National Electrical Benefit Fund v. PowerSource Telecom Inc.
REPORT AND RECOMMENDATION re 10 Plaintiff's MOTION for Default Judgment as to PowerSource Telecom Inc. Signed by: Judge Magistrate Judge Charles B. Day. Signed by Magistrate Judge Charles B. Day on 8/31/2017. (tds, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Case No.: TDC-17-574
REPORT AND RECOMMENDATION
This Report and Recommendation addresses the Motion for Entry of Default Judgment
(the “Motion”) filed by the Trustees of the National Electrical Benefit Fund (“Plaintiff” or
“NEBF”). ECF No. 10. Plaintiff is the trustee of a multiemployer employee pension benefit
plan, as defined by Section 3(2) of the Employee Retirement Income Security Act (“ERISA”).
29 U.S.C. § 1002(2); ECF No. 1, p. 2. On February 28, 2017, Plaintiff brought this action
against Powersource Telecom, Inc. (“Defendant”) under Sections 502 and 515 of ERISA and
Section 301 of the Taft-Hartley Act. ECF No. 1, p. 1–2; 29 U.S.C. § 185; 29 U.S.C. § 1132; 29
U.S.C. § 1145. Plaintiff alleges that Defendant breached the Collective Bargaining Agreements
(“the Agreements”) between Defendant and International Brotherhood of Electrical Workers
Local Union 1547 by failing to submit contributions to Plaintiff on behalf of the employees
covered by the Agreements. ECF No. 1, p. 3. Defendant’s time to file an Answer expired on
March 24, 2017. ECF No. 10, p. 1. The Clerk of the Court entered default against Defendant on
March 28, 2017. ECF No. 10, p.1. Pursuant to 28 U.S.C. Section 636 and Local Rules 301 and
302, the Honorable Theodore D. Chuang referred this matter to the undersigned for the making
of a Report and Recommendation concerning default judgment and/or damages. For the reasons
stated herein, I recommend that the Court DENY the Motion without prejudice.
Factual and Procedural Background
Plaintiff is a multiemployer employee pension benefit plan, as defined by Section 3(2) of
ERISA, established by an agreement between the International Brotherhood of Electrical
Workers (“IBEW”) and the National Electrical Contractors Association (“NECA”). 29 U.S.C. §
1002(3); ECF No. 1, p. 2. Employers participate in the NEBF pursuant to the Agreements with
either the IBEW or its local unions. EFC No. 1, p. 2. Plaintiff is authorized by the Restated
Employees Benefit Agreement and Trust for the National Electrical Benefit Fund (the “Trust
Agreement”) to “take all necessary actions to recover delinquent contributions,” including
recovering interest, liquidated damages, audit fees, and all costs and attorneys’ fees relating to
the delinquent contribution(s). Id. at 3.
Defendant is a signatory to the Agreements with IBEW Local Union 1547, which serves
as the collective bargaining representative of Defendant’s employees. Pursuant to the
Agreements, Defendant is required to submit contributions on behalf of all covered employees.
Id. at 2–3. As of February 28, 2017, Defendant has allegedly failed to make payments totaling
$5,404.90 to the NEBF for the period of December 2014 through April 2016. Id. at 3.
Standard of Review
Rule 55 of the Federal Rules of Civil Procedure governs entries of default and default
judgments. Rule 55(a) provides that “[w]hen a party . . . has failed to plead or otherwise defend,
and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed.
R. Civ. P. 55(a). If, after entry of default, the plaintiff’s complaint does not specify a “sum
certain” amount of damages, the Court may enter a default judgment against the defendant
pursuant to Rule 55(b)(2). When considering a motion for default judgment, the Court accepts
as true all well-pleaded factual allegations in the complaint as to liability. See Ryan v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (citation omitted). However, the
Court must “make an independent determination of the sum to be awarded” because “[a] default
does not [automatically] establish liability.” 10A Charles Alan Wright & Arthur Miller, Federal
Practice and Procedure § 2688, n.6 (4th ed. 2001); see also Ryan, 253 F.3d at 780–81 (holding
that acceptance of facts pled by the non-defaulting party “does not necessarily entitle the [party]
to the relief sought”).
The Fourth Circuit has a “strong policy that cases be decided on the merits.” United
States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993). However, default judgment “may
be appropriate when the adversary process has been halted because of an essentially
unresponsive party.” S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005).
If the plaintiff establishes liability, the Court then turns to the determination of damages.
Fed. Prac. & Proc. Civ. § 2688, n.6 (4th ed.). In determining damages, the Court cannot accept
Plaintiff’s factual allegations as true and must make an independent determination. See
Lawbaugh, 359 F. Supp. 2d at 422. Rule 54(c) of the Federal Rules of Civil Procedure limits the
type and amount of damages that may be entered as a result of a party’s default, stating that a
“default judgment must not differ in kind from, or exceed in amount, what is demanded in the
pleadings.” Fed. R. Civ. P. 54(c). While the Court may conduct an evidentiary hearing to
determine damages, it is not required to do so. Monge v. Portofino Ristorante, 751 F. Supp. 2d
789, 795 (D. Md. 2010) (citing Pentech Fin. Servs., Inc. v. Old Dominion Saw Works, Inc., No.
6:09cv00004, 2009 WL 1872535, at *2 (W.D. Va. June 30, 2009) (concluding that there was “no
need to convene a formal evidentiary hearing on the issue of damages” when determining
damages associated with default judgment because plaintiff submitted affidavits and printouts of
electronic records establishing the amount of damages it sought)); DirecTV, Inc. v. Yancey, No.
Civ. A. 404CV00011, 2005 WL 3435030, at *2 (W.D. Va. Dec. 12, 2005) (concluding plaintiff
“presented sufficient evidence to support its claim for damages, costs and fees by way of
uncontradicted affidavits” and therefore no evidentiary hearing was necessary). The Court may
rely instead on affidavits or documentary evidence of record to determine the appropriate sum.
See, e.g., Monge, 751 F. Supp. 2d at 795 (citing cases in which damages were awarded after a
default judgment and without a hearing, based on affidavits, printouts, invoices, or other
Plaintiff served its Complaint on Defendant on March 3, 2017, yet Defendant has failed
to plead or otherwise assert a defense. ECF No. 10, p. 1. Therefore, the Court deems all of
Plaintiff’s factual allegations in the Complaint not pertaining to damages admitted. See Fed. R.
Civ. P. 8(b)(6); Ryan 253 F.3d at 780. Plaintiff’s Motion was filed on April 6, 2017, and
Defendant has still not responded. It is within the Court’s discretion to grant default judgment
when a defendant is unresponsive. See Fed. R. Civ. P. 55(a)–(b); see also Disney Enterprises,
Inc. v. Delane, 446 F. Supp. 2d 402, 405–06 (D. Md. 2006) (holding that entry of default
judgment was proper because the defendant has been properly served with the complaint and did
not respond, even after the plaintiffs tried repeatedly to contact him); Lawbaugh, 359 F. Supp. 2d
418, 422 (D. Md. 2005) (concluding that default judgment was appropriate because the
defendant was “unresponsive for more than a year” after denial of his motion to dismiss, despite
being served with the plaintiff’s motions for entry of default and default judgment).
For the reasons stated below, it is my recommendation that Plaintiff be denied default
judgment without prejudice. However, if Plaintiff appropriately cures the deficiencies in the
Motion, it is my recommendation that Plaintiff be granted default judgment. In determining
damages, I find that no evidentiary hearing is necessary and instead reliance is appropriate on the
declarations and other evidence of record, such as a delinquency report and the itemization of
legal fees and costs, to determine the appropriate sum.
A. Deficient Documents
I recommend that the Motion be denied without prejudice because the Court does not
have reliable documents on which to base its analysis. Plaintiff has submitted a partial, unsigned
copy of the Agreements in conjunction with an affidavit by the Director of the Audit and
Delinquency Department of the NEBF. ECF No. 10-2. Plaintiff relies solely on the Agreements
as the basis for the terms that Defendant allegedly agreed to and has subsequently broken, giving
rise to this suit. ECF No. 1, p. 2–3. Without the dated signatures of Defendant and Plaintiff on
these documents, however, the unsigned Agreements are not acceptable evidence that the parties
have agreed to be bound to the terms within each document. The Court cannot appropriately
deem Defendant to have “agreed” to any of the terms in those documents as discussed in this
opinion. Without proof of Defendant’s assent to the terms, Plaintiff’s case has no foundation.
I recommend that the Court gives Plaintiff time to cure these deficiencies and provide
fully executed copies of the Agreements. If done, I recommend the granting of the Motion for
the reasons discussed below.
B. Default Judgment
In considering a motion for default judgment, the Court accepts as true the well-pleaded
factual allegations in a complaint as to liability. Ryan, 253 F.3d at 780. Nevertheless, the Court
must determine “whether the well-pleaded allegations . . . support the relief sought in this
action.” Id. Plaintiff’s allegation of unpaid contributions supports its cause of action under
ERISA, which states:
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.
Moreover, where a pension plan prevails in an ERISA action, a court shall award: (1)
unpaid contributions; (2) interest on the unpaid contributions; (3) liquidated damages; (4)
reasonable attorneys’ fees and costs; and (5) “such other legal and equitable relief as the court
deems appropriate.” 29 U.S.C. § 1132(g)(2). The Supreme Court has found that these sections
of ERISA are intended to “provide trustees of multiemployer benefit plans with an effective
federal remedy to collect delinquent contributions.” Laborers’ Health & Welfare Tr. Fund for N.
Cal. v. Advanced Lightweight Concrete Co., 484 U.S. 539, 541 (1988). The Fourth Circuit has
likewise found that in an action based on Section 515 of ERISA, “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) (citation omitted).
Under the Agreements, it appears that Defendant agreed to contribute three percent (3%)
of the gross labor payroll accrued by Defendant’s covered employees to the NEBF. ECF No. 102, p. 6. In the event of missed payments, the Agreements dictate that Defendant must pay the
NEBF the following:
(1) All costs and expenses associated with any audits;
(2) Liquidated damages in the amount up to 20% of the missed payment;
(3) Lost interest from the missed payment at 10% of the annual rate, compounded
monthly throughout the period of delinquency; and
(4) Costs and attorneys’ fees.
Id. at 11. Based on the content found within the Agreements and associated exhibits, it would
appear that Plaintiff’s well-pleaded factual allegations support the relief requested. Upon
Plaintiff’s submission of appropriately executed copies of the Agreements, the Court may rely on
the Agreements as supporting Plaintiff’s allegations.
Plaintiff’s Motion asserts that Defendant owes:
$5,404.90 in past-due contributions to the NEBF;
$20.00 in bank fees due to Defendant’s returned check;
$871.34 in interest assessed at 10% per annum, compounded monthly;
$1,539.52 in liquidated damages; and
$1,611.20 in legal fees and expenses.
ECF No. 10-2, p. 1–2. In total, Plaintiff asks for $9,446.96. ECF No. 10-2, p. 2.
In support of its request for delinquent contributions, Plaintiff submits the declaration of
Angel Losquadro, Director of the Audit and Delinquency Department of the NEBF. ECF No.
10-2. In support of its request for reasonable attorneys’ fees and costs, Plaintiff’s counsel
Jennifer Bush Hawkins submits a declaration. ECF No. 10-1. The representations of both Mr.
Losquadro and Ms. Hawkins appear to be adequate as to the contributions owed, interest due,
and attorneys’ fees and costs owed so as to make a hearing unnecessary. See Monge, 751 F.
Supp. 2d at 795. The Court, however, should not award Plaintiff the full $9,446.96 it claims is
owed because the liquidated damages calculation is incorrect. With the appropriate
recalculations discussed below, the total amount to be awarded to Plaintiff is $8,998.42.
a) Subsequent Past-Due Contributions and Returned Check Fees
Plaintiff claims Defendant owes $5,404.90 for past due contributions to the NEBF for the
months of December 2014 through April 2016. ECF No. 1, p. 3. These damages are supported
by a delinquency report generated by the NEBF that details the monthly contribution owed,
interest, and any payments made by Defendant during the period in question. ECF No. 10-2, p.
14; see also ECF No. 10-2, p. 1 (Losquadro Declaration confirming Defendant owes $5,404.90
for December 2014 through April 2016).
Plaintiff also claims that Defendant owes an additional $20.00 for a returned check bank
fee caused by Defendant. ECF No. 1, p. 4. However, Plaintiff does not provide documentation
or evidence that supports this cost. The undersigned recommends against accepting this
unsupported representation. Once proper documentation is provided, I recommend that the
Court award Plaintiff $5,424.90.
b) Accrued Interest
Plaintiff alleges that Defendant owes $871.34 in interest assessed December 2014
through April 2017. ECF No. 10-2, p. 2. Under the Agreements, Plaintiff is entitled to interest
on any unpaid contributions at a 10% annual rate compounded monthly throughout the
delinquency. Id. at 11. ERISA allows for an award of interest on unpaid contributions
“determined by using the rate provided under the plan.” 29 U.S.C. § 1132(g)(2). Plaintiff
outlines the interest on the amount owed in the NEBF Delinquency Report. ECF No. 10-2, p. 14.
Thus, after reviewing the evidence of record, I recommend the Court award Plaintiff its
requested amount of $871.34 in interest.
Plaintiff alleges that Defendant owes $1,539.52 in liquidated damages. ECF No. 1, p. 3.
Under ERISA, a prevailing plaintiff is entitled to “liquidated damages provided for under the
plan in an amount not in excess of 20 percent . . . of the amount [of unpaid contributions]
determined by the court.” 29 U.S.C. § 1132(g)(2)(C)(ii). The Agreements state:
In the event a Covered Employer has failed or fails to make required
contributions, the Trustees are authorized and empowered to assess and receive
from such Covered Employer as liquidated damages an amount up to twenty
percent (20%) of the amount found to be delinquent, in that the failure of the
Covered Employer to make the required payment of contributions imposes
additional burden and expense upon the Trustees in the collection thereof, in the
administration of the NEBF, including but not limited to the communication with
said Covered Employer, and, in addition thereto may cause a loss of benefits to
ECF No. 10-2, p. 11. Based on the 20% liquidated damages rate, Losquadro alleges that
Defendant owes Plaintiff $1,539.52 in liquidated damages. Id. at 2. The NEBF Delinquency
Report shows that Defendant failed to make timely contributions in the amount of $7,697.60. Id.
at 14. Defendant made two late payments totaling $2,292.70 in September and October 2015,
which reduced the total outstanding amount to the $5,404.90 Plaintiff now seeks. Id. However,
the liquidated damages allegedly owed are calculated as 20% of the overall untimely
contributions of $7,697.60, whereas ERISA permits liquidated damages only on the unpaid
contributions of $5,404.90. See 29 U.S.C. § 1132(g)(2)(C)(ii); see also Trustees of Glaziers
Local 963 Pension, Welfare, & Apprentice Funds v. Walker & Laberge Co., 619 F. Supp. 1402,
1405 (D. Md. 1985) (holding that untimely payments tendered prior to commencement of the
suit “do not qualify as ‘unpaid contributions’”). Therefore, Plaintiff is entitled only to 20% of
$5,404.90, the unpaid contributions existing at the commencement of the suit, which totals
$1,080.98 in liquidated damages.
Attorneys’ Fees and Costs
Plaintiff alleges Defendant owes $550.00 in costs and $1,061.20 in attorneys’ fees. ECF
No. 10-1, p. 2–3. In an ERISA action, a district court may 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. Metro. Life Ins. Co., 609 F.3d 622, 634 (4th Cir.
2010) (citing Hardt v. Reliance Std. Life Ins. Co., 560 U.S. 242, 245 (2010) (citation omitted)).
Courts use the lodestar calculation to determine reasonable attorneys’ fees, which
requires multiplying the number of reasonable hours expended by a reasonable rate. Robinson
v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009) (citing Grissom v. The Mills
Corp., 549 F.3d 313, 320 (4th Cir. 2008)). The Fourth Circuit has endorsed a list of twelve
factors, which aid a court in determining a reasonable fee. These factors are as follows:
(1) the time and labor required; (2) the novelty and difficulty of the questions; (3)
the skill requisite to perform the legal service properly; (4) the preclusion of
employment by the attorney due to acceptance of the case; (5) the customary fee;
(6) whether the fee is fixed or contingent; (7) time limitations imposed by the
client or the circumstances; (8) the amount involved and the results obtained; (9)
the experience, reputation, and ability of the attorneys; (10) the “undesirability” of
the case; (11) the nature and length of the professional relationship with the client;
and (12) awards in similar cases.
Id. at 243–44 (adopting the twelve factors articulated by the Fifth Circuit in Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)).
A party seeking a fee award “must produce satisfactory specific evidence of the
prevailing market rates in the relevant community for the type of work for which he seeks an
award.” See id. at 244 (quoting Plyer v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990)). While
Plaintiff has not provided information independent counsel affidavits regarding the local market
rate, the Local Rules provide guidelines for determining an attorney’s reasonable hourly rate in
Lawyers admitted to the bar for less than five (5) years: $150–225.
Lawyers admitted to the bar for five (5) to eight (8) years: $165–300.
Lawyers admitted to the bar for nine (9) to fourteen (14) years: $225–350.
Lawyers admitted to the bar for fifteen (15) years or more: $300–475.
Local Rules App. B, 2 (D. Md.). In the instant case, Johnson factors one and nine are most
persuasive in evaluating Plaintiff’s request for attorneys’ fees. Factor one examines the time and
effort Plaintiff’s attorney spent preparing the Complaint and the Motion. Factor nine asks us to
evaluate the fees based on the experience of counsel because a more experience attorney is
expected to perform more efficiently. Plaintiff’s counsel billed at an hourly rate of $379.00.
ECF No. 10-1 at 2. Ms. Hawkins has been a licensed attorney since 1995, has been responsible
for NEBF’s ERISA collection proceedings since 1996, and has been a member of Potts-Dupre,
Hawkins & Kramer since 2002. Id. at 1–2. The Local Rules advise that a reasonable hourly rate
for an attorney admitted to the bar for fifteen or more years is $300.00 to $475.00. Local Rule
App. B, 3(d). Ms. Hawkins’ hourly rate of $379.00 falls within that reasonable range.
Plaintiff’s counsel provided a detailed itemization of legal fees and costs. ECF No. 10-1,
p. 2–3. The records show that Ms. Hawkins billed a total of 2.80 hours. Id. These hours are
reasonable considering the amount of labor required to initiate the suit, to take the necessary
procedural steps in moving forward for default judgment, and to prepare sufficient evidence in
support of the damages requested. Moreover, the requested legal costs in the amount of $400.00
for filing and $150.00 for server fees are appropriate. Applying the lodestar method and the
Local Rules to Plaintiff’s request, I recommend that the Court ward Plaintiff $550.00 in costs
and $1,061.20 in attorneys’ fees.
Based on the foregoing, it is my recommendation that the Court DENY without prejudice
Plaintiff’s Motion for Default Judgment against Defendant. I recommend that Plaintiff be given
fourteen (14) days to correct the deficiencies in the Motion by providing the Court with: (1) a
copy of the Collective Bargaining Agreements that have been signed and dated by both parties,
and (2) a document supporting the $20.00 returned check fee incurred by Plaintiff. If the
documents are provided, I recommend that the Court grant Plaintiff’s Motion and enter judgment
against Defendant for the awards enumerated above in the total amount of $8,998.42.
August 31, 2017
Charles B. Day
United States Magistrate Judge
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