U.A. LOCAL 322 PENSION FUND et al v. DIRECT AIR L.L.C.

Filing 7

MEMORANDUM OPINION. Signed by Judge Jerome B. Simandle on 11/21/2017. (dmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

U.A. LOCAL 322 PENSION FUND,
NO. 322 PENSION FUND, et al.
Plaintiffs,
v.
DIRECT AIR LLC,
d/b/a Direct Air, LLC
d/b/a Direct Air Heating &
Cooling,
Defendant.

HONORABLE JEROME B. SIMANDLE

Civil Action
No. 16-3757 (JBS/KMW)
MEMORANDUM OPINION

SIMANDLE, District Judge:
This matter comes before the Court on the motion of
Plaintiffs U.A. Local 322 Pension Fund1, its associated benefit
funds2 and South Jersey Mechanical Contractors Association, Inc.
(hereinafter, “Plaintiffs”) for default judgment.3 Plaintiffs

1

The Pension Fund is also known as and referenced as "Plumbers
and Pipefitters Local Union No. 322 Pension Fund" and "U.A.
Local Union No. 322 Pension Fund." (Compl. ¶ 4.)
2

The associated benefit funds are U.A. Local 322 Health and
Welfare Fund, U.A.Local 322 Annuity Fund, U.A. Local 322
Education Fund, Loca1322 of the United Association of Journeymen
and Apprentices of the Plumbing and Pipe Fitting Industry of the
United States and Canada, AFL-CIO, and U.A. Local 322 Political
Action Committee.
3

The Court also notes that Kurt R Krueger, Jr., Trustee and
Fiduciary of U.A. Local 322 Pension Fund and its associated
benefit funds, and Dan Falasca, Jr, Chairman of South Jersey
Mechanical Contractors Association, Inc., are named Plaintiffs.

brought this suit against Defendant Direct Air, LLC, alleging
that Defendant failed to submit timely remittance reports and
contributions, due under a collective bargaining agreement
between the parties, for the periods August 2015 through January
2016, June 2016, December 2016 and January 2017. Because
Defendant has not answered or otherwise responded to Plaintiffs’
Complaint, Plaintiffs now seeks default judgment against it
under Fed. R. Civ. P. 55(b). For the reasons that follow,
Plaintiffs’ unopposed motion for default judgment will be
granted, and the Court will enter a Default Judgment in favor of
Plaintiff and against Defendant in the amount of $10,498.73.
Moreover, the Court will order that Defendant submit to an audit
in order to ascertain any remaining delinquent contributions
owed to Plaintiffs.
The Court finds as follows:
1.

Factual and Procedural Background. Plaintiffs filed a

Complaint [Docket Item 1] on June 27, 2016, alleging that
Defendant employer Direct Air LLC neglected to make timely
contributions to employee benefit plans as required under the
terms of a Collective Bargaining Agreement ("CBA"), in violation
of Section 515 of ERISA, 29 U.S.C. § 1145. [Docket Item 6-2 ¶

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10.] The Labor Agreement4 requires all signatory employers to
submit monthly contributions to the Benefit Plans by the
fifteenth (15th) of every month following the month in which the
work has been performed. The Labor Agreement further provided
for interest, costs and reasonable attorneys’ fees, stating
that:
“if the contributions are not submitted by that
date, that interest on the outstanding
contributions accrue from the due date of the
delinquent contributions at the rate of prime
plus two percent (2%) which rate shall be
established and reestablished on January 1 and
July 1 of each year as published by the Wall
Street Journal. Delinquent companies are also
responsible for all costs of collection including
reasonable attorneys' fees incurred in collection
efforts. If the delinquent contributions are
still outstanding for ten (10) days or more from
the date of the first notice of delinquency,
liquidated damages in the amount of ten percent
(10%) of the delinquent contributions are
immediately assessed.”

[Docket Item 6-2 ¶ 7](internal citations omitted).
Plaintiffs allege that they are without sufficient
information or knowledge to plead the precise nature,
extent and amount of the Defendant's delinquency because
the books, records and information necessary to determine
this liability are in the exclusive possession, custody and

4

[Docket Item 6-3.]
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control or knowledge of the Defendant. As a result of these
allegations, Plaintiffs seek both legal and equitable
relief. Plaintiffs seek at least the amount of $4,610.295 in
liquidated damages and interest plus any additional amounts
which may become due during the pendency of this lawsuit
together with any amounts revealed by an audit, late
charges, interest at the rates prescribed by 26 U.S.C.
§6621 from the due date for payment until the date of
actual payment, liquidated damages equal to the greater of
the interest on the unpaid contributions or liquidated
damages at ten percent as provided by the documents
governing the Funds or statute, the cost of an audit and
reasonable attorneys' fees and costs incurred in this
action or the collection or enforcement of any judgment as
provided under the Labor Agreement.
In order to determine the precise amount of delinquent
contributions owed to Plaintiffs, Plaintiffs specifically
seek equitable relief in the form of an injunction
enjoining “Defendant, its officers, agents, servants,
employees, attorneys and all others in active concert or

5

This figure is a sum of the liquidated damages and interest
assessed on contributions paid beyond the due date for the
periods of June 2015 to July 2015 ($963.83) and July 2016 to
November 2016 ($3,646.46). [Docket Item 6-2 ¶ 8.]
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participation with them to permit an audit of all records
under the actual or constructive control of the Defendant
and, in the absence of records, to cooperate in alternative
methods for the determination of work for which
contributions are due for the period January 1, 2012
through the present.” (Compl. ¶¶ 26-33.)6
2.

The Complaint together with the summons was served

upon Sal Toarmina, the purported owner of Direct Air LLC, on
August 17, 2016 at 2431 Reed Street, Philadelphia, PA 19146.
[See Docket Item 4.] Defendant filed no response to Plaintiffs’
Complaint, and the Clerk of Court accordingly entered default
against Defendant on September 14, 2016.7 Plaintiffs’ motion for
default judgment followed, to which Defendant has not filed a
response. [See Docket Item 7.]
3.

In support of the pending motion, Plaintiff filed an

affidavit from John Shaloo, the Administrator of the benefits
plans for Plumbers & Pipefitters Local Union 322 of Southern New
Jersey. [Docket Item 6-2.] The affidavit provides that, in the

6

Though Plaintiffs’ six-count Complaint seems to also request
that the Court enjoin Defendant from continuing to breach the
collective bargaining agreement, Plaintiffs’ Motion for Default
Judgment does not include this request. Thus, the Court will not
address such.
7

The deadline to respond to Plaintiff’s Complaint was September
7, 2016.
5

course of his standard review of the business records, Shaloo
identified that Defendant submitted June 2015 and July 2015
contributions on September 21, 2015. (Id. at ¶ 8.) Pursuant to
the aforementioned provisions of the agreement, a total of
$963.84 was assessed in liquidated damages and interest for the
untimely submitted contributions and remittance reports.

(Id.)

Moreover, Shaloo noted that, since the filing of the Complaint,
Defendant submitted remittance reports and contributions for the
months of July 2016 through November 2016. (Id.) A total of
$3,646.36 was assessed for that time period in interest and
liquidated damages. (Id.) Lastly, Shaloo noted that Defendant
“failed to timely submit contractually-required contributions
for the periods August 2015 through January 2016, June 2016,
December 2016 and January 2017.” (Id. at ¶ 10.)
4.

Standard of Review. Federal Rule of Civil Procedure

55(b)(2) authorizes courts to enter a default judgment against a
properly served defendant who fails to a file a timely
responsive pleading. See Fed. R. Civ. P. 55(b)(2); see also
Chanel v. Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008)
(citing Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d
168, 177 n.9 (3d Cir. 1990)). A party seeking default judgment
is not entitled to relief as a matter of right; the Court may
enter default judgment “only if the plaintiff’s factual
allegations establish the right to the requested relief.” Ramada

6

Worldwide Inc. v. Courtney Hotels USA, LLC, Case No. 11-896,
2012 WL 924385, at *3 (D.N.J. Mar. 19, 2012) (internal
quotations and citation omitted). Thus, before granting default
judgment, a court must determine: (1) whether the plaintiff
produced sufficient proof of valid service and evidence of
jurisdiction, (2) whether the unchallenged facts present a
sufficient cause of action, and (3) whether the circumstances
otherwise render the entry of default judgment “proper.”
Teamsters Health & Welfare Fund of Phila. v. Dubin Paper Co.,
No. 11–7137, 2012 WL 3018062, at *2 (D.N.J. July 24, 2012)
(internal citations omitted). A court must accept as true every
“well-pled” factual allegation of the complaint, but no
presumption of truth applies to the plaintiff’s legal
conclusions or factual assertions concerning damages. Comdyne I.
Inc. v. Corbin, 908 F.2d 1149 (3d Cir. 1990); 10 C. Right, A.
Miller, & M. Kane, Federal Practice and Procedure (2d ed. 1983),
§ 2688, at 444. The Court addresses each element in turn.
5.

Subject Matter Jurisdiction. Although a breach of

contract would normally be a state law cause of action, see
generally Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375 (1994), because this involves enforcement of rights under
ERISA, this Court has federal question subject matter
jurisdiction. See Bd. of Trustees of Hotel & Rest. Employees

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Local 25 v. Madison Hotel, Inc., 97 F.3d 1479, 1487 (D.C. Cir.
1996).
6.

Legitimate Cause of Action – Breach of Collective

Bargaining Agreement. The Court readily finds that Plaintiff has
asserted a valid cause of action for breach of contract. To make
out a claim for breach of contract under New Jersey law, a
plaintiff must allege that (1) there is a contract between the
parties; (2) the contract was breached; (3) the breach caused
damages; and (4) the party stating the claim performed its own
contractual obligations. Frederico v. Home Depot, 507 F.3d 188,
203 (3d Cir. 2007) (citing Video Pipeline, Inc. v. Buena Vista
Home Entertainment, Inc., 210 F. Supp. 2d 552, 561 (D.N.J.
2002)). Here, Plaintiffs have alleged the existence of a
contract, specifically the Collective Bargaining Agreement.
(Compl. ¶ 15.) Plaintiffs have alleged that Defendant breached
the terms of the Agreement by failing to make timely
contributions to Plaintiffs on a monthly basis. (Compl. ¶ 20.)
The Plaintiffs have sufficiently claimed resulting harm from
this breach in the amount of at least $4,610.29. [Docket Item 62 ¶ 8.] Therefore, Plaintiffs have sufficiently alleged a cause
of action for breach of contract to establish Defendant’s
liability for the purposes of this default judgment.
7.

Legitimate Cause of Action – Violation of ERISA. In

their Complaint, Plaintiffs have also asserted a claim for

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violation of ERISA resulting from Defendant’s breach of the
Collective Bargaining Agreement. ERISA Provides:
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. ERISA further provides that:
In any action under this subchapter by a
fiduciary for or on behalf of a plan to enforce
section 1145 of this title in which a judgment in
favor of the plan is awarded, the court shall
award the plan—
(A)
(B)
(C)
(i)
(ii)

(D)
(E)

the unpaid contributions
interest on the unpaid contributions,
an amount 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% (or such higher
percentage as may be permitted under Federal or
State law) of the amount determined by the court
under subparagraph (A),
reasonable attorney’s fees and costs of the
action, to be paid by the defendant, and
such other legal or equitable relief as the court
deems appropriate.

29 U.S.C. § 1132(g)(2).
In this case, Plaintiffs have brought this suit to
enforce payment of delinquent employer contributions
pursuant to 29 U.S.C. § 1145 (Compl. ¶ 23, 25), as required
by the Collective Bargaining Agreement. Plaintiffs claim
that the liquidated damages sought are ten percent of the
amount of the late payments, which is provided for in the

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Collective Bargaining Agreement. (Comp. ¶ 25.) This is
reasonable under ERISA since the liquidated damages are
provided for under the plan and are not in excess of twenty
percent.

Plaintiffs

further allege that they are entitled

to reasonable attorney fees in the amount of $4,626.02 and
costs in the amount of $664.02 pursuant to 29 U.S.C. §
1132(g)(2). [Docket Item 6-4 ¶ 2.]
Therefore, the Plaintiffs have stated a sufficient cause of
action under ERISA to establish Defendant's liability for
purposes of default judgment.
8.

Appropriateness of Default Judgment. The Court must

finally examine whether the entry of default judgment would be
proper, taking into consideration whether the party subject to
default has a meritorious defense, the prejudice suffered by the
party seeking default, and the culpability of the party subject
to default. Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d
Cir. 1987).
9.

In this case, Defendant has failed to proffer any

defense, meritorious or otherwise, to Plaintiffs’ claims, and
the Complaint itself reflects no fatal deficiency. See Hill v.
Williamsport Police Dept., 69 Fed. App'x 49, 52 (3d Cir. 2003)
(“Because the defendants had not yet filed an answer, the
District Court was unable to evaluate whether they had a

10

litigable defense, [rendering this] factor . . .
inconclusive.”); Surdi v. Prudential Ins. Co. of Am., No. 08–
225, 2008 WL 4280081, at *2 (D.N.J. Sept. 8, 2008) (“The facts
as alleged in the Complaint provide no indication of a
meritorious defense.”).
10.

Moreover, as Plaintiffs have no other means to recover

damages from Defendant, Plaintiff will be prejudiced in the
absence of default judgment. See Joe Hand Promotions, Inc. v.
Waldron, 2013 WL 1007398, at *4 (D.N.J. Mar. 13, 2013) (noting
prejudice to plaintiff “because it has no alternative means of
vindicating its claim against the defaulting parties.”); Gowan
v. Cont’l Airlines, Inc., No. 10–1858, 2012 WL 2838924, at *2
(D.N.J. July 9, 2012) (inability to “vindicate rights” absent a
default judgment constitutes prejudice).
11.

Lastly, the Court notes that Defendant was served with

the Complaint nearly fifteen months ago [Docket Item 4.], yet to
date has never responded to or defended against Plaintiffs’
claims, nor even entered an appearance in this case. Defendant
may be presumed culpable for their inaction. See Lee v. A to Z
Trading LLC, No. 12-4624, 2014 WL 7339195, at *3 (D.N.J. Dec.
23, 2014) (finding the defendant’s failure to respond despite
awareness of the litigation “due to culpable conduct”);
Teamsters Health & Welfare Fund, 2012 WL 3018062, at *4
(“Defendant’s failure to answer demonstrates Defendant’s

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culpability in its default”); Slover v. Live Universe, Inc., No.
08-2645, 2009 WL 606133, at *2 (D.N.J. Mar. 9, 2009) (Defendant
is presumed culpable where it has failed to answer, move, or
otherwise respond). On balance, these factors weigh in
Plaintiffs’ favor, and the Court will accordingly grant default
judgment. See Joe Hand Promotions, Inc., 2013 WL 1007398, at *4
(finding that factors weigh in favor of default where there was
no indication of a cognizable defense to plaintiffs’ claims,
plaintiff had no alternative means of seeking damages, and
defendants failed entirely to respond). Upon the evidence
submitted, Plaintiffs have proved Defendant is liable as
alleged.
12.

Damages. The Court turns now to the question of

damages. In considering the amount of damages, where a plaintiff
seeks damages in a sum certain, the Court may rely upon detailed
affidavits, without resorting to a hearing. Durant v. Husband,
28 F.3d 12, 15 (3d Cir. 1994); Golia v. IBCS Group, Inc., Case
No. 14-2577, 2015 WL 1914652, at *4 (D.N.J. April 27, 2015).
Though Plaintiffs are without the necessary information to
determine the full extent of Defendant’s delinquency, Plaintiffs
do seek a sum certain for the amount that they have been able to
determine. Plaintiffs maintain that Defendant is liable for
liquidated damages in the amount of $4,610.29 as a result of
late payments. [Docket Item 6-2 ¶ 8.] The amount of liquidated

12

damages represents 10 percent of the amount of the late
payments, which is provided for pursuant to the Collective
Bargaining Agreement. [Docket Item 6-2 ¶ 7.] The Court agrees.
Therefore, the Court will award $4,610.29 in liquidated damages
to Plaintiffs.
13.

Injunctive Relief.

Plaintiffs allege that Shaloo’s

review of the Funds’ business records revealed that Defendant
also failed to timely submit contributions for periods of August
2015 through January 2016, June 2016, December 2016, and January
2017, but Plaintiffs are unable to determine the precise amount
owed due to Defendant’s failure to submit the monthly remittance
reports. [Docket Item 6-2 ¶ 10.] Thus, Plaintiffs seek equitable
relief enjoining Defendant to submit to an audit in order to
determine the precise amount of delinquent contributions owed to
Plaintiffs. The Court finds that this is an appropriate remedy
in this situation. See Acosta v. Nat'l Packaging, Inc., Civil
Action No. 09-701 (GEB), 2010 U.S. Dist. LEXIS 75847, at *9
(D.N.J. July 28, 2010)(granting Plaintiff’s request to enjoin
defendant employer to submit to audit of defendant’s records to
ascertain other delinquent contributions).

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14.

Costs and Attorneys’ Fees. Finally, Plaintiffs seek

$457.948 in costs and $5,430.50 in attorneys’ fees. [Docket Item
6-4.] The starting point for this Court's determination of
reasonable attorneys’ fees is the lodestar calculation, which is
the reasonable number of hours expended on the litigation
multiplied by a reasonable hourly rate. United Auto. Workers
Local 259 Soc. Sec. Dept. v. Metro Auto Ctr., 501 F.3d 283, 290
(3d Cir. 2007). A request for fees must be accompanied by
“fairly definite information as to hours devoted to various
general activities, e.g., partial discovery, settlement
negotiations, and the hours spent by various classes of
attorneys.” Id. at 291 (quoting Evans v. Port Auth., 273 F.3d
346, 361 (3d Cir. 2001)). Moreover, “where the documentation of
hours is inadequate, the district court may reduce the award
accordingly.” Id. (quoting Hensley v. Eckerhart, 461 U.S. 424,
433 (1983)). Here, Plaintiffs have submitted adequate and
specific fee information as required by L. Civ. R. 54.2
(D.N.J.).

8

The Court notes a discrepancy between what Plaintiffs represent
the costs incurred in this case to be in two of their exhibits.
[See Docket Items 6-4; 6-5.] The Court will rely on the figure
in what appears to be the most recent report [Docket Item 6-5.],
as this is also the figure reflected in Plaintiffs’ proposed
order [Docket Item 6-7.].
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15.

The Court has reviewed the eight-page billing record

from Plaintiffs’ counsel, Jennings Sigmond, P.C., containing
individual entries memorializing the work spent on this case,
and

notes that it contains sufficient detail to determine

whether the fees and costs are reasonable. [Docket Items 6-4; 65.]; See Teamsters Health & Welfare Fund, 2012 WL 3018062, at
*5. The record reflects that attorneys spent 30.5 hours on
research, client contact, drafting pleadings, and filing the
present motion for default judgment. Counsel charged reasonable
hourly rates between $70 and $195. In addition, counsel accrued
$457.94 in costs from the Complaint filing fee, postage, and
service on Defendant. [Docket Item 6-4.] Having carefully
examined the itemized invoice submitted, the Court is satisfied
that the fees and costs are well documented and do not appear to
be “excessive, redundant, or otherwise unnecessary,” and that
30.5 hours of work at the stated hourly rate is reasonable in
light of the nature of the case and the services rendered.
Interfaith Cmty Org. v. Honeywell Intern., Inc., 426 F.3d 694,
711 (3d Cir. 2005). Accordingly, the Court will award fees and
costs in the requested amount of $5,888.44.
16.

For the reasons stated above, the Court will grant

Plaintiffs’ motion for default judgment, and the Court will
enter Default Judgment against Defendant and in favor of
Plaintiffs in the amount of $10,498.73, consisting of $4,610.29

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in liquidated damages and $5,888.44 in reasonable attorneys’
fees and litigation costs. Additionally, the Court will order
defendant to submit to an audit. Following such audit,
Plaintiffs retain the right to file a motion to amend default
judgment in order to seek any additional amount of delinquent
contributions and reasonable attorneys’ fees that are detected
in the audit.
17.

An accompanying Order for Default Judgment will be

entered.
November 21, 2017
Date

s/ Jerome B. Simandle_______
JEROME B. SIMANDLE
U.S. District Judge

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