Fanning v. C & L Service Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________
)
MICHAEL R. FANNING, as Chief )
Executive Officer of the Central )
Pension Fund of the International )
Union of Operating Engineers and )
Participating Employers, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-CV-0865(KBJ)
)
C&L SERVICE CORPORATION, )
)
Defendant. )
)
_________________________________ )

MEMORANDUM OPINION

Plaintiff Michael R. Fanning, in his official capacity as Chief Executive Officer

of the Central Pension Fund of the International Union of Operating Engineers and

Participating Employees (“Plaintiff” or the “Fund”), filed this action against Defendant

C&L Services Corporation (“Defendant” or “C&L”). In the complaint, Plaintiff alleges

that C&L failed to pay to the Fund the proper amount of contributions owed under the

governing Collective Bargaining Agreements (“CBAs”) and the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1145. (See Compl. ¶¶ 13-18.)

Although properly and timely served with the complaint and summons, Defendant has

failed to respond to the complaint; accordingly, the Clerk of Court entered default

against C&L on August 21, 2013. (See Entry of Default, ECF No. 5.) Before the Court

is Plaintiff’s motion seeking default judgment and monetary damages. (Mot. For Entry

of J. By Default & to Close Case (“Pl.’s Mot.”), ECF No. 7; Mem. in Support of Mot.
for Entry of J. by Default (“Pl.’s Mem.”), ECF No. 7-1.) Upon consideration of

Plaintiff’s motion and the attachments thereto, applicable case law, statutory authority,

and the record of this case as a whole, the Court GRANTS Plaintiff’s motion.

I. BACKGROUND

The Fund asserts that C&L is bound through a CBA with the International Union

of Operating Engineers Local 147, as well as the Fund’s charter agreement and ERISA,

to pay the Fund certain sums of money for each hour worked by employees of C&L

performing work covered by the agreement. (Compl. ¶¶ 6-7; Decl. of Michael R.

Fanning (“Fanning Decl.”), Appendix to Pl.’s Mot. (“App.”) 002 ¶¶ 8-9; CBA, Ex. B to

Fanning Decl., App. 012-13.) Pursuant to the terms of those agreements, the Fund

asserts that it is entitled to a monetary award in the amount of the unpaid contributions,

liquidated damages, interest on the unpaid contributions, as well as costs, such as

attorneys’ fees and filing costs. (Compl. ¶¶ A-C, E; Pl.’s Mem. at 4-6.)

As explained in the Fanning Declaration, the Fund is a multi-employer employee

pension benefit plan established pursuant to ERISA and maintained according to its

Restated Agreement of Declaration and Trust (“Trust Agreement”). (Compl. ¶ 1;

Fanning Decl. ¶¶ 4-5; Trust Agreement, Ex. A to Fanning Decl., App. 004.) The Fund

provides retirement, disability, survivor, and death benefits to employees (and their

beneficiaries) working as engineers in various industries throughout the United States.

(Fanning Decl. ¶ 6.) Employers make contributions to the Fund pursuant to the terms of

various CBAs entered into with local unions affiliated with the International Union of

Operating Engineers. (Id. ¶ 7.) Signatory employers are required to make the

contributions on the first of each month. (Id.) C&L is one such employer obligated to

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make monthly contributions under the terms of its CBA, the Fund’s Trust Agreement,

and ERISA. (Id. ¶ 8; CBA at App. 012.)

Specifically, C&L’s CBA with the local union provides that for every hour

worked by an employee performing work under the agreement, C&L is obligated to pay

a fixed amount of contributions to the Fund. (Fanning. Decl. ¶ 9; CBA at App. 007.)

Here, the Fund alleges that C&L failed to pay the requisite contributions for a three-

month period, from January 2013 through March 2013. (Fanning Decl. ¶ 12.) The

Fund maintains that C&L submitted payment for the contributions owed for January

2013 by check in the amount of $5,945.45 (id. ¶ 11; January 2013 Contributions

Calculations, Ex. C to Fanning Decl., App. 014-015), but C&L’s bank dishonored the

check, and C&L never provided a replacement (Fanning Decl. ¶ 11). C&L also

allegedly never submitted any payment for the contributions owed for February or

March 2013. (Id. ¶¶12-13.) Pursuant to a report that C&L prepared and sent to the

Fund, C&L owes delinquent contributions in the amount of $4,338.23 for February

2013, and $4,445.10 for March 2013. (Id. ¶ 12; C&L Contributions Report, Ex. D to

Declaration of R. Richard Hopp (“Hopp Decl.”), App. 029-031; Interest/Damages Shell,

Ex. D to Fanning Decl., App. 019.) 1 Thus, the total amount of unpaid contributions that

the Fund seeks to recover is $14,728.78. (Pl.’s Mem. at 4; Interest/Damages Shell,

App. 019.)

In addition to the unpaid contributions, the Fund also alleges that it is entitled to

interest on the unpaid contributions pursuant to the Fund’s Trust Agreement and

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Although C&L has not responded formally to the complaint or otherwise defended itself in this
litigation, in response to the Fund’s demand for an audit in Count II of the complaint, C&L did prepare
reports documenting the total amount of unpaid contributions, which Barbara L. Moore of C&L sent to
the Fund’s attorney, R. Richard Hopp. (Pl.’s Mem. at 4; Fanning Decl. ¶ 12; Hopp Decl. ¶ 7.)

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ERISA. (Compl. ¶ 18; Pl.’s Mem. at 5.) Plaintiff alleges that ERISA directs that

interests on unpaid contributions be paid in accordance with the rate provided by the

governing plan. (Pl.’s Mot. at 5 (citing 29 U.S.C. § 1132(g)(2).) Section 4.5(c) of the

Fund’s Trust Agreement provides for interest on unpaid contributions at a rate of 9%

per year. (Trust Agreement, App. 012-013.) Applying that interest rate to the

$14,728.78 of unpaid contributions that C&L allegedly owes in this case, the Fund

seeks $572.43 in interest. (Fanning Decl. ¶ 14; Interest/Damages Shell, App. 019; see

also C&L Contributions Report, App. 029-031.)

The Fund also alleges that it is entitled to liquidated damages pursuant to Section

4.5(b) of the Trust Agreement. (Compl. ¶17; Pl.’s Mem. at 5.) Plaintiff alleges that

ERISA provides for liquidated damages in an amount set forth in the governing plan.

(Pl.’s Mot. at 5 (citing 29 U.S.C. § 1132(g)(2)(C)(ii).) Section 4.5(b) of the Trust

Agreement provides for liquidated damages to be assessed at the rate of 20%. (Trust

Agreement, App. 012.) In the instant motion, however, the Fund requests a rate of only

15% of the unpaid contributions. (Pl.’s Mem. at 5.) Based on the amount of unpaid

contributions that C&L reported (see C&L Contributions Report, App. 029-031), the

Fund has calculated that liquidated damages for the periods of January through March

2013, at a rate of 15%, totals $2,209.32. (Interest/Damages Shell, App. 019; Fanning

Decl. ¶ 13.)

Finally, under Section 4.5 of the Trust Agreement and ERISA § 1132(g)(2)(D)

and (E), C&L is obligated to pay to the Fund all costs, audit expenses, and attorneys’

fees the Trustees incurred in enforcing the parties’ CBA. (Trust Agreement, App. 013.)

As set forth in the Declaration of R. Richard Hopp, counsel of record for the Fund, the

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Fund incurred legal costs in the amount of $600.00 for the filing fee and cost of service

of process in this case. (Decl. of R. Richard Hopp (“Hopp Decl.”), App. 021 ¶ 5; see

also Process Serv. Invoice, Ex. B. to Hopp Decl., App. 024.) In addition, the Fund paid

attorneys’ fees in the amount of $1,900.00 in this case based on Mr. Hopp’s 7.6 hours

of work as described in his Detail of Fees. (Hopp. Decl. ¶ 4; Detail of Fees, Ex. A to

Hopp Decl., App. 022.) Thus, the Fund maintains that C&L is obligated to pay a total

of $2,500.00 in costs and fees. (Pl.’s Mot. at 6.)

The Fund served C&L with the complaint and summons in this case on June 13,

2013. (Return of Service/Affidavit, ECF No. 3.) When C&L failed to file an answer

within the time period allotted by Federal Rule of Civil Procedure 12(a)(1)(A), this

Court ordered C&L to file a responsive pleading by August 9, 2013. (See Minute Order

of July 26, 2013.) When C&L failed to meet the Court’s extended deadline, the Court

offered C&L another lifeline, ordering C&L to show cause why it should not enter

default judgment for the Fund. (See Minute Order of August 12, 2013.) C&L failed to

respond yet again. (Pl.’s Mem. at 1.) C&L failed to meet the Court’s show cause

deadline, and on August 20, 2013, the Fund requested an entry of default and served

C&L with both a copy of the affidavit for default (Request for Clerk’s Entry of Default,

ECF No. 4, ¶ 4) and an emailed copy of the Court’s minute orders (Hopp Decl. ¶ 6).

The following day, the Clerk of the Court entered the default. (Entry of Default,

ECF No. 5.)

The Fund has now filed the instant motion for default judgment pursuant to

Federal Rule of Civil Procedure 55(b)(2). (Pl.’s Mot.) 2 The Fund’s attorney, Mr.

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Rule 55 sets out a two-step process for a party seeking to obtain a default judgment. First, a plaintiff
must ask that the Clerk of the Court enter default against “a party against whom a judgment for

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Hopp, has been in touch with Barbara L. Moore, a representative of C&L. (Hopp. Decl.

¶ 6.) According to Mr. Hopp, Ms. Moore indicated that “she and C&L were aware of

the [pending] default and that [she] had consulted with her attorney.” (Hopp. Decl.

¶ 6.) Mr. Hopp stated that he has had “many communications” with Ms. Moore and has

advised her repeatedly of the Fund’s intent to seek default judgment. (Id.; see also

Hopp & Moore Emails, Ex. C. to Hopp. Decl., App. 025-028.) Indeed, it is Ms. Moore

who provided C&L’s reports identifying the amount of contributions due. (Hopp. Decl.

¶ 7.) Nevertheless, C&L has failed to submit any pleadings or otherwise defend itself

against this action as of the date of this order.

II. Legal Standard

“A court has the power to enter default judgment when a defendant fails to

defend its case appropriately or otherwise engages in dilatory tactics.” Boland v. Elite

Terrazzo Flooring, Inc., 763 F. Supp. 2d 64, 66-67 (D.D.C. 2011) (citing Keegel v. Key

W. & Caribbean Trading Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980)). Federal Rule of

Civil Procedure 55(a) provides for entry of default “[w]hen a party against whom a

judgment for affirmative relief is sought has failed to plead or otherwise defend as

provided by these rules.” Fed. R. Civ. P. 55(a). Once the Clerk enters default, Rule 55

authorizes the court to enter default judgment for the amount claimed and for costs.

Fed. R. Civ. P. 55(b)(2). “The determination of whether default judgment is

appropriate is committed to the discretion of the trial court.” Int’l Painters & Allied

affirmative relief is sought [which] has failed to plead or otherwise defend” against an action. Fed. R.
Civ. P. 55(a). Second, if the plaintiff’s claim is not for a “sum certain,” the plaintiff must apply to the
court for a default judgment. Id. 55(b)(1)-(2). “This two-step process gives a defendant an opportunity
to move to set aside a default before the court enters judgment.” Boland v. Elite Terrazzo Flooring,
Inc., 763 F. Supp. 2d 64, 66 n.1 (D.D.C. 2011) (citing Fed. R. Civ. P. 55(c) and H.F. Livermore Corp.
v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)).

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Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C.

2008) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). “Because courts

strongly favor resolution of disputes on their merits, and because it seems inherently

unfair to use the court’s power to enter judgment as a penalty for filing delays, modern

courts do not favor default judgment[, which] . . . usually is available only when the

adversary process has been halted because of an essentially unresponsive party . . . .”

Elite Terrazzo Flooring, 763 F. Supp. 2d at 67 (internal quotation marks omitted)

(quoting Jackson, 636 F.2d at 835).

Entry of default by the Clerk of Court establishes the defaulting party’s liability

for the well-pleaded allegations of the complaint. Elite Terrazzo Flooring, 763 F.

Supp. 2d at 67; Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001). However,

“[t]he court has considerable latitude in determining the amount of damages.” Elite

Terrazzo Flooring, 763 F. Supp. 2d at 67 (citation omitted). “Although the default

establishes a defendant’s liability, the court is required to make an independent

determination of the sum to be awarded unless the amount of damages is certain.”

Fanning v. Permanent Solution Indus., 257 F.R.D. 4, 7 (D.D.C. 2009) (quoting Int’l

Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co., Inc., 239

F. Supp. 2d 26, 30 (D.D.C. 2002)). “Accordingly, when moving for default judgment,

the plaintiff must prove its entitlement to the amount of monetary damages requested”

using “detailed affidavits or documentary evidence” on which the court may rely.

Permanent Solution Indus., 256 F.R.D. at 7 (citing Amrine Drywall, 239 F. Supp. 2d at

30). The court may conduct a hearing regarding the scope of damages, Fed. R. Civ. P.

55(b)(2), but is not required to “as long as it ensure[s] that there [is] a basis for the

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damages specified in the default judgment,” Elite Terrazzo Flooring, 763 F. Supp. 2d at

67 (quoting Transatlantic Mar. Claims Agency, Inc. v. Ace Shipping Corp. Div. of Ace

Young Inc., 109 F.3d 105, 111 (2d Cir. 1997)).

III. Analysis

“Where, as here, there is a complete absence of any request to set aside the

default or suggestion by the defendant that it has a meritorious defense, it is clear that

the standard for default judgment has been satisfied.” Permanent Solution Indus., 257

F.R.D. at 7 (internal quotation marks and citation omitted). As noted above, C&L has

failed to respond to the complaint and to this Court’s multiple orders. Moreover, based

on the affidavits supported the uncontested motion for default, the Court finds that the

Fund’s attorney has been communicating with a representative of C&L, who

acknowledged C&L’s awareness of this litigation, including the instant default motion.

(See Hopp. Decl. ¶ 6.) Given the defendant’s unresponsiveness—especially in light of

C&L’s reported recognition of this action and its knowledge of the possibility of default

judgment—the court concludes that default judgment is appropriate. See Elite Terrazzo

Flooring, 763 F. Supp. 2d at 68 (concluding that the defendant was liable to the

plaintiff because the defendant had failed to respond to the complaint or otherwise

defend itself); Permanent Solution Indus., 257 F.R.D. at 7 (same).

As a result of the entry of default, this Court adopts the well-pleaded allegations

in the complaint as findings of fact regarding this matter. Elite Terrazzo Flooring, 763

F. Supp. 2d at 68; Permanent Solution Indus., 257 F.R.D. at 7; Amrine Drywall, 239

F. Supp. 2d at 30 (citation omitted). The Plaintiff asserts, and this Court concludes,

that C&L violated the CBA and ERISA by failing to make monthly contributions to the

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Fund from January through March 2013. (See Pl.’s Mem. at 4.) Accordingly, the Fund

is entitled to default judgment as to C&L’s liability for its failure to make timely

contributions to the Fund pursuant to the CBA.

With liability established, the Court now must make an independent

determination of the amount of damages due. See Elite Terrazzo Flooring, 763 F. Supp.

2d at 68; Permanent Solution Indus., 257 F.R.D. at 7; Adkins, 180 F. Supp. 2d at 17.

Pursuant to the Fund’s Trust Agreement, C&L is obligated to pay (1) the total amount

of outstanding unpaid contributions; (2) interest on the unpaid contributions at a 9%

rate; (3) liquidated damages in an amount up to 20% of the amount past due; and (4)

related legal costs and fees. (Trust Agreement, App. 008-009.) ERISA echoes these

requirements. See 29 U.S.C. § 1132(g) (noting that employers are obligated to pay

unpaid contributions, interest according to governing agreements, liquidated damages at

a rate of 20% or as determined by governing agreements, legal costs and fees, as well as

other such relief).

In support of its motion for default judgment, the Fund has provided the

declarations of Fanning, the Chief Executive of the Fund, and Hopp, counsel for the

Fund. Fanning’s declaration details the amount of unpaid contributions, interest, and

liquidated damages that C&L owes, based in large part on C&L’s own calculations.

(See Fanning Decl. ¶ 12; C&L Contributions Report, App. 019.) Hopp’s declaration

similarly details the legal costs and attorneys’ fees that the Fund incurred as a result of

its effort to recover the unpaid contributions. (See Hopp. Decl. ¶¶ 4-5.) Relying on the

declarations and materials attached thereto to calculate the appropriate damages amount

in this case, see Permanent Solution Indus., 256 F.R.D. at 7; Amrine Drywall, 239

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F. Supp. 2d at 30, the Court finds that the Fund has established damages in the amount

of: $14,728.78 in unpaid contributions for January through March 2013; $572.43 in

interest on the unpaid contributions at a rate of 9% per annum for the time period of

January 2013 through August 2013; $2209.32 in liquidated damages at a rate of 15% of

the unpaid contributions; $600 in legal costs and $1,900.00 in attorneys’ fees for a total

of $2,500.00 in costs and fees.

Therefore, pursuant to the terms of the Trust Agreement and 29 U.S.C.

§ 1132(g)(2), the Court finds that the Fund is entitled to a monetary judgment in the

amount of $20,010.53.

IV. Conclusion

For the reasons described above, the Court GRANTS Plaintiff’s motion for

default judgment (ECF No. 7) and will enter a judgment awarding the Fund $20,010.53.

A separate order will follow.

Date: September 13, 2013 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge

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