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Bricklayers & Allied v. Watercontrol Services

July 30, 2012

BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 1 OF PA/DE, ET AL.
v.
WATERCONTROL SERVICES, INC., ET AL.



The opinion of the court was delivered by: Surrick, J.

MEMORANDUM

Presently before the Court is Plaintiffs' Amended Motion for Default Judgment. (ECF No. 6.)*fn1 For the following reasons, Plaintiffs' Motion will be granted.

I. BACKGROUND

Plaintiffs brought this action against Defendants WaterControl Services, Inc. ("WaterControl") and Edward Creedon, alleging among other things, violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq., and the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151, et seq. (Compl., ECF No. 1.)*fn2 Plaintiffs seek to recover unpaid employee benefit fund contributions, interest, liquidated damages, attorney's fees and costs from Defendants and to compel an audit of Defendants' payroll. (Compl.)

Defendant WaterControl and Plaintiff Union entered into a Collective Bargaining Agreement ("CBA") on October 19, 2005. (Compl. ¶ 12; Certification ¶ 18, ECF No. 6; Certification Am. Ex. E ("CBA"), ECF No. 7.)*fn3 Defendant Creedon is the President, Chief Executive Officer ("CEO"), and owner of WaterControl. (Compl. ¶ 8.) Creedon signed the CBA on behalf of WaterControl. The CBA requires WaterControl, as the "Employer," to make employee benefit fund contributions to Plaintiff Funds. (Compl. ¶ 12.) Specifically, the CBA obligates WaterControl "to make hourly contributions at set rates to the benefits funds for each hour worked" by its employees. (Pls.' Mem. 4, ECF No. 6.) WaterControl is required to remit these contributions no later than the fifteenth day of each month. (Certification ¶ 9; see also CBA § 5.B.1 ("Contributions shall be remitted and received . . . not later than the 15th day of the month following the month in which the work was performed.").) In addition, the CBA requires WaterControl to deduct union dues and political action committee contributions from employees, upon the employee's authorization, and turn over such dues and contributions to Plaintiff BAC Union on a monthly basis. (Compl. ¶ 12; Pls.' Mem. 4.) WaterControl is also obligated under the CBA to remit employer contribution reports no later than the fifteenth day of each month. (Compl. ¶ 16; CBA § 5.B.1) The contribution reports advise Plaintiffs of the hours worked by each WaterControl union employee and calculate the monthly benefit fund contributions based upon the number of hours worked. (See Certification Ex. A.)

In the event that WaterControl fails to make the required benefit fund contributions when due, the CBA provides that damages may be assessed against WaterControl. (CBA § 5.B.3.) Damages include interest, liquidated damages, attorneys fees and costs associated with collection. (Id.) Article 5 of the CBA states:

In the event that an Employer fails to remit contributions when due, the Employer shall be assessed and required to pay interest at the rate of 12% per annum plus liquidated damages in the amount of 10% of the principal amount due. In the event that delinquent contributions are referred to an attorney for collection, the Employer shall also be assessed and required to pay all attorney's fees and costs of collection. (CBA §5.B.3.)*fn4

Plaintiffs state that Defendants failed to make timely benefit fund contributions for the following periods of time: January 2007 through December 2007; March 2008 through September 2008; and November 2008 through January 2011. (Certification ¶ 7.) Plaintiffs calculate that Defendants owe interest on these delinquent contributions in the amount of $26,623.87 (id. at ¶ 13) and liquidated damages in the amount of $165,586.27 (id. at ¶ 15).*fn5 In addition, Defendants have failed to make principal benefit fund contributions and remit the required contribution reports for the period of February 2011 through April 2011. (Certification ¶ 7.) Plaintiffs claim that, in addition to the principal contributions, Defendants owe interest and liquidated damages for this three-month period, but that such amounts are presently undeterminable since Defendants have failed to remit contribution reports for these months. (Id. at ¶¶ 14, 16.) Plaintiffs also claim that Defendants owe attorney's fees and costs as a result of Plaintiffs having to file a lawsuit to attempt to recover the amounts owed.

The CBA also provides Plaintiffs with the right to audit WaterControl's records. Specifically, Plaintiffs may, "at any reasonable time, [ ] examine any and/or all records of the Employer to establish that all payments required under the terms of this Agreement have been paid to the respective Funds." (CBA § 5.E.) In addition, the CBA incorporates a separate Agreement and Declaration of Trust for each covered benefit fund. (See CBA § 5.B.4.) Plaintiffs attach as an exhibit to the Certification an "Amendment 2 to Agreement and Declaration of Trust" for Plaintiff BAC Health & Welfare Fund. According to Amendment 2, owners, principals or officers of employers, such as WaterControl, are personally liable for "breach[es] of fiduciary duties with respect to the disposition of [] contributions as assets of the Fund." (Certification ¶ 19 & Ex. G at ¶ 2.)*fn6

On August 28, 2009, Plaintiffs filed a Complaint, asserting the following causes of action: (i) breach of contract under NLRA § 301 against WaterControl (Count I); (ii) breach of contract under ERISA § 515 against WaterControl (Count II); (iii) breach of contract under NLRA § 301 and breach of fiduciary duties under ERISA against Creedon (Count III); and common law conversion against Creedon (Count IV). (Compl.) Defendants were each served with a Summons and Complaint on September 8, 2009. (Certification ¶ 2; see also Affs. of Service, ECF Nos. 2, 3.) The record shows that, even though Defendants were properly served with the Complaint, they have not appeared, answered, moved or otherwise responded to the pleading.

On October 12, 2009, Plaintiffs filed a Request for Entry of Default against both Defendants. (ECF No. 4.) Default was entered against both Defendants by the Clerk of Court on October 13, 2009. On May 5, 2011, Plaintiffs' counsel sent Defendants a letter via certified and first class mail. (Certification ¶ 11 & Ex. D.) The letter advises Defendants that interest and liquidated damages continue to accrue on their delinquent contributions. (Certification Ex. D.) In the letter, Plaintiff's counsel attempts to resolve the dispute by offering to waive the liquidated damages that had accrued ($165,586.27) on the condition that Defendants pay the outstanding interest ($28,483,87). Defendants never responded to the letter or to counsel's offer to settle the matter. (Certification ¶ 11.)

On May 27, 2011, Plaintiffs filed a Motion for Default Judgment (Pls.' Mot.), together with a Certification of Counsel (Certification), and Memorandum of Law (Pl.'s Mem.). (ECF No. 6.) To date, Defendants have failed to answer, plead or otherwise defend this action.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 55(b)(2) provides that a district court may enter default judgment against a party when default has been entered by the Clerk of Court. Fed. R. Civ. P. 55(b)(2). The entry of a default by the Clerk of Court, however, does not automatically entitle the non-defaulting party to a default judgment. D'Onofrio v. Il Mattino, 430 F. Supp. 2d 431, 437 (E.D. Pa. 2006) (citing Mwani v. bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005); Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984)). Judgment by default is generally disfavored. Budget Blinds, Inc. v. White, 536 F.3d 244, 258 (3d Cir. 2008). Nevertheless, the entry of default judgment is a matter within the sound discretion of the district court. Hritz, 732 F.2d at 1180. Courts consider three factors when determining whether to enter default judgment against a defendant: "(1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). If a default judgment is ...


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