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Board of Trustees v. Five Star Kitchen Installations, Inc.

United States District Court, E.D. Virginia, Alexandria Division

August 2, 2019

BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, et al t Plaintiffs,
v.
FIVE STAR KITCHEN INSTALLATIONS, INC., Defendant,

          PROPOSED FINDINGS OF FACT AND RECOMMENDATIONS

          John F. Anderson United States Magistrate Judge.

         This matter is before the court on plaintiffs' motion for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). (Docket no. 6). Plaintiffs arc the Board of Trustees of the Sheet Metal Workers' National Pension Fund ('"NPF"). the Board of Trustees of the International Training Institute for the Sheet Metal and Air Conditioning Industry ('ITI"), the Board of Trustees for the Sheet Metal Workers' International Association Scholarship Fund ("IASF"), the Board of Trustees of the National Stabilization Agreement of the Sheet Metal Industry Trust Fund ("SASMI”), the Board of Trustees of the Sheet Metal Occupational Health Institute Trust Fund (“SMOHIT"), and the Board of Trustees of the National Energy Management Institute Committee (“NEMIC”), and they seek a default judgment against Five Star Kitchen Installations, Inc. ("Five Star"). Pursuant to 28 U.S.C. § 636(b)(1)(C), the undersigned magistrate judge is finding with the court his proposed findings of fact and recommendations, a copy of which will be provided to all parties.

         Procedural Background

         On March 25, 2019, the plaintiffs filed this action alleging that the defendant is obligated to pay them for certain delinquent contributions, liquidated damages, interest, audit testing fees, and attorneys' fees and costs. (Docket no. 1). The summons and complaint were posted on the door of 16 Morton Avenue, East Rockaway, New York 11518, the residence of Five Star's agent, James E. Draghi, on June 4, 2019 after four unsuccessful attempts to personally serve Mr. Draghi at that address.[1] (Docket no. 3). A copy of the summons and the complaint were also mailed to that address by First Class Mail (Id.). The plaintiffs filed a copy of the executed return of service of process on June 18, 2019. (Id.). In accordance with New York Civil Practice Law § 308(4) and Federal Rule of Civil Procedure 12(a), a responsive pleading was due no later than July 19, 2019, which is 21 days after service by posting and mailing was complete.[2]

         On July 1, 2019, the plaintiffs filed their request for entry of default on the grounds that defendant had not timely responded to the summons and the complaint.[3] (Docket no. 4). The Clerk of Court entered default against the defendant pursuant to Federal Rule of Civil Procedure 55(a) on July 3, 2019. (Docket no. 5). Later that day, the plaintiffs filed a motion for default judgment with a supporting memorandum and declarations from Kenneth Anderson, Jr., Diana Bardes, and Lori Wood, and a notice of hearing for August 2, 2019 at 10:00 a.m. (Docket nos. 6-8). The motion for default judgment, supporting memorandum, and notice of hearing were served on the defendant by mail on July 3, 2019. (Id.). On August 2, 2019, counsel for the plaintiffs appeared at the hearing on the motion for default judgment and no one appeared on behalf of the defendant.

         Factual Background

         The following facts are established by the complaint (Docket no. 1) ("Compl."), the motion for default judgment (Docket no. 6), and the memorandum and declarations filed in support of the motion for default judgment (Docket nos. 7, 7-1, 7-2).

         This action is brought under Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145, and under Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. (Compl. ¶ 1). Each of the plaintiffs are "fiduciaries" with respect to their fund, as defined in 29 U.S.C. § 1002(21)(A), and they are empowered to bring this action pursuant to 29 U.S.C. §§ 1132(a)(3) and 1132(g)(2). (Compl. ¶¶ 5-10). NPF, ITI, IASF, and SASMI are jointly administered trust funds created and maintained pursuant to 29 U.S.C. § 186(c) and "multiemployer plans" within the meaning of 29 U.S.C. § 1002(37). (Compl. ¶¶ 5-8). NEMIC and SMOHIT are organizations created and maintained pursuant to 29 U.S.C. § 186(c). (Compl. ¶¶ 9-10). The funds for which the plaintiffs bring this action are administered in Fairfax, Virginia. (Compl. ¶¶ 5-10).

         Five Star is a New York corporation with offices in Farmingville, New York and is an employer in an industry affecting commerce as defined by 29 U.S.C. § 152(2) and 29 U.S.C. § 1002(5), (11), and (12). (Compl. ¶ 12). Five Star employs employees represented for the purposes of collective bargaining by the International Association of Sheet Metal, Air, Rail and Transportation Union (f/k/a the Sheet Metal Workers' International Association), Local Union No. 28, which is a labor organization representing employees in an industry affecting interstate commerce ("Local Union No. 28"). (Compl. ¶ 13). Five Star was a signatory to and bound by a collective bargaining agreement with Local Union No. 28 (the "CBA"). (Compl. ¶ 14). Pursuant to the CBA, Five Star is obligated to abide by the terms and conditions of the Trust Agreements establishing each of the funds, including any amendments thereto (the "Trust Agreements"). (Compl. ¶ 15).

         Under the CBA, Trust Agreements, and applicable law, Five Star is obligated to submit monthly remittance reports and fringe benefits contributions to the plaintiffs for all hours worked or paid on behalf of the defendant's covered employees no later than the twentieth day after the end of each month during which covered work was performed. (Compl. ¶¶ 14, 16, 18). When an employer fails to make a timely remittance report and contribution payments and the funds file a lawsuit to recover unpaid contributions, the employer is obligated to pay interest on the delinquent contributions at the rate of 0.0233% per day, late fees equal to the greater of $50.00 or 10% of the contributions due for each month of contributions paid after the due date and before any lawsuit is filed, liquidated damages equal to 20% of the delinquent contributions, and the attorneys' fees and costs incurred in pursuing the delinquent amounts. (Compl. ¶ 20).

         In the complaint, the plaintiffs allege that a payroll audit for the period of November 3, 2015 through November 13, 2018 revealed that the defendant owes contributions in the amount of $180, 246.36 for the audit period, along with accrued interest in the amount of $24, 995.05 calculated through March 22, 2019, liquidated damages of $36, 049.67, and $5, 527.09 in audit testing fees. (Compl. ¶¶ 24-25). The total amount the plaintiffs claim they are owed is $246, 780.17, plus attorneys' fees and costs. (Compl. ¶¶ 25-26).

         In the motion for default judgment, plaintiffs state that they are owed the amounts as detailed below. (Docket nos. 7, 7-1, 7-2). As described in the briefs in support of the motion for default judgment and the declarations of Kenneth Anderson, Jr. and Diana M. Bardes, the plaintiffs are seeking an award of the underpaid contributions, accrued interest, liquidated damages, and audit testing fees resulting from the audit period of November 3, 2015 through November 13, 2018. (Docket no. 7 at 9). The plaintiffs are also seeking an award of their attorneys' fees and costs incurred in bringing this action.[4] (Id.).

Contributions[5]

Interest through 7/15/2019

Liquidated Damages

Audit Testing Fees

Audit from November 3, 2015 to November 13, 2018

$180, 248.36

$31, 172.22

$36, 049.67

$5, 527.09

Attorneys' Fees

Costs

Total

$2, 412.50

$670.28

$256, 080.12

         Proposed Findings ...


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