Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, Apprenticeship, Journeyman, Retraining, Educational and Industry Fund et al v. Paladin Construction Corp.
Filing
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OPINION AND ORDER: For the reasons stated above, the Court grants in part and denies in part plaintiffs unopposed motion for summary judgment. On Claims One, Two, and Four, summary judgment is granted to plaintiffs. On Claim Three, summary judgment i s denied, without prejudice to plaintiffs ability to pursue this claim in Bankruptcy Court or, in the event plaintiffs can show that this Court is an appropriate forum to resolve this claim, in this Court. Judgment is awarded in the amount of: Claim One: $16,346.14, with interest at the rate of 5.25% from February 3, 2012 Claim Two: $244,494.68, with interest at the rate of 5.25% from May 21, 2012. Claim Four: $42,479.96, with interest at the rate of 5.25% (the prim e rate of Citibank plus 2%) from February 28, 2012, plus liquidated damages of $8,495.99 (20% of the principal). The parties are directed to submit a letter setting out, in detail, their views as to how the parties wish to proceed as to attorneys' fees. Plaintiffs' letter is due by June 17, 2013. Defendant's letter in response, if any, is due by June 24, 2013. (Signed by Judge Paul A. Engelmayer on 6/10/2013) (js) Modified on 6/11/2013 (js).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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TRUSTEES OF THE NEW YORK CITY DISTRICT
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COUNCIL OF CARPENTERS PENSION FUND,
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WELFARE FUND, ANNUITY FUND,
:
APPRENTICESHIP, JOURNEYMAN, RETRAINING,
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EDUCATIONAL AND INDUSTRY FUND et al.,
:
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Plaintiffs,
:
:
-v:
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PALADIN CONSTRUCTION CORP.,
:
:
Defendant.
:
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12 Civ. 1533 (PAE)
OPINION & ORDER
PAUL A. ENGELMAYER, District Judge:
This case arises out of a collective bargaining agreement between the parties. Plaintiffs
are the Trustees of the New York City District Council of Carpenters Welfare, Annuity,
Apprenticeship, Journeyman Retraining and Educational and Industry Fund (the “ERISA Fund”),
the Trustees of the New York City District Council of Carpenters Charity Fund (the “Charity
Fund”; together with the ERISA Fund, the “Funds”), and the District Council for New York City
and Vicinity, United Brotherhood of Carpenters and Joiners of America (the “Union”; together
with the Funds, “plaintiffs”). Defendant Paladin Construction Corp. (“Paladin”) is an employer
who is a signatory of the collective bargaining agreement with the Union.
Plaintiffs seek to (1) confirm two arbitration awards in their favor (Claims One and Two);
(2) enforce an order of the United States Bankruptcy Court for the Eastern District of New York
(Claim Three); and (3) collect unpaid contributions from Paladin due under the collective
bargaining agreement and the Employment Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. § 1145 (Claim Four). Plaintiffs now move for summary judgment. Paladin has not
opposed their motion. For the reasons that follow, that motion is granted in part.
I.
Background 1
On July 1, 2001, Paladin entered into a collective bargaining agreement with the Union.
See Capurso Decl. Ex. A (the “CBA”). The agreement covered all carpentry work within the
trade and geographical jurisdiction of the Union. Pl. 56.1 ¶ 7; CBA art. II § 2. By its terms, it
was to be effective through June 30, 2006, and thereafter to renew automatically for one-year
terms, unless either party sought to modify or amend it. CBA art. XIX; Pl. 56.1 ¶ 12. Paladin
has “not provide[d] written notice indicating a desire to negotiate a new contract or modify or
amend the CBA.” Capurso Decl. ¶ 15.
As part of the CBA, Paladin was required to make regular contribution payments to the
Funds, based on the number of hours worked by its employees. CBA art. XV. The CBA sets out
specific amounts to be contributed by Paladin to each constituent fund. Id. § 2.
As an enforcement mechanism, the CBA provides for audits by the Union to verify
independently that proper contributions have been made. Id. § 1. The CBA further provides that
any dispute as to payment of these contributions is to be resolved through an arbitrator; in the
agreement, the parties designated four potential impartial arbitrators. Id. § 7. Finally, the CBA
includes a provision that awards, in addition to any unpaid contributions, “interest at the prime
rate of Citibank plus 2%,” plus “an amount equal to the greater of -- (a) the amount of the
interest charges on the unpaid contribution as determined in the above, or (b) liquidated damages
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The Court’s account of the underlying facts of this case is drawn from plaintiffs’ submissions in
support of the instant motions—specifically, the Declaration of Paul Capurso (“Capurso Decl.”)
(Dkt. 20) and attached exhibits; the Declaration of Luke Powers (“Powers Decl.”) (Dkt. 21) and
attached exhibits; the Declaration of Richard B. Epstein (“Epstein Decl.”) (Dkt. 22) and attached
exhibits; and Plaintiff’s Local Rule 56.1 Statement of Material Fact (“Pl. 56.1”) (Dkt. 19).
Citations to a party’s 56.1 Statement incorporate by reference the documents cited therein.
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of 20% of the amount of the unpaid contributions,” plus “reasonable attorney’s fees and costs of
the action.” Id. § 6.
II.
Discussion
A.
Unopposed Summary Judgment Standard
To prevail on a motion for summary judgment, the movant must “show[] that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). The movant bears the burden of demonstrating the absence of a
question of material fact. In making this determination, the Court must view all facts “in the
light most favorable” to the non-moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); see also Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d Cir. 2008). To survive a
summary judgment motion, the opposing party must establish a genuine issue of fact by “citing
to particular parts of materials in the record.” Fed. R. Civ. P. 56(c)(1); see also Wright v. Goord,
554 F.3d 255, 266 (2d Cir. 2009). Only disputes over “facts that might affect the outcome of the
suit under the governing law” will preclude a grant of summary judgment. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether there are genuine issues of
material fact, the Court is “required to resolve all ambiguities and draw all permissible factual
inferences in favor of the party against whom summary judgment is sought.” Johnson v. Killian,
680 F.3d 234, 236 (2d Cir. 2012) (citing Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)).
However, “[e]ven when a motion for summary judgment is unopposed, the district court
is not relieved of its duty to decide whether the movant is entitled to judgment as a matter of
law.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 242 (2d Cir. 2004); Amaker v.
Foley, 274 F.3d 677, 681 (2d Cir. 2001) (“[W]hen a nonmoving party chooses the perilous path
of failing to submit a response to a summary judgment motion, the district court may not grant
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the motion without first examining the moving party’s submission to determine if it has met its
burden of demonstrating that no material issue of fact remains for trial . . . .”).
B.
The Arbitration Award
1. Facts
Pursuant to the CBA, plaintiffs audited Paladin’s books for the period between April 3,
2010, and December 28, 2010. This audit established delinquencies. Pl. 56.1 ¶ 13. Paladin
refused to pay; plaintiffs sought arbitration. A later audit, for the period between December 29,
2010, and December 27, 2011, uncovered additional delinquencies, for which the plaintiffs also
sought arbitration.
Plaintiffs seek to enforce two separate arbitration awards. The first, dated February 3,
2012, found Paladin delinquent in not providing fringe benefit monies due under the CBA.
Powers Decl. Ex. D. The arbitrator awarded plaintiffs $16,346.14, which included interest,
liquidated damages, attorneys’ fees, and other costs. Id. at 3.
The second, dated May 21, 2012, found additional delinquencies for the following year.
Powers Decl. Ex. F. The arbitrator awarded plaintiffs $244,494.68, which included interest,
liquidated damages, attorneys’ fees, and other costs. Id. at 3.
Both arbitrations took the form of default hearings, because Paladin, despite being given
notice, failed to appear. See id. Ex. B, E; Pl. 56.1 ¶¶ 17, 23. The Funds have not been paid the
amount awarded them in arbitration. Powers Decl. ¶¶ 5, 7.
2. Confirmation of Awards
The FAA provides a “streamlined” process for a party seeking a “judicial decree
confirming an award, an order vacating it, or an order modifying or correcting it.” Hall St.
Assocs. L.L.C. v. Mattell, Inc., 552 U.S. 576, 582 (2008). “Normally, confirmation of an
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arbitration award is a summary proceeding that merely makes what is already a final arbitration
award a judgment of the court, and the court must grant the award unless the award is vacated,
modified, or corrected.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006). But
“[a]rbitration awards are not self-enforcing.” Hoeft v. MVL Grp., Inc., 343 F.3d 57, 63 (2d Cir.
2003), overruled on other grounds by Hall St., 552 U.S. 576. Rather, “they must be given force
and effect by being converted to judicial orders by courts.” D.H. Blair, 462 F.3d at 104.
Review of an arbitral award by a district court “is ‘severely limited’ so as not unduly to
frustrate the goals of arbitration, namely to settle disputes efficiently and avoid long and
expensive litigation.” Salzman v. KCD Fin., Inc., No. 11 Civ. 5865 (DLC), 2011 WL 6778499,
at *2 (S.D.N.Y. Dec. 21, 2011) (quoting Willemijn Houdstermaatschappij, BV v. Standards
Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997)). “To ensure that the twin goals of
arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation are
met, arbitration awards are subject to very limited review.” NYKcool A.B. v. Pac. Fruit Inc., No.
10 Civ. 3867 (LAK)(AJP), 2010 WL 4812975, at *5 (S.D.N.Y. Nov. 24, 2010) (collecting recent
Second Circuit cases). Indeed, “an arbitration award should be enforced, despite a court’s
disagreement with it on the merits, if there is a barely colorable justification for the outcome
reached.” Landy Michaels Realty Corp. v. Local 32B–32J, Serv. Emps. Int’l Union, AFL–CIO,
954 F.2d 794, 797 (2d Cir. 1992) (citation omitted).
Here, although Paladin has not responded to the summary judgment motion, a remedy in
plaintiffs’ favor in the form of a default judgment is inappropriate. The Second Circuit has made
clear that the default judgment procedure set by Federal Rule of Civil Procedure 55 “does not
operate well in the context of a motion to confirm or vacate an arbitration award.” D.H. Blair,
462 F.3d at 107. “While Rule 55 is meant to apply to situations in which only a complaint has
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been filed ‘and the court thus has only allegations and no evidence before it,’ ‘a motion to
confirm or vacate an [arbitration] award is generally accompanied by a record, such as an
agreement to arbitrate and the arbitration award decision itself, that may resolve many of the
merits or at least command judicial deference.’” N.Y.C. Dist. Council of Carpenters Pension
Fund v. Star Intercom & Constr., Inc., No. 11 Civ. 03015 (RJH), 2011 WL 5103349, at *3
(S.D.N.Y. Oct. 27, 2011) (alteration in original) (quoting D.H. Blair, 462 F.3d at 109).
Therefore, “generally a district court should treat an unanswered . . . petition to confirm
[or] vacate as an unopposed motion for summary judgment.” D.H. Blair, 462 F.3d at 110. Thus,
on an unopposed motion for confirmation of an arbitration award,
a court “may not grant the motion without first examining the moving party’s
submission to determine if it has met its burden of demonstrating that no material
issue of fact remains for trial. If the evidence submitted in support of the
summary judgment motion does not meet the movant’s burden of production, then
summary judgment must be denied even if no opposing evidentiary matter is
presented.”
D.H. Blair, 462 F.3d at 110 (emphasis in original) (quoting Vt. Teddy Bear Co., 373 F.3d at 244).
Accordingly, the Court treats petitioners’ motion as one for summary judgment under Rule 56,
rather than for default judgment under Rule 55.
On the basis of the arbitral awards, and on the very limited review that is appropriate, the
Court concludes that plaintiffs have shown that there is no material issue of fact for trial. The
arbitrator was acting within the scope of the authority granted him by the parties. See CBA Art.
XV § 10. There is at least, and by all indications more than, a “barely colorable justification for
the outcome reached.” Landy Michaels Realty Corp., 954 F.2d at 797. Accordingly, the Court
confirms both awards in favor of plaintiffs, for a total amount of $260,840.82, plus interest.
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C.
Bankruptcy Plan of Reorganization
In an Order dated July 10, 2008, the Honorable Jerome Feller, United States Bankruptcy
Judge in the Eastern District of New York, confirmed an amended Chapter 11 plan of
reorganization for Paladin. See Powers Decl. Ex. G. The plan provides that Paladin shall make
monthly payments in the amount of $767.16 to “NYC Dist. Counsil [sic] Carpenter.” Id. at 6.
The payments are classified as a “priority” claim. Id. The Funds have not received any of these
payments, which total $36,823.68. Powers Decl. ¶ 9.
Although plaintiffs have put forward evidence that, under the confirmed Order, Paladin
has defaulted on monthly payments due to the plaintiffs, they have not sufficiently supported
their request for this Court to enforce that plan. The Order of the Bankruptcy Court confirming
the reorganization plan states that “[i]n accordance with Fed. R. Bankr. P. 3020(d), the Court
retains jurisdiction post-confirmation to issue any order necessary to administer the estate.”
Powers Decl. Ex. G ¶ 2. In an attempt to defeat this reservation of jurisdiction, plaintiffs cite
only to 28 U.S.C. § 1334, which states that “the district courts shall have original but not
exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to
cases under title 11.” 28 U.S.C. § 1334.
Because the Bankruptcy Court expressly retained its jurisdiction, and there is no
indication that plaintiffs have sought relief in that forum, the Court will not disturb the terms of
the Order. 2 Accordingly, plaintiffs’ motion for summary judgment as to that claim is denied,
without prejudice to plaintiffs’ ability to pursue their claims in Bankruptcy Court, or, upon a
2
On the record before it, the Bankruptcy Court appears to have a basis for post-confirmation
jurisdiction over this issue: The nonpayment of the monthly payments to plaintiffs has a “close
nexus” to the plan, and the plan expressly provides for retention of jurisdiction. See In re Park
Ave. Radiologists, P.C., 450 B.R. 461, 467–68 (Bankr. S.D.N.Y. 2011) (enumerating
requirements for post-confirmation jurisdiction); see also Luan Inv. S.E. v. Franklin 145 Corp.
(In re Petrie Retail, Inc.), 304 F.3d 223, 230 (2d Cir. 2002); 11 U.S.C. § 1142.
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proper showing that this Court is an appropriate forum notwithstanding the Bankruptcy Court’s
retention of jurisdiction, in this Court.
D.
Unpaid Contribution Payments
Finally, plaintiffs seek additional unpaid contribution payments, for which there is no
arbitration award. Under the terms of the CBA, Paladin must remit contributions for all hours
worked within the trade and geographical jurisdiction of the Union. CBA art. XV. Such
contributions are authorized by ERISA. See 29 U.S.C. § 1145. Paladin has failed to remit such
contributions for the period between January 2, 2012, and February 28, 2012, and the Funds have
not received contributions for that period. Powers Decl. ¶ 12; Pl. 56.1 ¶¶ 26–27. According to
Paladin’s records, plaintiffs are owed $42,479.96. See Powers Decl. Ex. H.
There is no material dispute of fact for trial. Accordingly, the Court grants summary
judgment to plaintiffs on Claim Four.
In addition to the principal amount of unpaid contributions, ERISA and the CBA each
require that Paladin pay interest, liquidated damages, and fees:
In any action under this subchapter by a fiduciary for or on behalf of a plan to
enforce section 1145 of this title in which a judgment in favor of the plan is
awarded, the court shall award the plan-(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(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),
(D) reasonable attorney’s fees and costs of the action, to be paid by the defendant,
and
(E) such other legal or equitable relief as the court deems appropriate.
For purposes of this paragraph, interest 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.
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29 U.S.C. § 1132(g)(2). Article XV § 6 of the CBA provides for an interest rate of “the prime
rate of Citibank plus 2%,” and “liquidated damages of 20%.” CBA Art. XV § 6. The Court
awards plaintiffs those additional amounts as well.
E.
Attorneys’ Fees
Finally, plaintiffs seek reasonable attorneys’ fees and costs. The CBA provides that, “in
the event that formal proceedings are instituted . . . to collect delinquent contributions” to the
Funds, “reasonable attorney’s fees and costs of the action” shall be awarded. CBA art. XV § 6.
ERISA, too, provides that reasonable attorneys’ fees are to be paid by the defendant. See 29
U.S.C. § 1132(g)(2). Neither provision affords the Court discretion: In an enforcement action
brought by an ERISA plan under § 1145 for unpaid contributions and accrued interest, in which
the plan receives a judgment in its favor, fees and costs are mandatory. Labarbera v. Clestra
Hauserman, Inc., 369 F.3d 224, 226 (2d Cir. 2004).
Accordingly, the Court awards plaintiffs reasonable attorneys’ fees and costs, to be
determined by the Court after submissions by the parties if the parties cannot agree among
themselves as to this figure.
CONCLUSION
For the reasons stated above, the Court grants in part and denies in part plaintiffs’
unopposed motion for summary judgment. On Claims One, Two, and Four, summary judgment
is granted to plaintiffs. On Claim Three, summary judgment is denied, without prejudice to
plaintiffs’ ability to pursue this claim in Bankruptcy Court or, in the event plaintiffs can show
that this Court is an appropriate forum to resolve this claim, in this Court.
Judgment is awarded in the amount of:
Claim One: $16,346.14, with interest at the rate of 5.25% from February 3, 2012.
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Claim Two: $244,494.68, with interest at the rate of 5.25% from May 21,2012.
Claim Four: $42,479.96, with interest at the rate of 5.25% (the prime rate of
Citibank plus 2%) from February 28,2012, plus liquidated damages of $8,495.99
(20% of the principal).
The parties are directed to submit a letter setting out, in detail, their views as to how the
parties wish to proceed as to attorneys' fees. Plaintiffs' letter is due by June 17,2013.
Defendant's letter in response, if any, is due by June 24, 2013.
SO ORDERED.
fwJA·[h
Paul A. Engelmayer
United States District Judge
Dated: June 10,2013
New York, New York
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