Trustees of Empire State Carpenters Annuity, Apprenticeship, Labor-Management Cooperation, Pension and Welfare Funds v. Rodrigue et al
MEMORANDUM & ORDER ADOPTING REPORT AND RECOMMENDATION; For the foregoing reasons, Judge Locke's R&R (Docket Entry 72) is ADOPTED in its entirety and Plaintiffs' motion for summary judgment (Docket Entry 58) is GRANTED. Plaintiffs are gran ted leave to file a motion for attorneys' fees and costs within sixty (60) days of the date of this Memorandum and Order. Plaintiffs are further directed to advise the Court whether they intend to proceed with their claims against C.R. Drywall Co., Inc. and C.R. Drywall Residential, Inc., within fourteen (14) days of the date of this Memorandum and Order. So Ordered by Judge Joanna Seybert on 3/29/2017. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
TRUSTEES OF EMPIRE STATE CARPENTERS
ANNUITY, APPRENTICESHIP, LABOR-MANAGEMENT
COOPERATION, PENSION AND WELFARE FUNDS,
MEMORANDUM & ORDER
-againstCLAUDE RODRIGUE doing business as
Mr Drywall, Inc., C.R. DRYWALL CO.,
INC., C.R. DRYWALL RESIDENTIAL, INC.,
and MR DRYWALL, INC.,
Charles R. Virginia, Esq.
Richard B. Epstein, Esq.
Elina Burke, Esq.
Todd Dickerson, Esq.
Virginia & Ambinder LLP
40 Broad Street, 7th Floor
New York, NY 10004
C.R. Drywall Co.
William F. Ryan, Jr., Esq.
Tabner, Ryan, and Keniry, LLP
18 Corporate Woods Blvd., Suite 8
Albany, NY 12211
David Brickman, Esq.
David Brickman PC
1664 Western Avenue
Albany, NY 12203
SEYBERT, District Judge:
Currently pending before the Court is Magistrate Judge
Steven I. Locke’s Report and Recommendation dated January 25, 2017
(the “R&R”) with respect to plaintiffs Trustees of Empire State
Carpenters Annuity, Apprenticeship, Labor-Management Cooperation,
Pension and Welfare Funds’ (“Plaintiffs” or the “Funds”) motion
for partial summary judgment, which requests confirmation of the
subject arbitration award and an award of summary judgment against
defendant Claude Rodrigue d/b/a Mr Drywall Inc. (“Rodrigue”).
Plaintiffs’ motion be granted. (R&R, Docket Entry 72.) Defendants
Rodrigue, C.R. Drywall Residential, Inc., and Mr Drywall, Inc.
(collectively, “Defendants”)1 have filed objections that are also
pending before the Court.
(Defs.’ Obj., Docket Entry 73.)
the reasons set forth below, Defendants’ Objections are OVERRULED
and the R&R is ADOPTED in its entirety.
background of this matter, which is set forth in detail in the
Briefly, the Funds are employer and employee trustees of
multiemployer labor-management trust funds and a labor management
(Compl. ¶ 5.)
The Funds allege that
Rodrigue was the owner and operator of Mr Drywall, Inc., an
(Compl. ¶ 6.)
On June 27, 2002, Mr Drywall, Inc. executed a Memorandum
of Understanding with respect to a collective bargaining agreement
The remaining defendant in this action, C.R. Drywall Co. Inc.,
is represented by separate counsel and has not objected to the
with the Northeast Regional Council of Carpenters f/k/a Empire
State Regional Council of Carpenters (the “Union”) for the period
from June 1, 2002 through May 31, 2006.
(Craven Decl., Docket
Entry 60, ¶¶ 1, 5; Craven Decl. Ex. C, Docket Entry 60-3.)
Drywall Distributors, Inc.,2 executed a Memorandum of Agreement
providing that the Master Agreement for the period from June 1,
2002 through May 31, 2006, shall remain in full force and effect
from June 1, 2006, through May 31, 2011 (the “2006 Memorandum of
Agreement”). (2006 Mem. of Agmt., Craven Decl. Ex. D, Docket Entry
The collective bargaining agreement governing the period
from June 1, 2006 through May 31, 2011 (the “CBA”) requires that
employers make specified contributions to the Funds and “‘comply
with the agreements, declarations of trust, plans and/or rules,
(Craven Decl. ¶ 9 (quoting CBA, Craven Decl. Ex.
E, Docket Entry 60-5, at 11).)
The Funds established a Joint Policy for Collection of
Delinquent Contributions (the “Collection Policy”) that requires
employers to provide their books and payroll records to enable the
For ease of reference, the Court will refer to Mr Drywall, M.R.
Drywall, Inc., and M.R. Drywall Distributors, Inc., collectively,
as “MR Drywall.”
Funds to conduct an audit. (Collection Policy, Craven Suppl. Decl.
Ex. A, Docket Entry 70-1, at 5-6.)3
In the event an employer fails
to contribute to the Funds, the matter is referred to arbitration.
(Craven Decl. ¶ 12.)
The Funds allege that they conducted an audit of MR
Drywall’s books and records for January 1, 2008, through June 30,
2011 (the “Audit”), and discovered that MR Drywall failed to remit
contributions in the principal amount of $438,717.24.
Decl. ¶¶ 13-14.)
The Funds allege that they initiated arbitration
and a representative of MR Drywall failed to appear at the hearing.
(Craven Decl. ¶ 16.)
The Arbitrator ultimately determined that MR
Drywall violated the CBA and awarded $641,009.32 to the Funds (the
(Craven Decl. ¶ 17; see also Arb. Award,
Craven Decl. Ex. H, Docket Entry 60-8.)
On October 21, 2013, the Funds commenced this action to
confirm and enforce the Arbitration Award pursuant to the Employee
Retirement Income Security Act of 1974 (“ERISA”), Section 301 of
the Labor Management Relations Act of 1947 (“LMRA”), and Section 9
of the Federal Arbitration Act (“FAA”).
(See generally Compl.)
The Funds have submitted two substantially similar collection
policies executed in 2012 and 2013, respectively. (See Craven
Decl. Ex. F, Docket Entry 60-6; Craven Suppl. Decl. Ex. A,
Docket Entry 70-1.) The Court will refer to the Collection
Policy dated March 6, 2012, (Collection Policy, Craven Suppl.
Decl. Ex. A), as it predates the subject arbitration.
Plaintiffs’ Motion for Partial Summary Judgment
On August 25, 2016, Plaintiffs filed their motion for
partial summary judgment seeking confirmation of the Arbitration
Award and summary judgment against Rodrigue.
(Pls.’ Mot., Docket
Plaintiffs argued that the arbitrator acted within
the scope of his authority and the Arbitration Award was consistent
with the CBA and Collection Policy.
(Pls.’ Br., Docket Entry 63,
Plaintiffs also argued that Rodrigue failed to raise any
genuine issues of material fact with respect to his personal
liability for any judgment issued against MR Drywall.
Finally, Plaintiffs argued that they are entitled to
attorneys’ fees and costs.
(Pls.’ Br. at 9-12.)
In opposition, Defendants argued that issues of fact
preclude the confirmation of the Arbitration Award and alleged,
inter alia, that: (1) Plaintiffs have not established that the
Collection Policy was binding on MR Drywall and Rodrigue, as
arbitrate or authorize the arbitrator to enter a default award,
(b) MR Drywall’s failure to appear at the arbitration constituted
a “clear objection,” and (c) the Collection Policy is inconsistent
with the CBA; (2) the CBA is unsigned, and the provision allegedly
binding MR Drywall to the Funds’ agreements and policies does not
define the terms “agreements” or “policies” or state that the
provision is to be applied prospectively, and (3) there is no
arbitration, choice of forum or attorneys’ fees provision in the
(Defs.’ Br., Docket Entry 65, at 3-5.)
reliability of the Audit and the arbitration failed to name
Rodrigue as a party and was conducted by an arbitrator selected by
the Funds at a location outside of Defendants’ county of residence.
(Defs.’ Br. at 8-9.)
Defendants also contended that Rodrigue
should not be held personally liable for the Arbitration Award,
as: (1) he was not served with notice of arbitration, (2) MR
Drywall is a de facto corporation, and (3) Plaintiffs are estopped
from asserting claims against Rodrigue based on their failure to
name him as a party to the arbitration and treatment of MR Drywall
(Defs.’ Br. at 10-13.)
Finally, Rodrigue argued
that Plaintiffs’ ERISA claim should be dismissed, and Plaintiffs’
request for attorneys’ fees should be denied.
(Defs.’ Br. at 14.)
On January 25, 2017, Judge Locke issued his R&R.
Locke recommended that the Court confirm the Arbitration Award,
and concluded that the arbitrator reasonably relied on the Audit
in rendering his award, and pursuant to the Collection Policy, the
Funds were entitled to interest, liquidated damages, attorneys’
fees, audit costs, and the arbitrator’s fee.
(R&R at 7-9.)
Locke also found that MR Drywall waived its right to challenge the
arbitration proceeding and/or Audit by failing to attend the
(R&R at 9.)
Judge Locke similarly rejected Defendants’ argument that
the arbitrator lacked jurisdiction over MR Drywall.
(R&R at 11.)
Judge Locke found that MR Drywall was bound by the Collection
Policy through the CBA, which incorporated the Collection Policy
as the CBA’s terms “anticipate the Funds’ subsequent imposition of
a collection policy through the Union’s relationship with various
employer associations.” (R&R at 13.) Judge Locke also noted that:
(1) Rodrigue testified at his deposition that his businesses were
union employers, he was aware that MR Drywall was required to remit
fringe benefit contributions to the Funds, and he signed the CBA
for MR Drywall, and (2) documentary evidence indicated that MR
Drywall had previously made benefit contributions and submitted to
(R&R at 13-15.)
Additionally, Judge Locke found that
the 2006 Memorandum of Agreement and the CBA “extended past their
expiration dates unless and until an employer issues an explicit
notice of withdrawal or a demand of some other modification.”
(R&R at 14-15.)
Further, Judge Locke found that pursuant to the
CBA, Rodrigue “explictly agreed to be represented by various
employer associations” and “to be bound by their agreements with
the Union,” and “authorized representatives from both the Union
and the [employer] associations signed the Collection Policy.”
(R&R at 14.)
Judge Locke declined to credit Defendants’ contention
that the arbitrator exceeded his authority by conducting the
arbitration hearing in MR Drywall’s absence and determined that
this failure to appear did not constitute the requisite “forceful
(R&R at 16-17 (internal quotation marks and citation
Judge Locke also found that Plaintiffs properly served
notice of arbitration, and the arbitrator considered the issues of
notice and Defendants’ absence in deciding to proceed with the
(R&R at 17-19.)
personally liable for the Arbitration Award.
(R&R at 19-24.)
Rodrigue’s status as the sole proprietor of MR Drywall in light of
his testimony that he was the sole owner, shareholder, officer,
and director of MR Drywall, he was responsible for MR Drywall’s
“labor relations,” and he signed the CBA.
(R&R at 20.)
Locke also determined that Defendants failed to establish that MR
Drywall should be treated as a de facto corporation based on the
absence of evidence “suggesting that Rodrigue ever attempted to
achieve legal corporate status for MR Drywall.”
(R&R at 21.)
Additionally, Judge Locke rejected Defendants’ argument that the
status because they previously sued MR Drywall as a corporation,
and concluded that “MR Drywall’s de facto corporate status is not
a factual assertion subject to the doctrine of admission. . .
[r]ather it is a statement of law.”
laches, and waiver.
(R&R at 22.)
(R&R at 23-24.)
Finally, Judge Locke recommended that Plaintiffs be
granted leave to file a motion for attorneys’ fees and costs. (R&R
Judge Locke found that the terms of the Collection Policy
as well as MR Drywall’s refusal to comply with the Arbitration
Award provide a basis for an award of fees.
(R&R at 24-26.)
III. Defendants’ Objections
On February 8, 2017, Defendants filed Objections to the
(See, Defs.’ Obj.)
Defendants argue that Judge Locke erred
in recommending that the Arbitration Award be confirmed because
arbitration and/or agreed to be bound by the subject arbitration
(Defs.’ Obj. at 7.)
Particularly, Defendants allege
that: (1) there are issues of fact as to “what the parties agreed
upon regarding the terms of the CBA,” (2) there is no evidence
Collection Policy was in existence during the relevant time period,
(3) Judge Locke’s conclusion that the Collection Policy applied
speculation, and (4) the Collection Policy is inconsistent with
the CBA because the CBA does not contain any arbitration, choice
of forum, or attorneys’ fees provisions.
(Defs.’ Obj. at 7-10,
interpretation of the Collection Policy rendered it illusory and
unenforceable insofar as he “erroneously assumed that Plaintiffs
had the unrestrained discretion to create any Collection Policy
they desired, regardless of whether or not the terms changed the
CBA” and failed to consider the lack of any evidence demonstrating
that Defendants had notice of the arbitration provision.
Obj. at 10-12.) Defendants also argue that Judge Locke “speculated
that Defendant(s) consented to the arbitration clause by making
benefit contributions and submitting to the audit” notwithstanding
the absence of any evidence that Defendants made contributions to
the Funds after the CBA expired in 2011.
(Defs.’ Obj. at 14-17.)
Additionally, Defendants aver that the arbitrator was
not authorized to conduct the arbitration in Defendants’ absence,
(Defs.’ Obj. at 12-13), and the Audit and arbitration proceeding
were deficient, (Defs.’ Obj. at 17-19).
recommending that Rodrigue be held personally liable for the
Arbitration Award because: (1) Rodrigue was deprived of due process
based on Plaintiffs’ failure to serve him with notice of the
arbitration, (Defs.’ Obj. at 5-7); (2) MR Drywall was a de facto
corporation, (Defs.’ Obj. at 19-22); (3) Plaintiffs have made
judicial admissions that MR Drywall was a corporation in this
matter and prior proceedings, (Defs.’ Obj. at 19-22); and (4)
estoppel, laches, and waiver, (Defs.’ Obj. at 23-24).
Defendants allege that Judge Locke erred by failing to
determining that Plaintiffs were entitled to request counsel fees
(Defs.’ Obj. at 24-25.)
Finally, Defendants argue
recommendations against defendants C.R. Drywall Co., Inc. and C.R.
Drywall Residential, Inc., as Plaintiffs’ motion did not address
their claims against these defendants.
(Defs.’ Obj. at 4-5.)
arguing that the Court should adopt Judge Locke’s well-reasoned
(See generally Pls.’ Resp., Docket Entry 74.)
“When evaluating the report and recommendation of a
magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are not
Walker v. Vaughan, 216 F. Supp. 2d 290, 291
A party may serve and file specific, written
See FED. R. CIV. P. 72(b)(2).
Upon receiving any
timely objections to the magistrate judge's recommendation, the
district court “may accept, reject, or modify, in whole or in part,
the findings or recommendations made by the magistrate judge.”
28 U.S.C. § 636(b)(1)(C); see also FED. R. CIV. P. 72(b)(3).
party that objects to a report and recommendation must point out
the specific portions of the report and recommendation to which
they are objecting.
See Barratt v. Joie, No. 96-CV-0324, 2002 WL
335014, at *1 (S.D.N.Y. Mar. 4, 2002).
When a party raises an objection to a magistrate judge's
report, the Court must conduct a de novo review of any contested
sections of the report.
See Pizarro v. Bartlett, 776 F. Supp.
815, 817 (S.D.N.Y. 1991).
However, where a party “makes only
Recommendation only for clear error.”
Walker, 216 F. Supp. 2d at
291 (internal quotation marks and citation omitted).
Preliminarily, the Court notes that much of Defendants’
Defendants’ arguments that (1) the arbitrator was not authorized
to conduct the arbitration in Defendants’ absence and Defendants’
non-appearance constituted an objection, and (2) the underlying
recitations of their underlying opposition brief.
Obj. at 12-13 with Defs.’ Br. at 3-4 and Defs.’ Obj. at 17-19 with
Defs.’ Br. at 7-9.)
Similarly, Defendants’ argument that Rodrigue
should not be held personally liable for the Arbitration Award
based on due process violations in connection with Plaintiffs’
failure to serve Rodrigue with notice of arbitration, as well as
their argument that the defenses of estoppel, laches, and waiver
are applicable, also constitute reiterations of their underlying
(Compare Defs.’ Obj. at 5-7 with Defs.’ Br. at 10; and
Defs.’ Obj. at 23-24 with Defs.’ Br. at 13-14.)
The Court has
reviewed the portions of the R&R addressing these arguments for
clear error and finds none.
To the extent Defendants argue--without citation to any
legal authority--that this matter differs from the cases cited by
Judge Locke regarding notice because “[u]nlike in the cases relied
upon by the Magistrate Judge, the notice [of arbitration] was not
even addressed to Mr. Rodrigue,” the Court finds that this factual
distinction does not render the case law set forth in the R&R
(See Defs.’ Obj. at 6; R&R at 17-19.)
As noted by
Judge Locke, notice of arbitration “need only be ‘reasonably
calculated to inform [the party] of the proceeding and provide[ ]
[the party] an opportunity to be heard,” and the record establishes
that Plaintiffs mailed a Notice of Intent to Arbitrate to MR
Drywall’s address, 11 Drywall Lane, Voorheesville, New York, and
a return receipt was signed “Rodrigue.”
(R&R at 18-19 (citing
Yukos Capital S.A.R.L. v. Samaraneflegaz, 963 F. Supp. 2d 289, 297
(S.D.N.Y. 2013), aff’d, 592 F. App’x 8 (2d Cir. 2014) (internal
quotation marks and citation omitted; alteration in original));
Craven Supp. Decl., Docket Entry 70, ¶¶ 6-7, Ex. B; Rodrigue’s
Dep. Tr., Dickerson Decl. Ex. D, Docket Entry 61-4, at 23:3-9.)
Drywall’s address, and at the time of his deposition, he had owned
the building at 11 Drywall Lane for twenty years.
Defendants’ submissions reveals that Rodrigue does not allege that
he did not receive notice of the arbitration.
Defs.’ Obj.; Rodrigue’s Aff., Docket Entry 65-1; Rodrigue’s Suppl.
Aff., Docket Entry 65-2.)
The Court will conduct a de novo review of Defendants’
Objections Regarding the Confirmation of the Award
“[C]onfirmation of an arbitration award is a summary
proceeding that merely makes what is already a final arbitration
award a judgment of the court, and the court must grant the award
unless the award is vacated, modified, or corrected.”
& Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006)
(internal quotation marks and citation omitted).
an award requires “[o]nly a barely colorable justification,” and
the Court must confirm the arbitration award where “there is no
indication that the arbitration decision was made arbitrarily,
exceeded the arbitrator’s jurisdiction, or otherwise was contrary
Trustees of Empire State Carpenters Annuity v. P&B
Specialties Inc., No. 15-CV-2053, 2015 WL 9943252, at *4, report
and recommendation adopted, 2016 WL 373966 (E.D.N.Y. Dec. 15, 2015)
(internal quotation marks and citation omitted).
As previously noted, Defendants argue that Judge Locke
erred in concluding that the parties agreed to arbitrate their
dispute because: (1) there are issues of fact as to whether the
parties agreed on the terms of the CBA, (2) there are issues of
fact as to whether Defendants consented to arbitration, (3) the
Collection Policy is inconsistent with the CBA, and (4) Judge Locke
erroneously assumed that Plaintiffs could unilaterally create a
Collection Policy and failed to consider the absence of any
evidence that Defendants had notice of the arbitration provision
set forth in the Collection Policy.
(See generally Defs.’ Obj. at
The Court finds these objections to be without merit.
First, the Court concurs with Judge Locke that MR Drywall
was bound by the CBA.
Defendants allege that Plaintiffs have
relied on an unsigned copy of the CBA and have not proffered the
determining that MR Drywall was a signatory to the CBA.
Obj. at 14-15.)
R&R at 14-15),
However, as set forth more fully in the R&R, (see
MR Drywall executed Memoranda regarding collective
bargaining agreements with the Union applicable to the time periods
of June 1, 1999 through May 31, 2002, and June 1, 2002, through
May 31, 2006.
(Craven Decl. Exs. B and C.)
On May 31, 2006, MR
Drywall executed the 2006 Memorandum of Agreement, which states
that “[a]ll terms and conditions of the Region 3 Master Agreement,
June 1, 2002-May 31, 2006 not modified below shall remain in full
force and effect.” (2006 Mem. of Agmt., Craven Decl. Ex. D, Docket
Plaintiffs have submitted an unsigned copy of the
CBA, which governs the period from June 1, 2006 through May 31,
The fact that Plaintiffs rely upon an unsigned copy of
the CBA is of no moment given MR Drywall’s execution of successive
Memoranda with respect to prior collective bargaining agreements,
as well as the 2006 Memorandum of Agreement with respect to the
(Rodrigue’s Dep. Tr. 70:3-14 and Ex. 3, at 75 (testifying that he
saw the CBA “once, I think, when I signed it for M.R. Drywall”).)
To the extent Defendants appear to argue that the 2006 Memorandum
of Agreement constitutes an “overlapping” collective bargaining
bargaining agreement to be incorporated into the CBA for 2006
Further, as noted by Judge Locke, the CBA provides that
it shall remain in effect until May 31, 2011, and “shall continue
thereafter from year to year unless either party notifies the other
party in writing . . . that either party desires to modify this
(R&R at 15; CBA, Article 41, at 18.)
failed to proffer any evidence that MR Drywall, the Union, or the
signatory employer association, sought to modify the CBA.
absence of any such evidence, it is not “speculat[ive]” to conclude
that “the CBA was in force and in place during the relevant time
period at issue during the arbitration[.]”
(Defs.’ Obj. at 8-9;
R&R at 15.)
deposition testimony does not establish that he agreed to the CBA
is similarly unpersuasive.
(Defs.’ Obj. at 15-16.)
assertion that Plaintiffs’ counsel “outlandish[ly]” asked Rodrigue
quick questions to prevent him from reviewing the CBA is not
supported by a review of the deposition transcript.
During Rodrigue’s deposition, Plaintiffs’ counsel
asked if Rodrigue “had a chance to review Plaintiffs’ Exhibit 3
[the CBA].” (Rodrigue’s Dep. Tr. 70:3-4.) When Rodrigue responded
no, Plaintiffs’ counsel asked if Rodrigue just “review[ed] this
(Rodrigue’s Dep. Tr. 70:5-6.)
Such an exchange hardly
constitutes rapid fire questioning designed to disrupt Rodrigue’s
review of the document.
Moreover, while the Court acknowledges that counsel
disputed whether the CBA had been produced in discovery prior to
Rodrigue’s deposition, before he was presented with the CBA,
Rodrigue testified that he signed “union contracts” on behalf of
MR Drywall with a carpenter’s union.
(Rodrigue’s Dep. Tr. 66:17-
Additionally, with respect to the CBA, Rodrigue
testified as follows:
Q. Do you recognize this document?
A. I saw it once, I think, when I signed it
for M.R. Drywall; I never saw it again.
Did you ever try to terminate this
A. Not that I know of . . .
Q. Why did M.R. Drywall sign with the union?
A. To perform union work.
(Rodrigue’s Dep. Tr. 70:12-71:3.)
Rodrigue also testified that
MR Drywall was required to remit fringe benefit contributions
Rodrigue’s use of equivocal language and allegation that he did
not read the CBA, (see, e.g. Rodrigue’s Dep. Tr. 74:19-21), do not
alter his testimony that he signed the CBA and MR Drywall was
responsible for fringe contributions.
Second, as the CBA was in full force and effect at all
relevant times, Defendants’ argument that Judge Locke erred in
concluding that the parties agreed to arbitration is without merit.
(Defs.’ Obj. at 7-10.)
The CBA provides, with respect to fringe
benefits, that “[t]he employer shall be bound by and shall comply
with the agreements, declarations of trust, plans and/or rules,
policies and regulations of the applicable Funds so designated,
provided in each such case that such agreements, declarations of
trust, plans and/or rules, policies and regulations are not in
conflict or inconsistent with any provisions of th[e] [CBA].”
(CBA, Article 17, § 3, at 11.) As previously noted, the Collection
Policy sets forth an arbitration procedure in connection with the
collection of delinquent employer contributions.
Policy at 3-4.) Thus, as the CBA provides that employers are bound
by the Funds’ policies, MR Drywall is bound by the Collection
Policy and Defendants’ allegations that they did not sign or agree
to the Collection Policy and were not notified of the terms of the
Collection Policy are of no import.
(See Defs.’ Obj. at 7-8.)
Cf. Trustees of the Empire State Carpenters Annuity v. Bayview
Custom Constr. Corp., No. 15-CV-6574, 2016 WL 6892147, at *3
(E.D.N.Y. Nov. 22, 2016) (confirming the arbitration award where
“[t]he arbitrator’s award followed the terms of the CBA and
Collection Policy to the letter”); P&B Specialties, Inc., 2015 WL
bargaining agreement] and the Collection Policy, which allows for
the performance of an audit at the Funds’ request”).
also finds that the CBA’s failure to define the terms “agreements”
or “policies” is not probative as to the applicability of the
(See Defs.’ Obj. at 10.)
Further, the Court disagrees with Defendants’ contention
that Judge Locke “merely speculated that the March 2012 Collection
Policy applied retroactively to the parties’ dispute which arose
prior to this time.”
(Defs.’ Obj. at 8.)
As set forth above,
the CBA states that it continues from year to year absent written
notification of a desire to modify the CBA, and Defendants failed
to proffer evidence of any written request to modify the CBA. (CBA
It follows that the CBA remained in effect through 2012
and MR Drywall continued to be bound by the Funds’ agreements and
policies, particularly the Collection Policy.
(See CBA at 11.)
The parties’ dispute arose in connection with the Audit and while
the record does not indicate the date that Plaintiffs commenced
the Audit, Plaintiffs provided MR Drywall with the revised Audit
results on or about November 9, 2012.
(Audit Results, Dickerson
Decl. Ex. D, Docket Entry 61-4, at 123-32.)
Thus, the Collection
Policy was not applied retroactively.
As noted by Judge Locke, MR Drywall’s prior conduct in
making benefit contributions provides additional support for the
applicability of the Collection Policy.
(R&R at 15.)
Defendants note that “there is no evidence that Defendant(s) made
any such contributions after the CBA expired in 2011[,]” (Defs.’
Obj. at 16-17), Plaintiffs proffered a sampling of remittance
reports detailing MR Drywall’s contributions during 2009-2011,
(Tompuri Aff. Ex. A, Docket Entry 62-1), and MR Drywall submitted
to the Funds’ Audit of their payroll records for the period of
November 9, 2012, (see Audit Results). Cf. Trustees of Sheet Metal
Workers Int’l Ass’n Local No. 38 Vacation Fund v. Katonah Roofing,
Inc., Nos. 10-CV-1619, 11-CV-8185 2011 WL 9010113, at *4 (S.D.N.Y.
Sept. 4, 2011) (“courts in this Circuit, have held the following
behaviors established the defendant employer adopted the unsigned
CBA[:] signing a previous CBA; submission of remittance reports in
submission to audits by the funds; and payment of union wages”).
Third, the Court rejects Defendants’ argument that Judge
Locke “effectively determined” that Plaintiffs were authorized to
unilaterally create the arbitration provision, and interpreted the
Collection Policy in a manner that would render it “illusory and
(Defs.’ Obj. at 10-11.)
As noted by Judge Locke,
pursuant to the CBA, MR Drywall “agreed to be represented by
contracting and to be bound by their agreements with the Union.”
(R&R at 14 (citing CBA, Article 3, at 5).)
The Collection Policy
was executed by “authorized representatives (Trustees) from the
Union and from employers covered by the collective bargaining
agreements with the Union.”
(Craven Suppl. Decl. ¶ 5, at 10.)
representatives from both the Union and the associations signed
the Collection Policy at issue, it is applicable, and MR Drywall
is bound under its terms to submit to an arbitration regarding the
disputed contribution payments.”
(R&R at 14.)
Thus, Judge Locke did not determine that Plaintiffs “had
the unrestrained discretion to create any Collection Policy they
desired,” and the record does not support Defendants’ position
that Plaintiffs “unilaterally included the arbitration provision
in the Collection Policy and, in effect, changed the terms of the
alleged CBA without the Defendants’ consent.”
(Defs.’ Obj. at
employer trustee was authorized to bind MR Drywall in light of the
association representation of the employers bound by the CBA. (See
Defs.’ Obj. at 12; CBA, Article 3, § 3 at 6 (“[t]he Associations
shall be one bargaining unit for all Employers bound by this
unsupported argument that the absence of any provision regarding
arbitration, choice of forum, or attorneys’ fees in the CBA somehow
renders the Collection Policy “inconsistent or in conflict” with
(Defs.’ Obj. at 14.)
The CBA essentially incorporated
the Collection Policy by providing that the Funds’ policies and
regulations are binding on employers, (see R&R at 13), and the
inclusion of the arbitration provision in the Collection Policy
did not conflict with the terms of the CBA.
Locke’s recommendation that the Arbitration Award be confirmed are
Objections Regarding Rodrigue’s Personal Liability
As previously noted, Defendants argue that Judge Locke
erred in concluding that MR Drywall was not a de facto corporation.
Particularly, Defendants allege that Judge Locke (1) applied this
doctrine too narrowly by relying on the alleged absence of any
corporate status, and (2) incorrectly concluded that Plaintiffs’
treatment of MR Drywall as a corporation in this action and prior
lawsuits did not constitute informal judicial admissions.
Obj. at 19-23.)
The Court disagrees.
“‘Under very limited circumstances, courts may invoke
the de facto corporation doctrine where there exists (1) a law
under which the corporation might be organized, (2) an attempt to
organize the corporation and (3) an exercise of corporate powers
Hwang v. Grace Road Church (in New York), No. 14-
CV-7187, 2016 WL 1060247, at *8 (E.D.N.Y. Mar. 14, 2016) (quoting
In re Hausman, 13 N.Y.3d 408, 412, 921 N.E.2d 191, 193, 893
N.Y.S.2d 499 (N.Y. 2009)).
The second prong of this inquiry has
been narrowly construed and the alleged corporation must make a
incorporation prior to the exercise of corporate powers.”
(internal quotation marks and citation omitted).
See also Gelfman
Int’l Enters. v. Miami Sun Int’l Corp., No. 05-CV-3826, 2009 WL
2242331, at *6 (E.D.N.Y. Jul. 27, 2009) (“New York courts recognize
a business as a de facto corporation in cases where the business
inadvertently failed to meet the requirements of the law or was
operating with the formalities of a corporation and was attempting
to achieve legal status”).
But see J&J Sports Prods., Inc. v.
Tellez, No. 11-CV-2823, 2011 WL 6371521, at *2 (E.D.N.Y. Dec. 20,
2011) (holding that the entity was a de facto corporation where it
“continued to function as a bar and represented itself as a
corporation to the New York State Liquor Authority . . . ”).
Judge Locke properly concluded that there is no basis to
treat MR Drywall as a de facto corporation in the absence of any
evidence of an attempt to organize the entity as a corporation.
(R&R at 21-23.)
Defendants do not dispute Judge Locke’s finding
that the only iteration of MR Drywall to be formally incorporated
proclamation in 1997. (R&R at 21; see also Dickerson Decl., Docket
Entry 61, ¶¶ 2-3; Ex. A, Docket Entry 61-1.)
The record is bereft
of any evidence that any of the MR Drywall entities made the
slightest attempt to incorporate after M.R. Drywall Distributors,
In the absence of any allegations regarding
attempts to incorporate, the Court also concludes that MR Drywall
was not a de facto corporation.
See Gelfman, 2009 WL 2242331, at
*1, 6 (holding that the plaintiff, which forfeited its corporate
charter for failure to file a property return, was not a de facto
corporation where, inter alia, “there [wa]s no evidence that it
made efforts to remedy defects of incorporation in Maryland”).
Defendants’ reliance on L-Tec Elecs. Corp. v. Cougar
Elec. Org., Inc., 198 F.3d 85, 87 (2d Cir. 1999), is misplaced.
(See Defs.’ Obj. at 20, 22.)
In L-Tec, the plaintiff alleged that
the defendant-entity failed to pay for electronics.
F.3d at 86.
Certain deliveries were made while the defendant-
entity was temporarily dissolved for failure to pay franchise
taxes; however, the entity was reinstated less than three years
after its dissolution.
Id. at 86.
While the Second Circuit
affirmed the district court’s determination that “reincorporation
relieved the individual defendants of any personal liability on
the purchases from [the plaintiff],” id. at 87, again, as set forth
above, in the instant action, there is no evidence that M.R.
Drywall Distributors, Inc., was reinstated.
Defendants also argue that “unlike the cases relied upon
arbitration against the subject entity and now seek to obtain a
judgment in this proceeding based on those proceedings.”
arbitration against “MR Drywall Inc.” and seek to enforce the
resulting Arbitration Award against Rodrigue does not change the
Court’s analysis of whether MR Drywall is a de facto corporation.
finding that Rodrigue engaged in “knowingly deceptive conduct” is
supported by the record. (See Defs.’ Obj. at 23 (“[t]he Magistrate
Judge’s findings--that Defendant(s) misle[d] Plaintiffs or that
Plaintiffs did not know about MR Drywall’s corporate status--are
not supported by the record”); R&R at 23.)
Again, the only MR
Drywall entity to be incorporated, MR Drywall Distributors, Inc.,
was dissolved in 1997, yet Rodrigue executed a Memorandum of
Understanding as an officer of “M.R. Drywall Inc.” on July 2, 1999,
and signed the 2006 Memorandum of Agreement on behalf of “M.R.
Drywall Distributors, Inc.”
(See Dickerson Decl. Exs. A and B,
Docket Entries 61-1 and 61-2; Craven Decl. Exs. B and D, Docket
Entries 60-2 and 60-4.)
Additionally, Plaintiffs’ prior lawsuit against “‘MR
Drywall Services, LLC’, which according to [Plaintiffs] was a/k/a
‘M.R. Drywall, Inc.,’” (see Quinn Aff., Docket Entry 65-3, ¶ 5),
and commencement of this action against “MR Drywall Inc.” do not
constitute judicial admissions.
“An assertion of fact in a
pleading is a judicial admission by which [a party] normally is
bound throughout the course of the proceeding.”
Incandela, --- F. Supp. 3d ----, 2016 WL 7406442, at *7 (E.D.N.Y.
2016) (internal quotation marks and citation omitted; alteration
See also Craft v. Covey, No. 10-CV-0246, 2011 WL
923487, at *4 (D. Vt. Mar. 4, 2011) (“[i]t is well-established
that judicial admissions are limited to statements of fact, and do
conclusions”); Ancile Inv. Co. Ltd. v. Archer Daniels Midland Co.,
No. 08-CV-9492, 2011 WL 3516128, at *2 (S.D.N.Y. Aug. 3, 2011)
(“the law is clear that judicial admissions are ‘statements of
fact rather than legal arguments made to a court’”) (quoting N.Y.
State Nat’l Org. for Women v. Terry, 159 F.3d 86, 97 n.7 (2d Cir.
Accordingly, as noted by Judge Locke, whether MR Drywall
is a de facto corporation is a question of law, not a statement of
(R&R at 22.)
Thus, the commencement of this action and
prior actions against “MR Drywall Inc.” do not constitute judicial
admissions regarding MR Drywall’s corporate status.
Moreover, while the Second Circuit has not addressed
whether judicial admissions may be binding in subsequent actions,
“the general rule seems to be that a judicial admission only binds
the party that makes it in the action in which it is made, not in
separate and subsequent cases.”
Hausler v. JP Morgan Chase Bank,
N.A., 127 F. Supp. 3d 17, 37 (S.D.N.Y. 2015) (internal quotation
marks and citations omitted).
Thus, even if the Court were to
construe Plaintiffs’ filing of a prior lawsuit against MR Drywall
Inc. as a judicial admission regarding MR Drywall’s corporate
status, it would not be binding in this action and would only be
considered as evidence.
Indeed, while Defendants cite to
Matter of Union Indem. Ins. Co. of N.Y. v. Am. Centennial Ins.
Co., 89 N.Y.2d 94, 674 N.E.2d 313, 651 N.Y.S.2d 383 (N.Y. 1996),
that case expressly states that a formal judicial admissions in a
prior action become informal judicial admissions in a subsequent
action and are “not conclusive, though they are evidence of the
fact or facts admitted.”
Id. at 103 (internal quotation marks and
Rodrigue’s status as sole proprietor of MR Drywall, which renders
him personally liable for MR Drywall’s debts.
(R&R at 19-20.)
See Trustees of the Mason Tenders, Dist. Council Welfare Fund,
Pension Fund, Annuity Fund and Training Program v. Faulkner, 484
It is undisputed that MR Drywall was not
incorporated during the relevant time period and, as noted by Judge
Locke, Rodrigue testified, inter alia, that he was the sole owner,
shareholder, officer, and director of MR Drywall, as well as the
sole supervisor and manager.
(R&R at 20.)
In a footnote, Defendants state that “in this action,
the plaintiffs have alleged that ‘Terry Bailey owns and manages MR
Drywall’” and argue that this allegation is an “official judicial
(Defs.’ Obj. at 21, n.3.)
allegation does not constitute a judicial admission as it is not
[Plaintiffs’] knowledge and control.”
Hausler, 127 F. Supp. 3d at
37 (internal quotation marks and citation omitted).
relieve the parties from the consequences of judicial admissions
in the appropriate circumstances,” such as where “accepting the
admission would be manifestly unjust or if the evidence contrary
to the stipulation is substantial.”
See TR 39th St. Land Corp. v.
Salsa Distribution USA, LLC, No. 11-CV-7193, 2015 WL 1499173, at
*5 (S.D.N.Y. Mar. 25, 2015) (internal quotation marks and citation
At his deposition, Rodrigue testified as follows:
Who owns M.R. Drywall?
And that’s you; is that correct?
Are there any other owners?
At any point, were there any other owners?
responses also confirm that he was the only current or former
(Dickerson Decl. Ex. C, Docket Entry 61-3, at 1-2.)
Thus, even if
Plaintiffs’ allegation regarding Terry Bailey--which appears in
the Complaint, (Compl. ¶ 12)--constitutes a judicial admission,
the Court exercises its discretion to relieve Plaintiffs from the
consequences of that admission in light of the substantial evidence
that Rodrigue was the sole owner of MR Drywall.
Locke’s recommendation that Rodrigue be held personally liable for
the Arbitration Award are OVERRULED.
III. Objections Regarding CR Drywall
Defendants object to the R&R to the extent it made any
findings or recommendations against C.R. Drywall Residential, Inc.
and C.R. Drywall Co., Inc. (collectively, “CR Drywall”).
Obj. at 4.)
Defendants allege that in collectively referring to
all defendants as “Defendant” or “Rodrigue,” Judge Locke made vague
and ambiguous findings even though Plaintiffs’ motion did not seek
any relief against CR Drywall.
(Defs.’ Obj. at 4-5.)
concede that summary judgment should not be entered against CR
(Pls.’ Resp. at 23.)
It is undisputed that Plaintiffs did not move for summary
judgment against CR Drywall.
However, Judge Locke did not make
As set forth above, Judge Locke recommended that the
Arbitration Award be confirmed, Rodrigue be held personally liable
for MR Drywall’s failure to comply with the Arbitration Award, and
Plaintiffs be granted leave to move for attorneys’ fees and costs.
(R&R at 19, 24-25.)
following definition for “Defendant”: “Defendant Claude Rodrigue
doing business as MR Drywall Inc; C.R. Drywall Co., Inc; and C.R.
Drywall Residential, Inc. (‘Defendant’ or ‘Rodrigue’)”.
However, the Court finds that Judge Locke clearly indicated
that his findings with respect to confirmation of the Arbitration
Award and Rodrigue’s personal liability were against MR Drywall
Indeed, the sole reference to CR Drywall in the
R&R is the previously noted definition.
objection is OVERRULED.
However, in the interest of additional
clarity, the Court reaffirms that Judge Locke’s findings and
recommendations set forth in the R&R are limited to MR Drywall and
Additionally, Plaintiffs are directed to advise the
Court whether they intend to proceed with their claims against CR
Drywall within fourteen (14) days of the date of this Memorandum
Objections Regarding Attorneys’ Fees and Costs
Defendants argue that Judge Locke erred in recommending
that Plaintiffs be granted leave to move for attorneys’ fees and
(Defs.’ Obj. at 24-25.)
Defendants aver that Plaintiffs’
request for attorneys’ fees is derived from the Collection Policy
and as Rodrigue was not provided notice of the terms of the
Collection Policy and did not agree to those terms, “the request
unilaterally imposed against a party.”
(Defs.’ Obj. at 25.)
Alternatively, Defendants allege that they possessed a “colorable
argument” for failing to comply with the Arbitration Award, namely,
that MR Drywall went out of business and the Arbitration Award was
not against MR Drywall’s co-defendants.
(Defs.’ Obj. at 25.)
As set forth in great detail above, the Collection Policy
is binding on MR Drywall and expressly provides that the Funds are
connection with their collection efforts.
§§ 1.1(C)(4); 6.2.)
(Collection Policy at
Additionally, while attorneys’ fees are
generally not recoverable in the absence of statutory authority,
“[i]n the context of confirmation proceedings . . . ‘when a
challenger refuses to abide by an arbitrator’s decision without
Trustees of the N.Y. City Dist. Council of Carpenters
Pension Fund v. Coastal Envtl. Grp., Inc., No. 16-CV-6004, 2016 WL
7335672, at *3 (S.D.N.Y. Dec. 16, 2016) (quoting Int’l Chem.
Workers Union, Local No. 227 v. BASF Wyandotte Corp., 774 F.2d 43,
47 (2d Cir. 1985)).
The Court concurs with Judge Locke that MR
Drywall’s alleged “colorable basis” for failing to comply with the
Arbitration Award--that MR Drywall “went out of business” and
Plaintiffs did not commence the arbitration against Rodrigue--is
(R&R at 25-26; Defs.’ Obj. at 25.)
should not have been filed as part of this action and, thus, their
request for attorneys’ fees should be denied since “the ERISA claim
has delayed the resolution of the confirmation action[.]”
Obj. at 24.)
However, as noted by Plaintiffs, this argument
relates to the reasonableness of any claimed fees, not the basis
for an award of attorneys’ fees.
(See Pls.’ Resp. at 22-23.)
Defendants will have the opportunity to posit their argument
regarding Plaintiffs’ ERISA claim in connection with Plaintiffs’
motion for attorneys’ fees and costs.
Locke’s recommendation that Plaintiffs be granted leave to move
for attorneys’ fees are OVERRULED.
For the foregoing reasons, Judge Locke’s R&R (Docket
Entry 72) is ADOPTED in its entirety and Plaintiffs’ motion for
summary judgment (Docket Entry 58) is GRANTED.
granted leave to file a motion for attorneys’ fees and costs within
Plaintiffs are further directed to advise the Court whether they
intend to proceed with their claims against C.R. Drywall Co., Inc.
and C.R. Drywall Residential, Inc., within fourteen (14) days of
the date of this Memorandum and Order.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
29 , 2017
Central Islip, New York
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?