National Electrical Benefit Fund v. United Network Systems, Inc. et al

Filing 12

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 10/30/2017. (tds, Deputy Clerk)

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r r" ) "r :'L,) . I r-'''~T : .... _.. :.., ' IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND lOll OCT 30 SOlllhem Divisioll NATIONAL ELECTI{ICAL BENEFIT FUND, p lj: 2'-1 * * 1'llIintiff, v. * UNITED NETWORK SYSTEMS, INC., * lind * .JANET MROZ, * Defendants. * Case No.: (;."'-17-00027 * * * * * * * * * * * * * MEMORANDUM OI'INION PlaintilTNational against Defendants Electrical Benefit Fund ("Plaintifr' United Network Systems. Inc. and Janet Mroz (collectively. under thc Employee Retirement Multiemployer Defendants' or "NEBF") brings this action Income Security Act of 1974 ("ERISA"). Pension Plan Amendments "Defendants") as amended hy the Act of 1980.29 U.S.c. ~~ 100 I el self. Following tailure to answer or otherwise detend in this action. the Clerk of the Court entered detault against DeJendants on .Iune 6. 20 I 7. ECF No. I I. Now pending before the Court is Plaintitrs Motion for Default Judgment against Delendants pursuant to Fcd. R. Civ. P. 55(b). ECF No. 10. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For thc t()llowing reasons. Plaintiffs Motion t()r Default Judgment is granted. andjudgmcnt DeJendants in the amount 01'$29.551.56. is cntcred against I. BACKGROUND The following facts are established by the Complaint. ECF No. I. and evidentiary exhibits in support of the Motion for Default Judgment. ECF Nos. 10-1. 10-2. The NEBI' is a multiemployer employee pension bene/it plan within the meaning ofScction 3(2) of ERISA. 29 U.S.c. * 1002(2). which has been established pursuant to an agreement entered into between the International Brotherhood of Electrical Workers ("IBEW") and the National Electrical Contractors Association ("NECA"). Eel' No. I ~ 4. Employers agree to participate in the NEBF pursuant to collective bargaining agreements with the IBEW or one of its arnliated local unions. /<1.The NEBI' is administered at 2400 Research Boulevard. Suite 500. Rockville. Maryland 20850-3238. /<1. Plaintiff states. upon in!cJnllation and belief: that Defendant United Network Systems. Inc. ("UNS") is an lllinois corporation whose main place of business is or was 2021 Midwest Road. Suite 1.1.-1. Oak Brook. Illinois 60523. /<1. 5. UNS is an employer within the meaning of ~ Section 3(5) of ERISA. 29 U.S.c. * 1002(5) and is contractually and legally obligated to submit contributions to the NEBF. Id. According to the website for the Illinois Secrctary of State. UNS was involuntarily dissolved on December 13. 2013./<1. Defendant Mroz is or was the president of UNS and. since at least December 13.20 J 3. has continued to do business under the UNS name and maintains the same address for service of process. /<1.'i'16. 7. Plaintiff alleges that Mroz is or was the functioning principal of UNS. failed to observe corporate !cJnllalities as they related to UNS. commingled the undercapitalized assets of UNS with her own personal IClI1ds. and is obligated to satisfy UNS's delinquent payments owed to Plaintiff pursuant to 29 U.S.c. * 1I32(g)(2). /<1.~~ 26-32. 2 At all times relevant to the action. Defendants agreements ("Collective Bargaining bargaining representatives Collective Bargaining Agreements") for Defendants' Agreements NEBI' on behalfofemployecs were signatories '18. According Id Defendants of thc Restated Employees Trust ("Trust Agrcement""). administration actions to recovcr dclinquent authorizes contributions. Plaintiff: as a Trustee. to take all necessary including interest on the delinquent and all costs. including attorneys' the delinquency. NEBI' on behalf of its cmployees ~ 10. Specifically. Defendants according covered by thc Collective to an audit of Defendants' by covered employces II. Upon further inquiry. PlaintilTlearned contributions between January that Defendants the Complaint. I Defendant Pin cites to documents by made demands Bargaining for payments Agreements. I. 2013 and December ECF NO.1 in 2015. with 31. 2014. Ill. ~ have failed to pay required owed flJr the periods January I. Id. ~~ 12. 13. filing system (CM/ECF) 3 to the owed to NEBI' in connection has failed and rcfused to pay the same. ECI' NO.1 filed on the Court's electronic fees and ECF No. 10-2 at 12. of the foregoing amounts. that system. at a in an amount in making contributions contributions 2006 through July 31. 2016 arc equal to $29.602.51. 'i 23: damages books and records conducted in contributions since at least 2006. and Defendants' PlaintifThas ECF No. I have been delinquent failed to rcport or pay $5.197.09 work performed liquidated contributions equal to twenty percent (20%) of the delinquency. PlaintifT allegcs that Defendants and of the NEBI'. ECF No. I ~ 9: ECF monthly. incurred in collecting to the Benelit Agreement rate of ten percent (10%) per annum compounded audit expenscs the ECF No. 10-2 at 7.1 Defendants were also bound to the terms and conditions No. 10-2 at 6-13. The Trust Agreement to the Complaint. to submit payroll contributions covcrcd by thc Agrcements.ld.: which govcrned bargaining with lBEW Local Union 134 as the collective employees. obligated to collective and. prior to liling 'i 14.PlaintifTliled refer to the page numbers generated the instant Complaint on January 5. 2017, ECF No. I. and Defendants were properly served with the Complaint on January 29. 2017. lOCI'No. 10 ~ 2. An Answer li'om Defendants was due on or belore February 19.2017. On May 22. 2017. with no answer having been tiled. Plaintiff moved for default. and the Clerk of the Court entered default against Defendants on June 7. 2017. ECF Nos. 9. 11. Alier the Complaint was served. PlaintilT received one payment of $35.954.26 on Defendants' behalf~ ECF NO.1 0-2 ~ 7. Plaintiff considers this payment sufficient to satisfy Defendants' unpaid contributions. liquidated damages. and audit expenses but maintains that Defendants remain liable lor accrued interest and attorney's fees and costs in the total amount of $29.551.56. ECF No. 10-2 ~'17. 12. II. STANDARD OF REVIEW "When a party against whom ajudgment for affirmative relief is sought has failed to plead or otherwise delend, and that failure is shown by aflidavit or otherwise. thc clerk must enter the party's default:. Fed. R. Civ. 1'. 55(a). "A detendant's default does not automatically entitle the plaintiff to entry ofa default judgment: rather. that decision is leli to the discretion of the court:' Educ. Credil A~~II1I.COl]).\'. Oplill1ull1 Weldin/;. 285 F.R.D. 371. 373 (D. Md. 2012). Although "[tJhe Fourth Circuit has a 'strong policy' that 'cases be decided on their merits .... Choice Holels fmci'll .. Illc. 1'. Sa\'Qllllah Slwkli Carp .. No. DKC-II-0438. *2 (D. Md. Oct. 25. 2011) (citing Ulliled Slales 1'. 2011 WL 5118328. at ShafFer Equip. Co.. 11 F.3d 450. 453 (4th Cir. 1993 i). "del~lltltjudgmentl11ay be appropriate when the adversary process has been halted because of an essentially unresponsive partyl']"" fd. (citing s.E.C. \'. Lall'bauxh. 359 F. Supp. 2d 418.421 (D. Md. 2005)). "Upon del~lUlt.the well-pled allegations in a complaint as to liability arc taken as true. although the allegations as to damages are not:' Lml'hauxh. 359 F. Supp. 2d at 422: see also 4 RyanI'. Homecomings Fin. Network. 253 F.3d 778. 780 (4th Cir. 2001) (noting that "[t]he defendant. by [its] default. admits the plaintiffs well-pleaded allegations of fact:' whieh provide the basis for judgment). Upon a finding of liability ... [tJhe court must make an independent determination regarding damages .. :. IlIt'IPalmers & Allied hades IlIdlis. Pellsioll Fllml I'. Capital Restoration & Paimillg Co.. 919 F. Supp. 2d 680. 684 (D. Md. 2013). Fed. R. Civ. 1'. 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:' 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 \'. Teseo. 180 F. Supp. 2d 15, 17 (D.D.C. 2001) (citing Unifed Artists CO/I)' \'. Freeman. 605 F.2d 854. 857 (5th Cir. 1979)). III. ANALYSIS The Court has subject matter jurisdiction over this action pursuant to Section 502 of ERISA, 29 U.S.c. ~ 1132. Venue is proper under 29 U.S.c. ~~ 1132(e)(2) as the NEBF is administered in Rockville. Maryland. Under ERISA. "'elvery employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms ofa collectively bargained agreement shall. , . make such contributions in accordance with the terms and conditions of such plan or such agreement:' 29 U,S,C, ~ 1145: see Bd. (!(Trllstees, Sheet Metal Workers' Nat 'IPellsioll Fllnd 1'. Camelof Constr .. IIIC,.No, I: 14-CV -161- LM B-TRJ. 2015 WL 13050031. at *3 (E.D, Va. Apr. 14. 2015). In the Complaint, Plaintiff alleges that Defendants were obligated under the terms of the Collective Bargaining Agreements and Trust Agreement to make contributions to NEBF. but failed to do so between January 1.2006 through July 31. 2016. ECF NO.1 'lJ 13: ECF No. 10-2 '15. 5 29 U.S.C. ~ 1\32(g)(2) provides that in any action brought to enforce the payment of delinquent contributions, and in which ajudgment in favor of the plan is awardcd, the court shall award the plan: (A) (B) (C) I. II. the unpaid contributions, interest on the unpaid contributions, an amount equal to the greater of-interest on the unpaid contributions, or 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 Statc law) of the amount determined by the court under subparagraph (A), (D) (E) reasonable attorney's fees and costs of the action. to be paid by the defendant. and such other Icgal or equitable relief as the court decms appropriate. 29 U.S.c. ~ 1132(g)(2): see a!so Board (!fTruslees Sheel Mew! Workers' Nat. i'ension Fllnd ". Columblls Sho\\' Case Co., NO.1: 14-cv-4 78. 2014 WI. 3811252. at *4 (E.D. Va. Aug. I. 2014): /111 '!i'ailllers & Allied hades /ndlls. i'ension Fund I'. Capita! Restoration & i'aintin~ Co.. 919 F. Supp. 2d 680. 686 (D. Md. 2013): 7i'ustees (!(I'lumhers & i'ipe./illers Nat. i'ension FUlld ". Lake Side i'!lImhin~ & Heatin~. /nc .. NO.1 :12-CV-00298 LOIIDD, 2012 WL 6203001. at *4 (E.D. Va. Nov. 20. 2012). Thus. assuming the truth of the well-pleaded allegations in the Complaint. PlaintilThas established Defendants' liability under the Collective Bargaining Agrecmcnts, Trust Agrccmcnt. and Section 502(g) of ERISA. 29 U.S.c. ~ I I32(g)(2). In support of its request for damages. Plaintiff submits a Delinquency Report for the months of January 2006 through May 2017. ECF No. 10-2 at 20-23. along with the Affidavit of Angel Losquadro, Director ofthc Audit and Delinquency Department of the NEBI', ECF No. 102 at 1-4. Losquadro attests that pursuant to the Trust Agreemcnt and 29 U.S.c. ~ 1132(g)(2). NEBI' is authorized to recover interest on delinquent contributions at a rate often pcrcent per 6 annum. liquidated damages in the amount of twenty pcrcent of the delinqucncy. audit expenses. and attorney's fees. ECI' No. 6-2 ~ 9. Thc Delinquency Repon indicates $29.602.51 in unpaid contributions rcmained outstanding during the months betwcen January 2006 through .Iuly 2016. as well as $5.920.50 in liquidated damages and $431.25 in audit expenses. ECI' No. I0-2 ~ 23. Plaintiff rcceived a check for $35.954.26 on February 14.2017 and applied the funds to satisfy the unpaid contributions. liquidated damages. and audit expenses. lei. However. Defendants have failed to satisfy the accrued interest charged on their unpaid contributions in the amount of $28.212.262 Id: see also 29 U.S.c. S 1132(g)(2)(B). In support ofPlaintitrs request for attorney's tees and costs in an amount of$1.339.30. Plaintiff attaches the Allidavit of attorney Jennifer Bush Hawkins. ECl' No. 10-1. $1.339.30 represents 1.2 hours of work done by Hawkins. at an hourly rate of $3 79.00. 1.5 hours of work done by legal assistant Caroline Lippie. at an hourly rate of$123.00. $400.00 filing fee. and $300 for services of process fees. lei. at 2-3 (noting that Hawkins has been a licensed attorney for twenty two years). The Court finds the time billed and hourly rates applied to be reasonable and commensurate with the Local Guidelines (D. Md. July 1. 2016). Therefore. the request will be granted in full. See Nal'l Elec. Bellefit Fund \'. AI/rallil-lemmer Elf!('.. LLC. No. GJII-16-1184. 2017 WL 1273922. at *4 (D. Md. Jan. 6. 2017) (awarding attorneys' fees and expenses to same counsel for NEBl'). Detendants therefore owe $1.339.30 in attorney's tees and costs. See 29 U.S.c. 2 S 1132(g)(2)(D). PlaintitTs Complaint prays for judgment to include "interest on the unpaid contributions calculated from the date due until the date paid at the rate of I 0% per annum:' ECF No. I ,; 23(b). At the lime of tiling the Complaint. Plaintiff calculated interest due as $22.82 \.4 7. Id At the time of filing the Motion for Default Judgment. PlaintifT now calculates interest due as $28.212.26. ECF No. I0-2 ~ 10. While Fed. R. Civ. P. 54(c) provides Ihat "[a] default judgment must not differ in kind from. or exceed in amount, \vhat is demanded in the pleadings:" this Court has held that such an increase is permissible where Defendants had notice that an additional unspecified alllount of interest would become due in subsequent months after filing the Complaint. Trustees (!fthe Nat 'I Automatic Sprinkler Indus. Welfare Fund \'. II(I/,\,~)', No. GJH-15-521. 2016 WL 297425, at ,(, (D. Md. Jan. 21. 2016). 7 IV. CONCLUSION For the foregoing reasons. Plaintiffs Motion for Default Judgment. Eel' No. 10, is granted against Defendants in the total amount of$29.551.56. Additionally. post-judgment interest shall accrue until the judgment is satistied pursuant to 28 U.S.c. * 1961. A separate Order shall issue. Date: October &/?- '5J. 2017 GEORGE J. HAZEL United States District Judge 8

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