Trustees of the IBEW-NECA Southwestern Health and Benefit Fund et al v. Rockey Electric Inc
MEMORANDUM OPINION AND ORDER denying without prejudice 10 Motion for Default Judgment. Should Plaintiffs choose to re-file their motion, they must first amend their complaint to address the deficiencies detailed in this Order. Plaintiffs shoul d then serve a copy of any amended complaint on Rockey. If Rockey does not answer or otherwise respond to Plaintiffs' amended complaint within the time allowed under the Federal Rules of Civil Procedure, then Plaintiffs may again move for default judgment following the procedures outlined in Rule 55. (Ordered by Judge Jane J Boyle on 11/13/2023) (axm)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
TRUSTEES OF THE IBEW-NECA
SOUTHWESTERN HEALTH AND
BENEFIT FUND, TRUSTEES OF THE
NECA-IBEW LOCAL UNION NO. 584
PENSION PLAN, TRUSTEES OF THE
NECA-IBEW LOCAL UNION NO. 584
PROFIT SHARING PLAN, AND
TRUSTEES OF THE TULSA
APPRENTICESHIP AND TRAINING
ROCKEY ELECTRIC, INC.,
CIVIL ACTION NO. 3:23-CV-0224-B
MEMORANDUM OPINION AND ORDER
Before the Court is Trustees of the IBEW-NECA Southwestern Health and Benefit Fund,
Trustees of the NECA-IBEW Local Union No. 584 Pension Plan, Trustees of the NECA-IBEW
Local Union No. 584 Profit Sharing Plan, and Trustees of the Tulsa Electrical Joint Apprenticeship
and Training Committee (collectively “Plaintiffs”)’s Motion for Default Judgment (Doc. 10). For
the following reasons, Plaintiffs’ Motion is DENIED.
This is an employee benefits case. Plaintiffs are administrators and fiduciaries of employee
pension and welfare benefit plans under the Employee Retirement Income Security Act
(“ERISA”). Doc. 1, Compl., ¶¶ 4–7, 10; see also 29 U.S.C. §§ 1002(1)–(3), 1132(d)(1). The plans
are also subject to § 302 of the Labor Management Relations Act (“LMRA”). Doc. 1, Compl., ¶
10; see also 29 U.S.C. § 186. Defendant Rockey Electric, Inc. (“Rockey”) is an employer subject to
ERISA. Id. ¶¶ 8–9; see 29 U.S.C. §§ 1002(5), 1145.
On July 6, 2020, Rockey executed a “Letter of Assent,” which bound Rockey to the terms
of the “Inside Agreement” between the International Brotherhood of Electrical Workers Union
584 and the Eastern Oklahoma Chapter of the National Electrical Contractors Association. Doc.
1, Compl., ¶ 9. By assenting to the terms of the Inside Agreement, Rockey agreed to pay Plaintiffs
“certain monetary contributions.” Id. ¶ 9. And in the event of late or unpaid employer
contributions, Rockey was also obligated to pay “contractual and statutory interest and . . .
liquidated damages.” Doc. 1, Compl., ¶ 11. In addition, Plaintiffs allege that Rockey was bound by
certain “Trust Fund Agreements,” which apparently contemplated that Rockey would submit to
payroll audits at Plaintiffs’ discretion to ensure that contributions were paid as required. Id. ¶ 11.
Plaintiffs filed this action on January 30, 2023, alleging Rockey “breached its agreements
with Plaintiffs by failing and refusing to submit to an exit audit” and—depending on the outcome
of the audit—by failing to make employer contributions per the terms of the parties’ agreements.
Id. ¶¶ 13–14. According to Plaintiffs, Rockey’s actions constituted a violation of § 515 of ERSIA.
Id. ¶ 18. After filing their Complaint, Plaintiffs conducted an audit of Rockey’s payroll records and
found “a deficiency in . . . contributions for the months of August 2020, September 2020, February
2021, April 2021, and May 2021.” Doc. 10-1, Shanklin Aff., ¶ 5; Doc. 10-2, Sarmiento Aff., ¶ 5.
Rockey failed to respond to Plaintiffs’ pleading, and Plaintiffs requested an entry of default
against Rockey. Doc. 8, Request for Entry of Default; see also Doc. 10., Mot. Default J., 2. The
Clerk of the Court filed an entry of default on May 10, 2023. Doc. 9, Entry of Default. On July 17,
2023, Plaintiffs filed a Motion for Default Judgment against Rockey. Doc. 10, Mot. The Motion
asks for default judgment on the unpaid contributions revealed by the audit. See generally id. The
Court considers it below.
Federal Rule of Civil Procedure 55 sets forth the requirements for obtaining a default
judgment. A plaintiff may only seek a default judgment after he obtains an entry of default by the
clerk of court. FED. R. CIV. P. 55. The entry of default occurs when the plaintiff demonstrates by
affidavit or otherwise that the defendant is in default, which means the defendant “has failed to
plead or otherwise respond to the complaint within the time required by the Federal Rules.” New
York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996); FED. R. CIV. P. 55. However, an entry
of default does not automatically entitle a plaintiff to judgment. Instead, a plaintiff must apply for
judgment based on the defendant’s default—this is the motion for default judgment. New York Life
Ins. Co., 84 F.3d at 141.
District courts are afforded discretion in determining whether to enter a default judgment.
See Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). That said, “[d]efault judgments are a
drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme
situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989)
(internal footnote omitted). Accordingly, courts must carefully review the pleadings to ensure that
a plaintiff is entitled to a default judgment. See Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d
1200, 1206 (5th Cir. 1975). To that end, courts employ a three-part analysis to determine whether
to grant a motion for default judgment, which assesses: “(1) whether the entry of default is
procedurally warranted, (2) the substantive merits of the plaintiff’s claims and whether there is a
sufficient basis in the pleadings for the judgment, and (3) what form of relief, if any, a plaintiff
should receive.” Griffin v. O'Brien, Wexler, & Assocs., LLC, No. 4:22-CV-0970, 2023 WL 4303649,
at *2 (E.D. Tex. June 30, 2023).
Applying the three-part analysis set forth above, the Court concludes that Plaintiffs are not
entitled to default judgment. While Plaintiffs have established that a default judgment is
procedurally warranted, they have failed to demonstrate a sufficient basis in the pleadings exists to
support a judgment, and they do not provide adequate evidence to support the relief they request.
Default Judgment is Procedurally Warranted
As explained, the Court must first determine whether the entry of default judgment is
procedurally warranted. The Court is guided by the following factors in making this determination:
(1) whether material issues of fact exist, (2) whether there has been substantial prejudice, (3)
whether the grounds for default are clearly established, (4) whether the default was caused by a
good faith mistake or excusable neglect, (5) the harshness of a default judgment, and (6) whether
the court would think itself obliged to set aside the default on the defendant’s motion. Lindsey, 161
F.3d at 893. In this case, each of these factors indicates that an entry of default judgment is
First, there is no dispute of material fact. By defaulting, Rockey “admits the plaintiff’s well
pleaded allegations of fact.” Nishimatsu, 515 F.2d at 1206. As such, there is no dispute with respect
to the factual allegations in Plaintiffs’ Complaint.
Second, there has been prejudice to Plaintiffs. Rockey’s “failure to respond threatens to
bring the adversary process to a halt, effectively prejudicing [Plaintiffs’] interests.” Ins. Co. of the
W. v. H & G Contractors, Inc., 2011 WL 4738197, at *3 (S.D. Tex. Oct. 5, 2011) (citing Lindsey,
161 F.3d at 893). Moreover, an entry of a default judgment would not result in substantial prejudice
to Rockey. Rockey received notice of Plaintiffs’ claims over eight months ago yet has taken no
action in this case. Doc. 6, Aff. Service. Over five months ago, the Court ordered Rockey to show
cause explaining why it failed to file an answer. Doc. 7, Order. Rockey did not respond to this
Order either. Plaintiffs’ Motion for Default Judgment has been on the docket for nearly three
months without any response from Rockey. See Doc. 10, Mot. Under these circumstances, the
second factor indicates that a default judgment is procedurally warranted.
Third, the grounds for default judgment are clearly established. Rockey was served on
February 7, 2023. Doc. 6, Aff. Service. As of October 2023, Rockey has not taken any action in
this case. Therefore, “[t]he grounds for default judgment are . . . clearly established because
[Rockey has] not participated in any part of the adversarial process—[it has] failed to respond to
the summons, the complaint, the entry of default, or [Plaintiffs’] Motion for Default Judgment.”
Griffin, 2023 WL 4303649, at *3.
Fourth, there is no evidence before the Court indicating that Rockey’s silence is the result
of a “good faith mistake or excusable neglect.” See Lindsey, 161 F.3d at 893. As stated above,
Plaintiffs properly served Rockey. The summons executed on Rockey unequivocally provided that
“[w]ithin 21 days after service of this summons . . . you [Rockey] must serve on the plaintiff an
answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil
Procedure.” Doc. 6, Aff. Service, 1. Rockey failed to comply with the directive that was served
upon it and has offered no explanation for this failure—even after the Court explicitly ordered
Rockey to provide such an explanation. Thus, the Court concludes that this factor likewise
indicates that a default judgment is procedurally warranted.
Fifth, a default judgment against Rockey is not harsh. See Joe Hand Promotions, Inc. v. 2
Tacos Bar & Grill, LLC, 2017 WL 373478, at *2 (N.D. Tex. Jan. 26, 2017) (Lynn, C.J.) (reasoning
that default judgment was not harsh when defendants “had over six months to respond to Plaintiff’s
Complaint, and over three months to respond to Plaintiff’s Motion for Partial Default Judgment.”).
Rockey has been aware of the allegations levied against it for over six months, but it has presumably
elected not to respond to these allegations or otherwise defend itself. As such, entry of a default
judgment would not be harsh.
Sixth, and finally, the Court is not aware of any facts that would give rise to good cause to
set aside the default if challenged by Rockey. See Lindsey, 161 F.3d at 893. Therefore, this factor
also demonstrates that a default judgment is procedurally warranted.
In sum, after reviewing the Lindsey factors, the Court concludes that a default judgment
would be procedurally warranted.
There is Not a Sufficient Basis in the Pleadings for Judgment
While procedurally warranted, the allegations in the Complaint are insufficient to support
a default judgment. See Ventura v. Pro. Frame & Home, No. 3:18-CV-2659-B, 2019 WL 2436263,
at *3 (N.D. Tex. June 11, 2019) (Boyle, J.) (denying default judgment where complaint pleaded
insufficient facts to establish claim even though default judgment was procedurally warranted).
Due to its default, Rockey is deemed to have admitted the well-pleaded allegations in
Plaintiffs’ Complaint. See Nishimatsu, 515 F.2d at 1206. However, a “defendant is not held to admit
facts that are not well-pleaded or to admit conclusions of law.” Id. To determine whether there is
a sufficient factual basis for default judgment, the Court applies the pleading standards set forth in
Rule 8. See Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015) (citing
FED. R. CIV. P. 8(a)(2)). There is a sufficient basis for the judgment if a complaint’s factual
allegations “‘raise a right to relief above the speculative level, on the assumption that all the
allegations in the complaint are true.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
Here, Plaintiffs’ Motion asks for a judgment on their ERISA claim against Rockey for
unpaid employer contributions, plus other contractual and statutory liquidated damages and
interest. Doc. 10, Mot., 1–2. Section 515 of ERISA requires employers “who [are] obligated to
make contributions to a multiemployer plan . . . [to] make such contributions in accordance with
the terms and conditions of such plan or [collectively bargained] agreement.” 29 U.S.C. § 1145.
In the event an employer fails to make contributions in violation of § 515, ERISA’s civil
enforcement provision, § 502, provides that a court “shall award” unpaid contributions, interest,
liquidated damages, reasonable attorney’s fees, and any other appropriate legal or equitable relief.
29 U.S.C. § 1132(g)(2).
Therefore, to be entitled to default judgment on their ERISA claim, Plaintiffs must have at
least pleaded that Rockey did not make employer contributions when it was under an obligation
to do so. See 29 U.S.C. § 1145. However, the Complaint is devoid of any facts indicating that
Rockey failed to make contributions as required under § 515 of ERISA. To begin, the Complaint
does not attach or quote the relevant contractual language establishing Rockey’s obligation to pay
contributions to each of the Plaintiffs. And even if there was such an obligation, the Complaint
alleges no facts that suggest Rockey breached any collectively bargained agreement by failing to
make timely contributions. Instead, the Complaint only alleges that Rockey failed to submit to a
required audit, and therefore might have been delinquent in paying its employer contributions:
Defendant breached its agreements with Plaintiffs by failing and refusing to submit
to an exit audit for the purpose of ensuring accurate employer contributions were
made . . . . [A]nd if such exit audit reveals a deficiency in the payment and reporting
of employer contributions, Defendant will be liable for the deficient and delinquent
employer contributions plus liquidated damages, interest, audit and attorney’s fees
and costs of court.
Doc. 1, Compl., ¶¶ 13–14 (emphasis added).
Ultimately, the failure to plead facts demonstrating that Rockey was delinquent is fatal to
Plaintiffs’ Motion because actual delinquency is a precondition to judgment under ERISA. See 29
U.S.C. §§ 1132(g), 1145. Section 502(g) of ERISA authorizes relief only when an employer has in
fact failed to pay the requisite contributions under § 515; there is no similar provision under ERISA
for employers who may have failed to make the requisite contributions. 29 U.S.C. §§ 1132(g)(2),
1145. As such, allegations that Rockey may have been delinquent in making employer
contributions, even when taken as true, do not amount to a violation of § 515. See 29 U.S.C. §
1145; Nishimatsu, 515 F.2d at 1206. And because the Complaint’s factual allegations do not
plausibly demonstrate that Rockey violated § 515 of ERISA, Plaintiffs’ pleadings are insufficient to
support a default judgment on that claim. See Nishimatsu, 515 F.2d at 1206; IBEW-NECA Sw.
Health & Ben. Fund v. Morley-Moss, Inc., No. 3:12-CV-1335-M, 2012 WL 6021305, at *2 (N.D.
Tex. Dec. 4, 2012) (Lynn, J.) (“Plaintiffs merely request delinquent funds in the event the audit
reflects that such funds are owed. . . . [so] [t]here is no allegation that, if taken as true, would show
that [Defendant] actually owed back contributions.” (alterations and quotations omitted)).
While Plaintiffs’ Motion for Default Judgment indicates that Plaintiffs have since
conducted an audit, which revealed that Rockey is delinquent, Doc. 10, Mot., 2, Rockey is not
held to admit to this fact by default. A defaulting defendant only admits to the well pleaded facts
contained in the pleadings—but a Motion for Default Judgment is not a pleading. See Nishimatsu,
515 F.2d at 1206; FED. R. CIV. P. 7 (defining pleadings); Cf. Lohr v. Gilman, 248 F. Supp. 3d 796,
810 (N.D. Tex. 2017) (Lindsay, J.) (explaining in the context of motion to dismiss for failure to
state a claim that a “court is limited to consideration of the pleadings, and matters or theories raised
in a response are not part of the pleadings.”). The allegations in Plaintiffs’ Motion, therefore, do
not cure the inadequacies of the Complaint.
In sum, to be entitled to default judgment, Plaintiffs’ pleadings must have contained facts
which “raise a right to relief above the speculative level.” Wooten, 788 F.3d at 498 (quotations
omitted). Here, that required Plaintiffs to plead facts demonstrating that Rockey failed to timely
pay its employer contributions. Plaintiffs, however, never pleaded this—instead, Plaintiffs only
pleaded that Rockey may have been delinquent on its payments. Accordingly, there is not a
sufficient basis in the pleadings for the judgment.
There is Insufficient Evidence Supporting the Relief Requested
Even if there were a sufficient basis for judgment in the pleadings, Plaintiffs have failed to
attach adequate evidence to support the relief they seek. See Griffin, 2023 WL 4303649, at *2
(“After the Clerk enters a default, the plaintiff’s well-pleaded factual allegations are taken as true,
except regarding damages.” (internal quotations omitted)).
The Motion for Default Judgment asks for an award of $35,158.65. Doc. 10, Mot., 2.
Plaintiffs arrived at this figure after they conducted an audit, which apparently revealed the
following amounts owed: $12,098.13 (the principal amount of unpaid employer contributions);
$6,042.26 (the interest on the unpaid contributions at the rate of 1.5% per month); $1,814.72
(liquidated damages at the rate of 15%); $3,400.00 (audit fees)1; $11,336.14 (attorney’s fees); and
$467.40 (court costs). Id.
Plaintiffs’ pleadings do not request audit fees. Doc. 1, Compl., ¶ 26; see FED. R. CIV. P. 54(c) (“A
default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”).
However, Plaintiffs have not provided the Court with the audit report (or a detailed
summary thereof) substantiating the deficiency alleged. The only support for the claimed award
are two conclusory affidavits attached to Plaintiffs’ Motion, which summarily state that Rockey is
liable for the amount owed.2 Doc. 10-1, Aff. of Thomas Shanklin; Doc. 10-2, Aff. of Benazir
Sarmiento. The affidavits do not indicate what amount is owed to each Plaintiff, or how the
auditors arrived at this figure; nor do the affidavits indicate when the alleged amounts owed became
due such that interest may be calculated. Plaintiffs have not even attached the relevant contractual
language demonstrating that Rockey is obligated to pay interest and liquidated damages on the
unpaid contributions at the rate requested by Plaintiffs. See, e.g., 29 U.S.C. § 1132(g) (“[I]nterest
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.”). Accordingly, while the amount requested by
Plaintiffs “may be capable of mathematical calculation, . . . [Plaintiffs’] math has not been
presented to the Court.” Travelers Cas. & Sur. Co. of Am. v. Hub Mech. Contractors, Inc., No.
2:13CV101-KS-MTP, 2014 WL 1464553, at *4 (S.D. Miss. Apr. 15, 2014). Therefore, even if the
Court were to find a sufficient basis in Plaintiffs’ Complaint to support default judgment, the Court
would be unable to award Plaintiffs damages at this time.
For the reasons stated above, the Court DENIES WITHOUT PREJUDICE Plaintiffs’
Motion for Default Judgment (Doc. 10). Should Plaintiffs choose to re-file their motion, they must
Plaintiffs have also attached a third affidavit in support of attorney’s fees. Doc. 1-3, Att’y Fee
Aff. The Court limits the present discussion to evidence supporting (1) unpaid contributions; (2) interest;
(3) liquidated damages; and (4) audit fees. Thus, the Court does not consider the sufficiency of evidence
supporting the amount of attorney’s fees.
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first amend their complaint to address the deficiencies detailed in this Order. Plaintiffs should then
serve a copy of any amended complaint on Rockey. If Rockey does not answer or otherwise respond
to Plaintiffs’ amended complaint within the time allowed under the Federal Rules of Civil
Procedure, then Plaintiffs may again move for default judgment following the procedures outlined
in Rule 55.
SIGNED: November 13, 2023.
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
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