United States District Court, D. Maryland, Southern Division
NATIONAL ELECTRICAL BENEFIT FUND and NATIONAL ELECTRICAL ANNUITY PLAN Plaintiffs,
3W ELECTRIC LLC, Defendant.
W. Grimm, United States District Judge
Electrical Benefit Fund ("NEBF") and National
Electrical Annuity Plan ("NEAP") (referred to
collectively as "Plaintiffs",, filed this civil
enforcement action under the Employee Retirement Income
Security Act of 1974 ("ERISA",, 29 U.S.C. S 1001
et seq., seeking delinquent pension contributions
pursuant to SS 502 and 515 of ERISA, 29 U.S.C. SS 1132, 1145.
Compl. ¶¶ 1, 8-10, ECF No. 1. I
struck Defendant's Answer filed pro se by a
member of the LLC, ECF NO.5, for failure to comply with Local
Rule 101.1(a), which requires corporate defendants to be
represented by counsel. Order, ECF NO.6. Defendant did not
file any further response to the pleadings. Plaintiffs have
since filed a Motion for Clerk's Entry of Default, ECF
No., , which was granted, ECF No. 10, and a
Motion for Default Judgmen,, Pls.' Mot., ECF NO.9,, to
which Defendant has also not responded. A Suggestion of
Bankruptcy, Def's Bankr. Sugg. ECF No. 11, was filed
giving notice that the United States Bankruptcy Court for the
Western District of Arkansas ordered relief for a Mr. William
Weems on October 25, 2016. Having reviewed the filings, I
find that a hearing is unnecessary in this case. See
Loc. R. 105.6 (D. Md.). Plaintiffs have demonstrated
liability and established the damages they seek. Accordingly,
Plaintiffs' Motion for Default Judgment will be granted.
are multiemployer pension benefit plans subject to ERISA. 29
U.S.C. SS I002(3), 1003(a); Compl.
¶¶ 3-4. NEBF is a defined benefit
plan and NEAP is a defined contribution plan. 29 U.S.C. SS
1002(34)-(35;; Compl. ¶¶ 3-4. Both
plans were established pursuant to an agreement between the
International Brotherhood of Electrical Workers and the
National Electrical Contractors Association. Compl.
3W Electric, LLC, is an Arkansas limited liability company
("Defendant" or "the LLC"). Id.
~ 6. Defendant is an employer who agreed to participate
in NEBF and NEAP pursuant to agreements with the
International Brotherhood of Electrical Workers Local Union
222, the collective bargaining representative of the
company's employees. Id. ~ 7. Plaintiffs'
complaint seeks a total of $178, 535.61 in damages and
attorney's fees and costs, as well as injunctive relief
directing Defendant to submit required payroll reporting
forms for the months of February 2016 until present, along
with any corresponding contribution,, interest, and
liquidated damages, or submit to an audit. Id. at
Weems, a member of the LLC, filed apro se Answer on
August 29, 206.. ECF No. 5. The Answer stated that Defendant
intended to file for bankruptcy under Title 13. Id.
I struck the Answer from the record for failure to comply
with Local Rule 101.1(a), which requires corporate defendants
to be represented by counsel. Order, ECF NO.6. I did,
however, advise Mr. Weems to notify the court if Defendant
did file for bankruptcy. Id. On September 14, 2016,
Plaintiffs filed a Motion for Clerk's Entry of Default,
ECF No., , and a Motion for Default
Judgment, ECF NO.9. The Office of the Clerk entered an Order
of Default for want of answer or other defense on October 6,
2016. ECF No. 10. On October 31, 2016, a Suggestion of
Bankruptcy was filed with the Court. Def.'s Bankr. Sugg.,
ECF No. 11. The Suggestion explained that Mr. Weems filed a
bankruptcy petition and that the United States Bankruptcy
Court for the Western District of Arkansas ordered relief for
that petition on October 25, 2016. Id.
of the Federal Rules of Civil Procedure establishes a
two-step process when a party applies for default judgment.
First, the rule provides that "when a party ... 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). Following the
Clerk's entry of default, "the plaintiff [then may]
seek a default judgment." Godlove v. Martinsburg
Senior Towers, LP, No. 14-CV-132, 2015 WL 746934, at *1
(N.D. W.Va. Feb. 20, 2015); see also Fed. R. Civ. P.
55(b). "The Fourth Circuit has a 'strong policy'
that 'cases be decided on their merits.'" S.
E.C. v. Lawbaugh, 359 F.Supp.2d 418, 420 (D. Md. 2005)
(citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md.
2002)). However, "default judgment may be appropriate
when the adversary process has been halted because of an
essentially unresponsive party." Id. at 420-22.
determining whether to grant a motion for default judgment,
the Court takes as true the well-pleaded factual allegations
in the complaint, other than those pertaining to damages.
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780
(4th Cir. 2001). If the Court finds that "liability is
established, [it] must then determine the appropriate amount
of damages." Agora Fin., LLC v. Samler, 725
F.Supp.2d 491, 484 (citing Ryan, 253 F.3d at
780-81.. In order to do so, "the court may conduct an
evidentiary hearing, or may dispense with a hearing if there
is an adequate evidentiary basis in the record from which to
calculate an award." Mata v. G0. Contractors Grp.,
Ltd., No. TDC-14-3287, 2015 WL 6674650, at *3 (D. Md.
Oct. 29, 2015); see also Fed. R. Civ. P. 55(b).
Weems's Automatic Stay
initial matter, Mr. Weems's Suggestion of Bankruptcy asks
that this action be stayed under 11 U.S.C. 9 362.
Id. The filing of a Chapter 13 bankruptcy petition
automatically stays "the commencement or continuation
... of a judicial . . . action or proceeding against the
debtor that was or could have been commenced before
the commencement of the case under this title, or to recover
a claim against the debtor that arose before the
commencement of the case under this title." 11 U.S.C. 9
362(a)(1) (emphasis added). "The purpose of the
automatic stay, in addition to protecting the relative
position of creditors, is to shield the debtor from financial
pressure during the pendency of the bankruptcy
proceeding." Winters ex rel. McMahon v. George Mason
Bank, 94 F.3d 130, 133 (4th Cir. 1996). It is well
settled that an automatic stay only applies to the debtor,
not co-defendan's or related parties. See e.g.,
Kreisler v. Goldberg, 478 F.3d 209, 213 (4th Cir. 2007)
(holding that the automatic stay did not apply to actions
against debtor's non-bankrupt subsidiary corporation;;
Williford .. Armstrong World Indus., 715
F.2d 124, 126 (4th Cir. 1983) (holding that the automatic
stay did not apply to codebtors, but observing that such a
stay can extend to codebtors of consumer debts). As I
understand it, Mr. Weems filed for bankruptcy relief,
Def.'s Bankr. Sugg., but Mr. Weems is not a named party
to this case. See Compl. ¶¶ l, 6. The only
named Defendant is the LLC. Id.
member or agent of an Arkansas LLC is not liable for the
debts of the company. Ark. Code Ann. 9 4-32-304 ("[A]
person who is a member, manager, agent or employee of a
limited liability company is not liable for a debt,
obligation, or liability of the limited liability company,
whether arising in contract, tort, or otherwise . .
. ."). Furthermore, under Arkansas law,
an LLC is a separate legal entity from its members. See
Anderson v. Stewart, 234 S.W.3d 295, 298 (Ark. 2006)
(applying the "nearly universal rule that a corporation
and its stockholders are separate and distinct entities, even
though a stockholder may own the majority of the
stock(]" to an LLC and its sole member). Thus, a
member's bankruptcy does not automatically stay
proceedings against an LLC.
automatic stay further prevents "any act to obtain
possession of property of the estate or of property from the
estate or to exercise control over property of the
estate." 11 U.S.C. S 362(a)(3). But a member's
ownership interest in an LCC does not give that member direct
ownership interest in the assets of the LCC. See
Kreisler, 478 F.3d at 214 (holding that a parent
corporation's ownership interest in a subsidiary LLC
"does not give the parent any direct interest in the
assets of the subsidiary."). As the Fourth
Circuit explained in Kreisler, the owner of an LLC
could have established ownership interest in the assets, but
chose instead to create an LLC and "[h]aving assumed
whatever benefits flowed from that decision, it cannot now
ignore the existence of the LLC in order to escape its
disadvantages." Id. Although Mr. Weem's
ownership interest in the LLC may be part of the bankruptcy
estate, the property interests of the LLC remain its own and
are not protected by Mr. Weems's automatic stay.
does this case fall under the "unusual
circumstance"" exception which extends the
protection of an automatic stay to third parties. In AH.
Robins Co., Inc. v. Piccinin, the Fourth Circuit
explained that an
unusual situation . . . arises when there is
such identity between the debtor and the third-party
defendant that the debtor may be said to be the real party
defendant and that a judgment against the third-party
defendant will in effect be a judgment or finding against the
debtor. An illustration of such a situation would be a suit
against a third-party who is entitled to absolute ...