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Trustees of Nat'l Auto. Sprinkler Indus. Fund v. Sprinkler Contractors, LLC

United States District Court, D. Maryland, Southern Division

March 31, 2017



          Charles B. Day United States Magistrate Judge.

         This Report and Recommendation addresses the Motion for Entry of Default Judgment (the “Motion”) (ECF No. 11) filed by Trustees of the National Automatic Sprinkler Industry Welfare Fund; Trustees of the National Automatic Sprinkler Local 669 UA Education Fund; Trustees of the National Automatic Sprinkler Industry Pension Fund; Trustees of the Sprinkler Industry Supplemental Pension Fund; and Trustees of the International Training Fund (collectively “Plaintiffs” or the “Collective Funds”). Plaintiffs brought this action against Sprinkler Contractors, LLC (“Defendant”) under Sections 502 and 515 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132 and 1145, and under Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185(a). ECF No. 1, p. 1. Plaintiffs allege Defendant breached the Collective Bargaining Agreement (“the Agreement”) between Defendant and the National Automatic Sprinkler Local 669 (“the Union”) and seek to recover contributions due to employee benefit plans under the terms of the Agreement. Id. The Clerk entered default against Defendant on October 19, 2016. ECF No. 10. Defendant has not filed a response and the time for doing so has passed. See Local Rule 105.2(a) (D. Md.).

         Pursuant to 28 U.S.C. § 636 and Local Rules 301 and 302, the Honorable Theodore D. Chuang referred this matter to the undersigned for the making of a Report and Recommendation concerning default judgment and/or damages. For the reasons stated herein, I recommend the Court DENY the Motion without prejudice.

         I. Factual and Procedural Background

         The Collective Funds are multiemployer employee benefit plans as defined in ERISA, 29 U.S.C. § 1002(3). ECF No. 1, p. 2. The Collective Funds are established and maintained according to provisions of the Restated Agreements and Declarations of Trust establishing the Collective Funds and the Agreement between the Union and Defendant. Id. The Agreement established the terms and conditions of employment for journeymen and apprentice sprinkler fitters employed by Defendant. Id.

         Pursuant to the Agreement, Defendant agreed to pay the Collective Funds certain sums of money for each hour worked by Defendant's employees. Id. at 3. However, Defendant failed to make the required contributions to the Collective Funds for the period of April 2013 through March 2016 in the amount of $518, 064.00. Id.

         Plaintiffs filed a Complaint on July 20, 2016, under ERISA, 29 U.S.C. § 1132 and 1145, seeking to recover the required contributions and liquidated damages due to Plaintiffs. ECF No. 1, p. 1. Plaintiffs sought to collect the $518, 064.00 of owed contributions, $103, 612.80 in liquidated damages, costs, and attorneys' fees. Defendant was served with a copy of the summons and Complaint on August 21, 2016. ECF No. 11-1, p.1. Defendant's time to respond expired, without reply, on September 12, 2016. Id. The Court entered a default judgment against Defendant on October 19, 2016. ECF No. 10.

         II. Standard of Review

         Rule 55 of the Federal Rules of Civil Procedure governs entries of default and default judgments. Rule 55(a) provides that “[w]hen 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). If, after entry of default, the plaintiff's complaint does not specify a “sum certain” amount of damages, the Court may enter a default judgment against the defendant pursuant to Rule 55(b)(2). In considering a motion for default judgment, the Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (citation omitted). However, “[a] default does not establish liability, ” but the Court must instead “make an independent determination of the sum to be awarded.” 10A Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 2688, n. 6 (4th ed. 2001); see also Ryan, 253 F.3d at 780-81 (holding that acceptance of facts pled by the non-defaulting party “does not necessarily entitle the [party] to the relief sought”).

         The Fourth Circuit has a “strong policy that cases be decided on the merits, ” United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), but finds that 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 (D. Md. 2005).

         If the plaintiff establishes liability, the Court then turns to the determination of damages. Fed. Prac. & Proc. Civ. § 2688, n.6 (4th ed.). In determining damages, the Court cannot accept Plaintiffs' factual allegations as true and must make an independent determination. See Lawbaugh, 359 F.Supp.2d at 422. Rule 54(c) of the Federal Rules of Civil Procedure limits the type and amount of damages that may be entered as a result of a party's default, stating that 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). While the Court may conduct an evidentiary hearing to determine damages, it is not required to do so. Monge v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md. 2010); see also Pentech Fin. Servs., Inc. v. Old Dominion Saw Works, Inc., No. 6:09cv00004, 2009 WL 1872535, at *2 (W.D. Va. June 30, 2009) (concluding that there was “no need to convene a formal evidentiary hearing on the issue of damages” after default judgment was entered against defendant because plaintiff submitted affidavits and printouts of electronic records establishing the amount of damages it sought); DirecTV, Inc. v. Yancey, No. Civ. A. 404CV00011, 2005 WL 3435030, at *2 (W.D. Va. Dec. 12, 2005) (concluding that a hearing was “not required to enter default judgment” because plaintiff “presented sufficient evidence to support its claim for damages, costs and fees by way of uncontradicted affidavits”). The Court may rely instead on affidavits or documentary evidence of record to determine the appropriate sum. See, e.g., Monge, 751 F.Supp.2d at 794-95 (citing cases in which damages were awarded after a default judgment, and without a hearing, based on affidavits, printouts, invoices, or other documentary evidence).

         III. Discussion

         Plaintiffs served their Complaint on Defendant over nine months ago, yet Defendant has failed to plead or otherwise assert a defense. Therefore, the Court deems all of Plaintiffs' factual allegations in the Complaint not pertaining to damages admitted. See Fed. R. Civ. P. 8(b)(6); Ryan, 253 F.3d at 780. Plaintiffs' Motion was filed on November 28, 2016, and Defendant still did not respond. It is within the Court's discretion to grant default judgment when a defendant is unresponsive. See Fed. R. Civ. P. 55(a)-(b); see also, Park Co. v. Lexington Ins. Co., 812 F.2d 894, 895-97 (4th Cir. 1987) (upholding a default judgment when the defendant did not respond to the plaintiff's complaint, even though the defendant would have had a valid defense had it responded); Disney Enterprises, Inc. v. Delane, 446 F.Supp.2d 402, 405-06 (D. Md. 2006) (holding that entry of default judgment was proper because the defendant had been properly served with the complaint and did not respond, even after the plaintiffs tried repeatedly to contact him); see also, Lawbaugh, 359 F.Supp.2d 418, 422 (D. Md. 2005) (concluding that default judgment was appropriate because the defendant was “unresponsive for more than a year” after denial of his motion to dismiss, despite being served with the plaintiff's motions for entry of default and default judgment).

         For the reasons stated below, it is my recommendation that Plaintiffs be denied default judgment without prejudice. However, if Plaintiffs appropriately cure the deficiencies in the Motion, it is my recommendation that Plaintiffs be granted default judgment. In determining damages, I find that no evidentiary hearing is necessary and instead rely on the declarations and other evidence of record, such as a delinquency calculation analysis and itemization of legal fees and costs, to determine the appropriate sum.

         A. Deficient Documents

         I recommend that the Motion be denied without prejudice because the Court does not have reliable documents on which to base its analysis. Plaintiffs have submitted unsigned copies of the Agreement and the Guidelines for Participation in the Sprinkler Industry Trust Funds (“the Guidelines”). ECF Nos. 11-5 and 11-11. Plaintiffs rely heavily on these documents as the basis for the terms Defendant agreed to and has subsequently broken, thus giving rise to this suit. Without the dated signatures of Defendant and Plaintiffs on these documents, the Agreement and the Guidelines are not acceptable evidence that the parties have agreed to be bound to the terms within each document. The Court cannot appropriately deem Defendant to have “agreed” to any of the terms in those documents as discussed in this opinion. Without proof of Defendant's assent to the terms, Plaintiffs' case has no foundation.

         I recommend that the Court give Plaintiffs time to cure these deficiencies and provide fully executed copies of the Agreement and the Guidelines. If done, I recommend the ...

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