Trustees of the National Automatic Sprinkler Industry Welfare Fund et al v. Kimberly Harvey d/b/a All Valley Fire Protection et al
Filing
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MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 1/21/2016. (bus, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern
Division
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TRUSTEES OF THE NATIONAL
AUTOMATIC SPRINKLER INDUSTRY
WELFARE FUND, et al.,
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Case No.: GJH-15-521
Plaintiffs,
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v.
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KIMBERLY HARVEY, etal.,
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Defendants.
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MEMORANDUM OPINION
Pursuant to Fed. R. Civ. P. 55(b), Trustees of the National Automatic Sprinkler Industry
Welfare Fund, Trustees of the National Automatic Sprinkler Local 669 UA Education Fund,
Trustees of the National Automatic Sprinkler Industry Pension Fund, Trustees of the Sprinkler
Industry Supplemental Pension Fund, and Trustees of the International Training Fund
(collectively, "Plaintiffs" or "NASI Funds"), have tiled a motion for default judgment. with
supporting declarations and exhibits, as to Defendants Kimberly Harvey, Gregory Harvey, I and
All Valley Fire Protection (collectively, "Defendants"). See ECF No. 10.2 The Court deems a
hearing unnecessary, see Loc. R. 105.6 (D. Md.), and for the reasons that follow, grants
Plaintiffs' Motion.
I The Complaint
names Defendants Kimberly Harvey and Gregory Harvey both as individuals
"doing business as All Valley Fire Protection." ECF No. I at 1-2.
and as individuals
2 In response
to the Court's December 18, 2015 letter order, ECF No. 12, and January 7, 2016 paperless order, ECF
No. 16, Plaintiffs filed supplemental declarations and exhibits in support of their Motion for Default Judgment, ECF
Nos. 15 &17, which the Court considers in conjunction with Plaintiffs' Motion.
I.
BACKGROUND
Plaintiffs NASI Funds are "employee benefit plans" as that term is defined in the
Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. ~ 1002(3). ECF NO.1 at
I.
The NASI Funds are established and maintained according to provisions of the Restated
Agreements and Declarations of Trust ("Restated Agreements") and the collective bargaining
agreements between the Sprinkler Fitters Local Union Nos. 669 and 483 and Defendants. Id.: see
also. e.g., ECF Nos. 10-7 & 17-1. Defendants are contractors or subcontractors in the sprinkler
industry. ECF No. 1 at ~ 2-6.
Plaintiffs allege that Defendants entered collective bargaining agreements requiring that
they submit reports and pay contributions to the NASI Funds for each hour of work by
employees performing installation of automatic sprinkler systems. See ECF No. 1 at
11: ECF
No. 10-5 at ~~ 2-5. Under the terms of the Restated Agreements, when an employer fails to
submit the required contributions and file the properly completed report forms, the NASI Funds
are permitted to determine the amount of the employer's delinquency using the following
formula:
[T]he amount of the delinquency [is] the greater of (a) the average of the monthly
payments or reports submitted by the Employer for the last three (3) months for
which payments or reports were submitted, or (b) the average of the monthly
payments or reports submitted by the Employer for the last twelve (12) months
for which payments or reports were submitted ....
ECF NO.1 0-5 at ~ 13; see also ECF No. 17-1 at 26. The trust agreements further provide that an
employer who fails to timely pay required contributions under the collective bargaining
agreement is obligated to pay liquidated damages pursuant to the following calculations:
(1) If payment is not received ... by the 15th of the month, 10% of the amount
[owed] is assessed.
(2) An additional 5% is added if payment is not received ... by the last working
day of the month in which payment was due.
2
(3) An additional 5% is added if payment is not recei ved by the 15th of the month
following the month in which payment was due.
ECF NO.1 0-5 at
Defendants
17.
experienced
response to these difficulties,
and promissory
note allowing
difficulty
making the required benefit contributions,
the NASI Funds and Defendants
Defendants
to make systematic
entered a settlement
to the settlement
agreement
was $257,978.32,
agreement
payment over time of all amounts
owed to the NASI Funds. ECF NO.1 at 4J 11; ECF No. 10-5 at
pursuant
and, in
8. The principal amount owed
and liquidated
damages had accrued to
$62,899.42. See ECF NO.1 0-5 at
8; ECF No. 15-1 at 4J4J 8-9; ECF No. 15-3 at 1-2. Under the
terms of the settlement,
were permitted
installments
Defendants
Defendants
over thirty six months. Liquidated
remaining
monthly contributions
to pay the principal amount in monthly
damages were waived, contingent
current on their payments
under the settlement
owed during the duration of the settlement.
agreement
upon
and in all future
ECF No. 10-5 at 4J 8; ECF No.
15-1 at 4J 8-9; ECF No. 15-3 at 2.
After the Parties executed
information
principal
regarding
the settlement
ECF No. 15-1 at
Plaintiffs
defaulted
commenced
to $255,034.71
provided additional
damages calculation
this action on February 24, 2015, alleging that Defendants
Funds for the months of November
settlement
and reduce the liquidated
10.
on the terms of the settlement
in its monthly
Defendants
the amounts they owed, causing the NASI Funds to agree to reduce the
amount of the settlement
to $53,481.75.
agreement,
payments.3
agreement
by failing to pay contributions
had
to the NASI
2014 through January 2015 and by failing to remain current
ECF NO.1 at
12; see also ECF No.1 0-5 at 4J 9. In the
Subsequent to Plaintiffs' initiation of the instant action, Defendants submitted the required reports and
contributions for the month of November 20 14, and submitted the required report for December 2014, but failed to
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Complaint, Plaintiffs sought to recover $203,405.80 owed under the settlement agreement;
$11,579.61 in additional contributions owed for the months of November 2014 through January
2015; $12,572.30 in liquidated damages; and "costs, interest, and reasonable attorneys' fees
assessed pursuant to 29 U.S.C.
S 1132(g)
... " and the trust agreements. ECF NO.1 at ~ A-D.
Plaintiffs also sought to recover "all contributions and liquidated damages which become due
subsequent to the filing of this action through the date of judgment, plus costs, interest, and
reasonable attorneys' fees .... " Id. at
E.
Each Defendant was served on March 9, 2015. ECF Nos. 4-8. When Defendants failed to
respond within the requisite time period, Plaintiffs filed a motion for entry of default, ECF NO.9,
and the pending motion for default judgment, ECF No. 10. Defendants failed to respond, and the
clerk entered default on July 31,2015. ECF No. 11.
II.
STANDARD OF REVIEW
"A defendant's default does not automatically entitle the plaintiff to entry ofa default
judgment: rather, that decision is left to the discretion of the court." Choice Hotels Intern., Inc. v.
Savannah Shakti Carp., No. DKC-II-0438,
2011 WL 5118328 at
* 2 (D.
Md. Oct. 25.2011)
(citing Dow v. Jones, 232 F.Supp.2d 491,494 (D. Md. 2002)). Although "(t]he 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)), "default judgment may be appropriate when the
adversary process has been halted because of an essentially unresponsive party(.]" Id. (citing
s.E.c.
v. La'wbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005)).
"Upon default, the well-pled allegations in a complaint as to liability are taken as true,
although the allegations as to damages are not." s.£. C. v. Lawbaugh, 359 F. Supp. 2d 418, 422
make the required payment for that month, and any subsequent months through May 2015. See ECF No. 10-5 at ~~
10-11; ECFNo. 15-1 at~ 14.
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(D. Md. 2005). Fed. R. Civ. P. 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." In entering default judgment, the court cannot, therefore, award
additional damages "because the defendant could not reasonably have expected that his damages
would exceed th[e] amount [plead in the complaint]''' In re Genesys Data Techs .. Inc., 204 F.3d
124, 132 (4th Cir. 2000). Where a complaint does not speci fy 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) (citingS.E.C
v. Management Dynamics. Inc., 515 F.2d 801,
814 (2nd Cir. 1975); Au Bon Pain Corp. v. Artect. Inc., 653 F.2d 61, 65 (2nd 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' District Council Pension, et al. v. E.G.s., Inc., No. WDQ-09-3174,
2010 WL
1568595, at *3 (D. Md. Apr. 16, 20 I0) ("[O]n default judgment, the Court may only award
damages without a hearing if the record supports the damages requested.").
III.
DISCUSSION
Assuming the truth of the well-pleaded allegations of the complaint, as the Court must
upon entry of default judgment, Plaintiffs have established Defendants' liability for breach of the
settlement agreement and for failure to make the contributions required under the trust
agreements. See 29 U.S.c.
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1132(g) (providing that employers who fail to timely make
contributions are liable in a civil action for, inter alia, unpaid contributions, interest on the
unpaid contributions, and reasonable attorneys' fees and costs of the action).
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With respect to damages, Plaintiffs now seek an award in the amount of $243,480.26
broken down as follows: $203,405.80 owed as a result of Defendants' default on the tenns of the
settlement agreement; $22,100.55 in additional contributions owed for the months of December
2014 through May 2015; $14,960.64 in liquidated damages; $710 in costs; $1,680.00 in
attorneys' fees; and $623.27 in interest "set at the rate of 12% per annum on paid contributions
through the date of payment and assessed on unpaid contributions through June 30, 2015 and
continuing to accrue through the date of payment." ECF No. 10; see also ECF Nos. 10-1, 10-3,
10-5 & 15-1.
A. Settlement Payments
Plaintiffs seek $203,405.80 for contributions and reinstated liquidated damages currently
owed under the settlement agreement. ECF No 10 at ~ 1. This request is substantiated in the
record through the declarations of John P. Eger, Assistant Fund Administrator of the NASI
Funds, ECF NO.1 0-5, and Michael W. Jacobson, Fund Administrator of the NASI Funds, ECF
No. 15-1, and the settlement agreement and promissory note, ECF No. 15-3. Thus, the record
supports Plaintiffs' request for $203,405.80 under the settlement agreement.
B. Unpaid Contributions
In the Complaint, Plaintiffs sought $11,579.61 for contributions due for work performed
during the months of November 2014 through January 2015, plus costs, interest, and reasonable
attorneys' fees assessed pursuant to 29 U.S.c. ~ 1132(g), ECF No. I at
B, as well as other
contributions "which become due subsequent to the filing of this action through the date of
judgment .... " ECF NO.1 at ~ D. By the time Plaintiffs filed their Motion for Default Judgment,
several months had passed, and, although Defendants had submitted the required contribution for
November 2014, they failed to do so for the months of December 2014 through May 2015.
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Plaintiffs accordingly now seek $22,100.55 in contributions owed for those months. ECF NO.1 0
at ~ 2.
The Court is, of course, limited in the amount of damages it may award in a default
judgment by Fed. R. Civ. P. 54(c). Under that rule, the award may not "differ in kind from, or
exceed in amount, what is demanded in the pleadings." Id. Courts around the country have
interpreted the meaning of this provision differently, however. See In re Genesys, 204 F.3d at
132 ("(OJur research reveals that Fed. R. Civ. P. 54(c) and its many state analogues have led to a
dizzying array of judicial decisions addressing the precise meaning of the requirement that a
default judgment may not 'exceed in amount that prayed for in the demand for judgment.,,').4
In a case from this district, which coincidentally involved many of the same plaintiffs that
are involved in this case, the Court concluded that contributions owed by an employer under a
collective bargaining agreement that arose after the date the complaint was filed could not be
awarded as damages in a default judgment because any such award would "exceed in amount"
that demanded in the complaint. Trs. oINat. Automatic Sprinkler Indus. We(fclre Fund v. United
Automatic Sprinklers. Inc., No. CIY.A. DKC 2008-2220, 2009 WL 2058178, at
* 1 (D. Md. July
14,2009) (declining to award damages not specified in the complaint, notwithstanding that
complaint sought damages "which become due subsequent to the tiling of this action," where
complaint sought contributions for only certain months). That reading of Rule 54(c) finds
support in other cases. See. e.g., Producers Equip. Sales. Inc. v. Thomason, 808 P.2d 881, 888
The United States Court of Appeals for the Fourth Circuit addressed the meaning of the predecessor to Rule 54(c)
in two opinions which preceded In re Genesys, but neither case resolves the issue presented in the present case. In
Compton v. Alton Steamship Co., 608 F.2d 96, 105 (4th Cir. 1979), the court found that a default judgment that far
exceeded the dollar amount of damages sought in the complaint was void where the district court awarded additional
statutory damages which, based on the facts alleged in the complaint, the plaintiff was not entitled to. And in Eddins
v. Medlar, 88\ F.2d 1069 (4th Cir. 1989), the court held that a default judgment was void where, although a plaintiff
sought $25,000 in compensatory damages and $500,000 in punitive damages, the court ultimately awarded $50,000
in compensatory damages and $\ 00,000 in punitive damages. The plaintiff in Eddins, however, did not allege in the
complaint that he sought any additional damages that might become due after the filing of the action.
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(Kan. Ct. App. 1991) (holding that trial court's award of damages in excess of that demanded in
complaint was void under state analogue to Rule 54( c), although complaint prayed for "charges
[that] continue to accrue," because defendant lacked sufficient notice of excess damages); see
also Thorp Loan & Thr([t Co. v. Morse, 451 N.W.2d 361, 364 (Minn. Ct. App. 1990); Mahmoud
v. In! 'I Islamic Trading (IIT), Ltd., 572 So. 2d 979, 982 (Fla. Dist. Ct. App. 1990).
Other courts have reached a different conclusion. Notably, in Ames v. STAT Fire
Suppression, Inc., 227 F.R.D. 361, 362 (E.D.N.Y. 2005), the court held:
Although Rule 54(c) limits the damages recoverable by a plaintiff following a
default judgment to the type and quantity of damages demanded in the complaint,
it does not require plaintiff to have demanded a sum certain in order to recover on
default. In this case, the rule does not preclude an award of damages that accrued
during the pendency of the action because such damages were explicitly requested
in the complaint, and sufficiently established by the affidavits submitted by
plaintiffs. Defendant was put on notice that plaintiff was seeking such damages
when defendant was served with the complaint. That notice was renewed when
defendant was served with plaintiffs motion for default judgment, as well as
when defendant was served with plaintiffs' supplemental affidavits ....
The Ames Court's interpretation of Rule 54( c) also finds support in other cases. See. e.g., Hemy
v. Sneiders, 490 F.2d 315, 317 (9th Cir. 1974) (affirming district court's default judgment for
$235,338.89 where complaint prayed for $71,243.68 "together with additional amounts not yet
fully determined ... the full amounts of which [p]laintiffwill prove at the time oftria\"); Boland
v. Yoccabel Canst. Co., 293 F.R.D. 13,19 (D.D.C. 2013) ("Because the defendant was made
aware that the plaintiffs sought an award in excess of the amount specifically calculated in the
complaint, the Court finds it appropriate to award damages in accordance with the amount
outlined in the plaintiffs' motion."); see also Appleton Elec. Co. v. Graves Truck Line. Inc., 635
F.2d 603, 610 (7th Cir. 1980); Tarnoflv. Jones, 497 P.2d 60, 65 (Az. Ct. App. 1972).
This Court is persuaded by the Ames Court's reading of Rule 54(c). It is evident that the
purpose of Rule 54(c)'s prohibition on damages that "exceed in amount" or "differ in kind" from
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that sought in the complaint is to allow the defendant to 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." 10 Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure
S 2663
(3d ed. 1998). Indeed,
[i]t would be fundamentally unfair to have the complaint lead [a] 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.
Id. Where a complaint demands a specific amount of damages and unspecified additional
amounts, however, so long as a defendant has notice that additional unspecified damages may be
awarded if the case proceeds to judgment, general allegations in the complaint may suffice to
support default judgment in an amount that is proven, either by way of exhibits, affidavits, and
other documentation in support of a motion for default judgment, or at a hearing. See generally
In re Genesys, 204 F.3d at 132-33 (citing cases adopting this view before certifying case to the
Supreme Court of Hawaii to resolve issue as a matter of state law); see also Adkins, 180
F.Supp.2d at 17. This reasoning applies with even greater force where, as in this case, the
Complaint specifies the basis of any additional damages.
Here, although Plaintiffs only demanded $11,579.61 for contributions then due at the
time they filed the Complaint, they also sought contributions "which become due subsequent to
the filing of this action through the date of judgment .... " ECF NO.1 at
D. Defendants,
accordingly, had notice at the time the Complaint was filed that failure to defend the action could
result in a judgment against them in excess of$11,579.61
for contributions owed under the
collective bargaining agreements and had notice of what could be included in any additional
damages. They also received notice of the specific amounts Plaintiffs sought to recover in default
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judgment when they were served with copies of Plaintiffs' Motion for Default Judgment. See
ECF No.1 0-4. The damages sought by Plaintiffs in their Motion for Default Judgment do not
"differ in kind" or "exceed in amount" that plead for in the Complaint; rather under the plain
language of that provision, the damages Plaintiffs request in their Motion are precisely the
damages plead for in the Complaint, notwithstanding that the total amount of those damages has
increased since the time this action was initiated.
In support of their request for contributions owed under the collective bargaining
agreements, Plaintiffs submit the declarations of Mr. Eger, ECF No.1 0-5, and Mr. Jacobson,
ECF No. 15-1, as well as a spreadsheet ("Exhibit L") specifying the unpaid contributions due,
ECF No. 10-14. The record, therefore, supports their request for $22,100.55.
C. Liquidated Damages
With respect to Plaintiffs' request for liquidated damages, the Court is again confronted
with a request that differs in dollar amount from that demanded in the Complaint. For the reasons
previously stated, the Court nevertheless concludes that Plaintiffs' are permitted to recover
liquidated damages that have accrued since they initiated the instant action, as the basis of that
recovery was specified in the Complaint. See ECF No.1 at
D (seeking "all contributions and
liquidated damages" which become due subsequent to the filing of this action) (emphasis added).
Exhibit L, submitted in support of their request for contributions, also includes the calculated
amounts owed in liquidated damages. ECF No. 10-14. The declarations of Mr. Eger and Mr.
Jacobson also support Plaintiffs' request. Thus, Plaintiffs are entitled to recover $14,960.64 in
liquidated damages owed.
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D. Interest
Plaintiffs seek $623.27 in interest at the rate of 12% per annum assessed on late paid
contributions through the date of the payment and on unpaid contributions through June 30,
2015. ECF NO.1 0 at ~ 4. The interest is owed pursuant to 29 U.S.C.
S
1132(g) and the trust
agreements. The figures in Exhibit L correspond with the amount requested in the motion for
default judgment and are otherwise supported by the record.
E. Attorneys' Fees and Costs
In support of their claim for attorneys' fees and costs, Plaintiffs submit the declarations of
their attorney, Charles W. Gilligan, ECF Nos. 10-15 & 15-2, a spreadsheet specifying the hourly
billing by Gilligan and his paralegal with respect to the instant lawsuit, ECF No. 10-16, and
invoices for costs spent on out-of-state process service, ECF No. 10-17. These materials indicate
that Gilligan's firm spent thirteen hours on this case on behalf of Plaintiffs, at a rate of $122 per
hour for paralegal time and $310 per hour for attorney time. ECF NO.1 0-15. These rates are well
within the local guidelines and are reasonable. See Loc. R. App. B (D. Md.). Plaintiffs are
therefore awarded $1,680 in attorneys' fees. The record also substantiates the following
expenses: $310 for service of process and $400 for filing fees. ECF Nos. 10-15 & 10-17. Thus,
Plaintiffs are awarded $710 in costs.
IV.
CONCLUSION
For the foregoing reasons, Plaintiffs' Motion for Default Judgment, ECF No. 10, is
GRANTED. Judgment will be entered in favor of Plaintiffs in the amount of$243,480.26
as
follows: $203,405.80 owed as a result of Defendants' default on the terms of the settlement
agreement; $22,100.55 in additional contributions owed; $14,960.64 in liquidated damages;
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$1,680 in attorneys' fees; $710 in costs; and $623.27 in interest. A separate Order follows.
Dated: January
"l , 2016
GEORGE 1. HAZEL
United States District Judge
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