United Association of Plumbers and Steamfitters Local No. 22 v. H&M Plumbing and Mechanical Contractors, Inc.

Filing 53

DECISION AND ORDER DIRECTING the Clerk of the Court to enter a default against Defendants H&M Plumbing and Mechanical Contracting Inc. and David J. Morrison pursuant to Rule 55(a) of the Federal Rules of Civil Procedure with respect to the Third Amended Complaint; DENYING without prejudice Plaintiffs' 47 Second Motion for a Default Judgment against these Defendants. Signed by William M. Skretny, Senior United States District Judge on 4/13/2015. (MEAL) - CLERK TO FOLLOW UP -

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
UNITED ASSOCIATION OF PLUMBERS AND
STEAMFITTERS LOCAL NO. 22, et al.,
Plaintiffs,
v.

DECISION AND ORDER
14-CV-070S

H&M PLUMBING AND MECHANICAL
CONTRACTING INC., DAVID J. MORRISON
and D. JUSTIN MORRISON
Defendants.

I. INTRODUCTION
Plaintiffs commenced this breach of contract action in February 2014 against
Defendant H&M Plumbing and Mechanical Contracting Inc. (“H&M”) pursuant to section
502(a)(3) and 515 of the Employee Retirement Income Security Act (“ERISA”) and Section
301 of the Labor-Management Relations Act of 1947 (29 U. S. C. §185). Plaintiffs filed an
amended complaint on March 14, 2014 that additionally named David J. Morrison and D.
Justin Morrison as defendants. H&M was served with the Amended Complaint on March
21, 2014, and the remaining defendants were served on April 7, 2014. Although the
parties stipulated to an extension of time in which all Defendants could respond to the
Amended Complaint, only Defendant D. Justin Morrison filed an answer.
The Clerk of this Court filed an Entry of Default against Defendants H&M and
Defendant David J. Morrison with respect to the Amended Complaint on June 3, 2014.
Plaintiffs moved for a default judgment as against these Defendants on this pleading, but
filed a second and third amended complaint prior to resolution of the motion. That motion

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was therefore dismissed as moot in light of the subsequently filed pleadings. (see Docket
No. 46 (citing Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994); Rock
v. AM. Exp. Travel Related Servs., No. 1:08-CV-0853 (GTS/RFT), 2008 WL 5382340, *1
(N.D.N.Y. Dec. 17, 2008)).) Plaintiffs filed their second motion for a default judgment on
the Third Amended Complaint in December 2014. (Docket No. 47.)
II. DISCUSSION
Before obtaining default judgment, a party must first secure a Clerk’s Entry of
Default by demonstrating, by affidavit or otherwise, that the opposing party is in default.
See Fed. R. Civ. P. 55(a). Here, Plaintiffs obtained a default from the Clerk with respect
to H&M and David Morrison on their first complaint, but did not seek a new entry of default
on the Third Amended Complaint. As with a motion for a default judgment, once an
original complaint is superseded, a clerk's entry of default on that pleading is also mooted.
Allstate Ins. Co. v. Yadgarov, No. 11-CV-6187(PKC)(VMS), 2014 WL 860019, *8, n. 12
(E.D.N.Y. Mar. 5, 2014) (collecting cases). Nonetheless, Plaintiffs assert no new claims
against the defaulting Defendants in the Third Amended Complaint, therefore service of
this pleading was not required. DeCurtis v. Ferrandina, 529 F. App’x 85, 86 (2d Cir. 2013)
(citing Fed. R. Civ. P. 5(a)(2)); Yadgarov, 2014 WL 860019 at *7. This Court will therefore
deem the present motion a request for an entry of default as well as a judgment, and direct
the Clerk of the Court accordingly.
Once a default has been entered, the allegations of the complaint that establish the
defendant’s liability are accepted as true, except for those relating to the amount of
damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d

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Cir. 1992), cert denied, 506 U.S. 1080 (1993). In considering whether to enter a default
judgment, the court must determine whether the facts alleged in the complaint are
sufficient to state a claim for relief as to each cause of action for which the plaintiff seeks
default judgment. Further, where the damages sought are not for a sum certain, the court
must determine the propriety and amount of the default judgment. See Fed. R. Civ. P.
55(b)(2). Damages must be established by proof, unless the damages are liquidated or
“susceptible of mathematical computation.” Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir.
1974). All reasonable inferences from the evidence presented are drawn in the moving
party’s favor. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981).
In the Third Amended Complaint (Docket No. 41), Plaintiffs’ first two causes of
action are asserted against only Defendant H&M, and allege that: (1) Defendant H&M
breached a Forbearance Agreement that established a payment plan for the $206,615.56
it owed pursuant to a collective bargaining agreement (“CBA”) for fringe benefit
contributions, dues, and penalties from May to August 2013; and (2) Defendant H&M failed
to pay additional contributions due under the CBA during 2013, as well as interest and
liquidated damages on these missed or untimely made contribution payments. Plaintiffs
demanded a judgment against H&M on their first cause of action of “not less than
$137,743.74,” the amount unpaid under the Forbearance Agreement, plus interest,
attorneys’ fees and costs. (Docket No. 41 at 18.) On the second cause of action, Plaintiffs
demanded a judgment against Defendant H&M for “not less than $196,015.66 plus
attorneys’ fees and costs.” (Id. at 18-19.)

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Plaintiffs’ third cause of action alleges that Defendant David J. Morrison,1 is or was
a fiduciary with respect to the Funds pursuant to 29 U.S.C. § 1002(21) “with respect to
amounts not paid to the Funds by reason of their possession, authority and control
respecting the management or disposition of assets of the Funds in their possession.” (Th.
Am. Compl. ¶ 83.) Plaintiffs further allege that Morrison violated his fiduciary duties under
29 U.S.C. §§ 1103(a) and 1104 by “retaining Fund assets that were not properly payable
to [him] and/or diverting Fund assets and/or diverting Fund assets for [his] own respective
use or benefit.” (Compl ¶ 85.) Accordingly, Plaintiffs requested a judgment against
Defendant Morrison:
(i) requiring Defendant[ Morrison] . . . to render an accounting of assets of
the Funds received and held by [him], or in the alternative directing an audit
of said individual Defendant[] to allow the Funds to prepare such an
accounting; (ii) enjoining Defendant[] . . . to comply with governing law, the
CBA and other documents incorporated into the CBA, including the
applicable Trust Agreements and/or plan documents of the Funds
concerning the care and custody of assets of the Funds and accounting for
the custody and earnings on such Fund assets; [and] (iii) requiring
Defendant[] . . . to reimburse the Funds for any losses resulting from his
breach of fiduciary duties and to restore to the Funds any profits which have
been made through use of Fund assets.
(Th. Am. Compl. ¶ 87.)
Despite these three distinct causes of action, Plaintiffs’ current motion seeks a
judgment against Defendants H&M and David J. Morrison, jointly and severally, in the
amount of $622,331.70 plus interest pursuant to Section 7.6 of the parties’ CBA. (Docket
Nos. 47-1 at 6, 47-6 at 2.) This amount reflects $489,498.10 in unpaid fringe benefit
contributions, which includes additional missed payments for January through May 2014;

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Plaintiffs’ third cause of action is also asserted against Defendant D. Justin Morrison, who is not
in default.

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$63,871.05 in interest calculated pursuant to the CBA; $42,858.55 in liquidated damages
pursuant to the CBA; and $26,104.00 in attorney’s fees and costs. (Docket No. 47-1 at 6;
See Th. Am. Compl. ¶ 79 (Plaintiffs’ second cause of action against H&M asserts this
Defendant continued to be delinquent in contributions from January through April 2014).)
The failure to link the requested relief to the individual causes of action alleged raises
several concerns.
Initially, a portion of the unpaid contributions and related penalties are subject to the
forbearance agreement between the parties. (Th. Am. Compl. ¶¶ 37-39, 62-68, Exs I
(labeled “F”), J.) This agreement memorializes a “Settlement Amount” for these unpaid
amounts. (Th. Am. Compl. Ex I.) A confession of judgment was signed by Defendant David
Morrison on behalf H&M for the sum of $206,615.56. (Id. Ex J.) In the event of a default,
which Plaintiffs have alleged, Plaintiffs had the right to file the confession of judgment for
this agreed-upon amount “plus interest at the rate of one (1%) per month, costs and
attorneys fees, crediting H&M with any payments made by H&M toward the $206,615.56.”
(Id. ¶ 65 Ex J.) Even assuming that the “Settlement Amount” merely reflects the total of
unpaid contributions from May through August 2013 without any concessions or
adjustments,2 the Forbearance Agreement expressly states that it is binding upon H&M,
“but shall not create personal or individual liability” of H&M’s “administrators, trustees,
officers, directors, shareholders, subsidiaries, affiliates, successors and assigns.” (Id. Ex
I.) Because Plaintiffs’ first cause of action is expressly asserted against only H&M

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The amount owed for these months totals $192,889.10 as listed in Exhibit K to the Third
Amended Complaint. (See Docket Nos. 41-11.) As noted, the Settlement Amount, which is only marginally
higher, includes penalties. (Th. Am. Compl. Ex I.)

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“pursuant to the terms of the Forbearance Agreement and Confession of Judgment,”
holding Defendant David Morrison jointly and severally liable for the unpaid obligations
associated with this claim would be improper. (Id. ¶ 68.)
Moreover, it is unclear under what theory Plaintiffs are seeking to hold Defendant
Morrison jointly and severally liable for the entirety of the unpaid contributions. Generally,
a corporate employer does not have a fiduciary obligation to make trust fund contributions;”
rather, that obligation is contractual. Sasso v. Cervoni, 985 F.2d 49, 51 (2d Cir. 1993)
(citing 29 U.S.C. § 1002(21)(A)), cert denied 508 U.S. 973 (1993). Thus, absent special
circumstances, “an individual is not liable for corporate ERISA obligations solely by virtue
of his role as officer, shareholder, or manager.” Sasso, 985 F.2d at 50; Bricklayers & Allied
Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., 779 F.3d
182, 188 (2d Cir. 2015). “These ‘special circumstances’ included corporate officers who
conspired to defraud ERISA funds as well as non-fiduciaries who participated in a
fiduciary's breach of ERISA trust obligations.” Hardy v. Kaszycki & Sons Contractors, Inc.,
870 F. Supp. 489, 495 (S.D.N.Y. 1994); see Leddy v. Standard Drywall, Inc., 875 F.2d 383,
387 (2d Cir. 1989) (individual liability found where controlling corporate official did not
merely fail to make required contributions, but actively conspired with other corporate
officials to defraud the benefit fund).
Here, even assuming the conclusory assertion that Defendant Morrison was a
fiduciary suffices to establish his joint and several liability for the unpaid contributions,
Plaintiffs never requested this relief. Instead, the Third Amended Complaint seeks an
accounting and injunctive relief with respect to Defendant Morrison. “A default judgment
must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.
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R. Civ. P. 54(c); see Silge v. Merz, 510 F.3d 157, 159 (2d Cir. 2007). Although Plaintiffs
request that Morrison be directed to reimburse the Funds for any losses resulting from his
breach of fiduciary duties, there is no basis on which to assume that these losses equate
with the unpaid contributions. If that were the case, there would be no need for an
accounting.
III. CONCLUSION
For the reasons stated above, the Court finds that the collective relief requested in
the motion for a default judgment does not comport with the relief requested in connection
with each of the three causes of action alleged in the Third Amended Complaint. Plaintiffs’
motion is therefore denied.
IV. ORDERS
IT HEREBY IS ORDERED, that the Clerk of the Court is directed to enter a default
against Defendants H&M Plumbing and Mechanical Contracting Inc. and David J. Morrison
pursuant to Rule 55(a) of the Federal Rules of Civil Procedure with respect to the Third
Amended Complaint;
FURTHER, that Plaintiffs’ Second Motion for a Default Judgment against these
Defendants (Docket No. 47) is DENIED without prejudice.
SO ORDERED.
Dated: April 13, 2013
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Senior District Court Judge

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