Engineers Joint Welfare Fund et al v. C. Destro Development Co., Inc. et al

Filing 75

MEMORANDUM-DECISION and ORDERED, that Plaintiffs Motion (Dkt. No. 65) for summary judgment is GRANTED in part and DENIED in part consistent with this Memorandum-Decision and Order; and it is further ORDERED, that Plaintiffs are awarded $711,429. 09 plus post-judgment interest at the rate pursuant to 28 U.S.C. § 1961 against Defendant C. Destro Development Corporation, Inc., consisting of: (1) $223,031.88 in unpaid contributions and deductions; (2) $232,640.63 in interest and ( 3) $220,346.35 in liquidated damages on unpaid contributions and deductions, plus interest from June 5, 2015 through the date of judgment at the rates provided for by 29 U.S.C. § 1132(g)(2) and the Trusts and Collections Policy; (4) $2 ,582.29 in interest on untimely contributions, and (5) $32,827.94 in attorneys fees and costs; and it is further ORDERED, that Plaintiffs are awarded $181,904.84 plus post-judgment interest at the rate pursuant to 28 U.S.C. § 1961 agai nst Defendant Carmen Destro, Jr., consisting of: (1) $149,076.90 in unpaid contributions and (2) $32,827.94 in attorneys fees and costs; and it is further ORDERED, that Plaintiffs may renew their Motion for summary judgment within thirty (3 0) days of the date of this Memorandum-Decision and Order; and it is further ORDERED, that if Plaintiffs do not renew their Motion for summary judgment within thirty (30) days of the date of this Memorandum-Decision and Order, then the Clerk of Court shall enter judgment in the above amounts in favor of Plaintiffs and close this action; and it is further ORDERED, that Plaintiffs Letter Motion (Dkt. No. 74) is GRANTED. Signed by Senior Judge Lawrence E. Kahn on March 31, 2016.***A copy of this order was served upon the pro se party by regular US mail. (sas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
ENGINEERS JOINT WELFARE FUND,
et al.,
Plaintiffs,
-against-

5:10-cv-0474 (LEK/ATB)

C. DESTRO DEVELOPMENT CO., INC.,
et al.,
Defendants.

MEMORANDUM-DECISION and ORDER
I.

INTRODUCTION
On April 22, 2010, Plaintiffs Engineers Joint Welfare Fund (“Welfare Fund”), Engineers

Joint Pension Fund (“Pension Fund”), Engineers Joint Supplemental Unemployment Benefit Fund
(“S.U.B. Fund”), Engineers Joint Training Fund (“Training Fund”), Operating Engineers Local 17
Training Fund (“Local 17 Training Fund”), Central Pension Fund of the International Union of
Operating Engineers and Participating Employers (“Central Pension Fund”) (together, the “Plans”),
International Union of Operating Engineers, Local Union No. 17 (“Union”) (collectively,
“Plaintiffs”) commenced this action to recover contributions, interest, liquidated damages, audits
fees, and attorneys’ fees and costs under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq. and the Labor Management Relations Act of 1947 (“LMRA”),
29 U.S.C. § 185. Dkt. No. 1 (“Complaint”). On April 30, 2015, Plaintiffs moved for summary
judgment. Dkt. Nos. 65 (“Motion”); 65-11 (“Memorandum”). Defendants C. Destro Development
Co., Inc. (“Destro Development”) and Carmen Destro, Jr. (“Destro”) (collectively, “Defendants”)
did not oppose the Motion. For the following reasons, Plaintiffs’ Motion is granted in part and

denied in part.
II.

BACKGROUND
Under Local Rule 7.1(a)(3), “[t]he Court shall deem admitted any properly supported facts

set forth in the Statement of Material Facts that the opposing party does not specifically controvert.”
L.R. 7.1(a)(3). Therefore, Plaintiffs’ Statement of Material Facts is deemed admitted to the extent
that it is supported by proper citations to the record. Dkt. No. 65-1 (“Statement of Material Facts”);
see also Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).
As alleged in the Complaint, the Plans are multi-employer benefit plans within the meaning
of §§ 3(3) and 3(37) of ERISA, 29 U.S.C. §§ 1002(3), (37). Compl. ¶ 13. From September 1, 2006
through February 23, 2013, Destro Development was party to collective bargaining agreements
(“CBAs”) with the Union. SMF ¶ 1. The CBAs obligated Destro Development to remit
contributions to the Plans for each hour paid to each employee covered by the CBAs and to deduct
sums from certain employees’ wages and pay those sums to the Union as union dues, voluntary
political action fund, political action fund, and defense fund money. Id. ¶¶ 5-6. Destro was the
officer and manager of Destro Development and ran the day-to-day operations of the company. Id.
¶ 2. Plaintiffs allege that Defendants are employers within the meaning of ERISA § 3(5), 29 U.S.C.
§ 1002(5). Compl. ¶ 19.
The CBAs bound Destro Development to the terms and conditions of the Plans’ Agreements
and Declarations of Trust (“Trusts”). SMF ¶ 7. The Trusts provide that unpaid contributions are
trust assets. Id. ¶ 8. The Plans adopted a Collections Policy, by which Destro Development is
bound. Id. ¶ 10. The Collections Policy obligates Destro Development to submit contributions to
the Plans and deductions to the Union no later than the fifteenth day of the month following the
2

month for which the contributions and deductions are due. Id. ¶ 11. If Destro Development fails to
submits the contributions and deductions by the thirtieth day of the month, its remittances for the
month are considered delinquent. Id. ¶ 12. Destro Development is liable for delinquent
contributions and deductions, plus interest, liquidated damages, and any audit fees and costs and
attorneys’ fees and costs incurred in collecting such delinquent contributions. Id. ¶ 13.
From September 1, 2006 through October 2008, Destro Development untimely remitted
$96,187.29 in contributions and deductions. Id. ¶ 18. Defendants have not paid the interest and
liquidated damages due in connection with these untimely contributions and deductions. Id. ¶ 19.
According to audits conducted by Plaintiffs, from September 1, 2006 through December 2012,
Destro Development did not remit $249,853.681 in contributions and deductions. Id. ¶ 20. After
crediting $26,821.80 in mistaken payments, Destro Development owes $223,031.88 in contributions
and deductions, plus interest and liquidated damages. Id. ¶¶ 21-22. Defendants have also not paid
Plaintiffs’ audits fees or attorneys’ fees and costs. Id. ¶¶ 23-24.
Plaintiffs’ Complaint seeks all contributions and deductions determined to be due by audit of
Defendants’ records, plus applicable interest, liquidated damages, audit fees, and attorneys’ fees and
costs. Compl. ¶ 41. Plaintiffs move for summary judgment against Destro Development in the
amount of $762,296.23 and summary judgment against Destro in the amount of $467,447.82. Mem.
III.

LEGAL STANDARD
Federal Rule of Civil Procedure 56 instructs a court to grant summary judgment if “there is

no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of

1

Plaintiffs’ SMF contains a clerical error as to the amount of Destro Development’s
delinquent contributions. See Dkt. No. 65-9 (“Harrigan Affidavit”) ¶¶ 29-30.
3

law.” FED. R. CIV. P. 56. The movant bears the burden of demonstrating the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A court must resolve all
ambiguities and draw all reasonable inferences in favor of the nonmoving party. Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Nora Beverages, Inc. v. Perrier Grp. of
Am., Inc., 164 F.3d 736, 742 (2d Cir. 1998).
Where a motion for summary judgment is unopposed, the court must nonetheless determine
that the movant has meet their burden of showing that there is no genuine issue of material fact.2
Vt. Teddy Bear, 373 F.3d at 244. “If the evidence submitted in support of the summary judgment
does not meet the movant’ burden of production, then ‘summary judgment must be denied even if
no opposing evidentiary matter is presented.’” Id. (quoting Giannullo v. City of New York, 322
F.3d 139, 141 (2d Cir. 2003)). “An unopposed summary judgment motion may also fail where the
undisputed facts fail to ‘show that the moving party is entitled to judgment as a matter of law.’” Id.
(quoting Champion v. Artuz, 76 F.3d 483, 486 (2d Cir. 1996) (per curiam)).
IV.

DISCUSSION
A. Destro Development
1. Unpaid Contributions and Deductions
Plaintiffs assert violations for unpaid plan contributions under ERISA § 515, which requires

“[e]very employer who is obligated to make contributions to a multiemployer plan under the terms

2

On August 26, 2015, Plaintiffs filed a Letter Motion requesting that the Court deem
Defendants’ failure to oppose Plaintiffs’ Motion consent to granting that Motion. Dkt. No. 74.
Under Local Rule 7.1(b)(3), the Court may deem a non-moving party’s failure to oppose a motion
“consent to the granting or denial of the motion.” L.R. 7.1(b)(3). Thus, Defendants’ failure to
oppose the Motion is deemed consent to grant it. However, Plaintiffs must still meet their “burden
to demonstrate entitlement to the relief requested.” L.R. 7.1(b)(3).
4

of the plan or under the terms of a collectively bargained agreement shall, to the extent not
inconsistent with law, make such contributions in accordance with the terms and conditions of such
plan or such agreement.” 29 U.S.C. § 1145. Plaintiffs also assert violations of § 301(a) of the
LMRA for unpaid union deductions. 29 U.S.C. § 185(a) (authorizing “[s]uits for violation of
contracts between an employer and a labor organization representing employees in an industry
affecting commerce”). The undisputed facts establish that the CBAs required Destro Development
to remit contributions and deductions to Plaintiffs for each hour paid to employees who performed
operating engineers work. SMF ¶¶ 5-6; Dkt. No. 65-8 (“Noon Affidavit”) ¶¶ 18-20; Harrigan Aff.
¶ 18; see also Noon Aff., Ex. A-1 at 23-26, 34-38; Noon Aff., Ex. B-1 at 23-26, 34-38; Noon Aff.,
Ex. B-2 at 23-26, 34-38.
Plaintiffs’ audits demonstrate that Destro Development failed to remit $223,031.88 in
contributions and deductions to Plaintiffs for the period from September 1, 2006 through December
2012. Dkt. No. 65-2 (“McCarthy Affidavit”) ¶¶ 10-12; McCarthy Aff., Exs. A and B; see also Dkt.
No. 65-3 (“DeMacy Affidavit”) ¶ 8; DeMacy Aff., Ex. B. Plaintiffs’ submissions are sufficient to
meet their burden of proving that Destro Development violated § 515 of ERISA and § 301(a) of
LMRA and owes Plaintiffs $223,031.88 in delinquent contributions and deductions. See Cement &
Concrete Workers Dist. Council Welfare Fund v. Angel Constr. Grp., LLC, No. 08 CV 1672, 2010
WL 3463181, at *4 (E.D.N.Y. June 15, 2010) (finding audit report and spreadsheet listing
unreported employee hours sufficient to establish violation of § 515).
In addition to the $223,031.88 in unpaid contributions and deductions, under ERISA
§ 502(g)(2), Plaintiffs are entitled to
(B) interest on the unpaid contributions,
5

(C) an amount equal to the greater of –
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount
not in excess of 20 percent (or such higher percentage as may be
permitted under Federal or State law) of the amount determined by
the court under subparagraph (A),
29 U.S.C. § 1132(g)(2).
a. Interest
Plaintiffs are entitled to receive interest on all unpaid contributions. 29 U.S.C.
§ 1132(g)(2)(B). “[I]nterest on unpaid contributions shall be determined by using the rate provided
under the plan, or, if none, the rate prescribed under section 6621 of title 26.” Id. § 1132(g)(2).
Under the Collections Policy for the Welfare, Pension, S.U.B., and Training Funds, “the
employer will be assessed interest on the amount of delinquent contributions at the rate of two
percent (2%) month.” Harrigan Aff., Ex. F at 3.3 Plaintiffs’ documentation demonstrates that
Destro Development owes interest, calculated through June 5, 2015, in the amount of $60,758.11
for unpaid contributions to the Pension Fund, $112,723.42 to the Welfare Fund, $18,132.23 to the
S.U.B. Fund, and $68.80 to the Training Fund. DeMacy Aff., Ex. B at 21-24.4 The Collections
Policy for the Central Pension Fund provides that interest is “to be calculated at the rate of 9%
simple interest.” Dkt. No. 65-6 (“Fanning Affidavit”), Ex. A. at 13. Plaintiffs’ documentation
demonstrates that Destro Development owes interest, calculated through June 5, 2015, in the
amount of $28,446.45 for unpaid contributions to the Central Pension Fund. DeMacy Aff., Ex. B at

3

The Exhibits attached to the Harrigan Affidavit are found at docket numbers 65-9 and 65-

4

The pagination corresponds to the page numbers assigned by ECF.

10.

6

26. The Local 17 Training Fund does not specify an interest rate and Plaintiffs accordingly claim
interest at the rate prescribed by § 502(g)(2), which is currently three percent. DeMacy Aff. ¶ 6;
DeMacy Aff., Ex. A. Plaintiffs’ documentation demonstrates that Destro Development owes
interest, calculated through June 5, 2015, in the amount of $3,463.88 for unpaid contributions to the
Local Training 17 Fund. DeMacy Aff., Ex. B at 25.
ERISA § 502(g)(2) directs that in an action to enforce § 515 a court “shall” award interest on
unpaid contributions. 29 U.S.C. § 1132(g)(2). Thus, having reviewed Plaintiffs’ submissions and
found those submissions sufficient to meet Plaintiffs’ burden, the Court awards Plaintiffs interest for
the unpaid contributions to the Plans in the amounts requested.
Plaintiffs also request interest on the unpaid Union deductions. The award of prejudgment
interest on LMRA claims is a matter trusted to the district court’s discretion. See Lodges 743 &
746, Int’l Ass’n of Machinists & Aerospace Workers v. United Aircraft Corp., 534 F.2d 422, 446
(2d Cir. 1975); Finkel v. Triple A Grp., Inc., 708 F. Supp. 2d 277, 287 (E.D.N.Y. 2010).
Prejudgment interest “serves as compensation for the use of money withheld.” Diduck v. Kaszycki
& Sons Contractors, Inc., 974 F.2d 270, 286 (2d Cir. 1992). Plaintiffs request interest at the state
statutory rate in N.Y. C.P.L.R. 5004, which is currently nine percent. Noon Aff. ¶ 25; N.Y.
C.P.L.R. 5004. Plaintiffs’ documentation demonstrates that Destro Development owes interest,
calculated through June 5, 2015, in the amount of $123.65 for unpaid deductions to the
C.O.U.C./C.I.R.S.T. fund and $8,924.09 for unpaid deductions to the voluntary political action
fund, defense fund, and dues. DeMacy Aff., Ex. B at 27-28. Accordingly, having reviewed
Plaintiffs’ submissions and found those submissions sufficient to meet Plaintiffs’ burden, Plaintiffs
are awarded interest on the unpaid Union deductions in the amounts requested.
7

In total, Plaintiffs are awarded $232,640.63 in interest on Destro Development’s unpaid
contributions and deductions. Because Plaintiffs only calculated the interest due through June 5,
2015, Plaintiffs are awarded interest through the date of entry of judgment at the rates applicable to
each Fund.
b. Liquidated Damages
Section 502(g)(2) further provides that in an action to enforce § 515 a court “shall” award an
amount that is the greater of interest on unpaid contributions or “liquidated damages provided for
under the plan in an amount not in excess of 20 percent.” 29 U.S.C. § 1132(g)(2). The Pension,
Welfare, S.U.B., Training, and Central Pension Funds provide for liquidated damages equal to
twenty percent of the delinquent contributions. Harrigan Aff., Ex. F at 3; Fanning Aff., Ex. A at 1213. Because the interest on unpaid contributions is greater than the liquidated damages under the
Plans, Plaintiffs request liquidated damages for each of the Funds as follows: $112,723.42 for
unpaid contributions to the Welfare Fund; $59,589.39 for the Pension Fund; $68.80 for the Training
Fund; $18,132.23 for the S.U.B. Fund; $3,463.88 for the Local 17 Training Fund; $26,368.63 for
the Central Pension Fund. Noon Aff. ¶ 34; DeMacy Aff., Ex. B at 21-26. In total, Plaintiffs claim
$220,346.79 in liquidated damages. DeMacy Aff., Ex. B at 20. Having reviewed Plaintiffs’
submissions and determined that they are sufficient to meet their burden, the Court awards Plaintiffs
liquidated damages in the amount requested. Because Plaintiffs’ liquidated damages award is the
amount of interest on unpaid contributions, and Plaintiffs only calculated the interest due through
June 5, 2015, Plaintiffs are awarded interest through the date of entry of judgment at the rates
applicable to each Fund.
2. Untimely Contributions and Deductions
8

Plaintiffs request $2,757.84 in interest and $12,901.44 in liquidated damages for Destro
Development’s untimely payments totaling $96,187.29 from September 1, 2006 through October
2008. Mem. at 7; Harrigan Aff. ¶¶ 26-27. Section 502(g)(2) only mandates the award of interest
and liquidated damages for contributions that are unpaid at the time of suit. Operating Eng’rs Local
139 Health Benefit Fund v. Gustafsion Constr. Corp., 258 F.3d 645, 654 (7th Cir. 2001); Iron
Workers Dist. Council & Vicinity Welfare & Pension Funds v. Hudson Steel Fabricators &
Erectors, Inc., 68 F.3d 1502, 1508 (2d Cir. 1995); Mich. Carpenters Council Health & Welfare Fund
v. C.J. Rogers, Inc., 933 F.2d 376, 388 (6th Cir. 1991); Bd. of Trs. of Local 41, Int’l Bhd. of Elec.
Workers Health Fund v. Zacher, 771 F. Supp. 1323, 1331-33 (W.D.N.Y. 1991). However, Plaintiffs
can claim interest and liquidated damages for Destro Development’s untimely payments in violation
of the LMRA. See Operating Eng’rs, 258 F.3d at 654 (stating that late payments “violated the terms
of the plan, thus entitling the fund to enforce the plan’s provisions imposing interest and liquidated
damages on delinquent contributions”); Mich. Carpenters Council, 933 F.2d at 390 (“[A] fund has a
valid claim for late payment and/or audit damages pursuant to its collective bargaining agreements
with defendants.”); LaBarbera v. T & M Specialities Ltd., No. CV-065022, 2007 WL 2874819, at
*2 (E.D.N.Y. Sept. 27, 2007) (“The CBA and MOAs . . . provide a contractual basis for the
assessment of interest, additional damages . . . in the event of untimely contribution payments.”);
Finkel v. Rico Elec., Inc., No. 07-CV-2145, 2009 WL 3367057, at *3 (E.D.N.Y. Oct. 16, 2009)
(same). Prejudgment interest may be awarded on LMRA claims at the court’s discretion. Triple A
Grp., 708 F. Supp. 2d at 287.
As discussed above, the Collections Policy for the Welfare, Pension, S.U.B., and Training
Funds provides that “the Employer will be assessed interest on the amount of delinquent
9

contributions at the rate of two percent (2%) month.” Harrigan Aff., Ex. F at 3. Furthermore, “in
the event the delinquent contributions are paid either prior to commencement of the lawsuit or
proceedings or prior to judgment or other resolution, the Funds are still entitled to collect . . .
interest.” Id. at 4. The Central Pension Fund Trust provides that interest will be assessed on
delinquent contributions at the rate of nine percent. Fanning Aff., Ex. A at 12-13. Accordingly,
having reviewed Plaintiffs’ submissions and found them sufficient to meet Plaintiffs’ burden, the
Court awards Plaintiffs interest as follows: $695.28 on untimely payments to the Pension Fund;
$1,252.23 to the Welfare Fund; $212.55 to the S.U.B. Fund; and $422.23 to the Central Pension
Fund.5 DeMacy Aff., Ex. B at 21-26. However, the Local 17 Training Fund does not provide for
the award of interest on untimely contributions. See Dkt. No. 65-7 (“Smolinski Affidavit”), Ex. A.
Therefore, Plaintiffs’ request for interest on untimely payments to that Fund is denied.
The Collections Policy for the Welfare, Pension, S.U.B., and Training Funds, and the
Central Pension Fund Trust, additionally provide for liquidated damages of twenty percent. Fanning
Aff., Ex. A at 12-13 (providing “as liquidated damages an amount up to twenty (20%) of the amount
found to be delinquent”); Harrigan Aff., Ex. F at 3 (providing “liquidated damages equal to twenty
(20%) of the delinquent fringe benefit contributions”). A district court must “examine whether the
liquidated damages provisions in the operative collective bargaining agreements constitute a penalty
under federal common law.” Mich. Carpenters Council, 933 F.2d at 390. The enforceability of a
contractual liquidated damages provision depends on two conditions: (1) “the harm caused by the
breach must be very difficult or impossible to estimate” and (2) “the amount fixed must be a

5

Plaintiffs have not provided calculations for the interest due on late payments to the
Training Fund. DeMacy Aff., Ex. B at 24.
10

reasonable forecast of just compensation for the harm caused.” LaBarbera, 2008 WL 858985, at *6
(quoting Bricklayers Pension Trust Fund v. Rosati, Inc., 23 F. App’x. 360, 360 (6th Cir 2001)).
Plaintiffs assert that the costs of collecting late payments are difficult to estimate. Harrigan Aff.
¶ 21. However, Plaintiffs have not established that twenty percent is a reasonable forecast of the
harm. See id. ¶ 22; see also Zacher, 771 F. Supp. at 1334. The Court therefore denies without
prejudice to renew Plaintiffs’ request for liquidated damages on account of untimely payments.
Thus, in conclusion, Plaintiffs are awarded $2,582.29 in interest on Destro Development’s
untimely payments.
3. Attorneys’ Fees and Costs
Finally, Plaintiffs request audit fees and attorneys’ fees and costs pursuant to ERISA
§ 502(g)(2) and LMRA § 301(a). Mem. at 8. Section 502(g)(2) requires the district court to award
“reasonable attorney’s fees and costs of the action.” 29 U.S.C. § 1132(g)(2)(D). Additionally, the
Plans’ Trusts and Collection Policy provide for the award of all audit fees and attorneys’ fees and
costs incurred in seeking recovery of delinquent contributions. Harrigan Aff., Ex. F at 3; Fanning
Aff., Ex. A at 13.
“Attorneys’ fees are awarded by determining a presumptively reasonable fee, reached by
multiplying a reasonable hourly rate by the number of reasonably expended hours.” Bergerson v.
N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric Ctr., 652 F.3d 277, 289 (2d Cir. 2011)
(citing Simmons v. N.Y.C. Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009)). “The fee applicant
bears the burden of establishing entitlement to an award and documenting the appropriate hours
expended and hourly rates.” Cruz v. Local Union No. 3 of Int’l Bhd. of Elec. Workers, 34 F.3d
1148, 1160 (2d Cir. 1994) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).
11

Plaintiffs seek a total of $52,297.32 in attorneys’ fees and costs for the period for the period
from June 15, 2009 through April 27, 2015. Mem. at 10. In support of their request, Plaintiffs’
submit the Affidavit of Jennifer A. Clark (“Clark”), along with billing records. Dkt. No. 65-4
(“Clark Affidavit”) ¶¶ 21-26; Id., Ex. H.6
Plaintiffs seek fees at the following hourly rates: $247 to $291 for Clark, a partner at
Blitman & King LLP (“Blitman & King”) with over thirty years of experience on labor and
employee benefit law; $282 for Daniel Kornfeld (“Kornfeld”), a partner at Blitman & King with
over fifteen years of experience on labor and employee benefit law; $137 to $160 for paralegals and
secretaries. Clark Aff. ¶ 23 n.1; Id., Ex. H at 41-42. “Th[e Second] Circuit’s ‘forum rule’ generally
requires use of ‘the hourly rates employed in the district in which the reviewing court sits in
calculating the presumptively reasonable fee.’” Bergerson, 652 F.3d at 290 (quoting Simmons, 575
F.3d at 174). Recent cases in the Northern District have upheld hourly rates between $250 and $345
for partners, between $165 and $200 for senior associates, and between $80 and $90 for paralegals.
Pope v. County of Albany, No. 11-cv-0736, 2015 WL 5510944, at *9 (N.D.N.Y. Sept. 16, 2015)
(Kahn, J.) (collecting cases). The rates Plaintiffs seek for Clark and Kornfeld are within the range
awarded by courts in the Northern District. Having reviewed the Clark Affidavit, the Court accepts
these rates as reasonable. However, the rates Plaintiffs request for their paralegals are higher than
the range allowed in the Northern District. Because Plaintiffs have not offered any justification for
this higher rate, the Court will apply a rate of $80 to work performed by Plaintiffs’ paralegals.
The Court next turns to the reasonableness of the hours billed. “[T]o determine whether
time for which reimbursement is sought was reasonably spent, the court must evaluate the tasks and
6

The Exhibits attached to the Clark Affidavit are found at docket numbers 65-4 and 65-5.
12

the time documented in counsel’s contemporaneous time records in light of its general experience
and its experience with the case.” Liberty Mut. Ins. Co. v. Conmas, Inc., No. 10-CV-717, 2012 WL
913312, at *3 (N.D.N.Y. Mar. 16, 2012) (quoting DLJ Mortg. Capital, Inc. v. Act Lending Corp.,
No. 07 Civ. 10318, 2008 WL 5517589, at *7 (S.D.N.Y. Dec. 1, 2008)). The party seeking an award
of attorneys’ fees must support such application with sufficiently detailed records of the nature of
the work performed. See Lewis v. Coughlin, 801 F.2d 570, 577 (2d Cir. 1986).
Plaintiffs’ billing records document the hours expended and the nature of the tasks
completed for each attorney in sufficient detail. The Court finds the amount of time expended
reasonable for pursuing this action. However, Plaintiffs did not submit contemporaneous time
records. In the Second Circuit, attorneys seeking an award of fees must submit contemporaneous
time records from which the Court can determine whether the hours expended were reasonable.
N.Y. State Ass’n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983) (“[A]ny
attorney . . . who applies for court-ordered compensation in this Circuit for work done after the date
of this opinion must document the application with contemporaneous time records. These records
should specify, for each attorney, the date, the hours expended, and the nature of the work done.”);
see also Scott v. City of N.Y., 626 F.3d 130, 133 (2d Cir. 2010) (“Carey establishes a strict rule
from which attorneys may deviate only in the rarest of cases.”). The Court will accordingly reduce
the number of hours for which fees are awarded by 30%. See Monaghan v. SZS 33 Assos., L.P.,
154 F.R.D. 78, 84 (S.D.N.Y. 1994) (“[C]ourts in this Circuit intermittently have seen fit to adopt
roughly a 30% fee reduction rule for an attorney’s failure to keep contemporaneous time records of
their services.”). The reduction will be deducted proportionally from the number of hours reported
for each attorney or paralegal.
13

Plaintiffs also request $3,260.12 in costs incurred from June 15, 2009 through April 20,
2015. Clark Aff. ¶ 25; Clark Aff., Ex. H at 193-208. “[A]ttorney’s fees awards include those
reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients.”
LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998) (citation omitted). Upon review,
the Court finds Plaintiffs’ requested costs reasonable.
Accordingly, the Court awards Plaintiffs $32,827.94 in reasonable attorneys’ fees and costs.
The Court next considers Plaintiffs’ request for $18,320.77 in audit fees. Plaintiffs are
entitled to “auditing fees” incurred in collecting delinquent contributions under the Collections
Policy. Harrigan Aff., Ex. F at 3. “Requests for audit for audit fees are ‘generally determined by
utilizing the same standards the court applies in awarding attorneys’ fees.’” Teamsters Local 814
Welfare Fund v. Dahill Moving & Storage Co., 545 F. Supp. 2d 260, 269 (E.D.N.Y. 2008) (quoting
King v. Unique Rigging Corp., No 01-CV-3797, 2006 WL 3335011, at *5 (E.D.N.Y. Oct. 27,
2006)). Plaintiffs have submitted the invoices of Joseph W. McCarthy & Associates, who
performed the audit, indicating the number of hours spent on the audit and the rates charged.
McCarthy Aff., Ex. C. However, the invoices do not specify the work performed and therefore offer
no basis for the Court to determine whether or not Plaintiffs’ request is reasonable. Teamsters Local
814, 545 F. Supp. 2d at 270. Accordingly, Plaintiffs’ request for $18,320.77 in audit fees is denied
without prejudice.
4. Summary
In sum, the Court awards Plaintiffs $711,429.09 against Destro Development.
B. Destro
Plaintiffs further request judgment against Destro in the amount of $467,447.82, consisting
14

of $207,221.24 in unpaid contributions, $189,608.49 in prejudgment interest, $52,297.32 in
attorneys’ fees and costs, and $18,320.77 in audit fees. Mem. at 14.
1. Liability
Section 409 of ERISA provides that
Any person who is a fiduciary with respect to a plan who breaches any of the
responsibilities, obligation, or duties imposed upon fiduciaries by this subchapter shall
be personally liable to make good to such plan any losses to the plan resulting from each
such breach, and to restore to such plan any profits of such fiduciary which have been
made through use of assets of the plan by the fiduciary, and shall be subject to such
other equitable or remedial relief as the court may deem appropriate, including removal
of such fiduciary.
29 U.S.C. § 1109. “A fiduciary, under ERISA is ‘someone who exercises any discretionary
authority or discretionary control respecting management of [an ERISA benefit] plan or exercises
any authority or control respecting management or disposition of its assets.’” Bricklayers & Allied
Craftworkers Local 2, Albany, New York Pension Fund v. Moulton Masonry & Const., LLC, 779
F.3d 182, 188 (2d Cir. 2015) (alteration in original) (quoting Finkel v. Romanowicz, 577 F.3d 79,
85 (2d Cir. 2009)).
Here, the undisputed facts establish that Destro was the officer and manager of Destro
Development, who ran the day-to-day operations of the company, who determined when and how
much money would be paid to the Plans, and who chose not to pay the company’s obligations to the
Plans. SMF ¶ 2. Furthermore, the Agreements and Declarations of Trust for the Welfare, Pension,
S.U.B., and Training Funds classify unpaid contributions as trust assets. Harrigan Aff., Ex. A at 42;
Id., Ex. B at 76; Id., Ex. C at 106; Id., Ex. D at 146.7 However, the Agreements and Declarations of

7

Citations to Amendments to the Agreements and Declarations of Trust refer to the
pagination assigned by ECF.
15

Trust for the Local 17 Training Fund and Central Pension Fund do not classify unpaid contributions
as trust assets. Fanning Aff., Ex. A; Smolinski Aff., Ex. A. Plaintiffs’ submissions are therefore
sufficient to establish that Destro was a fiduciary of the Welare, Pension, S.U.B., and Training
Funds; they do not establish that Destro was a fiduciary of the Local 17 Training and Central
Pension Funds. See Moulton, 779 F.3d at 189 (finding liability under § 409 where complaint
alleged defendant exercised control over money due to plaintiff funds, determined which creditors
the company would pay, and failed to remit contributions under his control, when the contributions
were designated as plan assets); see also In re Halpin, 566 F.3d 286, 290 (2d Cir. 2009) (stating that
presumption is that unpaid employer contributions are not plan assets, but that parties can contract
around presumption). Accordingly, Destro is liable under § 409 for breach of his fiduciary duties as
to the Welfare, Pension, S.U.B., and Training Funds.
2. Damages
Having established Destro’s liability, Plaintiffs are entitled to “any losses to the plan
resulting from such breach.” 29 U.S.C. § 1109. Plaintiffs’ submissions—discounting for the fact
that Destro is not liable for unpaid contributions to the Local 17 Training and Central Pension
Funds—establish that Destro owes $149,076.90 in unpaid contributions. Harrigan Aff. ¶ 32; Noon
Aff. ¶ 33. Plaintiffs are also entitled to “such other equitable or remedial relief as the court may
deem appropriate,” 29 U.S.C. § 1109(a), which may include prejudgment interest and attorneys’
fees. Moulton, 779 F.3d at 190.
a. Interest
A district court has “wide discretion” under § 409(a) to award prejudgment interest. Diduck,
974 F.2d at 286. Prejudgment interest is intended to serve “as compensation for the use of money
16

withheld” and to put “the plan in the position it would have occupied but for the breach.” Id. Thus,
in order to make the Plans whole, the Court finds it appropriate to award Plaintiffs prejudgment
interest against Destro.
As stated in Diduck,
Assessing the appropriate amount of interest requires a comparison of what the plan
earned during the time in question and what it would have earned had the money lost due
to the breach been available. One must look to the return on investments held by the plan
to determine the appropriate interest rate to be applied under § 409. The burden is on
defendant to demonstrate the plan would not have placed the money in the most
profitable of equally plausible investment alternatives.
Id. Consistent with this statement, Plaintiffs have submitted investment manager reports showing
the rates of return on various investments. Harrigan Aff., Ex. I. Plaintiffs claim interest based on
the following rates of return earned by their investments during 2009 to 2014:
Highest Rate
of Return on
Investments
2009

Highest Rate
of Return on
Investments
2010

Highest Rate
of Return on
Investments
2011

Highest Rate
of Return on
Investments
2012

Highest Rate
of Return on
Investments
2013

Highest Rate
of Return on
Investments
2014

Welfare Fund

9.37%

10.11%

7.59%

7.69%

5.95%

4.85%

Pension Fund

28.9%

10.93%

5.25%

9.78%

10.34%

6.86%

S.U.B. Fund

8.18%

7.52%

4.99%

4.70%

1.40%

3.43%

Training
Fund

6.46%

10.25%

7.64%

7.25%

5.07%

4.36%

Harrigan Aff. ¶ 36.
However, based on its review of Plaintiffs’ submission, the Court finds that Plaintiffs’
documentation for these years appears to be incomplete. Furthermore, Plaintiffs seek interest for the
period from 2006 to 2014. See Demacy Aff., Ex. C at 86-93. However, their submission only
provides evidence of the rates of return earned during 2009 to 2014. Harrigan Aff., Ex. I.
Accordingly, the Court does not find that Plaintiffs have met their burden of establishing that they
17

are entitled to the requested rates. See Bricklayers & Allied Craftworkers Local 2 v. Moulton
Masonry & Constr., LLC, 113 F. Supp. 3d 601, 607 (N.D.N.Y. 2015). “The court must . . . explain
and articulate its reasons for any decision regarding prejudgment interest.” Henry v. Champlain
Enters., Inc., 445 F.3d 610, 623 (2d Cir. 2006). Because the Court cannot determine based on the
record whether Plaintiffs’ requested rates are appropriate and Plaintiffs do not suggest an alternative
rate, Plaintiffs’ request for prejudgment interest is denied without prejudice to renew.
b. Attorneys’ Fees and Costs
Under § 1131(g)(1) of ERISA, “[i]n any action under this subchapter . . . the court in its
discretion may allow a reasonable attorney’s fee and costs of action to either party.” 29 U.S.C.
§ 1131(g)(1). A court may only award attorneys’ fees to a plaintiff who has achieved “some degree
of success on the merits.” Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254 (2010); see
also Donachie v. Liberty Life Assurance Co. of Boston, 745 F.3d 41 (2d Cir. 2014) (“After Hardt,
whether a plaintiff has obtained some degree of success on the merits is the sole factor that a court
must consider in exercising its discretion.”). Under Hardt, courts retain discretion to consider the
five Chambless factors in deciding whether to award fees. Hardt, 560 U.S. at 255 n.8; see also
Toussaint v. JJ Weiser, Inc., 648 F.3d 108, 110 (2d Cir. 2011). The Chambless factors are:
(1) the degree of opposing parties’ culpability or bad faith; (2) ability of opposing
parties to satisfy an award of attorneys’ fees; (3) whether an award of attorneys’ fees
against the opposing parties would deter other persons acting under similar
circumstances; (4) whether the parties requesting attorneys’ fees sought to benefit all
participants and beneficiaries of an ERISA plan or to resolve a significant legal question
regarding ERISA itself; and (5) the relative merits of the parties’ positions.
Donachie, 745 F.3d at 46 (quoting Hardt, 560 U.S. at 249 n.1). “[N]o one Chambless factor is
dispositive.” Pierorazio v. Thalle Constr. Co., Inc., No. 13 CV 4500, 2014 WL 3887185, at *3

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(S.D.N.Y. June 26, 2014). Furthermore, “granting a prevailing plaintiff’s request for fees is
appropriate absent ‘some particular justification for not doing so.’” Donachie, 745 F.3d at 47
(quoting Birmingham v. SoGen–Swiss Int’l Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983)).
The Court finds that an award of fees is appropriate in this case. Plaintiffs are the prevailing
party, having established Destro’s liability under § 409. With respect to the first Chambless factor,
the Court finds the Destro was culpable. “[A] defendant is ‘culpable’ under Chambless where it
‘violated ERISA, thereby depriving plaintiffs of rights under a pension plan and violating a
Congressional mandate.’” Locher v. Unum Life Ins. Co. of Am., 389 F.3d 288, 299 (2d Cir. 2004).
Here, Destro did not remit Defendants’ obligations to Plaintiffs for a period extending from 2006 to
2014. Harrigan Aff. ¶¶ 36-37; Noon Aff. ¶¶ 37-38. Destro used trust assets to pay for other
obligations, including sports tickets, health insurance, life insurance, investments, car payments,
personal and corporate travel, and premiums on a snowmobile. Clark Aff. ¶ 9(5)(a). Furthermore,
Defendants did not accurately report the number of hours paid to their employees and
misrepresented the work performed by certain employees, causing Plaintiffs to incur audit and
attorneys’ fees pursuing Defendants’ delinquency. Noon Aff. ¶¶ 45-46; Harrigan Aff. ¶¶ 11-12.
Other Chambless factors weigh in favor of awarding Plaintiffs fees: an award of fees would deter
other parties from similar conduct; Plaintiffs’ position was clearly of merit, because Plaintiffs’
audits demonstrate that Defendants failed to remit fees for a period from 2006 to 2014; the action
confers a common benefit on the beneficiaries of the Plans by making the Funds whole. See
Bricklayers, 113 F. Supp. 3d at 609. The Court is unable to determine Destro’s ability to satisfy an
award of attorneys’ fees.
Accordingly, consistent with the Court’s analysis above regarding the reasonableness of
19

Plaintiffs’ fee request, Plaintiffs are awarded $32,827.94 in attorneys’ fees against Destro. To the
extent, Plaintiffs request audit fees, that request is denied without prejudice to renew because
Plaintiffs have not shown they are entitled to audit fees under § 1131(g)(1). Furthermore, the Court
found above that Plaintiffs failed to meet their burden of showing that they were entitled to the
requested audit fees.
c. Summary
The Court therefore awards Plaintiffs $181,904.84 against Destro.
C. Defendants’ Answer
In their Answer, Defendants state that Plaintiffs failed to properly credit certain payments.
Dkt. No. 12 (“Answer”). To the extent Defendants seek to state a claim under ERISA, Defendants
lack standing. Under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), a civil action may be brought by
“the Secretary [of Labor], or by a participant, beneficiary or fiduciary.” Neither Destro
Development nor Destro are participants, beneficiaries, or fiduciaries of the Plans. 29 U.S.C.
§ 1002(7), (8), (21). Accordingly, Defendants lack standing to assert a claim under ERISA and
Plaintiffs’ Motion is granted as to Defendants’ defense.
V.

CONCLUSION
Accordingly, it is hereby:
ORDERED, that Plaintiffs’ Motion (Dkt. No. 65) for summary judgment is GRANTED in

part and DENIED in part consistent with this Memorandum-Decision and Order; and it is further
ORDERED, that Plaintiffs are awarded $711,429.09 plus post-judgment interest at the rate
pursuant to 28 U.S.C. § 1961 against Defendant C. Destro Development Corporation, Inc.,
consisting of: (1) $223,031.88 in unpaid contributions and deductions; (2) $232,640.63 in interest
20

and (3) $220,346.35 in liquidated damages on unpaid contributions and deductions, plus interest
from June 5, 2015 through the date of judgment at the rates provided for by 29 U.S.C. § 1132(g)(2)
and the Trusts and Collections Policy;8 (4) $2,582.29 in interest on untimely contributions, and (5)
$32,827.94 in attorneys’ fees and costs; and it is further
ORDERED, that Plaintiffs are awarded $181,904.84 plus post-judgment interest at the rate
pursuant to 28 U.S.C. § 1961 against Defendant Carmen Destro, Jr., consisting of: (1) $149,076.90
in unpaid contributions and (2) $32,827.94 in attorneys’ fees and costs; and it is further
ORDERED, that Plaintiffs may renew their Motion for summary judgment within thirty
(30) days of the date of this Memorandum-Decision and Order; and it is further
ORDERED, that if Plaintiffs do not renew their Motion for summary judgment within
thirty (30) days of the date of this Memorandum-Decision and Order, then the Clerk of Court shall
enter judgment in the above amounts in favor of Plaintiffs and close this action; and it is further
ORDERED, that Plaintiffs’ Letter Motion (Dkt. No. 74) is GRANTED; and it is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.

8

The applicable rates of interest are: 2% per month for the Pension, Welfare, S.U.B., and
Training Funds; 9% simple interest for the Central Pension Fund; the rate prescribed by ERISA
§ 502(g)(2) for the Local 17 Training Fund; and the rate prescribed by N.Y. C.P.L.R. 5004 for
unpaid Union deductions.
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DATED:

March 31, 2016
Albany, NY

22