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Carpenters Health And Welfare Fund of Philadelphia And Vicinity v. Reyes

United States District Court, E.D. Pennsylvania

July 16, 2018

CARPENTERS HEALTH AND WELFARE FUND OF PHILADELPHIA AND VICINITY, et al., Plaintiffs,
v.
SALVADORA YAMILETH MARROQUN REYES, et al. Defendants.

          MEMORANDUM

          GERALD J. PAPPERT, J.

         The Carpenters Joint Apprentice Committee, Carpenters Political Action Committee of Philadelphia and Vicinity, Northeast Regional Council of Carpenters, Interior Finish Contractors Association of Delaware Valley, John Ballantyne and various Benefit Funds (collectively “Plaintiffs”) sued Salvadora Yamileth Marroquin Reyes, doing business as Y & F Campos Construction, and Francisco Campos (collectively “Defendants”). The Plaintiffs allege the Defendants failed to pay contributions pursuant to the parties' Collective Bargaining Agreement (“CBA”), in violation of the Labor Management Relations Act (“LMRA”) and Employee Retirement Income Security Act (“ERISA”). (Compl. at 6-8, ECF No. 1.) Neither Defendant pled nor otherwise defended the lawsuit, and the Clerk of Court entered default on January 3, 2018. (ECF No. 5.) The Plaintiffs moved for default judgment on February 12, 2018 (ECF No. 6), and seek unpaid contributions, interest, liquidated damages, audit costs, attorneys' fees and costs, and equitable relief. The Court grants the Motion in part and denies it in part for the reasons that follow.

         I

         A consequence of “the entry of a default judgment is that the factual allegations of the complaint, 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) (citations and internal question marks omitted). The Court need not, however, accept the moving party's legal conclusions. Id.; see also DirecTV, Inv. V. Asher, No. 03-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing 10 A Wright & Miller, Federal Practice and Procedure, § 2688, at 58-59 (3d ed. 1998)).

         Plaintiffs allege that Campos and Reyes were owners of an unincorporated business, Y & F Campos Construction (“the Company”). (Compl., ¶¶ 11-13.) Campos signed a CBA with the Plaintiffs on behalf of the Company, listing himself as the owner. (Compl., Ex. 1 (“CBA”) at 60, ECF No. 1-4; Mot., Ex. 1 (“Letushko Decl.”), ¶ 8, ECF No. 6-4.) The CBA imposes certain obligations on the Company, including: (1) payment of contributions for work performed by the Company's employees; (2) reporting contributions and deductions for all work performed by those employees; and (3) payment of interest, liquidated damages, audit costs and attorneys' fees and costs if the Company is delinquent in making payments required by the CBA. (CBA, Art. 19, §§ 2, 4(A), 5, 6(B).) The CBA also provides that the Plaintiffs may audit the Company's records to ensure compliance with the agreed upon payment obligations. (Id., Art. 19, § 11.)

         David Letushko, Plaintiffs' collections manager, audited the Company's records for the time period from February to November 2017 and found that the Company owed the Plaintiffs at least $3, 063.46 in unpaid contributions. (Letushko Decl., ¶ 15.) Based on this audit, Letushko also determined that the Company owed $111.22 in accrued interest on the unpaid contributions, $306.35 in liquidated damages, and an audit fee of $250.00. (Id.) The Plaintiffs sent letters to Campos on May 5 and October 16, 2017, requesting an audit of the Defendants' records to verify the accuracy of contributions and demanding payment of delinquent contributions. (Compl., Exs. 6, 7.) Despite repeated demands, the Defendants failed to comply with an audit or pay the amounts due. (Mot. at 4.)

         II

         Rule 55(b)(2) authorizes a court to enter a default judgment against a properly served defendant who fails to file a timely responsive pleading. See Anchorage Assocs. v. V.I. Bd. of Tax Review, 922 F.2d 168, 177 n.9 (3d Cir. 1990). Three factors guide whether default judgment should be granted: (1) prejudice to the plaintiff if default judgment is denied; (2) whether the defendants appear to have a litigable defense; and (3) whether the defendants' delay is due to culpable conduct. 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)).

         Application of the Chamberlain factors supports entry of default judgment. First, denying the motion will prejudice the Plaintiffs. “Considerable delays, ” especially those that might “stretch on indefinitely, ” are sufficient to show prejudice to the plaintiff. Grove v. Rizzi 1857 S.P.A., No. 04-2053, 2013 WL 943283, at *2 (E.D. Pa. Mar. 12, 2013). The Defendants failed to answer or otherwise respond, compelling the Plaintiffs to seek a default judgment. See, e.g., Moody Nat'l FFI Meadowlands Mt, LLC v. Gager, No. 12-2124, 2013 WL 622128, at *10 (D.N.J. Jan 24, 2013); see also Carpenters Health & Welfare Fund v. Bold & Clauss Constr., Inc.., No. 05-4858, 2006 WL 782051, at *2 (E.D. Pa. Mar. 23, 2006) (noting prejudice arising from delinquent contributions to multiemployer plans). Further, it does not appear that the Defendants have a litigable defense; courts in this district have considered the failure to respond to the Complaint to suggest a lack of a litigable defense. See, e.g., Serv. Employees Int'l Union Local 32BJ District 36 v. ShamrockClean Inc., No. 17-5380, 2018 WL 1124270, at *2 (E.D. Pa. Feb. 26, 2018); Joe Hand Promotions, Inc. v. Yakubets, 3 F.Supp.3d 261 (E.D. Pa. 2011). Finally, the Defendants' failure to “engage [ ] in the litigation process” constitutes “culpable conduct with respect to the entry of a default judgment-indeed, for the Court to conclude otherwise would be to reward the recalcitrant or the oppositional and uncooperative.” E. Elec. Corp. of N.J. v. Shoemaker Constr. Co., 657 F.Supp.2d 545, 554 (E.D. Pa. 2009); see also Bricklayers & Allied Craftworkers Local 1 of PA/DE v. WaterControl Servs., Inc., No. 09-3935, 2012 WL 3104437, at *6 (E.D. Pa. July 30, 2012). The Defendants were served with the Complaint and put on notice as to their obligation to file a responsive pleading. (ECF Nos. 3 & 4.) The “equities of the situation and the need for efficacious resolution of controversies” thus weigh in favor of entering default judgment. Summit Tr. Co. v. Paul Ellis Inv. Assocs., LLC, No. 12-6672, 2013 WL 3967602, at *4 (E.D. Pa. Aug. 2, 2013) (quoting Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984)).

         III

         A

         Plaintiffs seek, pursuant to both the LMRA and ERISA, unpaid contributions along with interest, liquidated damages and attorneys' fees and costs for violations of the CBA. 29 U.S.C. § 185; 29 U.S.C. § 1145. Plaintiffs also seek audit costs and ask the Court to compel the Defendants to submit to an additional audit. (Mot. at 6-7, 14-18.) Section 301 of the LMRA “creates a federal cause of action for breach of a [CBA].” Bricklayers, 175 F.Supp.3d at 493 (citing 29 U.S.C. § 185); see also Caterpillar Inc. v. Williams, 482 U.S. 386, 394 (1987) (“Section 301 governs claims founded directly on rights created by collective-bargaining agreements, and also claims substantially dependent on analysis of a collective-bargaining agreement.”) (internal quotations omitted).[1] Although the LMRA confers a federal cause of action, “liability is determined by an analysis of the CBA itself.” Bricklayers, 175 F.Supp.3d at 493 (citing Rosen v. Hotel & Rest. Emp. & Bartenders Union of Phila., Bucks, Montgomery & Delaware Cntys., Pa., 637 F.2d 592, 597 (3d Cir. 1981)).

         i

         Plaintiffs' counsel has submitted a certification for the amount due, which includes $3, 063.46 in unpaid contributions at the time the suit commenced. See (Ex. 4, ECF No. 1-8; Letushko Decl. ¶¶ 9, 15(a)). Plaintiffs also seek interest on the unpaid contributions at the rate provided by the CBA, which requires that the interest be calculated in accordance with ERISA, incorporating the rate prescribed under 26 U.S.C. § 6621(a). See (Art. 19, § 6(B)). Plaintiffs are entitled to four percent interest on the unpaid contributions, compounded monthly, from the date the contributions were due until the time this suit commenced. See United Auto. Workers Local 259 Soc. Sec. Dep't v. Metro Auto Ctr., 501 F.3d 283, 289 (3d Cir. 2007) (interpreting claim for interest on unpaid contributions under ERISA to include interest “on contributions unpaid at the time the suit is filed.”); see also ShamrockClean, 2018 WL 1124270 at *2 (awarding 4% interest rate as prescribed by 26 U.S.C. ยง 6621(a)). The contributions were due March 2017, and the Plaintiffs commenced suit in November of that year. Accordingly, Plaintiffs are entitled to $93.14 in interest ...


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