Trustees for The Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, and Training Program Fund et al v. One Ten Restoration Corp.
Filing
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OPINION AND ORDER re: 19 MOTION to Confirm Arbitration filed by Trustees for The Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, and Training Program Fund. For the reasons discussed above, Plaintiffs' motion to confirm the arbitration award is GRANTED. The Clerk of Court is directed to close the motion at Docket Number 19 and to close the case. SO ORDERED. (Signed by Judge J. Paul Oetken on 11/16/2016) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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TRUSTEES FOR THE MASON TENDERS
:
DISTRICT COUNCIL WELFARE FUND,
:
:
PENSION FUND, ANNUITY FUND, AND
TRAINING PROGRAM FUND, and JOHN J. :
VIRGA, in his fiduciary capacity as Director, and :
ROBERT BONANZA, as Business Manager of :
the MASON TENDERS DISTRICT COUNCIL :
:
OF GREATER NEW YORK,
:
Plaintiffs, :
:
-v:
:
ONE TEN RESTORATION CORP.,
:
:
Defendant. :
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15-CV-10000 (JPO)
OPINION AND ORDER
J. PAUL OETKEN, District Judge:
Trustees for the Mason Tenders District Council Welfare Fund, Pension Fund, Annuity
Fund, and Training Program (the “Funds”), John J. Virga, Director of the Mason Tenders District
Council of Greater New York (the “Union”), and Robert Bonanza, Business Manager of the
Union (together “Plaintiffs”) bring this action under section 301 of the Taft-Hartley Act, 29
U.S.C. § 185, seeking to confirm a default arbitration award against Defendant One Ten
Restoration Corp. (“One Ten”). One Ten opposes the motion to confirm arbitration, arguing that
it had insufficient notice of the arbitration and, in the alternative, that the arbitration award is
substantively flawed. For the reasons that follow, Plaintiffs’ motion to confirm arbitration is
granted.
I.
Background
The following facts are, unless otherwise noted, uncontested and taken from Plaintiffs’
56.1 Statement. (Dkt. No. 21.)
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Mason Tenders District Council of Greater New York (the “Union”) is a labor
organization. (Dkt. No. 21 ¶ 2.) The Union is represented in this action by Plaintiffs Virga and
Bonanza. (Dkt. No. 1.)
Plaintiff Trustees for the Mason Tenders District Council Welfare Fund, Pension Fund,
Annuity Fund, and Training Program (the “Funds”) is made up of “employer benefit plan[s]” and
“multiemployer plan[s],” as defined by ERISA, 29 U.S.C. §§1002(3), (37)(A). (Dkt. No. 21
¶ 1.) An Amended and Restated Agreement and Declaration of the Trust (the “Trust
Agreements”) establish and maintain the Funds. (Id.) The Funds provide fringe benefits to
employees, for whom employers contribute to the Funds under the terms of collective bargaining
agreements between those employers and the Union. (Id.)
Defendant One Ten is a contractor, an “Employer” as defined by the Trust Agreements,
and a signatory to the New York City School Construction Authority Project Labor Agreement
(“SCA PLA”) and an Independent Collective Bargaining Agreement (“CBA”) with the Union.
(Id. ¶¶ 4-9; see Dkt. No. 20-1.) The SCA PLA and the CBA obligate One Ten to pay wages and
benefit contributions to the Funds, to pay dues, and to make contributions to an affiliated
political action committee (“PAC”); they further bind One Ten to the Trust Agreements. (Dkt.
No. 21 ¶¶ 7, 9, 12; see Dkt. No. 20-3, Ex. 2.) The Trust Agreements, in turn, provide that the
Funds may take steps to collect delinquent contributions (as defined in the SCA PLA and the
CBA), including instituting legal or administrative proceedings. (Dkt. No. 21 ¶ 10; Dkt. No. 203, Ex. 2 at 38.) The Trust Agreements allow the Funds’ representatives to audit an employer
when necessary to ensure that it has made all required payments and contributions, and further
provide that if an employer is found to be substantially delinquent in the payment of
contributions, the employer “bear[s] the costs of the audit.” (Dkt. No. 21 ¶ 11; Dkt. No. 20-3,
Ex. 2 at 39.)
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When an employer is delinquent in payments and contributions, the Trust Agreements
and the correlative “Arbitration Procedures and Rules” (see Dkt. No. 20-3, Ex. 2 at 39; Dkt. No.
20-3, Ex. 3), as well as the CBA, provide that the Funds may initiate a binding arbitration
proceeding (Dkt. No. 21 ¶ 13; Dkt. No. 20 ¶¶ 16-17). In such proceedings, the Trust Agreements
provide that an employer may be responsible for all unpaid contributions, interest on these
contributions, interest on these contributions as liquidated damages, attorney’s fees and costs of
the action, and other legal or equitable relief where “appropriate.” (Dkt. No. 21 ¶ 14; Dkt. No.
20-3, Ex. 2 at 39-40.) The Arbitration Procedures and Rules explicitly authorize statutory
damages under ERISA. (Dkt. No. 20-3, Ex. 3 at 5.)
This action arises from an arbitration initiated by Plaintiffs against One Ten. The Funds
started to look into One Ten’s records beginning in November 2013, and auditors found that One
Ten owed unpaid principal fringe benefits, union dues, and PAC contributions. (Dkt. No. 21 ¶
15; Dkt. No. 20-4, Ex. 4 at 4-5, 6, 33.) The Funds proceeded, on March 14 and May 16, 2014, to
make demands for payment from One Ten by certified mail. (Dkt. No. 21 ¶ 16.) The Funds sent
the demands to the address where the audit of One Ten had been carried out: 2366 61st St.,
Brooklyn, New York. (Dkt. No. 20 ¶ 19-20; Dkt. No. 21 ¶ 16.) The certified mail receipts bear
a signature of the addressee’s “Agent.” (Dkt. No. 20-5, Ex. 5 at 4, 7.) One Ten confirms that
2366 61st St., Brooklyn, had been its address but represents that the business relocated from
December 1, 2012 to December 28, 2014, during the period of the audit and all notices related to
this matter. (See Dkt. No. 25 ¶¶ 9, 13, 17.)
Having received no payment from One Ten, counsel for the Funds sent an additional
request for payment to the same address on July 25, 2014, indicating that if One Ten again failed
to make payment, the matter would be referred to arbitration “pursuant to the relevant collective
bargaining agreement.” (Dkt. No. 20-5 at 8; Dkt. No. 21 ¶ 17.) Several months later, One Ten
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had still failed to pay. On November 12, 2014, the Funds forwarded, together with a copy of the
Arbitration Procedures and Rules, a “Notice of Intention to Arbitrate” to One Ten and to
Arbitrator Joseph A. Harris. (Dkt. No. 20-5, Ex. 6 at 11; Dkt. No. 21 ¶ 18.) The certified mail
receipt again indicates that an “Agent” received the Notice at 2366 61st St., Brooklyn, on
November 13. (Dkt. No. 20-5, Ex. 6 at 12.) By first class mail, Arbitrator Harris then notified
One Ten (at the same address) that a hearing would be held on December 18, 2014. (Dkt. No.
20-5, Ex. 7.)
One Ten failed to appear at the hearing. Noting that the Funds had properly sent a
“Notice of Intention to Arbitrate” that “had not been returned,” and that he had also mailed the
date and time of the arbitration by first class mail which “was not returned,” Arbitrator Harris
“ruled that the arbitration would proceed as a default hearing.” (Dkt. No. 20-5, Ex. 8
(“Arbitration Opinion”) at 2.)
The Funds submitted evidence that they followed the procedures established in the Trust
Agreements and the Arbitration Rules and Procedures: They completed an audit; issued a
demand for payment by certified mail (and produced evidence that it had been received); and
sent a notice of intention to arbitrate (again with evidence that it had been received). (Id.) The
Funds also submitted the auditor’s reports and testimony by the Funds’ Collection Manager to
establish the precise sum of delinquent contributions: $197,142.88 in fringe benefits, dues and
PAC, interest, and payroll audit costs as of December 16, 2014; and an additional $687.55 in
interest for the period September 1, 2011 to November 30, 2011 for late payment of fringe
benefit contributions. (Id.) The Funds also sought ERISA statutory damages (measured by 20%
of the outstanding principal, or $28,855.00) and legal fees of $500.00, pursuant to the Trust
Agreements and Arbitration Procedures and Rules. The Arbitrator entered judgment against the
Funds for the sum of these amounts, plus arbitrator fees $1,500.00, totaling $228,625.43. (Id.)
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Plaintiffs forwarded a copy of the award to One Ten on January 6, 2015. (Dkt. No. 21 ¶
22.) One Ten failed to pay the award. (Id.) Plaintiffs then filed the instant action on December
23, 2015, along with the motion to confirm the arbitration award. (Id. ¶ 27.)
II.
Legal Standard
“[T]he court’s function in confirming or vacating an arbitration award is severely
limited.” N.Y.C. Dist. Council of Carpenters v. Oneida View Pile Driving Inc., No. 14 Civ.
4104, 2015 WL 427006, at *1 (S.D.N.Y. Feb. 2, 2015) (Oetken, J.) (quoting Willemijn
Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir.1997)).
Courts uphold a challenged award as long as “there is a ‘barely colorable justification for the
outcome reached.’” Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255, 260
(2d Cir. 2003) (quoting Landy Michaels Realty Corp. v. Local 32B–32J, Serv. Emps. Int’l Union,
AFL–CIO, 954 F.2d 794, 797 (2d Cir. 1992)).
“[T]he federal policy in favor of enforcing arbitration awards is particularly strong with
respect to arbitration of labor disputes.” N.Y.C. Dist. Council of Carpenters, 2015 WL 427006,
at *1 (quoting N.Y.C. Dist. Council of Carpenters v. Gen–Cap Indus., No. 11 Civ. 8425, 2012
WL 2958265, at *2 (S.D.N.Y. July 20, 2012)). “Such an award warrants confirmation as long as
it ‘draws its essence from the collective bargaining agreement and is not merely an exercise of
the arbitrator’s own brand of industrial justice.’” Id. (quoting Int’l Bhd. of Elec. Workers, Local
97 v. Niagara Mohawk Power Corp., 143 F.3d 704, 714 (2d Cir. 1998)).
III.
Discussion
One Ten challenges the Arbitrator’s decision on two grounds: (1) insufficient notice; and
(2) lack of detail in Plaintiffs’ audits and the Arbitrator’s award. The Court addresses each
objection in turn.
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A.
Notice
First, One Ten challenges Arbitrator Harris’s finding that One Ten had received due
notice of the arbitration. (Dkt. No. 25 ¶ 10.)
“[T]he relevant inquiry under both the federal and New York arbitration statutes is
whether misconduct by the Arbitrator resulted in a denial of ‘fundamental fairness.’” Miss
Universe L.P., LLLP. v. Monnin, 952 F. Supp. 2d 591, 603 (S.D.N.Y. 2013) (Oetken, J.) (quoting
Euromarket Designs, Inc. v. McGovern & Co., LLC, No. 08 Civ. 7908, 2009 WL 2868725, at *4
(S.D.N.Y. Sept. 3, 2009)). “A ‘fundamentally fair hearing’ requires that all parties receive notice
of the arbitration.” Smith v. Positive Prods., 419 F. Supp. 2d 437, 445 (S.D.N.Y. 2005) (quoting
Kaplan v. Dunhill, Inc., No. 96-0258, 1996 WL 640901, at *5 (S.D.N.Y. Nov. 4, 1996)).
One Ten’s arguments are insufficient to overwhelm the presumption that it received
multiple forms of notice. “[U]nder general New York law, [ ] the Second Circuit has indicated
that mailing a letter creates a presumption that the addressee received it.” Coach, Inc. v. Horizon
Trading USA Inc., 908 F. Supp. 2d 426, 432 (S.D.N.Y. 2012) (second alteration in the original)
(quoting Bronia, Inc. v. Ho, 873 F. Supp. 854, 859 (S.D.N.Y. 1995)). By submitting signed
receipts of certified mail indicating that two demands of payment and the Notice of Intention to
Arbitrate were sent to and received at the address where the audit of One Ten had been carried
out (Dkt. No. 20-5 at 4, 7, 11-12), Plaintiffs have invoked this presumption as regards the Notice
of Intention to Arbitrate, Coach, Inc., 908 F. Supp. 2d at 432 (accepting FedEx delivery receipts
as evidence sufficient to invoke the presumption). 1
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One Ten relies on several cases to suggest that Plaintiffs’ evidence of mailing of
the Notice of Intention to Arbitrate is insufficient to create a presumption of receipt. But these
cases are inapposite; they deal with parties that were unable to marshal direct evidence similar to
that submitted by Plaintiffs here. In re Best Payphones, Inc., for one, involved mailing of bills
by standard rather than certified mail such that there was no available evidence of mailing or
receipt apart from affidavits. No. 01 Civ. 15472, 2002 WL 31767796, at *9 (Bankr. S.D.N.Y.
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Arbitrator Harris further stated that he “sent . . . notice” of the date of the arbitration to
One Ten by first class mail; the letter was “not returned.” (Dkt. No. 20-5, Ex. 7; Arbitration
Opinion at 2.) The presumption of receipt has thus also been raised with respect to the
arbitration’s scheduling. See Gaul v. Chrysler Fin. Servs. Americas LLC, No. 13 Civ. 433, 2013
WL 3828549, at *2 (N.D.N.Y. July 23, 2013), aff’d, No. 15 Civ. 1337, 2016 WL 3582822 (2d
Cir. July 1, 2016); see also Trustees of the Mason Tenders Dist. Council Welfare Fund v.
Sukhmany Constr., Inc., No. 15 Civ. 7200, 2016 WL 3659925, at *2 (S.D.N.Y. July 1, 2016)
(accepting first-class mailing by Arbitrator Harris as sufficient notice to proceed as a default
hearing); Trustees for The Mason Tenders Dist. Council Welfare Fund v. Earth Constr. Corp.,
No. 15 Civ. 3967, 2016 WL 1064625, at *2 (S.D.N.Y. Mar. 15, 2016) (same).
Where a party has presented sufficient evidence to raise the presumption that a mailing
was received, “[m]ere denial of receipt is insufficient to rebut the presumption.” Ma v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 597 F.3d 84, 92 (2d Cir. 2010). In an affidavit, Amjad
Mazir, the “sole owner and president” of One Ten, represents that not only he and his wife but
also the business moved out of the 2366 61st St., Brooklyn address on December 1, 2012, and
returned on December 28, 2014, thus apparently missing the notices sent there by Plaintiffs and
Arbitrator Harris. (Dkt. No. 25 ¶ 9.) One Ten submits a single utility bill for November 2014
with the name of Mazir’s wife to demonstrate that it had relocated to another address. (Dkt. No.
25-1; Dkt. No. 25 ¶¶ 8, 12-13.) However, One Ten has presented no direct evidence that the
business moved. (And One Ten does not dispute that the audit, which listed 2366 61st St.,
Brooklyn, as the address of the business, took place during the period when it represents that the
Dec. 11, 2002). And the court in New York Presbyterian Hosp. v. Allstate Insurance Co.
determined that a print-out confirmation that certified mail was sent was insufficient evidence
without a “signed certified mail return receipt card,” which has been produced here. 29 A.D.3d
547, 547-48 (N.Y. App. 2d Dep’t 2006).
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property was “empty, and no one was living at the house or conducting business” there. (Dkt.
No. 25 ¶ 13.)) One Ten’s rebuttal thus boils down to Mazir’s statement in his affidavit that
“[m]y business office also moved,” a mere denial of receipt that is legally insufficient. (Dkt. No.
25 ¶ 9.)
Even assuming that Mazir’s evidence that his wife had moved during the relevant period
supported his representation that the business moved, One Ten does not represent that it notified
Plaintiffs—or anyone—of this change of address. Where a business has “not notified anyone of
a change of address, . . . the corporation [is deemed] still present at the premises” for the
purposes of notice of arbitration. N.Y.C. Dist. Council of Carpenters Pension Fund v. G & M
Drywall Sys. Inc., No. 07 Civ. 1969, 2010 WL 2291490, at *3 (S.D.N.Y. June 1, 2010); see also
Trustees of the N.Y.C. Dist. Council of Carpenters Pension Fund v. High Performance Floors
Inc., No. 15 CIV. 0781, 2016 WL 3194370, at *5 (S.D.N.Y. June 6, 2016); Papayiannis v. Zelin,
205 F. Supp. 2d 228, 232 (S.D.N.Y. 2002). One Ten has therefore failed to overcome the
presumption that he received due notice of the arbitration.
One Ten appears to further dispute Arbitrator Harris’s finding of procedural adequacy
more generally, including some allusion to the content of the notice provided by Plaintiffs. (See
Dkt. No. 26 at 2-3.) The procedures contained in the Trust Agreements and the accompanying
Arbitration Procedures and Rules provide a roadmap for referring disputes between these parties
to arbitration. (See Dkt. No. 20-3, Ex. 2 at 39; Dkt. No. 20-3, Ex. 3 at 3-6.) In order to arbitrate,
the Funds must “send[] written request” to the arbitrator and the employer, including a “brief”
statement of the issue (Dkt. No. 20-3, Ex. 3 at 3), as Arbitrator Harris found was satisfied here
based on Plaintiffs’ submissions (Arbitration Opinion at 2; see Dkt. No. 20-5, Ex. 5 at 4, 7, 1112). At that point, the arbitrator must “fix the date and time of the hearing” and “notify the Fund
and the Employer,” as Arbitrator Harris did here by first class mail. (Dkt. No. 20-3, Ex. 3 at 3;
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see Dkt. No. 20-5, Ex. 7.) Reviewing all the submissions on the procedures followed by both
Plaintiffs and Arbitrator Harris, as well as the reasoning of the Arbitration Opinion itself, the
Court finds that the Arbitrator had a sufficient basis to conclude that the operative procedures
had been followed and that there was no denial of fundamental fairness here (as would be
required to overturn the Arbitrator’s decision).
B.
Arbitration Award
One Ten additionally challenges the substance of the arbitration award, arguing that
“[n]either the award nor the audit detail[s] what payments were made” and that “[s]uch a lack of
showing is prejudicial and demonstrates that One Ten should be permitted to defend against the
award on its merits.” (Dkt. No. 26 at 4.)
The operative Arbitration Procedures and Rules provide that the hearing “shall proceed in
the absence of any party or representative who, after due notice, fails to be present or fails to
obtain a postponement. In such case, the award of the Neutral Arbitrator shall be based solely on
the evidence provided by the appearing party.” (Dkt. No. 20-3, Ex. 3 at 4.) See Smith, 419 F.
Supp. 2d at 445 (describing an analogous standard under AAA rules).
As dictated by the controlling procedures, Arbitrator Harris heard evidence from the
present party about what One Ten owed, including testimony from the Funds Delinquency
Manager and the auditor’s report (Dkt. No. 20 ¶ 25; Dkt. No. 20-4 at 2-13), which, as detailed
above, demonstrated specific sums of $144,275.76 in delinquent contributions, $12,143.84 in
dues and PAC contributions, $18,065.76 in interest, and $22,658.27 in audit costs (Arbitration
Opinion at 2). The Arbitrator entered judgment in the amount calculated in detail in the auditor’s
report, as well as ERISA statutory damages, interest for the period September 1, 2011 to
November 30, 2011, and attorney and arbitration fees (awards provided for under the terms of
the Trust Agreements (see Dkt. No. 20-3, Ex. 2 at 39-40; Dkt. No. 20-3, Ex. 3 at 6)).
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(Arbitration Opinion at 2.) His reasoning was sound and based on the evidence presented, in
keeping with the procedures provided by the binding agreement.
Moreover, as evidenced by the sums on the last page of the arbitration opinion and
default award (Arbitration Opinion at 2), the arbitrator’s award is “susceptible of mathematical
calculation” and therefore entry of default judgment without inquest is appropriate, Mason
Tenders Dist. Council of Greater N.Y. & Long Island v. Circle Interior Demolition, Inc., No. 07
Civ. 11227, 2009 WL 5061744, at *6 n.2 (S.D.N.Y. Dec. 22, 2009) (citing Flaks v. Koegel, 504
F.2d 702, 707 (2d Cir. 1974)). In a separate case involving Trustees for the Mason Tenders
District Council Welfare Fund and One Ten, a court in this District held that substantially similar
evidence from an auditor’s report provided a sufficient basis to enter judgment upholding an
arbitration award. See Trustees for the Mason Tenders Dist. Council Welfare Fund v. One Ten
Restoration, Inc., No. 13 Civ. 1879 (S.D.N.Y. Aug. 13, 2013) (See Dkt. No. 27-1; Dkt. No 27-2.)
The Court thus finds no reason it should not confirm Arbitrator Harris’s award here.
IV.
Conclusion
For the reasons discussed above, Plaintiffs’ motion to confirm the arbitration award is
GRANTED. The Clerk of Court is directed to close the motion at Docket Number 19 and to
close the case.
SO ORDERED.
Dated: November 16, 2016
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
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