Flynn v. Old World Plaster, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

JOHN FLYNN et al., :
:
Plaintiffs, : Civil Action No.: 09-0396 (RMU)
:
v. : Re Document No.: 6
:
OLD WORLD PLASTER, LLC, :
:
Defendant. :

MEMORANDUM OPINION

GRANTING THE PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

I. INTRODUCTION

This matter is before the court on the plaintiffs’ motion for entry of default judgment

pursuant to Federal Rule of Civil Procedure 55(b)(2). The plaintiffs are the fiduciaries of the

Bricklayers and Trowel Trades International Pension Fund and the International Masonry

Institute (collectively, “the Plans”), which are “employee benefit plans” and “multiemployer

plans” within the meaning of the Employment Retirement Income Security Act (“ERISA”), 29

U.S.C. §§ 1001 et seq. The plaintiffs commenced this action on February 26, 2009, alleging that

the defendant failed to make contributions to the Plans as required by ERISA and the applicable

collective bargaining agreements. The plaintiffs served the defendant with a copy of the

complaint on April 29, 2009. To date, the defendant has not responded to the complaint or

otherwise participated in this action. As a result, the court grants the plaintiffs’ motion for

default judgment and awards them $252,058.66 in damages.
 II. FACTUAL & PROCEDURAL BACKGROUND

The complaint states that representatives of the International Union of Bricklayers and

Allied Craftsmen and its affiliated local unions entered into a collective bargaining agreement

with the defendant. Compl. ¶ 8. Pursuant to the agreement, the defendant was required to

provide monthly reports to the plaintiffs’ representatives and remit regular contributions to the

Plans based on the number of hours worked by the defendant’s unionized employees. Id. ¶ 9; see

generally Compl., Ex. A (“CBA”). The plaintiffs assert that the defendant failed to make

monthly payments to the Plans, in violation of the collective bargaining agreement and ERISA.

Compl. ¶¶ 1, 11, 14.

The plaintiffs allege that an independent accounting firm performed an audit of the

defendant’s books and records and determined that during the period from January 2003 through

December 2004,1 the defendant failed to submit the required reports and contributions to the

Plans. Id. ¶ 11. According to the plaintiffs, the unpaid contributions for this period total

$12,983.99. Id. ¶ 12. The plaintiffs further allege that although the defendant did provide

monthly reports for May 2006 and February 2007 through April 2008, it failed to make

$123,213.72 in required contributions for those months. Id. ¶¶ 14-15.

On February 26, 2009, the plaintiffs initiated this action to recover delinquent

contributions to the Plans. See generally id. The plaintiffs also seek interest on the delinquent

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Although the claims arising out of the period from January 2003 to December 2004 could be
barred by the three-year statute of limitations applicable to ERISA claims in this district, Connors
v. Hallmark & Son Coal Co., 935 F.2d 336, 341 (D.C. Cir. 1991), the statute of limitations is not
a jurisdictional issue and the court will not address it sua sponte, Day v. McDonough, 547 U.S.
198, 205 (2006) (stating that “[a] statute of limitations defense . . . is not ‘jurisdictional,’ hence
courts are under no obligation to raise the time bar sua sponte”); Davis v. Bryan, 810 F.2d 42, 44
(2d Cir. 1987) (observing that “[i]f a defendant fails to assert the statute of limitations defense,
the district court ordinarily should not raise it sua sponte”).

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contributions, liquidated damages, attorney’s fees and costs. Id. ¶¶ 18-19.

On April 29, 2009, the plaintiffs served the defendant with the summons and complaint.

Pls.’ Aff. of Service. After the defendant failed to submit a timely response to the complaint, the

Clerk of the Court entered default against the defendant on June 10, 2009. Entry of Default.

Consistent with Federal Rule of Civil Procedure 55, the plaintiffs then filed this motion for

default judgment on May 21, 2010. See generally Pls.’ Mot. Throughout this period, the

defendant has not pleaded or otherwise defended itself against this action.

III. ANALYSIS

A. Legal Standard for Entry of Default Judgment Under Rule 55(b)(2)

Federal Rule of Civil Procedure 55 specifies a two-step process for a party seeking to

obtain a default judgment. First, the plaintiff must request that the Clerk of the Court enter a

default against the party who 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 party must apply to

the court for an entry of default judgment. Id. 55(b)(2). This two-step process gives a defendant

an opportunity to move to set aside a default before the court enters judgment. Id. 55(c); see also

H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir.

1970) (stating that “[t]he notice requirement contained in Rule 55(b)(2) is . . . a device intended

to protect those parties who, although delaying in a formal sense by failing to file pleadings . . .

have otherwise indicated to the moving party a clear purpose to defend the suit”).

A court has the power to enter default judgment when a defendant fails to defend its case

appropriately or otherwise engages in dilatory tactics. Keegel v. Key W. & Caribbean Trading

Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980). Rule 55(a) of the Federal Rules of Civil Procedure

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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).

Upon request of the party entitled to default, Rule 55(b)(2) authorizes the court to enter against

the defendant a default judgment for the amount claimed and costs. Id. 55(b)(2).

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 judgments. Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir.

1980). Accordingly, default judgment usually is available “only when the adversary process has

been halted because of an essentially unresponsive party . . . [as] the diligent party must be

protected lest he be faced with interminable delay and continued uncertainty as to his rights.” Id.

at 836 (quoting H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691

(D.C. Cir. 1970)).

Default establishes the defaulting party’s liability for the well-pleaded allegations of the

complaint. Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001); Avianca, Inc. v. Corriea,

1992 WL 102999, at *1 (D.D.C. Apr. 13, 1992); see also Brock v. Unique Racquetball & Health

Clubs, Inc., 786 F.2d 61, 65 (2d Cir. 1986) (noting that “default concludes the liability phase of

the trial”). Default does not, however, establish liability for the amount of damage that the

plaintiff claims. Shepherd v. Am. Broad. Cos., Inc., 862 F. Supp. 486, 491 (D.D.C. 1994),

vacated on other grounds, 62 F.3d 1469 (D.C. Cir. 1995). Instead, “unless the amount of

damages is certain, the court is required to make an independent determination of the sum to be

awarded.” Adkins, 180 F. Supp. 2d at 17; see also Credit Lyonnais Secs. (USA), Inc. v.

Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (stating that the court must conduct an inquiry to

ascertain the amount of damages with reasonable certainty). The court has considerable latitude

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in determining the amount of damages. Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir.

1993). To fix the amount, the court may conduct a hearing. FED. R. CIV. P. 55(b)(2). The court

is not required to do so, however, “as long as it ensure[s] that there [is] a basis for the damages

specified in the default judgment.” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping

Corp., Div. of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997).

B. The Court Grants the Plaintiffs’ Motion for Entry of Default Judgment

1. The Defendant is Liable to the Plaintiffs

The plaintiffs assert that default judgment is appropriate in this case given the

defendant’s failure to respond to the complaint or otherwise defend itself against this action.

Pls.’ Mot. at 2. As previously noted, the plaintiffs served the defendant with a copy of the

complaint on April 29, 2009. Id. at 1. Having concluded that the defendant failed to plead or

otherwise defend itself against the action, the Clerk of the Court entered default on June 10,

2009, pursuant to Federal Rule of Civil Procedure 55. Id., Ex. C. Since that time, the defendant

has not responded to either the initial complaint or this motion, despite being served with copies

of both documents. See generally Pls.’ Mot. Given the defendant’s failure to respond, the entry

of default judgment is appropriate. See, e.g., H. F. Livermore Corp., 432 F.2d at 691 (holding

that default judgment is appropriate when “the adversary process has been halted because of an

essentially unresponsive party”).

The defendant’s default constitutes an admission of liability for the well-pleaded

allegations in the complaint. Int’l Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine

Drywall Co., 239 F. Supp. 2d 26, 30 (D.D.C. 2002); see also Black v. Lane, 22 F.3d 1395, 1399

(7th Cir. 1994); Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971), rev’d on

other grounds, 403 U.S. 363 (1973). ERISA requires that “[e]very employer who is obligated to

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make contributions to a multiemployer plan . . . make such contributions in accordance with the

terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. The plaintiffs allege

that the defendant failed to make contributions to the employee benefit plans as required by the

parties’ collective bargaining agreements. Compl. ¶¶ 11, 14. Accordingly, the court deems these

well-pleaded allegations admitted and must now determine the appropriate relief.

2. The Plaintiffs Are Entitled to Monetary Relief in the Amount of $252,058.66

The plaintiffs claim that the defendant’s failure to make the required contributions to the

employee benefit plans entitles them to a total of $252,058.66 in monetary relief. Pls.’ Mot. at 1.

Specifically, the plaintiffs request: (1) $12,983.99 in delinquent contributions for the period

between January 2003 through December 2004; (2) $2,692.06 in interest payable on the

delinquent contributions for the period between January 2003 through December 2004,

calculated at a rate of fifteen percent per annum through April 21, 2005; (3) an additional

$2,692.06 in interest calculated in the same manner, for delinquent contributions for the period

between January 2003 through December 2004; (4) $123,213.72 in delinquent contributions for

May 2006 and the months of February 2007 through April 2008; (5) $51,443.09 in interest

payable on the delinquent contributions for May 2006 and the months of February 2007 through

April 2008, calculated at a rate of fifteen percent per annum through April 26, 2010; (6) an

additional $51,443.09 in interest calculated in the same manner, for delinquent contributions for

May 2006 and the months of February 2007 through April 2008; (7) $350.00 in filing fees; (8)

$181.85 representing the process server’s fee; (9) $570.30 for the cost of conducting an audit;

and (10) $6,488.50 in attorney’s fees. See generally Pls.’ Mot., Ex. B (Decl. of Charles Mehler

III (“Mehler Decl.”)).

ERISA provides that, in an action brought by a fiduciary of an employee benefit plan

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under 29 U.S.C. § 1145, 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 percent . . . of the amount determined by the court in
subparagraph (A),
(D) reasonable attorney’s fees and costs of the action, to be paid by the defendant,
and
(E) such legal or equitable relief as the court deems appropriate.

29 U.S.C. § 1132(g)(2).

Addressing each of these provisions in order, ERISA first entitles the plaintiffs to the

defendant’s unpaid contributions. Id. § 1132(g)(2)(A). The plaintiffs’ entitlement to delinquent

contributions is derived from two sources. See Pls.’ Mot., Ex. A (Decl. of David Stupar (“Stupar

Decl.”)) ¶¶ 8-12. First, the plaintiffs are entitled to $12,983.99 in delinquent contributions

discovered during an audit of the defendant’s books and records for the period from January

2003 through December 2004. See Fanning v. Big Warrior Corp., 2010 WL 1573807, at *4

(D.D.C. Apr. 21, 2010) (granting the plaintiff unpaid contributions discovered during an audit).

Second, the plaintiffs are entitled to unpaid contributions for the months of May 2006 and

February 2007 through April 2008. See 29 U.S.C. § 1132(g)(2). Using the reports provided by

the defendant for those months, the plaintiffs have calculated that the defendant failed to make

$123,213.72 in contributions for this period. Stupar Decl. ¶¶ 8-9.

The court accepts the plaintiffs’ calculation of delinquent contributions as both

reasonable and accurate. Accordingly, the court awards the plaintiffs $12,983.99 in delinquent

contributions for the period of January 2003 through December 2004 and $123,213.72 in

delinquent contributions for the months of May 2006 and February 2007 through April 2008,

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yielding a total sum of $136,197.71.

ERISA also entitles the plaintiffs to interest on the defendant’s unpaid contributions. 29

U.S.C. § 1132(g)(2)(B). The Trustees of the Plans adopted collection procedures that govern the

collection of delinquent employer contributions. Stupar Decl. ¶ 4. These procedures set the

interest rate on delinquent contributions at fifteen percent per annum. See Compl. ¶¶ 13, 16;

Stupar Decl. ¶ 5; Stupar Decl., Ex. 1. Applying this interest rate, the plaintiffs have calculated

that the defendant owes interest in the amount of $2,692.06 on the delinquent contributions for

period January 2003 through December 2004. Stupar Decl. ¶ 13; Mehler Decl. ¶ 4. This amount

is calculated from the due date of the unpaid contributions through April 21, 2005. Id. The

plaintiffs have also calculated that the defendant owes interest in the amount of $51,443.09 on

the delinquent contributions for May 2006 and the months of February 2007 through April

2008.2 Stupar Decl. ¶ 10; Mehler Decl. ¶ 4. The court grants the plaintiffs’ request for interest

on the delinquent contributions for both periods in the total amount of $54,135.15.

Pursuant to 29 U.S.C. § 1132(g)(2)(C), the court also grants the plaintiffs’ request for an

additional interest award of $54,135.15. See 29 U.S.C. § 1132(g)(2)(C) (stating that a successful

plaintiff is entitled to an additional award in the amount of the interest on the unpaid

contributions if that amount is greater than the liquidated damages provided for in the plan).

Furthermore, the plaintiffs are entitled to recover their filing fees and service costs in the

amounts of $350.00 and $181.85, respectively. See id. § 1132(g)(2)(D). The plaintiffs are also

entitled to recover $570.30 in costs incurred in connection with the independent audit of the

defendant’s books and records. See CBA, Art. XVII, § 9 (providing that “an Employer

2
This interest amounts are calculated from the due date of the unpaid contributions through April
26, 2010. Stupar Decl. ¶ 4; Mehler Decl. ¶ 4.

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determined to be delinquent in its payments . . . may be liable for . . . audit fees and other

expenses incurred incidental to collection of contributions due to the Fund”); cf. 29 U.S.C. §

1132(g)(2)(E) (providing that plaintiffs are entitled to recover “such legal or equitable relief as

the court deems appropriate”).

Finally, the court must determine whether the plaintiffs’ request for attorney’s fees is

reasonable. 29 U.S.C. § 1132(g)(2)(D). The court concludes that the plaintiffs’ request for

$6,488.50 in attorney’s fees is reasonable based on the itemized billing schedule provided by the

plaintiffs’ counsel. See Mehler Decl. ¶ 14.

In total, the court awards the plaintiffs monetary relief in the amount of $252,058.66.

IV. CONCLUSION

For the foregoing reasons, the court grants the plaintiffs’ motion for default judgment.

The defendant shall pay $252,058.66 representing unpaid contributions, interest, damages, costs

and attorney’s fees. An Order consistent with this Memorandum Opinion is separately and

contemporaneously issued this 4th day of October, 2010.

RICARDO M. URBINA
United States District Judge

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