Kauffman et al v. Specialty Flooring Systems, Inc.

Filing 8

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that the Pltf's 6 MOTION for Default Judgment is GRANTED. The Clerk of Court is directed to defer entering jgm on Pltf's clms pending the Court's computation of attys fees. SEE ORDER. Signed by Chief Judge Yvette Kane on Jan. 6, 2012. (sc)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
LESTER KAUFFMAN, as Trustee of the
Union Trowel Trades Benefit Funds of
Central Pennsylvania, et al.,
Plaintiffs
v.
SPECIALTY FLOORING SYSTEMS,
Inc.,
Defendant

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Civil Action No. 1:11-cv-01746
(Chief Judge Kane)

MEMORANDUM
Presently pending before the Court is Plaintiffs’ motion for default judgment. (Doc. No.
6.) As Defendant has yet to appear or defend in this action, no opposition to the motion has been
filed. For the reasons that follow, the Court will grant the motion.
I.

BACKGROUND
On September 19, 2011, Plaintiffs brought this action pursuant to sections 502(a)(3) and

515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§
1132(a)(3), 1145. (Doc. No. 1.) Plaintiffs allege that Defendant is a party to a multi-employer
collective bargaining agreement (“the Agreement”), which requires Defendant to make
contributions to the Union Trowel Trades Benefit Fund (“Local Funds”) as well as the
Bricklayers and Trowel Trades International Pension Funds and the International Masonry
Institute (“International Funds”) (“the Funds”). (Id. ¶¶ 3-6.) The Agreement requires Defendant
to pay liquidated damages and interest in the event that it fails to make timely contributions.1

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Section 3 of Article XV of the Agreement states:
If the Em ployer s hall fail to m ake any contributions to the funds
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(Id. ¶¶ 10, 14.) Plaintiffs aver that Defendant failed to make contributions under the terms of the
Agreement. (Id. ¶¶ 15, 17.) Specifically, the complaint states that Defendant made untimely
payments of its required contributions for the months of April, May, June, July, and August 2011
and, therefore, Plaintiffs are entitled to liquidated damages and interest. (Id. ¶¶ 15-18.)
In his affidavit, Plaintiff Lester Kauffman provides calculations of liquidated damages
and interest Defendant owes the Funds as a result of its failure to pay the required contributions
for the months of April, May, June, and July 2011 as well as calculations of the amount of the
unpaid contributions for the month of July 2011.2 (Doc. No. 6 ¶¶ 40-41.)

when same shall be due and payable, it shall be considered delinquent
and in breach of this A greement and shall pay as an additional
amount to cover bookkeeping costs and other incidental expenses the
sum of twenty (20) dollars, or ten (10) percent of the amount of the
delinquent payment, whichever is greater, plus interest at the rate of
one and one-half (1-1/2) percent per month until paid to each Fund.
In addition, the Em
ployer shall be liable for the reasonable expenses,
including attorney fees and account nt fees, incurred by each fund in
a
the collection of the Employer’s contributions.
(Doc. No. 6 at 31; see also id. at 30 (Section 4 of Article XIV)).
Section 5 of Article XV of the Agreement states:
Contributions and payments that the Employer is required to m ake
under this Agreement to the Funds shall be made monthly, and shall
be accompanied by report in the form prescribed by the Union and
the Funds. The c ontributions and paym ents and report for each
month shall be due on or before the 15th of the following m onth.
One report and one check encom
passing all paym ents and
contributions due to the Union and all Funds shall be sent to the
collection agent designated by the Union and the Funds.
(Id.)
Despite the allegations in the complaint, the affidavit does not contain any information
regarding Defendant’s failure to remit contributions to the Funds for the month of August 2011.
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The record shows that, although Defendant was properly served with the summons and
complaint (Doc. No. 3), Defendant has not appeared, answered, moved, or otherwise responded
to the pleading. After Defendant failed to respond to the pleading, Plaintiffs requested, and the
Clerk of Court entered, default against Defendant pursuant to Rule 55(a) of the Federal Rules of
Civil Procedure. (Doc. Nos. 4, 5.) Now before the Court is Plaintiffs’ motion for entry of
default judgment and their brief in support. (Doc. Nos. 6, 7.)
II.

DISCUSSION
Rule 55(b) of the Federal Rules of Civil Procedure provides for entry of default judgment

against a defendant who has not appeared and who is neither a minor nor an incompetent person.
Fed. R. Civ. P. 55(b). Entry of default does not entitle a claimant to default judgment as a matter
of right. 10 James Wm. Moore et al., Moore’s Federal Practice § 55.31 (Matthew Bender ed.
2010). Even when a party has defaulted and all of the procedural requirements for a default
judgment are satisfied, the decision to either render default judgment or refuse to render default
judgment rests in the discretion of the district court. See Emcasco Ins. Co. v. Sambrick, 834
F.2d 71, 74 (3d Cir. 1987). In undertaking this evaluation, the Court must consider: (1) whether
the plaintiff will be prejudiced if the default is denied; (2) whether the defendant has a
meritorious defense; and (3) whether the defaulting defendant’s conduct is excusable or
culpable. See, e.g., Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (citing United
States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)). However, when a
defendant has failed to appear or respond in any fashion to the complaint, this analysis is
necessarily one sided; entry of default judgment is typically appropriate in such circumstances at
least until the defendant comes forward with a motion to set aside the default judgment pursuant

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to Rule 55(c). As the United States Court of Appeals for the Third Circuit has explained:
In most instances where a party’s right to prosecute or defend would
be term inated as a sanction, the m oving party has the burden of
creating a record showing the appropriateness of
this ultim ate
sanction and the district court has the responsibility of m aking a
determination on that issue in light of considerations like those
articulated in Poulis. When a defendant fails to appear and perhaps
under other circumstances covered by Rule 55, the district court or its
clerk is authorized to enter a default judgm ent based solely on the
fact that the default has occurred. Even in those situations, however,
consideration of Poulis type factors is required if a motion to lift the
default is filed under Rule 55(c) or Rule 60(b) and a record is
supplied that will permit such consideration.
Anchorage Assocs. v. V.I. Bd. of Tax Review, 922 F.2d 168, 177 n.9 (3d Cir. 1990).
Here, it is clear that the factors weigh in favor of granting a default judgment. First, there
is a risk of prejudice to Plaintiffs if default is denied. Plaintiffs aver that Defendant’s failure to
make the required contributions has deprived and will continue to deprive Plaintiffs of
investment opportunities. (Doc. No. 7 at 8.) Plaintiffs also argue that there is a risk of prejudice
to the beneficiaries of the Funds if Defendant’s contributions are not made. (Id.) Second,
Defendant has not asserted any defense, either by answering the allegations in the complaint or
by opposing the present motion for entry of default judgment. Finally, the Court can find no
excuse or reason for Defendant’s default other than its own conduct. Plaintiffs have shown that
Defendant was personally served with all of the required documents. (Doc. No. 3.) Despite this,
Defendant has neither engaged in the litigation process nor offered any reason for its failure to
appear. Therefore, the Court finds that Defendant is personally culpable for its failure to appear
and that there is no basis in the record to excuse this conduct. Accordingly, the Court finds that
default judgment is due.
Because default judgment will be entered, “the factual allegations of the complaint,
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except those relating to the amount of damages, will be taken as true.” Comdyne I, Inc. v.
Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). The allegations in the complaint, taken as true, are
sufficient to show a violation of ERISA section 515. See 29 U.S.C. § 1145 (“Every employer
who is obligated to make contributions to a multiemployer plan under the terms 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 terms and conditions of such plan or such
agreement.”).
If a court enters judgment in favor of the plan fiduciary, the court shall award (1) unpaid
contributions; (2) interest on the unpaid contributions; (3) liquidated damages provided for under
the plan in amount not in excess of twenty percent of the unpaid contributions; (4) reasonable
attorney’s fees and costs; and (5) other relief the court deems appropriate. 29 U.S.C. §
1132(g)(2). As damages, Plaintiffs claim to be entitled to an award of $30,100.51, consisting of
$466.51 in liquidated damages and interest for the month of April 2011 (Doc. No. 6 ¶¶ 20, 37);
$1,057.27 in liquidated damages and interest for the month of May 2011 (Id. ¶¶ 21, 38);
$3,195.83 in liquidated damages and interest for the month of June 2011 (Id. ¶¶ 22, 39);
$20,649.96 in unpaid contributions for the month of July 2011 (Id. ¶¶ 14, 16, 31, 33); $3,802.94
in liquidated damages and interest for the month of July 2011 (Id. ¶¶ 23-24, 40-41) ; $350.00 in
costs; $158.00 in service fees; and $420.00 in attorney’s fees (Doc. No. 1 at 6). The Court finds
that the requested award for these categories of damages is properly recoverable under section
1132(g)(2) and the Agreement, as the Agreement provides in pertinent part:
If the Em ployer shall fail to m ake any contr ibutions to the funds
when same shall be due and payable, it shall be considered delinquent
and in breach of this Agreem ent and shall pay as an additional
amount . . . ten (10) percent of th amount of the delinquent payment
e
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. . . plus interest at the rate of one and one-half (1-1/2) percent per
month until paid to each Fund. In addition, the Em ployer shall be
liable for the reasonable expenses, i ncluding attorney fees and
accountant fees , i ncurred by each f und in the collection of the
Employer’s contributions.
(Doc. No. 6 at 31; see also id. at 30 (regarding an employer’s failure to make contributions to the
International Funds.))
Despite this, the Court finds that Plaintiffs have not sufficiently supported the requested
amount of damages in their submission. Although Mr. Kauffman’s affidavit is accompanied by a
copy of the Agreement and Plaintiffs provided documentary evidence regarding the amount of
the delinquent payment for the month of July 2011, Plaintiffs have failed to provide documentary
evidence regarding the amounts of the delinquent payments for the months of April, May, and
June 2010. Rather, Mr. Kauffman’s affidavit merely states that Defendant’s contributions to the
Local and International Funds for each of those months were untimely and that the requested
liquidated damages and interest for those months were assessed pursuant to Section 3 of Article
XV of the Agreement for the Local Funds and pursuant to Section 4 of Article XIV of the
Agreement for the International Funds. (Doc. No. 6 ¶¶ 20-22, 37-39.) Thus, the Court cannot
determine if the requested amount of liquidated damages and interest for the months of April,
May, and June 2011 is proper.3

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For example, Mr. Kauffman’s affidavit states:
Contributions due to the Local Funds for the mont h of April 2011,
which wer e due by May 15, 2011, were received June 14, 2011.
Liquidated damages and interest for the month of April, 2011 were
assessed by the Local Funds pursuant to Section 3 of Article XV of
the Agreem ent. The am ount of liquida ted dam ages assessed was
$123.61, and the amount of interest assessed was $18.54.
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Further, Plaintiffs have not submitted adequate support to demonstrate its request for
attorney’s fees is reasonable. In assessing a request for attorney’s fees, “[t]he most useful
starting point for determining the amount of a reasonable fee is the number of hours reasonably
expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461
U.S. 424, 433 (1983). Performing this calculation will provide the “lodestar” figure, which is
presumed to be the reasonable fees for the matter. Rode v. Dellaciprete, 892 F.2d 1177, 1183
(3d Cir. 1990). The party seeking the attorney’s fees has the burden to prove that the requested
attorney’s fees are reasonable, which initially requires the fee petitioner to “submit evidence
supporting the hours worked and the rates claimed.” Id. at 1183; see also E.E.O.C. v. Fed.
Express Corp., 537 F. Supp. 2d 700, 721 (M.D. Pa. 2005) (citing Hensley, 461 U.S. at 433). An
hourly rate is reasonable if the fee applicant demonstrates by evidence, in addition to the fee
applicant’s own affidavit, that the suggested rate is comparable to the current “rates prevailing in
the community for similar services by lawyers of reasonably comparable skill, experience, and
reputation.” Maldonado v. Houstoun, 256 F.3d 181, 184 (3d Cir. 2001). Here, Plaintiffs have
not submitted a fee petition from their counsel detailing the hours worked, tasks performed, or
support for a claimed hourly rate. Therefore, Plaintiffs will be required to submit further
evidence in support of their claimed attorney’s fees.
While Plaintiffs have not adequately supported their claim for the requested amount of
damages, the Court does not find that a hearing is necessary under Rule 55(b)(2)(B) to determine

(Doc. No. 6 ¶ 20.) The Court, however, cannot determine if the amounts of liquidated damages
and interest assessed “pursuant to Section 3 of Article XV of the Agreement” are accurate
without further documentary evidence regarding the amount of contributions that were due on
May 15, 2011.
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the amount of damages due, as the requested amounts are computable from the terms of the
Agreement and proper documentary evidence. See 10 James Wm. Moore, et al., Moore's Federal
Practice § 55.32[2][c] (Matthew Bender ed. 2010) (“[T]he “hearing” may be one in which the
court asks the parties to submit affidavits and other materials from which the court can decide
the issue”). As such, Plaintiffs will be required to submit further evidence in support of their
claimed damages. If Plaintiffs are unable to adequately support their claims with further
documentary submissions, the Court will schedule an evidentiary hearing on the matter.
III.

CONCLUSION
For the foregoing reasons, the Court will grant Plaintiffs’ request for default judgment,

but will instruct the Clerk of Court to defer entering judgment pending the Court’s determination
as to the amount of damages to be awarded. Plaintiffs will be directed to submit further evidence
to support the amount of liquidated damages and interest requested and further evidence of the
reasonableness of the attorney’s fees award.

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
LESTER KAUFFMAN, as Trustee of the
Union Trowel Trades Benefit Funds of
Central Pennsylvania, et al.,
Plaintiffs
v.
SPECIALTY FLOORING SYSTEMS,
Inc.,
Defendant

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Civil Action No. 1:11-cv-01746
(Chief Judge Kane)

ORDER
AND NOW, on this 6th day of January 2012, upon consideration of Plaintiffs’ motion
for default judgment (Doc. No. 6), and for the reasons set forth in the Court’s memorandum
opinion filed herewith, IT IS HEREBY ORDERED THAT:
1.

Plaintiffs’ motion (Doc. No. 6) is GRANTED.

2.

The Clerk of Court is directed to defer entering judgment on Plaintiffs’ claims pending
the Court’s computation of the appropriate amount of attorney’s fees.

3.

Plaintiffs SHALL SUBMIT further evidence documenting the amounts of contributions
due to the Local Funds and the International Funds for the months of April, May, and
June 2011, which were due May 15, 2011, June 15, 2011, and July 15, 2011,
respectively. (See Doc. No. 6 ¶¶ 20-22, 37-39.)

5.

Plaintiffs SHALL SUBMIT further evidence supporting their request for attorney’s fees,
in accordance with the limitations highlighted by the Court’s memorandum, within
fifteen (15) days of the date of this order.
s/ Yvette Kane
Yvette Kane, Chief Judge
United States District Court
Middle District of Pennsylvania

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