Gesualdi et al v. Scara-Mix, Inc.,

Filing 67

MEMORANDUM & ORDER ADOPTING REPORT AND RECOMMENDATION; Judge Tomlinson's R&R (Docket Entry 64) is ADOPTED in its entirety. Plaintiffs' motion for partial summary judgment (Docket Entry 51) is GRANTED IN PART and DENIED IN PART. Specifical ly, Defendant is directed to make an accelerated payment of the entire withdrawal liability amount allegedly due based on its default within twenty (20) days of the date of this Memorandum and Order, subject to a final determination by the arbitrator . Further, the determination on Plaintiffs' request for damages and attorneys' fees and costs will be held in abeyance pending the submission of a separate motion. Plaintiffs shall file such motion within thirty (30) days of the date of this Memorandum and Order. So Ordered by Judge Joanna Seybert on 3/10/2017. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
THOMAS GESUALDI, LOUIS BISIGNANO,
ANTHONY D’AQUILA, MICHAEL O’TOOLE,
BENNY UMBRA, JOSEPH A. FERRARA, SR.,
FRANK H. FINKEL, MARC HERBST, DENISE
RICHARDSON, and THOMAS F. CORBETT, as
Trustees and fiduciaries of the Local
282 Pension Fund,

MEMORANDUM & ORDER
14-CV-0765(JS)(AKT)

Plaintiffs,
-againstSCARA-MIX, INC.,
Defendant.
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APPEARANCES
For Plaintiffs:
Jonathan Michael Bardavid, Esq.
Christopher A. Smith, Esq.
Trivella & Forte, LLP
1311 Mamaroneck Avenue, Suite 170
White Plains, NY 10605
For Defendant:

Benjamin A. Karfunkel, Esq.
David William New, Esq.
Herbert New & David New, P.C.
1129 Bloomfield Avenue, Suite 215
West Caldwell, NJ 07006

SEYBERT, District Judge:
Pending before the Court are: (1) Thomas Gesualdi, Louis
Bisignano, Anthony D’ Aquila, Michael O’Toole, Benny Umbra, Joseph
A. Ferrara, Sr., Frank H. Finkel, Marc Herbst, Denise Richardson
and Thomas F. Corbett’s (collectively “Plaintiffs”) motion for
partial summary judgment (Pls.’ Mot., Docket Entry 51) and (2)
Magistrate Judge A. Kathleen Tomlinson’s Report and Recommendation
(“R&R”) (R&R, Docket Entry 64) recommending that this Court grant

Plaintiffs’ motion in part and deny it in part.

Specifically,

Judge Tomlinson recommends that the Court require Defendant ScaraMix,

Inc.

(“Defendant”)

to

“make

an

accelerated

withdrawal

liability payment consisting of the entire withdrawal liability
amount alleged to be due based upon its default . . . subject to
any

ultimate

finding

reasonableness

of

determination”

and

Plaintiffs’

by

the

arbitrator

Plaintiffs’
hold

damages,

in

default

abeyance

attorneys’

submission of a separate motion.”

as

fees

and

the
and

to

the

overall

acceleration

“determination
costs . .

(R&R at 46.)

of

. pending

For the following

reasons, the Court ADOPTS Judge Tomlinson’s R&R in its entirety.
BACKGROUND
On

February

4,

2014,

Plaintiffs,

as

Trustees

and

fiduciaries of the Local 282 Pension Fund (the “Fund”), commenced
this

action

to

collect

withdrawal

liability

from

Defendant

pursuant to the Employee Retirement Income Security Act of 1974
(“ERISA”) as amended by the Multiemployer Pension Plan Amendments
Act of 1980, 29 U.S.C. §§ 1381, et. seq. (“MPPAA”).
Docket Entry 1, ¶ 1.)

(Compl.,

Plaintiffs also seek interest, liquidated

damages, and attorneys’ fees and costs in accordance with Sections
502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145, and Section 301
of the Labor-Management Relations Act of 1947 (“LMRA”), 29 U.S.C.
§ 185.

(Compl. ¶ 1.)

2

Defendant

was

a

party

to

a

Collective

Bargaining

Agreement (the “CBA”) with Building Materials Teamsters Local 282
(the “Union”) which required that Defendant make contributions to
the Fund.

(Compl. ¶¶ 10-11.)

In July 2012, Defendant ceased its

contributions and withdrew from the Fund.
Subsequently,

the

Fund

demanded

(Compl. ¶¶ 13, 15.)

payment

of

Defendant’s

“proportionate share of the . . . Fund’s unfunded vested benefits,”
known as withdrawal liability, and provided Defendant with a
payment schedule.

(Compl. ¶¶ 16-17.)

Defendant failed to make

the first scheduled payment, and Plaintiffs notified Defendant
that “failure to cure the default within sixty (60) days would
result in the acceleration of the entire amount of withdrawal
liability.”

(Compl. ¶ 18.)

Thereafter, Defendant filed a demand

for arbitration disputing the imposition of withdrawal liability.
(Compl. ¶ 19.)

Plaintiffs allege that Defendant has an obligation

to make payments while the arbitration is pending and has not
complied, entitling them to accelerate the payments.

(Compl.

¶¶ 20-23.)
On May 6, 2016, Plaintiffs filed a partial motion for
summary

judgment

requesting

that

the

Court

“accelerate

the

$3,677,184.00 withdrawal liability balance and enter judgment
requiring Defendant to immediately pay th[e] balance” and award 29
U.S.C. § 1132 damages, including liquidated damages, attorneys’
fees, costs, and disbursements.

(Pls.’ Br., Docket Entry 51-14,
3

at 1.)

On June 14, 2016, Defendant opposed the motion.

Br., Docket Entry 54.)

(Defs.’

Plaintiffs filed their reply on June 28,

2016, and Defendants filed a sur-reply on July 14, 2016.

(Pls.’

Reply, Docket Entry 57; Def.’s Sur-Reply, Docket Entry 62.)

On

October 13, 2016, the undersigned referred the motion to Judge
Tomlinson for a Report and Recommendation on whether the motion
should be granted, and if necessary, to determine the appropriate
amount of damages, costs and/or fees to be awarded.

(Referral

Order, Docket Entry 63.)
A.

The R&R
On February 2, 2017, Judge Tomlinson issued her R&R

recommending that:
Plaintiffs’
partial
motion
for
summary
judgment be GRANTED, in part, and DENIED, in
part as follows: (1) Defendant be required to
make an accelerated withdrawal liability
payment consisting of the entire withdrawal
liability amount alleged to be due based upon
its
default,
pursuant
to
29
U.S.C.
1399(c)(5)(B) and the relevant plan rules, and
be subject to an ultimate finding by the
arbitrator as to the overall reasonableness of
Plaintiffs’
default
and
acceleration
determination; and (2) a determination of
Plaintiffs’ damages, attorney’s fees and costs
be held in abeyance pending submission of a
separate motion by Plaintiffs addressing these
issues and including proper substantiation to
support the relief sought in the motion.
(R&R at 46.)
As a preliminary matter, Judge Tomlinson declined to
adjudicate the underlying merits of this dispute—-specifically,
4

whether Defendant is in default within the meaning of the statute
and whether Plaintiff properly accelerated withdrawal liability
payments—-because ERISA requires that the parties arbitrate such
(R&R at 23.)

disputes.1
parties

dispute

certain

She found that particularly when the
facts

related

to

the

imposition

withdrawal liability, the dispute must be arbitrated.
21.)

of

(R&R at

Thus, she determined that the “narrow issue the Court must

resolve is whether Plaintiffs have a statutory and regulatory right
to effectively demand, on an interim basis, the entire withdrawal
liability payment pending the arbitrator’s final decision on the
merits.”

(R&R at 24.)

After examining the statutory language,

the purpose of the applicable provisions and the relevant case
law, Judge Tomlinson concluded that a plan was empowered to find
an employer in default and accelerate payment of the full amount
of withdrawal liability. (R&R at 32.) With regard to the specific
circumstances in this case, Judge Tomlinson analyzed the plan rules
and held that there was a basis for finding Defendant in default
and, as a result, Plaintiffs were entitled to accelerate payment.
(R&R at 35-36.)

She found that a letter indicating that Defendant

was insolvent constituted a reasonable basis for finding Defendant
in

default

pursuant

to

the

plan

rules.

(R&R

at

36-38.)

Initially, Judge Tomlinson analyzed Defendants’ argument that
the motion was improper because a claim for acceleration of
withdrawal liability does not appear in the Complaint. (R&R 1619.) Judge Tomlinson rejected that argument. (R&R at 18-19.)
1

5

Accordingly, she recommends that Defendant be required to make an
accelerated payment of the entire withdrawal liability amount
allegedly

due

based

on

its

default,

subject

to

a

final

determination by the arbitrator regarding the reasonableness of
Plaintiffs’ determinations.

(R&R at 42.)

As to damages, Judge Tomlinson concluded that, although
Plaintiffs

provided

adequate

documentation

related

to

the

calculation of withdrawal liability, Plaintiffs failed to prove
their entitlement to interest, liquidated damages, and attorneys’
fees and costs with sufficient detail.

(R&R at 43-45.)

She

recommends that a determination on Plaintiffs’ request for damages
and attorneys’ fees and costs be held in abeyance pending the
submission of a separate motion.

(R&R at 46.)

DISCUSSION
In reviewing an R&R, a district court “may accept,
reject,

or

modify,

recommendations

made

in
by

whole
the

or

in

part,

magistrate

the

judge.”

findings
28

and

U.S.C.

§ 636(b)(1)(C). If no timely objections have been made, the “court
need only satisfy itself that there is no clear error on the face
of the record.”

Urena v. New York, 160 F. Supp. 2d 606, 609-10

(S.D.N.Y. 2001) (internal quotation marks and citation omitted).
Objections were due within fourteen (14) days of service
of the R&R.

The time for filing objections has expired, and no

6

party has objected.

Accordingly, all objections are hereby deemed

to have been waived.
Upon careful review and consideration, the Court finds
Judge Tomlinson’s R&R to be comprehensive, well-reasoned, and free
of clear error, and it ADOPTS the R&R in its entirety.
CONCLUSION
Judge Tomlinson’s R&R (Docket Entry 64) is ADOPTED in
its entirety.

Plaintiffs’ motion for partial summary judgment

(Docket

51)

Entry

is

GRANTED

IN

PART

and

DENIED

IN

PART.

Specifically, Defendant is directed to make an accelerated payment
of the entire withdrawal liability amount allegedly due based on
its default within twenty (20) days of the date of this Memorandum
and Order, subject to a final determination by the arbitrator.
Further, the determination on Plaintiffs’ request for damages and
attorneys’ fees and costs will be held in abeyance pending the
submission of a separate motion. Plaintiffs shall file such motion
within thirty (30) days of the date of this Memorandum and Order.

SO ORDERED.

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

March
10 , 2017
Central Islip, New York

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