Painters District Council No. 2 et al v. Sutton Painting, LLC et al

Filing 19

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Auto-Owners Mutual Insurance Companys Motion to Intervene is GRANTED. (Doc. No. 14.) IT IS FURTHER ORDERED that Plaintiffs Motion for Partial Default Judgment as to liability (Doc. 10) is GRANTED. IT IS FURTHER ORDERED that Defendants shall, within twenty-one (21) days of the date of this Order, submit to Plaintiffs attorney for examination all individual compensation records, payroll register, payroll journal, time-cards, federal and state tax form s, W-2 forms and 1099 forms, state quarterly tax returns, workers compensation reports, fringe benefit records and reports, job cost records, general ledger with cash disbursements and supporting documents, accounts receivables, invoices, and check s tubsof Sutton Painting, LLC for the period of November 1, 2010, through the date of this Order. Failure to comply with this Order may result in the imposition of sanctions, including a finding of contempt, against Defendants. IT IS FURTHER ORDERED th at within than twenty-one (21) days of the completion of the audit, Plaintiffs shall submit to the Court all evidence of the delinquency, interest, liquidated damages, costs and attorneys fees it seeks to recover.IT IS FURTHER ORDERED that Plaintiffs shall promptly serve notice of thisOrder on Defendants in the manner they find most appropriate, and shall file a notice with the Court advising of the date and manner of service. Signed by District Judge Audrey G. Fleissig on 9/26/12. (JWJ)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

PAINTERS DISTRICT COUNCIL NO. 2, )
et al.,
)
)
Plaintiffs,
)
)
vs.
)
)
SUTTON PAINTING, LLC and
)
SHEILA SUTTON,
)
)
Defendants,
)
)
AUTO-OWNERS MUTUAL
)
INSURANCE CO.,
)
)
Intervenor.
)

Case No. 4:11CV01953 AGF

MEMORANDUM AND ORDER
Plaintiffs, a labor organization, pension trust and its trustees, move for partial
judgment by default against Defendant Sutton Painting, LLC, on Plaintiffs’ claims under
Section 301 of the Labor Management Relations Act of 1947 (“LMRA”), as amended, 29
U.S.C. §185 and Section 502 of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended, 29 U.S.C. §1132 for delinquent contribution under the collective
bargaining agreement between Plaintiffs and Sutton Painting. In addition, Plaintiffs move
for partial judgment by default against Defendant Sheila Sutton, individually, as
signatory1 to the Guaranty of Payment of Wages, Dues Remissions, Fringe Benefit

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Plaintiffs require companies entering into a collective bargaining agreement
with them to furnish a personal guaranty on wages, dues remissions, fringe benefit
contributions and other miscellaneous payments.

Contributions and Other Miscellaneous Payments (hereinafter the “Guaranty”) on
Plaintiffs’ claims under the Guaranty.2 Plaintiffs further seek an Order requiring
Defendants to submit to an examination of their business records.
Both Defendants were served with a copy of the Summons and Complaint in this
action on November 24, 2011. On January 17, 2012, the Clerk entered an order of
default against Defendants pursuant to Federal Rule of Civil Procedure 55(a). (Doc. No.
7.) Plaintiffs filed the present motion and memorandum in support, seeking a Partial
Default Judgment as to liability. Defendants have not responded to the motion and the
time to do so has expired.
Also before the Court is the motion of Auto-Owners Mutual Insurance Company
(“Auto-Owners”) to intervene, as a matter of right, pursuant Fed. R. Civ. P. 24(a)(2), to
enforce an assignment made by Plaintiffs to Auto-Owners and to enforce Auto-Owners’
asserted equitable lien on any judgment Plaintiffs may obtain against Defendants in this
action.

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The Guaranty reads in pertinent part:
The undersigned owner(s) of the Company guarantee(s) the payment of all
amounts due the Union, members of the Union employed by the Company,
and the Trustees of the various Trust Funds, pursuant to the collective
bargaining agreement between the Company and the Union and any
subsequent collective bargaining agreement, whether those amounts become
due before or after the date of this guaranty. The owner(s) of the Company
also guarantee(s) the payment of all damages, costs, fees and expenses
which the Union, the members of the Union employed by the Company or
the Trustees of the Trust Funds may be entitled to recover from the
Company pursuant to the collective bargaining agreement or under any
local, state or federal law.
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Auto-Owners alleges that, acting as a surety, it paid a $15,000 bond on Plaintiffs’
behalf, and that in exchange, Plaintiffs assigned to Auto-Owners all rights to any
judgment obtained under the Guaranty. Auto-Owners further alleges that Plaintiffs then
filed this suit, but failed to notify Auto-Owners of its pendency. Plaintiffs have not
responded to the request for intervention and the time to do so has expired.
For the reasons set forth below, Auto-Owners’ motion to intervene will be granted
and Plaintiffs’ motions for a partial default judgment and order of accounting will be
granted.
Applicable Law
Intervention
The Court is required to allow intervention as a matter of right under Fed. R. Civ.
P. 24 (a)(2) if a timely motion to intervene demonstrates an interest in the subject matter
of the litigation; potential impairment of that interest by the disposition of the action; and
lack of adequate representation of the intervenor’s interest by the existing parties to the
action. Medical Liability Mut. Ins. Co. v. Alan Curtis LLC, 485 F.3d 1006, 1008 (8th
Cir. 2007). The Court interprets Rule 24 “liberally and resolve[s] any doubts in favor of
the proposed intervenors.” United States v. Ritchie Special Credit Invs., Ltd., 620 F.3d
824, 831 (8th Cir. 2010) (quotation omitted).
The timeliness of a request for intervention is determined by the totality of the
circumstances, including the amount of time that has elapsed since the institution of the
action; the prejudice, if any, to the parties caused by the delay; and the desirability of
avoiding a multiplicity of lawsuits. Planned Parenthood of the Heartland v. Heineman,
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664 F.3d 716, 718 (8th Cir. 2011). Courts have permitted intervention near the close of a
case and even, in some instances, after final judgment. United States v. MSD, 569 F.3d
829, 833-34 (8th Cir. 2009).
An interest is cognizable for purposes of intervention under Rule 24(a)(2) only
where it is “direct, substantial, and legally protectable.” United States v. Union Elec.
Co., 64 F.3d 1152, 1161 (8th Cir. 1995). “An economic interest in the outcome of the
litigation is not itself sufficient to warrant mandatory intervention.” Medical Liability
Mut. Ins. Co., 485 F.3d at 1008. Nor is an interest “‘contingent upon the occurrence of a
sequence of events’” sufficient to satisfy Rule 24(a)(2). Id. (quoting Standard Heating &
Air Conditioning Co. v. City of Minneapolis, 137 F.3d 567, 571 (8th Cir. 1998)). To
prove the requisite interest, an intervenor must demonstrate a recognized interest in the
subject matter of the litigation which might be impaired by the disposition of the case and
which will not be adequately protected by the existing parties. Mausolf v. Babbitt, 85
F.3d 1295, 1300 (8th Cir. 1996).
Generally, where an assignment has been made, the assignee is deemed the real
party in interest and can, therefore, intervene as a matter of right. Sprint
Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 285 (2008). Rule 24
(a) only requires the applicant to show that the disposition of the action may, as a
practical matter, impair or impede its ability to protect its assigned interest or that the
parties to the action do not adequately protect its interest. See, e.g., Mausolf, 85 F.3d at
1303 (proposed intervenor met the minimal burden of showing that its interest may not be

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adequately represented); Sierra Club v. Robertson, 960 F.2d 83, 85 (8th Cir. 1992)
(same).
Applying these factors, the Court finds that the proposed intervention is timely. It
appears that Auto-Owners sought to intervene once it learned of the lawsuit and prior to
the entry of judgment and that its intervention will not unduly complicate the case.
Allowing intervention here will permit Auto-Owners to protect its asserted interest in the
proceeds of this suit, an interest that may not be adequately represented in the absence of
intervention. United States v. MSD, 569 F.3d at 840 (holding that “[t]he purpose of
intervention is to promote the efficient and orderly use of judicial resources by allowing
persons, who might otherwise have to bring a lawsuit . . . to protect their interests or
vindicate their rights, to join an ongoing lawsuit”). For these reasons, the motion to
intervene will be granted.
Partial Default Judgment
Upon entry of default, a defendant’s liability is established. Brown v. Kenron
Aluminum & Glass Corp., 477 F.2d 526, 531 (8th Cir. 1973) (stating that on
establishment of default, “the defendant has no further standing to contest the merits of
plaintiff’s right to recover”); Trustees of the IBEW Local 405 Health &Welfare Fund v.
Tichy Elec. Co., No. 07-CV-39-LRR, 2008 WL 154641, at *4-5 (N.D. Ia. Jan. 15, 2008)
(applying the above principle to a case for delinquent contributions under ERISA and
LMRA). The relief available in this ERISA fringe benefit collection case for payments
required under the collective bargaining agreement is mandatory. Id.; see also Flynn v.
Williams Masonry, 233 F.R.D. 176, 177 (D.D.C. 2005). Defendant Sutton Painting,
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LLC, as signatory to the collective bargaining agreement, and Defendant Sheila Sutton, as
guarantor under the collective bargaining agreement, are therefore liable for any
delinquent payments, damages, fees and interest due Plaintiffs under that agreement.
Default having been entered, and Defendants having failed to respond in any manner to
Plaintiffs’ complaint, the only issue before the Court is the amount of damages owed by
Defendants. See Tichy Elec. Co., 2008 WL 154641, at *4.
Among the various elements of relief available pursuant to 29 U.S.C. §
1132(g)(2)(A) is an award of delinquent contributions. Here, Defendant Sutton Painting
has failed to submit weekly fringe benefit reports for the period of November 1, 2010,
through the present date. In addition, Sheila Sutton has failed to fulfill her obligation to
Plaintiffs arising from the Guaranty. Therefore, the Court finds that Plaintiffs are entitled
to an award of all contributions due for the period of November 1, 2010, through the
present date. Carpenters & Joiners Welfare Fund v. Gittleman Corp., 857 F. 2d 476, 478
(8th Cir. 1988); Trustee of the Minn. Ceramic Tile and Allied Trades Retirement Fund v.
Legacy Tile and Marble, No. CIV. 06-2965 (JNE/ SRN), 2008 WL 624120, at*4. (D.
Minn. Mar. 4, 2008).
Audits are appropriate in order to determine the full amount of contributions due.
See, e.g., Mason Tenders Dist. Council Welfare Fund v. Bold Constr. Co., Inc., No.
01CIV0641LTSTHK, 2002 WL 1788024, at *3 (S.D.N.Y. Aug. 1, 2002). Defendants
will therefore be required to submit Sutton Painting’s records to an audit for purposes of
calculating the delinquent contributions and interest, liquidated damages, costs and
attorney’s fees owed to Plaintiffs.
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Accordingly,
IT IS HEREBY ORDERED that Auto-Owners Mutual Insurance Company’s
Motion to Intervene is GRANTED. (Doc. No. 14.)
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Partial Default
Judgment as to liability (Doc. 10) is GRANTED.
IT IS FURTHER ORDERED that Defendants shall, within twenty-one (21) days
of the date of this Order, submit to Plaintiffs’ attorney for examination all individual
compensation records, payroll register, payroll journal, time-cards, federal and state tax
forms, W-2 forms and 1099 forms, state quarterly tax returns, workers compensation
reports, fringe benefit records and reports, job cost records, general ledger with cash
disbursements and supporting documents, accounts receivables, invoices, and check stubs
of Sutton Painting, LLC for the period of November 1, 2010, through the date of this
Order. Failure to comply with this Order may result in the imposition of sanctions,
including a finding of contempt, against Defendants.
IT IS FURTHER ORDERED that within than twenty-one (21) days of the
completion of the audit, Plaintiffs shall submit to the Court all evidence of the
delinquency, interest, liquidated damages, costs and attorney’s fees it seeks to recover.

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IT IS FURTHER ORDERED that Plaintiffs shall promptly serve notice of this
Order on Defendants in the manner they find most appropriate, and shall file a notice
with the Court advising of the date and manner of service.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE

Dated this 26th day of September, 2012.

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