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Trustees of National Asbestos Workers Medical Fund v. Stotts Mechanical Insulation, Inc.

United States District Court, D. Maryland

June 24, 2016

TRUSTEES OF THE NATIONAL ASBESTOS WORKERS MEDICAL FUND, and TRUSTEES OF THE NATIONAL ASBESTOS WORKERS PENSION FUND, Plaintiffs,
v.
STOTTS MECHANICAL INSULATION, INC., Defendant.

          MEMORANDUM OPINION

          THEODORE D CHUANG UNITED STATES DISTRICT JUDGE.

         This case is before the Court on a Motion for Default Judgment. Having reviewed the Complaint, the Motion, and the supporting documents, the Court finds no hearing necessary. See D. Md. Local R. 105.6. For the following reasons, the Motion for Default Judgment is GRANTED.

         BACKGROUND

         Plaintiffs are the trustees ("Trustees") of the National Asbestos Workers Medical Fund ("Medical Fund") and the National Asbestos Workers Pension Fund ("Pension Fund") (collectively, the "Asbestos Funds"), as that term is defined in the Employee Retirement Income Security Act ("ERISA"). See 29 U.S.C. § 1002(3) (2012). Defendant Stotts Mechanical Insulation, Inc. ("Stotts") is an employer engaged in an industry affecting commerce, as defined in ERISA. See 29 U.S.C. §§ 1002(5), (12). Stotts is required to make regular contributions to the Asbestos Funds pursuant to (1) two Collective Bargaining Agreements ("CBAs") between the Insulation Contractors Association of Local # 50, the International Association of Heat and Frost Insulators and Allied Workers Local Union # 50, and various employers, including Stotts; and (2) two trust agreements ("Trust Agreements"), one establishing the Medical Fund and the other establishing the Pension Fund. By the terms of these agreements, an employer must submit monthly reports detailing the hours worked by all covered employees and make the corresponding contributions to the Asbestos Funds by the 15th day of the following month. If an employer fails to submit reports of actual hours worked, contributions are determined based on the greater of (1) the average of the monthly payments or reported figures actually submitted for the last three months for which payments or reports were submitted, or (2) the average of the monthly payments or reported figures submitted for the last 12 months for which payments or reports were submitted. If an employer makes its contributions late or fails to make contributions entirely, it is subject to interest on the unpaid balance and to liquidated damages. These enhanced damages begin to accrue only after a 10-day grace period. The Medical Fund trust agreement provides that interest may be assessed at either 8 percent from the due date to the date of payment, 1.5 percent per month, or at the rate provided for in ERISA. The Pension Fund trust agreement provides that interest may be assessed at 8 percent from the due date to the date of payment or at the rate provided for in ERISA. The Trust Agreements both provide that liquidated damages will be assessed at the rate of 20 percent of the outstanding balance or the amount of 20 dollars, whichever is greater. The Trust Agreements also provide that the employer will be liable for all reasonable costs and attorney's fees that the Trustees incur in attempting to recover delinquent contributions.

         Stotts failed to make its full contributions to the Asbestos Funds for the amounts due in March 2014, the period from July 2014 to September 2014, March 2015, and May 2015. Those incomplete or missed payments left Stotts $12, 559.39 in arrears on its required contributions. Stotts also failed to submit reports or pay contributions for the months of April 2015, July 2015, and August 2015. Based on the average of the reports Stotts submitted for March, May, and June 2015, Stotts owes the Asbestos Funds $30, 951.71 in unpaid contributions for April, July, and August 2015. In addition to these missed payments, Stotts was late on payments it made, whether for the full or a partial amount due, for the following months: September 2013, October 2013, January to May 2014, and July 2014 to February 2015.

         On September 16, 2015, the Trustees filed a Complaint seeking the monies owed under the terms of the CBAs and the Trust Agreements, specifically (1) $43, 511.10 in unpaid contributions; (2) $6, 896.40 in interest on the missed and delinquent payments to the Medical Fund, calculated at a rate of 1.5 percent per month; (3) $3, 484.14 in interest on the missed and delinquent payments to the Pension Fund, calculated at a rate of 8 percent from the due date to the date of payment; (4) $15, 814.96 in liquidated damages on the missed and delinquent payments to the Pension Fund; and (5) reasonable attorney's fees and costs incurred in efforts to recover the delinquent contributions. The Complaint also seeks an award "[f]or all contributions, liquidated damages and interest which become due subsequent to the filing of this action through the date of Judgment." Compl. at 5.

         On October 16, 2015, Stotts was served with the Complaint and failed timely to file a responsive pleading. On November 24, 2015, the Trustees filed a Motion for Clerk's Entry of Default and a Motion for Default Judgment. In that Motion, the Trustees revised the damages sought to include unpaid contributions and associated enhanced damages for September and October 2015. The Clerk entered default against Stotts on November 30, 2015. To date, Stotts has not responded to that default or to the Trustees' Motion for Default Judgment.

         DISCUSSION

         I. Legal Standard

         Pursuant to Federal Rule of Civil Procedure 55(a), "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed.R.Civ.P. 55(a). Pursuant to Rule 55(b)(2), after a default has been entered by the clerk, the court may, upon the plaintiffs application and notice to the defaulting party, enter a default judgment. Fed R. Civ. P. 55(b)(2). A defendant's default does not, however, automatically entitle the plaintiff to entry of a default judgment; rather, that decision is left to the discretion of the court. United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982) ("[T]rial judges are vested with discretion which must be liberally exercised, in entering [default] judgments and in providing relief therefrom."); Dow v. Jones, 232 F.Supp.2d 491, 494-95 (D. Md. 2002). The Fourth Circuit has a "strong policy that cases be decided on their merits, " United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), but default judgment may be appropriate "when the adversary process has been halted because of an essentially unresponsive party." S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421-22 (D. Md. 2005); see H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970) ("[T]he default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights.").

         In reviewing a Motion for Default Judgment, the court accepts as true the well-pleaded factual allegations in the complaint relating to liability. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). The court must determine whether the allegations support the relief sought. See Id. To do so, the court may conduct an evidentiary hearing, see Fed. R. Civ. P. 55(b)(2), or may dispense with a hearing if there is an adequate evidentiary basis in the record from which to calculate an award. See Pope v. United States, 323 U.S. 1, 12 (1944) ("It is a familiar practice and an exercise of judicial power for a court upon default, by taking evidence when necessary or by computation from facts of record, to fix the amount which the plaintiff is lawfully entitled to recover and to give judgment accordingly."). Rule 54(c) limits the type of judgment that may be entered based on a party's default: "A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed.R.Civ.P. 54(c). Thus, where a complaint specifies the amount of damages sought, the plaintiff is limited to entry of a default judgment in that amount. In re Genesys Data Techs., Inc., 204 F.3d 124, 132 (4th Cir. 2000).

         II. Liability

         ERISA requires that any employer obligated to make contributions to a qualifying benefit fund must "make such contributions in accordance with the terms and conditions" of the parties' agreements. 29 U.S.C. § 1145. Because Stotts has failed to appear or otherwise defend, the Court accepts as true the well-pleaded factual allegations in the Complaint. Ryan, 253 F'.3d at 780. Those allegations establish that Stotts was obligated by the terms of the CBAs and the Trust Agreements to provide timely reports of hours worked by covered employees and to make corresponding timely contributions to the Asbestos Funds. The allegations further establish that Stotts failed to make payments in full for the months of March 2014, July 2014 to September 2014, March 2015, and May 2015 and that Stotts failed to submit reports or pay contributions for the months of April 2015, July 2015, and August 2015. Lastly, the allegations establish that Stotts made late payments for the following months: September 2013, October 2013, January to ...


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