Rochester Laborers' Welfare-S.U.B. Fund et al v. Flower City Monitors, Inc. et al
Filing
23
ORDER granting 11 Motion for Default Judgment consistent with this Decision and Order and denying without prejudice Plaintiffs Motion to Amend the Complaint to Conform to the Proof.. Signed by Hon. Michael A. Telesca on 7/26/17. (JMC)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ROCHESTER LABORERS’ WELFARE-S.U.B.
FUND, by Robert Brown, as Chairman,
and Daniel Hogan, as Secretary;
ROCHESTER LABORERS’ PENSION FUND,
by Robert Brown, as Chairman, and
Daniel Hogan as Secretary;
ROCHESTER LABORERS ANNUITY FUND, by
Robert Brown, as Chairman and
Daniel Hogan, as Secretary;
ROCHESTER LABORERS’ APPRENTICE AND
TRAINING FUND, by Robert Brown, as
Chairman, and Daniel Hogan, as
Secretary; LABORERS’ INTERNATIONAL
UNION OF NORTH AMERICA, LOCAL UNION
NO. 435, by Daniel Kuntz, as
Business Manager,
DECISION AND ORDER
No. 6:15-cv-06446(MAT)
Plaintiffs,
-vsFLOWER CITY MONITORS, INC. and
LENORA L. PAIGE, Individually
and as an Officer of FLOWER CITY
MONITORS, INC.,
Defendants.
INTRODUCTION
This an action arising under the Employee Retirement Income
Security Act of 1974, 29 U.5.C. §§ 1001 et seq. (“ERISA”), and the
Labor-Management Relations Act of 1947, as amended, 29 U.S.C.
§ 185(a) (“LMRA”). The Rochester Laborers’ Welfare-S.U.B. Fund, the
Rochester
Laborers’
Pension
Fund,
the
Rochester
Laborers’
Apprentice and Training Fund, the Rochester Laborers’ Annuity Fund
(“the Rochester
Laborers’
Funds”),
through
their fiduciaries,
Robert Brown and Daniel Hogan; and the Laborers’ International of
North America Local Union 435 (“the Union”), through its fiduciary
Daniel
Kuntz
(collectively,
“Plaintiffs”),
seek
monetary
and
injunctive relief against Flower City Monitors, Inc. (“Flower
City”), a New York corporation with a principal place of business
in Rochester, and Lenora Paige (“Paige”), the president of Flower
City (collectively, “Defendants”).
Plaintiffs instituted this action by filing their Complaint on
July 29, 2015. On October 13, 2015, a Clerk’s Notice of Default was
entered against Defendants for failure to plead or otherwise defend
this action. Defendants filed a Motion to Vacate the Notice of
Default on June 5, 2017. In a Decision and Order filed on July 18,
2017, the Court denied that motion.
In
the
present
Decision
and
Order,
the
Court
addresses
Plaintiffs’ combined Motion to Amend the Complaint, pursuant to
Federal Rule of Civil Procdure (“F.R.C.P.”) Rule 15 and Motion for
Default Judgment, pursuant to F.R.C.P. 54 and 55(b)(2). The Court
assumes
the
parties’
familiarity
with
the
underlying
factual
background and procedural history, which is set forth in the
July 18, 2017 Decision and Order.
For the reasons discussed herein, Plaintiffs’ Motion for
Default Judgment is granted, and Plaintiffs’ Motion to Amend the
Complaint is denied without prejudice.
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DISCUSSION
I.
Default Judgment is Warranted in this Case
Pursuant to F.R.C.P. 55(b), judgment by default may be entered
as follows:
(1) By the Clerk. When the plaintiff’s claim against a
defendant is a sum certain or for a sum which can by
computation be made certain, the clerk upon request of
the plaintiff and upon affidavit of the amount due shall
enter judgment for that amount and costs against the
defendant. . . .
(2) By the Court. In all other cases the party entitled
to a judgment by default shall apply to the court
therefore. . . .
Fed. R. Civ. P. 55(b). By virtue of the default, the defendant is
deemed
to
have
admitted
to
the
truth
of
the
well-pleaded
allegations of liability in the complaint. Greyhound Exhibitgroup,
Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992),
cert. denied, 506 U.S. 1080 (1993). However, a default “is not
considered an admission of damages.” Id. (citing Flaks v. Koegel,
504 F.2d 702, 707 (2d Cir. 1974); Fed. R. Civ. P. 8(d)); see also
Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155
(2d Cir. 1999) (“Even when a default judgment is warranted based on
a party’s failure to defend, the allegations in the complaint with
respect to the amount of the damages are not deemed true. The
district
court
must
instead
conduct
an
inquiry
in
order
to
ascertain the amount of damages with reasonable certainty.”);
B.B.L. Constructors, Inc., 825 F. Supp. at 16 (“Entry of default
judgment on the issue of liability does not necessarily establish
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as a fact every imputation in an affidavit which relates to the
extent of damages.”) (citing Baccaro v. Pisa, 252 F. Supp. 900, 905
(S.D.N.Y. 1966)).
“As the Second Circuit has observed, the Court is guided by
the same factors which apply to a motion to set aside entry of a
default.” Rodriguez v. Almighty Cleaning, Inc., 784 F. Supp.2d 114,
123
(E.D.N.Y.
2011)
(citing,
inter
alia,
Pecarsky
v.
Galaxiworld.com, Ltd., 249 F.3d 167, 170–171 (2d Cir. 2001) (“When
deciding whether
to
relieve
a
party
from
default
or
default
judgment, we consider the willfulness of the default, the existence
of a meritorious defense, and the level of prejudice that the
non-defaulting party may suffer should relief be granted.”) (citing
Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 243
(2d Cir. 1994) (relying on Fed. R. Civ. P. 55(c)); Davis v. Musler,
713 F.2d 907, 915 (2d Cir. 1983)). In its previous Decision and
Order, this Court explained that, “[o]n balance, although there is
no indication that Plaintiffs would be prejudiced if this Court
vacated the
notice
of
default,
the
first
two
factors
weight
strongly in favor of denying Defendants’ motion to vacate. . . .
Defendants willfully defaulted and have not succeeded in stating a
potentially meritorious defense. Accordingly, the Court exercises
its discretion to deny Defendants’ motion.” (Dkt # , p. 17 of 18).
As the Court has been presented with no basis for departing from
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these findings, the Court will exercise its discretion to grant
Plaintiffs’ Motion for Default Judgment.
II.
Scope of Damages Available
In any action under 29 U.S.C. § 1132(g)(2) to enforce an
employer’s obligation to remit contributions in accordance with the
terms of its contract or a plan, the employee benefit plan is
entitled to recover, and the court must award, the contributions,
interest, liquidated
damages, attorneys’ fees and costs. Thus, 29 U.S.C. §1132(g)(2)
provides:
In any action under this subchapter by a fiduciary for or
on behalf of the 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% (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 attorneys’ 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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28 U.S.C. § 1132(g)(2). If an employer’s plan contributions are
made delinquently during the pendency of an action under this
section, the plaintiffs are still entitled to recover the penalties
provided for by Section 1132(g)(2). See Iron Workers District
Council of W. N.Y. and Vicinity Welfare and Pension Funds v. Hudson
Steel Fabricators and Erectors, Inc., 68 F.3d 1502, 1508 (2d Cir.
1995) (“Permitting delinquent employers to avoid paying § 1132
penalties after suit is filed, and particularly waiting until two
days prior to the argument of the plaintiffs’ motion for summary
judgment, as here, would largely thwart the purpose of § 1132(g)(2)
to provide plan fiduciaries with an effective weapon against
delinquent employers.”) (citation omitted).
III. The Complaint and the Amount of the Default Judgment Sought
An ERISA employee benefit plan is entitled to default judgment
for the unpaid contributions, deductions, interest, liquidated
damages, audit fees, attorneys’ fees and costs where the request
for judgment does not “differ in kind from, or exceed in amount,
what is demanded in the pleadings.” Fed. R. Civ. P. 54(c).
Plaintiffs’ first cause of action in the complaint seeks to
recover $10,784.41 in contributions and deductions from Flower City
plus the following: interest from August 15, 2012, on the $8,562.53
in unpaid Rochester Laborers’ Funds’ contributions, calculated at
a rate of one and one-half percent per month; plus the greater of
interest on the $8,562.53 in unpaid Rochester Laborers’ Funds’
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contributions or liquidated damages equal to twenty percent of
those delinquent contributions; plus interest from August 15, 2012,
on the $782.51 in unpaid L.E.C.E.T. contributions at the rate of
one and one half per month; plus interest from August 15, 2012, on
the $131.56 in unpaid A&S deductions, $1,245.21 in unpaid Union
deductions and $62.60 in unpaid P.A.C. monies, calculated at the
rate of nine percent per annum; plus costs and fees of collection,
audit
fees,
attorneys’
and
paralegal
fees.
(See
Complaint
(“Compl.”), ¶ 29).
The second cause of action does not set forth a specific
dollar amount, but seeks an order and judgment for “any and all
contributions and deductions that are determined to be due [as a
result of the audit] plus the applicable interest, liquidated
damages,
costs
and
expenses
of
collection,
audit
fees
and
attorneys’ and paralegal fees,” at the rate set forth in paragraph
25 of the complaint. (See Compl., ¶ 36).
The third and fourth causes of action do not specify a dollar
amount, but demand judgment against Paige for “[t]he monies due to
Rochester Laborers’ Funds as set forth at paragraph No. 27 plus any
monies discovered to be due to the Rochester Laborers’ Funds as
uncovered by the audit sought at paragraph Nos. 35 and 36 of the
Complaint herein plus interest thereon at the highest rate of
return on Plaintiff Rochester Laborers’ Funds’ investments, plus
the costs and expenses of collection, audit fees and attorneys and
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paralegal fees; and . . . [t]o restore to the Plans any profits
that Defendants made through use and retention of the assets of the
Plaintiff Funds.” (Compl., ¶¶ 45, 64).
The fifth cause of action does not specify a dollar amount,
but seeks an order and judgment directing Defendants to remit all
monies that “are determined to be due to Plaintiffs whether arising
before or after commencement of the action.” (Compl., ¶ 72).
Finally, the ad damnum clause of the complaint essentially
reiterates the allegations in the paragraphs discussed above.
In their motion for default judgment, Plaintiffs now seek
judgment against Flower City for $45,159.90. Plaintiffs cite the
results of an audit, as well as various affidavits, exhibits, and
damage
calculations
which
establish
that
Flower
City
owes
$16,166.89 in contributions and deductions for the month of July
2012, and the period from March 2014, through May 2014; $9,586.82
in interest through May 15, 2017; $9,586.82 in liquidated damages;
$2,258.46 in audit fees; and $7,527.91 in attorneys’ fees and costs
through May 1, 2017.
Plaintiffs assert that their request for a $45,159.90 judgment
against Flower City does not “differ in kind from, or exceed in
amount,” Fed. R. Civ. P. 54(c), what was demanded in the complaint.
While the Court agrees that the items of damages in request for
default judgment do not “differ in kind” from what was sought in
the complaint, they do “exceed in amount” what was sought in the
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complaint.
For
instance,
in
the
complaint,
Plaintiffs
sought
$10,784.41 in contributions and deductions; in the motion for
default judgment, Plaintiffs seek $16,166.89 in contributions and
deductions. Therefore, the Court disagrees with Plaintiffs to the
extent they assert that their default judgment request does not
“exceed in amount,” Fed. R. Civ. P. 54(c), what was demanded in the
complaint.
Plaintiffs alternatively argue that F.R.C.P. 15 permits an
amendment of the pleadings on a dispositive motion or at trial to
conform them to the proof, especially where the defendants are
given notice of the motion for default judgment and the opportunity
to
contest
damages.
The
cases
cited
by
Plaintiffs
involve
situations where there has been a trial or a hearing on the amount
of
damages,
or
the
defendant
had
been
at
least
granted
the
opportunity to contest the damages. Here, Defendants specifically
requested an opportunity to challenge the amount of damages in the
event this Court declined to vacate the entry of default—which it
did in its previous decision and order.
On the matter of damages in the context of a default judgment,
F.R.C.P.
55(b)(2)
hearings or
proper.”
provides
order
Fed.
Civ.
such
P.
that
“the
references
55(b)(2).
as
As
court
it
the
may
deems
Second
conduct
such
necessary and
Circuit
has
explained, the rule “allows but does not require the district judge
to conduct a hearing.” Action S.A. v. Marc Rich & Co., Inc., 951
-9-
F.2d 504, 508 (2d Cir. 1991) (where district judge was “inundated
with
affidavits,
evidence,
and
oral
presentations”
a
full
evidentiary hearing was not necessary), cert. denied, 503 U.S. 1006
(1992) (citing Fustok v. ContiCommodity
Services, Inc., 873 F.2d
38, 40 (2d Cir. 1989)); see also Tamarin v. Adam Caterers, Inc., 13
F.3d 51, 54 (2d Cir. 1993) (“not necessary for the district court
to hold a hearing to fix damages after a default judgment had been
entered where the court had ‘relied upon detailed affidavits and
documentary evidence supplemented by the District Judge’s personal
knowledge of the record gained during four years involvement with
the litigation . . .’”).
Here, Plaintiffs have submitted multiple detailed affidavits
and documentary proof, which they assert are sufficient to allow
their damages to be ascertained “with reasonable certainty.” Credit
Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d at 155. Defendants
have requested an inquest on damages, asserting that they “have
demonstrated
various
errors
and
discrepancies
in
Plaintiffs’
evidence,” and that “Plaintiffs are notably seeking an award nearly
nine times greater than what they originally demanded from the
Defendants.” (Defs’ Mem. at 10). The Court declines to order an
evidentiary hearing, but does find that Defendants should be given
an opportunity to submit their proof in opposition to Plaintiffs’
damages calculations.
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CONCLUSION
For the foregoing reasons, the Court finds that Plaintiffs are
entitled to default judgment against Defendants, with the amount of
the
default
judgment
to
be
determined
following
Defendants’
submission of evidence and argument in opposition to Plaintiffs’
damages calculations. Defendants’ submissions on damages are due
thirty (30) days from the date of entry of this decision and order.
Plaintiffs’ replies, should they wish to file any, are due twenty
(20) days from the date of service of Defendants’ papers. The Court
denies without prejudice Plaintiffs’ request for leave to amend the
complaint to conform to the proof.
SO ORDERED.
S/Michael A. Telesca
HONORABLE MICHAEL A. TELESCA
United States District Judge
DATED:
July 26, 2017
Rochester, New York
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