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Trustees of Mid-Atlantic Regional Council of Carpenters Pension Fund v. Design Surfaces, Inc.

United States District Court, Fourth Circuit

December 18, 2013

TRUSTEES OF THE MID-ATLANTIC REGIONAL COUNCIL OF CARPENTERS PENSION FUND, et al. Plaintiffs,
v.
DESIGN SURFACES, INC., Defendant.

REPORT AND RECOMMENDATION

BETH P. GESNER, Magistrate Judge.

The above-referenced case was referred to the undersigned for review of plaintiffs' motion for default judgment and to make recommendations concerning damages, pursuant to 28 U.S.C. § 636 and Local Rules 301 and 302. (ECF No. 11.) Currently pending is plaintiffs' Motion for Entry of Default Judgment ("Motion"). (ECF No. 9.) By Letter Order on December 4, 2013, I requested supplemental affidavits from plaintiffs to further explain plaintiffs' damages calculations and claim for attorneys' fees.[1] (ECF No. 12.) I have reviewed plaintiffs' Motion, the Supplemental Affidavit of Aileen Williams (ECF No. 13), and the Supplemental Declaration of John R. Harney Regarding Attorneys' Fees and Costs (ECF No. 14). Defendant has not filed any response to plaintiffs' filings. No hearing is deemed necessary. See Fed.R.Civ.P. 55(b)(2); Loc. R. 105.6. For the reasons discussed herein, I respectfully recommend that plaintiffs' Motion (ECF No. 9) be GRANTED and that relief be awarded as set forth herein.

I. STANDARD FOR ENTRY OF DEFAULT JUDGMENT

In reviewing a motion for default judgment, the court accepts as true the well-pleaded factual allegations in the complaint as to liability. Ryan v. Homecomings Fin. Network , 253 F.3d 778, 780-81 (4th Cir. 2001). It remains for the court, however, to determine whether these unchallenged factual allegations constitute a legitimate cause of action. Id . If the court determines that liability is established, the court must then determine the appropriate amount of damages. Id . The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. See, e.g., Credit Lyonnais Secs. (USA), Inc. v. Alcantara , 183 F.3d 151, 154-155 (2d Cir. 1999). The court may make a determination of damages without a hearing, so long as there is adequate evidence in the record, such as detailed affidavits or documentary evidence, for the award. See, e.g., Adkins v. Teseo , 180 F.Supp.2d 15, 17 (D.D.C. 2001).

II. DISCUSSION

A. Defendant's Liability

I have reviewed plaintiffs' Complaint (ECF No. 3), and find that plaintiffs have stated causes of action based on a breach of a collective bargaining agreement ("CBA") and a breach of a settlement agreement between the plaintiffs and defendant resolving a dispute arising out of the CBA. Plaintiff Mid-Atlantic Regional Council of Carpenters is an unincorporated labor organization as defined by 29 U.S.C. § 152(5). (ECF No. 3 at ¶ 3.) Plaintiffs Mid-Atlantic Regional Council of Carpenters Pension Fund, Mid-Atlantic Regional Council of Carpenters Health Fund, Mid-Atlantic Regional Counsel of Carpenters Annuity Fund, and Mid-Atlantic Council of Carpenters Training Centers[2] (collectively referred to as the "MARCC Funds") are employee benefit plans as defined in the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002(3). (ECF No. 3 at ¶ 1.) Plaintiffs Industry Promotional Trust Fund and the United Brotherhood of Carpenters and Joiners of America National Training Fund[3] (collectively referred to as the "Industry Funds") are funds that provide benefits to employees and employers of the carpet industry. (ECF No. 3 at ¶ 4.) Both the MARCC Funds and the Industry Funds (collectively, "plaintiffs") are established by CBAs and the Restated Agreements and Declarations of Trusts ("Trust Agreements"). (ECF No. 3 at ¶¶ 1-2, 4.) The Trustees of the MARCC Funds are fiduciaries as defined in ERISA, 29 U.S.C. § 1002(21). (ECF No. 3 at ¶ 2.) An employer who fails to make required contributions to an employee benefit plan, such as the MARCC Funds or the Industry Funds, is liable for the unpaid contributions, interest, liquidated damages, reasonable attorneys' fees, and costs, pursuant to ERISA. 29 U.S.C. § 1132(g).

Defendant Design Surfaces, Inc., ("defendant") is a Maryland corporation that engages in business as a contractor or subcontractor in the carpet industry. (ECF No. 3 at ¶ 5.) Defendant is an "employer in an industry affecting commerce" as defined in 29 U.S.C. §§ 142, 152, 1001(a) and 1002. (Id.) Defendant entered into a CBA with the Construction Contractors Council, Inc. - A.G.C. Labor Division, and the Mid-Atlantic Regional Council of Carpenters. (ECF No. 3 at ¶ 7.) This CBA defined the amount of money defendant would pay into the MARCC Funds and Industry Funds based on the hours worked by each of its employees who were journeymen and apprentice carpenters. (ECF No. 3 at ¶¶ 7-8.)

In 2009, defendant was unable to make the required benefit contributions and, in September 2009, entered into a Letter of Settlement with the MARCC Funds to make payments over time. (ECF No. 3 at ¶ 15; ECF No. 9-2[4] at 9.) This agreement permitted defendant to pay a principal of $47, 817.33 in unpaid contributions plus interest at a 12% annual rate by making sixty-five monthly payments of $1, 000.00 and a sixty-sixth payment of $367.80. (ECF No. 3 at ¶ 15.) This agreement waived liquidated damages and accrued interest totaling $11, 872.34 on the condition that defendant timely paid all future settlement payments and monthly contributions. (Id.) Subsequently, defendant defaulted on the settlement agreement by failing to make payments between February 25, 2012 and May 23, 2013, thereby making a balance of $49, 454.17 immediately due and payable. (ECF No. 3 at ¶ 16; ECF No. 13 at ¶ 6.) Plaintiffs filed this suit seeking recovery of these funds and other damages.

Plaintiffs served defendant with a Summons and copy of the Complaint on June 21, 2013. (ECF No. 6.) After defendant failed to answer the Complaint or otherwise defend within twentyone days, plaintiffs properly moved, pursuant to Federal Rule of Civil Procedure 55(a), for an entry of default. (ECF No. 8.) The Clerk of this court entered an Order of Default on October 30, 2013. (ECF No. 10.) On October 8, 2013, plaintiffs filed the pending Motion (ECF No. 9), to which defendant has not responded. Plaintiffs seek damages in the amount of $53, 221.78, which includes: (1) $49, 454.17 for the breach of the settlement agreement; (2) $1, 142.22 for unpaid contributions for July and August 2013; (3) $639.19[5] in liquidated damages for late payments between October 2012 and June 2013 and unpaid contributions for July and August 2013; (4) $238.70 in interest for late and unpaid contributions between October 2012 and August 2013; (5) $1, 237.50 in attorneys' fees; and (6) $510.00 in costs. (ECF No. 9 at ¶¶ 1-4.) In support thereof, plaintiffs submitted the affidavit and supplemental affidavit of Aileen Williams, Account Executive of the MARCC Funds, the Industry Funds, and the Mid-Atlantic Regional Council of Carpenters, and the declaration and supplemental declaration of John R. Harney, plaintiffs' attorney. (Ex. A & B of Pl.'s Mot., ECF No. 9-2; ECF Nos. 13 and 14.) Based upon my review of the record in this case, I conclude that plaintiffs have demonstrated defendant is liable to plaintiffs for damages and that plaintiffs are entitled to a default judgment against defendant.

B. Damages

Having determined that plaintiffs have proven liability, the undersigned now undertakes an independent determination of the damages to which they are entitled. Pursuant to ERISA, the terms of the CBA, the Trust Agreements, and the settlement agreement, plaintiffs seek to recover a total sum of the $53, 221.78 from defendant. (ECF No. 9.)

1. Breach of Settlement Agreement

Plaintiffs seek to recover $49, 454.17 arising from defendant's breach of the settlement agreement. (Pls.' Memo., ECF No. 9-2 at 2.) Plaintiffs present the affidavit and supplemental affidavit of Aileen Williams, Account Executive for the MARCC Funds, the Industry Funds, and the Mid-Atlantic Regional Council of Carpenters, as well as the Letter of Settlement and its associated documents. (Ex. A, ECF No. 9-2; ECF No. 13.) According to the September 2009 Letter of Settlement, defendant agreed to pay a principal of $47, 817.33 in unpaid contributions plus interest at a 12% annual rate by making sixty-five monthly payments of $1, 000.00 and a sixty-sixth payment of $367.80. (ECF No. 13 at 7.) The agreement waived liquidated damages and accrued interest totaling $11, 872.34 on the condition that defendant timely paid all future settlement payments and monthly contributions. (Id.) Defendant made eighteen monthly payments of $1, 000 each before defaulting on the settlement agreement and failing to make payments between February 25, 2012 and May 23, 2013. (ECF No. 13 at ¶ 6.) As outlined in the settlement agreement's payment schedule (ECF No. 13 at 10), after eighteen monthly payments, a balance of $37, 581.83 in contributions and attorneys' fees remained. (ECF No. 13 at ¶ 6.) As a result of defendant's breach of the settlement agreement, the conditionally waived $4, 998.98 in liquidated damages and $6, 873.36 in accrued interest, together with the unpaid amount of $37, 581.83 for a total of $49, 454.17 became immediately due ...


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