Greater St. Louis Construction Laborers Welfare Fund et al v. Fitzgerald Construction, Inc

Filing 16

MEMORANDUM AND ORDER (See Full Order) IT IS HEREBY ORDERED that plaintiffs' Motion for Default Judgment 14 is denied without prejudice. IT IS FURTHER ORDERED that no later than June 30, 2017, plaintiffs shall resubmit their motion for default judgment, with appropriate evidence and affidavits in support particularly regarding the amount of interest requested and the manner by which interest was calculated. Plaintiffs shall also submit a proposed judgment for my consideration. After review of this resubmitted evidence, I will determine whether a hearing is necessary on the motion. Signed by District Judge Catherine D. Perry on 6/16/17. (EAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
GREATER ST. LOUIS CONSTRUCTION )
LABORERS WELFARE FUND, et al.,
)
)
Plaintiffs,
)
)
v.
)
)
FITZGERALD CONSTRUCTION, INC., )
)
Defendant.
)

No. 4:16 CV 1375 CDP

MEMORANDUM AND ORDER
Local Union Nos. 42 and 110 of the Laborers International Union of North
America, AFL-CIO (the “Union”) and various of its trust funds and their trustees
bring this action under ERISA, 29 U.S.C. § 1145, and the LMRA, 29 U.S.C. § 189,
claiming that defendant Fitzgerald Construction, Inc., failed to make contributions
to the various funds as it was obligated to do under its Collective Bargaining
Agreements (CBAs) with the Union.
After being served with process, Fitzgerald failed to timely answer or
otherwise respond to plaintiffs’ complaint, and the clerk of court entered default
against it. At plaintiffs’ request, I ordered Fitzgerald to submit to a financial
compliance examination, and plaintiffs’ auditor has since provided an examination
report to plaintiffs. Plaintiffs now ask me to enter default judgment against
Fitzgerald and have submitted affidavits and other evidence – including the

examination report – in support of their request. Plaintiffs have also submitted a
proposed judgment. Because the evidence is insufficient to award the requested
interest, I will deny the motion for default judgment. I will, however, provide
plaintiffs an opportunity to cure this deficiency.
After default has been entered against a defendant, it is deemed to have
admitted all well-pleaded factual allegations in the complaint. See Taylor v. City of
Ballwin, 859 F.2d 1330, 1333 (8th Cir. 1988). While factual allegations in the
complaint are generally taken as true, those allegations relating to the amount of
damages must be proven to a reasonable degree of certainty. Everyday Learning
Corp. v. Larson, 242 F.3d 815, 818 (8th Cir. 2001); Stephenson v. El-Batrawi, 524
F.3d 907, 916-17 (8th Cir. 2008). Evidence and supporting documents must
provide a basis for the amount of damages sought by plaintiffs and awarded by the
Court. Stephenson, 524 F.3d at 917.
When entering judgment in favor of a benefits plan under 29 U.S.C. § 1132,
I must award the plan:
(A)

the unpaid contributions,

(B)

interest on the unpaid contributions,

(C)

an amount equal to the greater of-(i)

interest on the unpaid contributions, or

(ii) liquidated damages provided for under the plan in an
amount not in excess of 20 percent (or such higher percentage
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as may be permitted under Federal or State law) of the amount
determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by
the defendant, and
(E) such other legal or equitable relief as the court deems
appropriate.
29 U.S.C. § 1132(g)(2). “[I]interest on unpaid contributions shall be determined
by using the rate provided under the plan, or, if none, the rate prescribed under
section 6621 of Title 26.” Id.
In its motion and proposed judgment, plaintiffs seek to recover from
Fitzgerald $4635.09 in unpaid contributions from April 2013 through December
2015; $546.74 in interest; $1197.91 in liquidated damages; $1641.50 in attorneys’
fees; $232.03 in costs; and $735 in payroll examination fees. The total amount of
judgment plaintiffs seek is $8988.27.
Delinquent Contributions and Liquidated Damages
Plaintiffs submitted the affidavit of John Massa of the accounting firm that
conducted the payroll examination of Fitzgerald from the period of January 1,
2013, through December 31, 2015. Attached to Massa’s affidavit are the firm’s
calculations of Fitzgerald’s unpaid fringe benefit contributions based on the underreporting and over-reporting of reportable hours, as well as calculations of related
liquidated damages and interest. My review of these calculations shows that
Fitzgerald under-reported a number of hours that resulted in delinquent
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contributions totaling $5989.55. (ECF #14-3 at p. 10.) After crediting $1354.46 in
contributions for over-reported hours, plaintiffs seek unpaid contributions in the
amount of $4635.09. This amount of unpaid contributions is supported by the
affidavits and evidence submitted in the case.
Plaintiffs also seek $1197.91 in liquidated damages on the unpaid
contributions. This amount equals 20 percent of the $5989.55 in delinquent
contributions, without taking into account the credit of $1354.46 for
overpayments. When measured against the net amount of unpaid
contributions that plaintiffs seek to recover in this action – that is, $4635.09
– the amount of liquidated damages plaintiffs request equals 25.84 percent.
Under § 1132(g)(2)(C)(ii), I must award liquidated damages as provided
under the CBAs,1 but the award cannot be greater than 20 percent of the
amount of unpaid contributions I award under § 1132(g)(2)(A).2 Because I
will award plaintiffs unpaid contributions in their requested amount of
$4635.09, they are entitled to 20 percent of that amount – that is, $927.02 –
in liquidated damages.
Interest on Unpaid Contributions
Section 1132(g) provides that the rates applicable to interest on unpaid
1

The CBAs in this case provide for liquidated damages in a suit to recover unpaid contributions.
(ECF #6-3, Mar. 2009-Mar. 2014 CBA at p. 13; ECF #6-4, May 2014-Apr. 2019 CBA at p. 14.)
2

Plaintiffs do not argue, and the submitted evidence does not show, that Federal or State law
permits a higher percentage.
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contributions are determined by using the rate provided under the plan, or, if
none, the rate prescribed under 26 U.S.C. § 6621. While the CBAs provide
for interest,3 they do not provide a formula for the calculation of interest.
Accordingly, 26 U.S.C. § 6621 governs. Section 6621 is the section of the
Internal Revenue Code used to calculate interest applied to overpayments
and underpayments of taxes, providing various interest rate formulas for this
purpose.
The evidence submitted with plaintiffs’ motion for default judgment
states only that “default values” at “commercial rates” were used in the
auditor’s calculations and that there was “no interest . . . on over-reported
items.” (ECF #14-3 at p. 10.) These cryptic notations do not identify how
interest was calculated on the unpaid contributions or at what rate(s). With
this insufficient evidence, I am unable to determine whether interest was
calculated in accordance with 26 U.S.C. § 6621. I therefore cannot require
Fitzgerald to pay the amount of interest as requested by plaintiffs in their
motion and proposed judgment. I will direct plaintiffs to submit a proposed
judgment with proof that the interest rates applied are in accordance with
those determined by the Secretary of the Treasury under 26 U.S.C. § 6621.

3

ECF #6-3, Mar. 2009-Mar. 2014 CBA at p. 13; ECF #6-4, May 2014-Apr. 2019 CBA at p. 14.
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Attorneys’ Fees and Costs
Plaintiffs also seek judgment against Fitzgerald in the amount of $1873.53 in
attorneys’ fees and costs. Plaintiffs have submitted the affidavit of attorney Janine
M. Martin, who attests to the applicable billing rates, the details of the work
performed, and the time expended, resulting in legal fees totaling $1641.50.
Martin also attests to the details of the costs plaintiffs seek to recover in this action,
totaling $232.03.4 Plaintiffs are entitled to attorneys’ fees and costs against
Fitzgerald under 29 U.S.C. § 1132(g)(2)(D), and they have adequately proven the
amount of fees and costs they seek to recover in this action. Because the requested
fees and costs are reasonable, they will be awarded to plaintiffs.
Accounting Fees
Finally, plaintiffs seek to recover accounting fees from Fitzgerald in the
amount of $735 and have submitted the affidavit of John Massa who attests that his
firm billed plaintiffs this amount for the financial examination. I find this cost to
be reasonable and appropriate in the circumstances of this case and supported by
the evidence. Because the CBAs provide for Fitzgerald to bear audit costs,5 I will
award plaintiffs this cost in the final judgment.
4

Although plaintiffs incurred a $400 filing fee, Martin attests that plaintiffs seek to recover only
$232.03 in costs, which represents the costs of a special process server. (ECF #14-1, Martin
Affid.)
5

ECF #6-3, Mar. 2009-Mar. 2014 CBA at p. 13; ECF #6-4, May 2014-Apr. 2019 CBA at p. 14.
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Accordingly,
IT IS HEREBY ORDERED that plaintiffs’ Motion for Default Judgment
[14] is denied without prejudice.
IT IS FURTHER ORDERED that no later than June 30, 2017, plaintiffs
shall resubmit their motion for default judgment, with appropriate evidence and
affidavits in support – particularly regarding the amount of interest requested and
the manner by which interest was calculated. Plaintiffs shall also submit a
proposed judgment for my consideration.
After review of this resubmitted evidence, I will determine whether a
hearing is necessary on the motion.

_________________________________
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE

Dated this 16th day of June, 2017.

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