potential judgment by
not appearing or otherwise defaulting, allow
the court to give a different type of relief
or a larger damage award. . . . If defendant
chooses not to proceed, liability cannot be
increased.
This principle seems applicable
whether or not defendant appears at the
damage hearing and therefore should not turn
on when the default occurs.”
Id. at *7-8 (quoting 10 Charles Alan Wright et al., Federal
Practice and Procedure § 2663 (3d ed. 2005)).
In considering
the scope of Rule 54(c), the Fourth Circuit has held that in
default cases, there can be no recovery over the amount pled in
the complaint, and that the complaint must pray for a specific
monetary amount.
See Eddins v. Medlar, Nos. 87-2602, 89-2910,
881 F.2d 1069, 1989 WL 87630, at *1, 3 (4th Cir. July 21, 1989)
(unpublished table opinion) (“[Rule 54(c)] expressly protects a
defaulting party from a judgment in excess of that demanded in
the complaint.”); Compton v. Alton Steamship Co., 608 F.2d 96,
7
104 n.16 (4th Cir. 1979) (“[T]he relief available on default
[should] be such as is within the fair scope of the allegations
of
the
complaint
and,
when
money
judgment
is
sought,
the
specific amount demanded.” (internal quotations omitted)).2
Accordingly, the court will refer to Plaintiffs’ original
request
and
limit
the
award
for
unpaid
contributions
to
$94,628.70 as set forth in the complaint.
B.
Liquidated Damages
Plaintiffs seek $35,407.88 in liquidated damages assessed
on late contributions for the relevant time period.
¶ 2).
(ECF No. 8
In support of this request, Plaintiffs submit the Eger
Declaration.
(ECF No. 8-4 ¶¶ 6-8).
The amount specified in the
Eger Declaration corresponds with the amount requested in the
motion for default judgment, but it differs from the figure
requested in the complaint.
only
$13,789.74
in
In the complaint, Plaintiffs sought
liquidated
damages
contributions for the relevant time period.
12).
assessed
on
late
(ECF No. 1 ¶¶ 10-
Because liquidated damages are calculated as a percentage
of unpaid contributions, the increase in the amount of unpaid
2
Plaintiffs’ citation to “Tobin v. Prudential Lines, 2 EBC
1873 (S.D.N[.]Y[.] 1981)” in support of their contention is
unhelpful.
Despite a diligent search, the court was unable to
locate a case by this name.
Even if such a case existed, its
precedential value is minimal at best, especially in light of
the clear case law in the Fourth Circuit limiting default
judgments awards to the amounts sought in the complaint.
8
contributions sought between the complaint and the motion for
default
judgment
damages
logically
sought.
For
regarding
the
award
liquidated
of
complaint.
unpaid
led
the
to
same
an
reasons
contributions,
damages
on
increase
the
the
in
liquidated
discussed
court
figures
will
earlier
base
provided
in
its
the
Accordingly, the court will refer to Plaintiffs’
original request and limit the award for liquidated damages to
$13,789.74.
C.
Interest
Plaintiffs seek $24,595.24 in interest at the rate of 12%
per annum assessed on late paid contributions assessed through
July 21, 2011 and continuing to accrue through the date of the
payment.
(ECF No. 8 ¶ 3).
The interest is owed pursuant to 29
U.S.C. § 1132(g) and the trust agreements.
(Id.).
In support
of this request, Plaintiffs submit the Eger Declaration.
(ECF
No. 8-4 ¶ 8).
It
appears
that
Plaintiffs
calculated
the
interest
owed
based on the new information furnished to Plaintiffs after the
filing
of
Declaration.
the
complaint
that
(See id. ¶ 5).
is
referred
to
in
the
Eger
Because interest is a function of
the unpaid contributions, the increase in the amount of unpaid
contributions sought between the complaint and the motion for
default judgment would logically lead to an increase in interest
sought.
Therefore, the amount of interest sought in the motion
9
for
default
judgment
cannot
be
relied
upon.
The
court
is
otherwise unable to calculate independently the interest because
Plaintiffs
did
not
provide
the
original
unpaid contributions in the complaint.
directed
provide
to
supplement
sufficient
calculated
based
on
their
motion
information
the
amounts
with
of
monthly
amounts
of
As such, Plaintiffs are
for
default
which
unpaid
judgment
interest
may
contributions
to
be
set
forth in the complaint.3
D.
Attorneys’ Fees
Plaintiffs seek $787.50 in attorneys’ fees.
In support of
this request, Plaintiffs submit a Declaration of Attorney’s Fees
and Exhibit C, a spreadsheet of the hours billed by Plaintiffs’
counsel.
(ECF Nos. 8-5, 8-6).
Exhibit C indicates that the
firm spent 7.00 hours on this case on behalf of the Plaintiffs
at a rate of $100 per hour for paralegal time and $275 per hour
for attorney time.
(ECF No. 8-6).
The paralegals spent 6.5
hours on this case and the attorneys spent 0.5 hours on this
case.
(Id.).
The sum of $787.50 is accurate based on the rates
3
Alternatively, Plaintiffs may seek leave to amend their
original complaint to reflect the updated amounts of unpaid
contributions set forth in the Eger Declaration and the motion
for default judgment.
This course of action would, however,
require Plaintiffs to serve Defendant with the amended complaint
and would permit Defendant an opportunity to appear in the case
and defend the action.
10
and times listed in Exhibit C and is sufficiently supported by
the record.
E.
Costs
Plaintiffs
seek
$350.00
in
costs.
In
support
of
this
request, Plaintiffs submit Exhibit C, a spreadsheet of the costs
incurred by Plaintiffs’ counsel.
indicates
that
filing fee.
the
(Id.).
costs
included
(ECF No. 8-6).
$350.00
for
the
Exhibit C
complaint
The sum of $350.00 is accurate based on the
figures listed in Exhibit C and is sufficiently supported by the
record.
IV.
Conclusion
For the foregoing reasons, Plaintiffs will be directed to
supplement the motion for default judgment.
A separate order
will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
11
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