Gesualdi et al v. Scara-Mix, Inc.,
MEMORANDUM AND ORDER granting 70 Motion for Partial Summary Judgment; denying 73 Motion for Writ; denying 86 Motion to Dismiss for Lack of Jurisdiction; For the foregoing reasons, Defendant's motion to dismiss (Docket Entry 86) is D ENIED, Plaintiffs' motion seeking damages (Docket Entry 70) is GRANTED, and Plaintiffs' motion for a writ of attachment (Docket Entry 73) is DENIED. The Clerk of the Court is directed to enter judgment in favor of Plaintiffs as set forth herein. So Ordered by Judge Joanna Seybert on 11/17/2017. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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
Arthur Joseph Muller, Esq.
Jonathan Michael Bardavid, Esq.
Christopher A. Smith, Esq.
Trivella & Forte, LLP
1311 Mamaroneck Avenue, Suite 170
White Plains, NY 10605
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 seeking liquidated damages, fees, and
costs (Pls.’ Damages Mot., Docket Entry 70); (2) Plaintiffs’ motion
for a writ of attachment (Pls.’ Attach. Mot., Docket Entry 73);
and (3) Defendant Scara-Mix, Inc.’s (“Defendant” or “Scara-Mix”)
motion to dismiss for lack of subject matter jurisdiction (Def.’s
Mot., Docket Entry 86).
For the following reasons, Defendant’s
motion to dismiss is DENIED, Plaintiffs’ motion seeking damages is
GRANTED, and Plaintiffs’ motion for a writ of attachment is DENIED.
procedural history of this matter, which are detailed in Magistrate
Judge A. Kathleen Tomlinson’s Report and Recommendation dated
February 7, 2017 (the “R&R,” Docket Entry 64) and this Court’s
Order dated March 10, 2017, Gesualdi v. Scara-Mix, Inc., No. 14CV-0765, 2017 WL 945090 (E.D.N.Y. Mar. 10, 2017).
fiduciaries of the Local 282 Pension Fund (the “Fund”), commenced
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”).
8, ¶ 1.)
(Am. Compl., Docket Entry
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.)
Agreement (the “CBA”) with Building Materials Teamsters Local 282
(the “Union”), which required that Defendant make contributions to
the Fund on behalf of its covered employees.
(Am. Compl. ¶¶ 10-
In addition to the CBA, Defendant and the Union entered into
a trust agreement (the “Trust Agreement”), the terms of which were
incorporated into the CBA.
(CBA, Smith Decl. Ex. A, Docket Entry
51-3; Trust Agmt., Smith Decl. Ex. B, Docket Entry 51-4.)
2012, Defendant ceased its contributions and withdrew from the
(Am. Compl. ¶¶ 13, 15.)
On July 1, 2013, the Fund demanded
payment of Defendant’s “proportionate share of the . . . Fund’s
unfunded vested benefits,” known as withdrawal liability, which it
calculated as $3,677,184.00.
(Am. Compl. ¶¶ 16-17.)
In the same
letter, the Fund provided Defendant with a payment schedule under
seven . . . consecutive monthly installments of . . . $52,617.81
of . . . $14,920.35.”
(Am. Compl. ¶ 17.)
Defendant failed to make the first scheduled payment on
August 1, 2013, 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.)
By letter dated August 14, 2013, the President of
Scara-Mix informed the Fund that “Scara Mix, Inc. ceased all
operations in or about July 2012 and [was] insolvent” (the “August
(Aug. 2013 Letter, Karfunkel Decl., Ex. E, Docket
The August 2013 Letter further stated that Scara-
Mix “ha[d] no assets with which to satisfy any of the claims being
made by the Funds for alleged contribution deficiencies.”
2013 Letter.) Thereafter, Defendant filed a demand for arbitration
disputing the imposition of withdrawal liability.
Plaintiffs maintain that, notwithstanding the ongoing
(Am. Compl. ¶¶ 20-23.)
On May 6, 2016, Plaintiffs filed a motion for partial
$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.
Entry 51-14, at 1.)
(Pls.’ First Mot. Br., Docket
On October 13, 2016, the undersigned referred
the motion to Judge Tomlinson for a Report and Recommendation on
determine the appropriate amount of damages, costs, and/or fees to
(Referral Order, Docket Entry 63.)
On February 7, 2017, Judge Tomlinson issued her R&R and
recommended that the Court grant Plaintiffs’ motion for partial
summary judgment in part and deny it in part.
(R&R at 46.)
Specifically, she recommended that the Court order Defendant to
pay the entire amount of outstanding withdrawal liability on an
interim basis pursuant to 29 U.S.C. § 1399(c)(5)(B) and the
relevant plan rules.
(R&R at 46.)
However, she was careful to
point out that the ultimate determinations on the default and
acceleration issues were within the purview of the arbitrator.
(R&R at 46.)
Additionally, because Plaintiffs failed to submit
documentation to support their requests for damages, fees, and
costs, she recommended that the Court allow Plaintiffs to submit
a separate motion to address those issues.
(R&R at 46.)
particularly when the parties dispute certain facts related to the
(R&R at 21.)
As such, she focused on the “narrow
issue . . . [of] whether Plaintiffs have a statutory and regulatory
right to effectively demand, on an interim basis, the entire
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 while an arbitration is
(R&R at 32.)
With regard to the specific circumstances
in this case, Judge Tomlinson analyzed the plan rules and held
that the August 2013 Letter notifying the Fund that Defendant was
insolvent constituted a reasonable basis for finding Defendant in
default and, as a result, Plaintiffs were entitled to accelerate
(R&R at 35-38.)
On March 10, 2017, this Court adopted Judge Tomlinson’s
recommendation in its entirety.
Gesualdi, 2017 WL 945090, at *1.
The Court directed Defendant “to make an accelerated payment of
the entire withdrawal liability amount allegedly due based on its
determination by the arbitrator.”
Id. at *3.
also directed Plaintiffs to file a separate motion addressing their
Plaintiffs filed their motion on April 14, 2017.
Defendant has not opposed this motion.
restraining Defendant’s assets and attaching royalty payments
allegedly owed to Scara-Mix (the “Attachment Motion”).
Defendant opposed the Attachment Motion on May 12,
2017, and Plaintiffs filed their reply on May 19, 2017.
Defendant was subsequently denied leave to file a sur-
reply. (Electronic Order, June 16, 2017.)
On August 31, 2017, while those motions were pending,
Defendant filed a motion to dismiss for lack of subject matter
Plaintiffs’ default and acceleration claims and urges the Court to
vacate its March 10, 2017 Order.
(Def.’s Br., Docket Entry 86-1,
Plaintiffs opposed the Motion to Dismiss on September 15,
2017, and Defendant filed a reply in further support of its motion
on September 25, 2017. (Pls.’ Opp., Docket Entry 88; Def.’s Reply,
Docket Entry 89.)
Because Defendant’s Motion to Dismiss implicates the
Court’s subject matter jurisdiction, the Court will address that
damages, fees, costs, or a writ of attachment.
Defendant’s Motion to Dismiss
A. Legal Standard
“A case is properly dismissed for lack of subject matter
jurisdiction under Rule 12(b)(1) when the district court lacks the
statutory or constitutional power to adjudicate it.”
United States, 201 F.3d 110, 113 (2d Cir. 2000).
In resolving a
motion to dismiss for lack of subject matter jurisdiction, the
Court may consider affidavits and other materials beyond the
See Morrison v. Nat'l Austl. Bank, Ltd., 547 F.3d 167,
170 (2d Cir. 2008), aff’d, 561 U.S. 247, 130 S. Ct. 2869, 177 L.
Ed. 2d 535 (2010). Though the Court must accept the factual
allegations contained in the Amended Complaint as true, it will
not draw argumentative inferences in favor of Plaintiff; subject
Additionally, “[a] plaintiff asserting subject matter jurisdiction
has the burden of proving by a preponderance of the evidence that
Makarova, 201 F.3d at 113.
legislative scheme designed to address the adverse consequences
that arise when individual employers terminate their participation
in, or withdraw from, multiemployer pension plans.’”
Seacost Petroleum Products, Inc., 97 F. Supp. 3d 87, 97 (E.D.N.Y.
2015) (quoting Burke v. Hamilton Equip. Installers, Inc., 02-CV0519,
Specifically, if an employer withdraws from a pension plan, the
employer is responsible for its “proportionate share of the pension
plan’s unfunded vested benefits,”
Trustees of Local 138 Pension
Trust Fund v. F.W. Honerkamp Co. Inc., 692 F.3d 127, 130 (2d Cir.
2012), and the fund “is vested with the authority to determine the
amount of withdrawal liability” Seacost, 97 F. Supp. 3d at 97.
Thereafter, the fund must notify the employer of the withdrawal
liability due, formulate a payment schedule and demand payment.
Upon receiving notice, the employer must comply with the
payment schedule within sixty days.
Id.; 29 U.S.C. § 1399(c)(2).
liability, the employer must request a review by the plan sponsor,
and if that review does not resolve the dispute, the employer must
Finkel v. Athena Light & Power LLC, No. 14-
CV-3585, 2016 WL 4742279, at *6 (E.D.N.Y. Sept. 11, 2016); 29
U.S.C. § 1399(b)(2)(A); 29 U.S.C. § 1401(a)(1).
If the employer chooses to arbitrate the withdrawal
liability dispute, the employer must continue to make payments
until the arbitrator renders his decision, after which the payments
will be adjusted to address any “overpayments or underpayments
arising out the decision of the arbitrator.”
29 U.S.C. § 1401(d);
Cent. States Se. and Sw. Areas Pension Fund v. O’Neill Bros.
Transfer & Storage Co., 620 F.3d 766, 768 (7th Cir. 2010) (“The
employer may seek review of these calculations and then challenge
the plan’s determination in arbitration, but it must pay even while
the review and arbitration are pending.”).
In other words,
employers are required to “pay now” and “dispute later.”
620 F.3d at 772; Rao v. Prest Metals, 149 F. Supp. 2d 1, 5 (E.D.N.Y.
2001) (“ERISA is a pay-first-question-later statute in that the
employer must make withdrawal liability payments regardless of
whether there is a dispute as to the assessment of liability.”)
(internal quotation marks and citation omitted).
If the employer is determined to be in default, “a plan
sponsor may require immediate payment of the outstanding amount of
an employer’s withdrawal liability, plus accrued interest on the
total outstanding liability from the due date of the first payment
which was not timely made.”
29 U.S.C. § 1399(c)(5); Tr. of Local
531 Pension Plan v. Corner Distribs., Inc., No. 07-CV-529, 2008 WL
2687085, at *4 (E.D.N.Y. July 8, 2008).
definitions of default.
The statute provides two
Under Section 1399(c)(5)(A), an employer
defaults upon his failure to ”make, when due, any payment under
this section, if the failure is not cured within 60 days after the
employer receives written notification from the plan sponsor of
Pursuant to Section 1399(c)(5)(B), an employer is in default upon
the occurrence of “any other event defined in rules adopted by the
plan which indicates a substantial likelihood that an employer
will be unable to pay its withdrawal liability” (an “Insecurity
29 U.S.C. § 1399(c)(5)(B); Corner Distribs., 2008 WL
2687085, at *4.
Thus, when an event occurs which the plan has
designated as one indicating a substantial likelihood of the
employer’s inability to pay, “the plan[ ] may accelerate the entire
amount of withdrawal liability.”
O’Neill, 620 F.3d at 771.
C. The Parties’ Arguments
Defendant contends that the Court lacks jurisdiction
because “the Fund’s attempt to accelerate the entire withdrawal
liability, while arbitration is pending, is an issue solely within
the jurisdiction of an arbitrator.”
1, at 2.)
(Def.’s Br., Docket Entry 86-
Defendant relies on GCIU-Employer Retirement Fund v.
Vanard Lithographers, Inc., No. 12-CV-5169, 2013 WL 12080961 (C.D.
Cal. June 7, 2013), for support, arguing that under similar
circumstances, the Vanard court found that disputes related to a
default are reserved for the arbitrator.
(Def.’s Br. at 4-5.)
Defendant points to several factual disputes related to whether it
was properly determined to be in default.
(Def.’s Br. at 5-6.)
As discussed above, this issue was addressed by Judge Tomlinson in
her R&R, and several of Defendant’s arguments appear to be belated
objections to that R&R.
(Def.’s Br. at 11-12.)
Southwest Areas Pension Fund v. O’Neill Brothers Transfer & Storage
Co., 620 F.3d 766, (7th Cir. 2010), a case relied on by Judge
It argues that O’Neill is not analogous for several
reasons, including because the defendant in that case did not
dispute whether a default had occurred.
(Def.’s Br. at 12.)
relief, Defendant requests that the Court vacate the March 10,
2017 Order, defer to the arbitrator on the default and acceleration
issues, and dismiss any claims contained in the Amended Complaint
(Def.’s Br. at 14.)
Relying on cases from the First and Seventh Circuit
Courts of Appeals, Plaintiffs argue that it is within the Court’s
withdrawal liability is warranted while an arbitration is pending.
(Pls.’ Opp. at 1, 5-8.)
Plaintiffs contend that they are entitled
to demand the entire withdrawal liability amount on an accelerated
basis under the terms of the Trust Agreement and pursuant to 29
U.S.C. § 185.
(Pls.’ Opp. at 10-11.)
argue that, even if the determination of withdrawal liability is
arbitration by failing to submit this issue to the arbitrator.
(Pls.’ Opp. at 1.) Finally, Plaintiffs request that if Defendant’s
motion is granted, the Court modify its March 10, 2017 Order to
outstanding withdrawal liability payments due, instead of the
entire accelerated amount of $3,677,184.00.
(Pls.’ Opp. at 2.)
On reply, Defendant maintains that the relevant issue is
whether the Court has jurisdiction to accelerate the full amount
Defendant to make the installment payments that are past due.
(Def.’s Reply at 3.)
Defendant also argues that Plaintiffs’
request that the Court modify its prior Order in the event that
Defendant’s motion is granted is procedurally improper.
Reply at 3.)
Finally, Defendant contends that 29 U.S.C. § 185
does not apply to these facts and that it has not waived its right
(Def.’s Reply at 8-9.)
Defendant’s arguments are without merit.
It is well-
settled that the arbitrator must determine whether Plaintiffs
properly declared Defendant to be in default and accelerated the
See O’Neill, 620 F.3d at 772 (“[T]he
propriety of the plan’s default determination is beyond the scope
of our review at this juncture.”); 29 U.S.C. § 1401(a)(1); see
also Finkel, 2016 WL 4742279, at *5 (“‘ERISA requires that all
disputes arising out of a determination made under the withdrawal
liability sections must be arbitrated.’”) (quoting Rao, 149 F.
Supp. 2d at 6).
Consistent with this principle, Judge Tomlinson’s
R&R and this Court’s subsequent Order did not find that Plaintiff’s
default determination was proper, and in fact, expressly reserved
that issue for the arbitrator.
(See R&R at 38, n.8 (“The Court
proceedings is limited to whether, as a matter of law, Plaintiffs
possessed the authority to find Defendant in default and accelerate
payment during the pendency of the arbitration.”).) In its motion,
Defendant repeatedly mischaracterizes the Court’s prior Order and
implies that the Court found that the acceleration of Defendant’s
withdrawal liability was proper.
(See, e.g., Def.’s Br. at 11.)
However, the Court’s prior Order determined only that Defendant
was required to make an interim payment of the entire amount
pending the outcome of the arbitration.
9450910, at *3.
See Gesualdi, 2017 WL
The Court did not resolve the factual issues
surrounding Defendant’s default nor conclude that Plaintiffs’
determination was correct.
Thus, any argument relying on that
premise unquestionably fails.
As discussed, the relevant inquiry is whether the Court
has the authority to direct Defendant to make an interim payment
of the accelerated amount pending the outcome of the arbitration.
While the Second Circuit has not addressed this specific issue,
the Court finds the reasoning of several courts outside of this
Circuit to be instructive.
For example, in O’Neill, the Seventh
Circuit held that when a plan declares an employer to be in default
under the Insecurity Default provision (Section 1399(c)(5)(B)),
the plan may properly accelerate the entire amount of withdrawal
liability while the arbitration is pending.
O’Neill, 620 F.3d at
In that case, the employer informed the plan that it was
“preparing for its termination and liquidation,” and the plan
withdrawal liability pursuant to section 1399(c)(5)(B) and the
events specified in the plan rules. Id. at 771 (internal quotation
marks and citation omitted).
As an initial matter, the court
recognized that the ultimate finding as to the “propriety of the
plan’s default determination” was required to be made by the
Id. at 772.
Nonetheless, the court concluded that
because “withdrawal liability is ordinarily payable during the
pendency of the arbitration” and because the relevant statutes and
regulations did not foreclose acceleration after an Insecurity
Default while an arbitration is pending, the employer was required
to remit the entire accelerated amount of withdrawal liability
upon the occurrence of an Insecurity Default.1
Id. at 772-75.
See, e.g., Cent. States, Se. and Sw. Areas Pension
Fund v. Tel. Paving Co., Inc., No. 09-CV-7801, 2010 WL 3516169, at
*3-5 (N.D. Ill. Aug. 31, 2010) (finding that the fund was entitled
to accelerate employer’s withdrawal liability while the dispute
was being arbitrated after the fund declared the employer to have
defaulted under § 1399(c)(5)(B)); Cent. States Se. and Sw. Areas
Pension Fund v. Nat’ Concrete Prods. Co., No. 15-CV-3739, 2016 WL
4366595, at *3-5 (N.D. Ill. Aug. 16, 2016) (granting fund’s motion
for summary judgment, including for acceleration of the employer’s
The Seventh Circuit noted that in the event of a Missed Payment
Default under section 1399(c)(5)(A), a fund may declare a
default and accelerate withdrawal liability only if, after the
arbitrator rules, the employer fails to make a payment and fails
to cure the default within sixty days of receiving written
notice of the missed payment. See O’Neill, 620 F.3d at 773; see
also § 1399(c)(5)(A).
withdrawal liability, after employer ceased operations and was
declared to be in default under § 1399(c)(5)(B) while arbitration
Defendant attempts to distinguish O’Neill by arguing
that “O’Neill [ ] did not address the jurisdiction of a [f]ederal
[c]ourt to determine a dispute between the parties of whether
default has actually occurred based on ERISA, PBGC [r]egulations
and/or the Fund’s rules.”
(Def.’s Br. at 12.)
To the contrary,
the Seventh Circuit made clear that any disputes related to a
default determination must be resolved by the arbitrator. O’Neill,
620 F.3d at 772.
Moreover, the O’Neill court did not resolve the
withdrawal liability dispute; it simply found that if there is a
basis for declaring an Insecurity Default, acceleration of the
entire amount of withdrawal liability is permissible during the
pendency of the arbitration. Id. at 772-75.
argues that the employer in O’Neill did not dispute whether the
default was properly declared, but only whether the withdrawal
liability could be accelerated, and “[i]n this case, Defendant has
always disputed that an event of default has never occurred, a
factual issue . . . to be decided by the arbitrator.”2
In any event, the employer appears to have raised at least some
factual issues related to the declaration of default. The
Seventh Circuit noted that while the employer admitted that it
ceased operations, it denied that its counsel sent an email to
the fund explaining that the company was “preparing for its
termination and liquidation.” O’Neill, 620 F.3d at 771 & n.6.
Br. at 12 (emphasis in original).)
However, the existence of
acceleration of liability does not strip this Court of jurisdiction
Those issues will be resolved by the
arbitrator, but in the meantime, Defendant must comply with the
statute’s mandate requiring employers to “pay now” and “dispute
See O’Neill, 620 F.3d at 772; Rao, 149 F. Supp. 2d at 5;
29 U.S.C. § 1401(d).
Defendant relies heavily on GCIU-Employer Retirement
12080961 (C.D. Cal. June 7, 2013).
undermines its position.
However, Vanard actually
In that case, the fund determined that
Vanard, 2013 WL 12080961, at *1.
employer disputed the propriety of the default determination and
commenced an arbitration proceeding.
Id. at *1.
fund filed suit to collect the accelerated withdrawal liability
judgment should be denied because “there [was] a dispute of fact
regarding whether an event occurred that indicated a substantial
likelihood that it would be unable to pay it withdrawal liability.”
Id. at *3.
At the outset, the court noted that “the question of
whether Plaintiffs correctly determined that Defendant was in
default within the meaning of § 1399(c)(5)(B) is not properly
before this [c]ourt,” because the dispute must be arbitrated.
Nonetheless, the court held that “Defendant is required to pay the
amount of withdrawal liability assessed, despite its challenge to
the validity of Plaintiffs’ decision,” because “under the pay now,
dispute later rule, once a plan sponsor has demanded payment, the
employer must make an immediate payment regardless of whether it
disputes the propriety of the payment and whether it has submitted
the dispute to arbitration.”
Id. (internal quotation marks and
Thus, Vanard lends no support to Defendant’s
Based on the relevant case law and statutory framework,
the Court holds that it has jurisdiction to direct Defendant to
remit the entire amount of withdrawal liability due on an interim
basis while the arbitration is pending.
The Court further finds
that, subject to the determination of the arbitrator, Plaintiffs
presented sufficient evidence to establish a basis for declaring
Defendant to be in default under section 1399(c)(5)(B), and as a
result, this Court’s March 10, 2017 Order remains in full force.3
See Gesualdi, 2017 WL 945090, at *2 (describing Judge Tomlinson’s
In light of the above, the Court need not address Plaintiffs’
argument that Defendant failed to submit the acceleration issue
to the arbitrator.
1399(c)(5)(B) and the plan rules); (R&R at 33-38).
Defendant’s motion to dismiss (Docket Entry 86) is DENIED.
Plaintiffs’ Motion for Damages, Fees, and Costs4
A. Unpaid Contributions
Plaintiffs request an award of $18,755.86 in unpaid
contributions determined to be owed after an audit by the Fund,
referred to as the 13-0352 Audit (the “Audit”).
Br., Docket Entry 72-11, at 5-6.)
The Fund hired Schultheis &
Panettieri (“S&P”) to conduct an audit of Defendant’s books and
records and determine whether Defendant “contributed to the Funds
agreements, and, if not, to determine the amount of delinquencies”
during the period of May 30, 2011 to October 28, 2012.
Supp. 56.1 Stmt., Docket Entry 72-12, ¶ 1.)5
Based on this review,
As discussed, Defendant has not opposed this motion. Moreover,
its opposition to Plaintiffs’ prior motion for partial summary
judgment did not contain any arguments related to Plaintiffs’
request for damages, fees, and costs. (See Defs.’ Opp. to Pls.’
Mot. for Summ. J., Docket Entry 54).
Defendant did not respond to Plaintiffs’ Supplemental Rule 56.1
Statement of Facts by filing a Supplemental Counterstatement or
otherwise. Therefore, the facts contained in Plaintiffs’
Supplemental Rule 56.1 Statement are deemed admitted. Local
Civil Rule 56.1(c) (“Each numbered paragraph in the statement of
material facts set forth in the statement required to be served
by the moving party will be deemed admitted for purposes of the
motion unless specifically controverted by a correspondingly
numbered paragraph in the statement required to be served by the
S&P found that Defendant owed $18,755.86 in unpaid contributions.
(Pls.’ Supp. 56.1 Stmt. ¶¶ 7-9; Poulos Decl., Docket Entry 72-6,
Plaintiffs notified Defendant of this delinquency but
never received payment.
(Cody Decl., Docket Entry 71, ¶¶ 6-8;
Sept. 2013 Letter, Cody Decl. Ex. C, Docket Entry 71-4.)
“ERISA provides that an employer is obligated to make
contributions to multiemployer benefit plans under a collective
bargaining agreement in accordance with the agreement’s terms.”
Seacost, 97 F. Supp. 3d at 96; see also 29 U.S.C. § 1145.
employer fails to comply, the fund is entitled to an award in the
amount of the unpaid contributions.
Seacost, 97 F. Supp. 3d at
97; 29 U.S.C. § 1132(g)(2) (“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 . . . the unpaid contributions.”).
Moreover, in awarding such damages, courts have frequently relied
on the results of audits similar to the Audit conducted by S&P.
See Seacost, 97 F. Supp. 3d at 101; Ferrara v. PJF Trucking LLC,
No. 13-CV-7191, 2014 WL 4725494, at *11 (E.D.N.Y. Sept. 22, 2014).
As a party to the CBA and the Trust Agreement, Defendant had an
obligation to make contributions in amounts consistent with the
agreements, and the Audit revealed that between May 30, 2011 and
October 28, 2012, Defendant failed to do so.
(CBA at 16; Bulding
Decl., Docket Entry 72, ¶ 7.)
Accordingly, Plaintiffs are awarded
$18,755.86 in unpaid contributions.
Plaintiffs request an award of interest on the unpaid
contributions of $17,491.06--calculated as of April 14, 2017-along with $9.25 per day from April 15, 2017 through the date
judgment is entered.
(Pls.’ Damages Br. at 9.)
They contend that
September 13, 2013, the date the audit report was provided to
(Pls.’ Damages Br. at 9.)
request interest on the withdrawal liability of $2,225,876--also
calculated as of April 14, 2017--along with $1,813.41 per day from
April 15, 2017 through the date judgment is entered.
Damages Br. at 9.)
Plaintiffs argue that interest began accruing
on the withdrawal liability on December 7, 2013, sixty days after
the Fund’s October 8, 2013 Notice of Default advising Defendant
that it had sixty days to cure the default (the “October 2013
(Pls.’ Br. at 9.)
When the plan prevails it is entitled to “interest on
contributions . . . determined
provided under the plan, or, if none, the rate prescribed under
section 6621 of Title 26.”
29 U.S.C. § 1132(g)(2).
Agreement provides that interest will be calculated “at the rate
of 1.5% [one and one-half percent] per month” or eighteen percent
(18%) per year, for “each monthly amount due for each month, from
the first day of the month when the payment was due to the date
payment was made.”
(Trust Agmt. at 27.)
As of September 23, 2013,
the date Plaintiffs provided the Audit report to Defendant, the
accrued interest was $5,476.71.
(Sept. 2013 Letter at 2.)
calculate the interest between September 23, 2013 and April 14,
2017 (the date the motion was filed), the Court multiples the
number of days by the daily interest rate.
See Seacost, 97 F.
Supp. 3d at 101 (calculating interest on unpaid contributions
determined by an audit).
That calculation yields $12,015.75.6
Thus, the total interest as of April 14, 2017 is $17,492.46.
Additionally, interest on the unpaid contributions will continue
to accrue at a rate of $9.25 per day from April 15, 2017 through
the date of the judgment.
For withdrawal liability, the Trust Agreement specifies
that “interest shall be charged on any amount in default from the
date the payment was due to the date it is paid at the rate of
1 1/2% per month,” or eighteen percent per year (18%), “for each
Plaintiffs’ request interest beginning on December 7, 2013, the
The calculation is as follows:
$18,755.86 (amount of delinquent contributions) x .18 (yearly
interest rate)= $3,376.05 (total yearly interest)
$3,376.05 (total yearly interest)/ 365 days = $9.25 per day
$9.25 per day x 1299 days = $12,015.75
date by which Defendant was required to cure its default.
methodology outlined above, the Court finds that Plaintiffs are
entitled to an award of $2,255,882.04 in interest accrued as of
April 14, 2017 and an additional $1,813.41 per day through the
entry of judgment.7
See Seacost, 97 F. Supp. 3d at 103 (calculating
interest on withdrawal liability using similar methodology); see
also Daniello v. PML Furniture Grp. of NJ, Ltd., No. 06-CV-5261,
2009 WL 4722650, at *5 (E.D.N.Y. Dec. 9, 2009) (using similar
methodology to calculate interest based on entire outstanding
amount of withdrawal liability).
C. Liquidated Damages
Plaintiffs request an award of liquidated damages equal
to the interest on both the unpaid contributions and the withdrawal
(Pls.’ Damages Br. at 10.)
As such, based on the
Court’s calculations, Plaintiffs are requesting $17,492.46 in
liquidated damages on the unpaid contributions and $2,255,882.04
in liquidated damages on the withdrawal liability.
See supra 22-
The calculation is as follows:
$3,677,184 (total amount of withdrawal liability) x .18 (yearly
interest rate) = $661,893.12 (total yearly interest)
$661,893.12 (total yearly interest)/ 365 days = $1,813.41 per
$1,813.41 per day x 1244 days = $2,255,882.04
Under Section 1132(g)(2)(C), the plan is entitled to a
liquidated damages award in “an amount equal 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 percent” of the unpaid contributions.
29 U.S.C. § 1132(g)
whichever is greater.
(Trust Agmt. at 28.)
Because the interest is greater than twenty percent of
the unpaid contributions, the Court finds that Plaintiffs are
entitled to an award of liquidated damages in an amount equal to
the interest award. See Daniello, 2009 WL 4722650, at *5; Seacost,
97 F. Supp. 3d at 102. Thus, Plaintiffs are awarded $17,492.46 in
liquidated damages for the unpaid contributions and $2,255,882.04
in liquidated damages for the withdrawal liability as of April 14,
2017, the date of their motion.
Additionally, they are entitled
to $9.25 per day in liquidated damages on the unpaid contributions
and $1,813.41 per day in liquidated damages on the withdrawal
liability from April 15, 2017 through the entry of judgment.
D. Audit Costs
related to the Audit.
(Pls.’ Damages Br. at 10-11.)
S&P’s Audit report dated February 2, 2013 as support for the
request, which reflects that the accounting firm charged the Fund
$2,090.40 in fees.
(S&P Report, Poulos Decl. Ex. A, Docket Entry
72-7, at 5.)
1132(g)(2)(E), which provides that courts may award “such other
legal and equitable relief as a court deems appropriate,” as a
basis for awarding audit costs.
See, e.g., Seacost, 97 F. Supp.
at 103; Ferrara, 2014 WL 4725494, at *17; see also 29 U.S.C.
Additionally, the Trust Agreement provides that
when “collection of the [e]mployer’s delinquent contributions
reported by the audit is referred to the Funds’ attorney,” the
employer must also pay fees associated with an audit of “$350, or
such other amounts as the Trustees in their discretion shall
(Trust Agmt. at 27.)
The Court finds that an award of
such costs is appropriate and awards Plaintiffs $2,090.40 in audit
E. Attorneys’ Fees and Costs
Plaintiffs request $74,559.75 in attorneys’ fees for
prosecuting this action.
(Pls.’ Damages Br. at 12.)
case was commenced, seven attorneys, two paralegals, and one legal
Plaintiffs have submitted time records documenting the hours and
hourly rates requested.
(Time Recs., Smith Decl. Ex. A, Docket
Plaintiffs have requested the following hourly rates:
Scott Trivella (Attorney)
Denise Forte (Attorney)
Christopher Smith (Attorney)
Jonathan Bardavid (Attorney)
James Grisi (Attorney)
Gina Nicotera (Attorney)
Arthur Muller (Attorney)
While Plaintiffs submitted time records, they failed to specify
the hourly rates in either their brief or supporting
declaration. As a result, the Court compiled this information
based on the Time Records and the cursory explanation in
Plaintiffs’ brief. (See Time Records at 1-28; Pls.’ Damages Br.
Lauren Dammacco (Paralegal)
Michelle Salerno (Paralegal)
Anna Chiarolanza (Legal Secretary) 2/6/14-5/20/14
Smith, Trivella, Forte, and Grisi each have over twenty years of
experience, Bardavid has twelve years of experience, Nicotera has
four years of experience, and Muller has less than a year of
(Pls.’ Damages Br. at 12.)
Section 1132(g)(2)(D) provides that when a judgment is
entered in favor of the plan, the court should award “reasonable
attorney’s fees and costs of the action, to be paid by the
29 U.S.C. 1132(g)(2)(D).
In other words, “an award
of reasonable attorneys’ fees and costs [is] mandatory.” Daniello,
2009 WL 4722650, at *5; see also Ferrara, 2014 WL 4725494, at *18.
Plaintiffs are also entitled to an award of attorneys’ fees under
the terms of the Trust Agreement.
(See Trust Agmt. at 27 (“an
Employer in default for five working days shall be obligated to
pay . . .[a]ttorney’s fees in collection actions . . .
the actual amount to be billed to the Trustees by their counsel
for work performed in connection with this matter.”).)
It is well-established that “the lodestar method--the
product of a reasonable hourly rate and the reasonable number of
hours required by the case--creates a ‘presumptively reasonable
fee.’” Ferrara, 2014 WL 4725494, at * 18 (quoting Millea v. MetroNorth
determining the presumptively reasonable fee, the court should
consider “‘what a reasonable, paying client would be willing to
Id. (quoting Arbor Hill Concerned Citizens Neighborhood
Ass’n v. Cty. of Albany, 522 F.3d 182, 183 (2d Cir. 2007)).
Moreover, while “‘[t]he court has considerable discretion’ to
determine the presumptively reasonable fee, “it should ‘bear in
mind all case-specific variables that [the Second Circuit] and
other courts have identified as relevant to the reasonableness of
attorneys’ fees in setting a reasonable hourly rate.’”
97 F. Supp. 3d at 104 (quoting Arbor Hill, 522 F.3d at 190)
(alteration in original)).
As the party seeking a fee award,
Plaintiffs “bear[ ] the burden of proving the reasonableness and
necessity of the hours spent and rates charged,” including by
attorney, the date, the work performed, and the hours billed.
To determine whether the requested rates are reasonable,
the Second Circuit has instructed district courts to consider the
prevailing rates in the district where the court is located.
Ferrara, 2014 WL 4725494, at *19.
Based on the rates awarded in
this district, including cases involving Trivella & Forte LLP, the
Court finds that for some of the attorneys, the requested rates
are slightly higher than what has been found to be reasonable.
See Ferrara, 2014 WL 4725494, at *21 (recommending rates of between
$350 and $380 for partners and between $230-$300 for associates);
Seacost, 97 F. Supp. 3d at 106-08 (recommending rates of $300 for
Mechanical Insulation Inc., No. 14-CV-0724, 2015 WL 729728, at
*11-12 (E.D.N.Y. Feb. 18, 2015) (recommending rates of $400 for
partner, $375 for senior associate, $275 for junior associate, and
$110 for paralegal).
In light of the undersigned’s experience
with this case and the prevailing rates in this district, the Court
finds that the following hourly rates are reasonable: (1) $400 for
Trivella, Forte, and Smith; (2) $375 for Bardavid and Grisi; (3)
$275 for Nicotera; (4) $115 for Muller in 2016 and $275 in 2017;
and (5) $110 for Dammacco and Salerno.9
See Mechanical Insulation,
2015 WL 729728, at *11-12; Ferrara, 2014 WL 4725494, at *21.
Chiarolanza, a legal assistant.
See Tr. of Local 7 Tile Indus.
Welfare Fund v. Star Const. Marble & Granite, Inc., No. 13-CV-
It is unclear why Muller’s time
lower rate ($115 per hour) during
year associate, the Court assumes
clerk in 2016. In any event, the
rate of $115 for Muller’s time in
was billed at a significantly
2016. Because he is a firstthat he may have been a law
Court approves the requested
0925, 2014 WL 173420, at *4 (E.D.N.Y. Jan. 13, 2014) (recommending
rate of $90 for legal assistant).
Additionally, the Court has reviewed the time records
and finds the hours expended to be reasonable.
While the number
of hours is higher than in other ERISA cases in this district, see
Ferrara, 2014 WL 4725494, at *21, during the course of this matter
the parties litigated several discovery disputes and motions.
follows that ERISA cases in which the plaintiffs sought a default
judgment without any additional motion practice are not a useful
See id. (recommending award of attorneys’ fees for 98.7
hours in case that resulted in default judgment).
shown below, the Court awards attorneys’ fees of $70,425.75.
Finally, Plaintiffs request $876.34 in costs, which
includes the filing fee, expenses associated with service of
process, postage, and PACER fees.
(Pls.’ Damages Br. at 13.)
support for their request, Plaintiffs submitted an itemized list
of these expenses.
(See Time Records at 29.)
Section 1132(g)(2)(D) provides that the Fund may recover the costs
associated with this action. 29 U.S.C. § 1132(g)(2)(D). Moreover,
courts in this district routinely award such costs. See Mechanical
Insulation, 2015 WL 729728, at *12 (“[A] court will generally award
clients.”) (internal quotation marks omitted; second alteration in
original); see also Tr. of Local 7, 2014 WL 173420, at *4; Seacost,
97 F. Supp. 3d at 108-09.
The Court finds that the requested costs
are reasonable and awards $876.34 in costs.
Plaintiffs’ Motion to Restrain and Attach Assets
Plaintiffs request that the Court enter “a prejudgment
order . . . restraining assets currently in Defendant Scara-Mix,
Inc.’s possession and for a Writ of Attachment against any royalty
payments which become due and owing to Defendant from Eastern
Agreement between Scara-Mix, Inc. and Eastern . . . or payments to
Scara-Mix, Inc. from any other source.” (Pls.’ Attach. Br., Docket
Entry 73-3, at 1.)
They make two specific arguments: (1) that the
Court should restrain Defendant’s assets pursuant to New York Civil
Practice Law and Rules (“CPLR”) section 5229, and (2) that the
Court should issue a writ of attachment pursuant to Federal Rule
of Civil Procedure 64 and CPLR section 6201.
(Pls.’ Attach. Br.
However, because the Court is directing the Clerk of the
Court to enter judgment for the withdrawal liability, unpaid
contributions, interest, fees, costs, and liquidated damages, see
infra 34-35, Plaintiffs’ requests appear to be moot.
provided for by CPLR sections 5229 and 6201, as well as Federal
Rule 64, are pre-judgment remedies.
See N.Y. C.P.L.R. § 5229 (“In
any court, before a judgment is entered . . . the trial judge may
order examination of the adverse party and order him restrained
with the same effect as if a restraining notice had been served
upon him after judgment.”); N.Y. C.P.L.R. § 6201 (specifying that
an order of attachment may be issued “where the plaintiff has
demanded and would be entitled . . . to a money judgment against
one or more defendants”); FED. R. CIV. P. 64 (providing that federal
district courts can utilize “every remedy [that] is available
. . . , under the law of the state where the court is located . .
. for seizing a person or property to secure satisfaction of the
With the forthcoming judgment in hand,
Plaintiffs can pursue the appropriate enforcement mechanisms under
New York law.
Therefore, the motion for a pre-judgment order
restraining Defendant’s assets and for a writ of attachment is
Plaintiffs’ request for an award of fees and costs
associated with this motion is similarly DENIED.
At least some of
the costs and fees incurred in connection with the Attachment
Motion have been awarded in this Order.
See Time Records at 27
(documenting hours spent by Muller on research and drafting).
the extent Plaintiffs seek additional fees associated with the
motion pursuant to Section 1132(g)(2)(D) and the provisions of the
In a footnote, Plaintiffs state: “In addition to and/or in the
alternative, Plaintiffs seek a preliminary injunction freezing
Defendant’s assets and ordering any proceeds paid to Defendant
from Eastern or any source be forwarded to Plaintiff[s]”
pursuant to Federal Rule of Civil Procedure 65 and New York
Civil Practice Law and Rules 5526 and 6301. (Pls.’ Attachment
Br. at 1, n.l.) Aside from the language in this footnote,
Plaintiffs fail to elaborate on the basis for this request or
cite any additional authority to support it. Further,
Plaintiffs’ brief does not contain any arguments regarding the
elements typically analyzed by district courts when considering
a motion for a preliminary injunction. See, e.g., Johnson v.
Connolly, 378 F. App’x 107, 108 (2d Cir. 2010) (“Ordinarily, a
party seeking a preliminary injunction [must] show (a)
irreparable harm and (b) either (1) likelihood of success on the
merits or (2) sufficiently serious questions going to the merits
to make them a fair ground for litigation and a balance of
hardships tipping decidedly toward the party requesting the
preliminary relief.”) (internal quotation marks omitted)
(alteration in original). Accordingly, to the extent
Plaintiffs’ motion seeks a preliminary injunction, that request
is DENIED WITHOUT PREJUDICE.
Trust Agreement, they are granted leave to file a supplemental
motion for attorneys’ fees and costs at the conclusion of the case.
For the foregoing reasons, Defendant’s motion to dismiss
(Docket Entry 86) is DENIED, Plaintiffs’ motion seeking damages
(Docket Entry 70) is GRANTED, and Plaintiffs’ motion for a writ of
attachment (Docket Entry 73) is DENIED.
The Clerk of the Court is
directed to enter judgment in favor of Plaintiffs as follows:
Outstanding Withdrawal Liability
Interest on Unpaid Contributions
Calculated through 4/14/17
Interest on Withdrawal Liability
Calculated through 4/14/17
Liquidated Damages on Unpaid Contributions
Calculated Through 4/14/17
Liquidated Damages on Withdrawal Liability
Calculated Through 4/14/17
Daily Interest on Unpaid Contributions
From 4/15/17 through Entry of Judgment
Daily Interest on Withdrawal Liability
From 4/15/17 through Entry of Judgment
Continued Accrual of Liquidated Damages
On Unpaid Contributions From 4/15/17
through Entry of Judgment
Continued Accrual of Liquidated Damages
On Withdrawal Liability From 4/15/17
through Entry of Judgment
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
17 , 2017
Central Islip, New York
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