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United Food and Commercial Workers Unions and Participating Employers Pension Fund v. Magruder Holdings, Inc.

United States District Court, D. Maryland, Southern Division

July 21, 2017

UNITED FOOD AND COMMERCIAL WORKERS UNIONS AND PARTICIPATING EMPLOYERS PENSION FUND, Plaintiff,
v.
MAGRUDER HOLDINGS, INC., et al., Defendants.

          MEMORANDUM OPINION

          GEORGE J. HAZEL United States District Judge

         Plaintiff United Food and Commercial Workers Unions and Participating Employers Pension Fund (the "Fund") and its Trustees brings this action against Defendants Magruder Holdings, Inc. ("Magruder") and Fanaroff & Steppa, LLC under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980. 29 U.S.C. §§ 1001 et seq. Following Defendant Magrude's failure to answer or otherwise defend in this action, the Clerk entered default against Magruder on December 9. 2016. ECF No. 20. Now pending before the Court is Plaintiffs Motion for Default Judgment against Magruder pursuant to Fed.R.Civ.P. 55. ECF No. 13. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, Plaintiffs Motion for Default Judgment is granted, in part, and denied, in part. Judgment is entered against Defendant Magruder in the total amount of $2, 760, 573.07. Plaintiff shall re-submit its request for attorneys* fees and costs, consistent with the Local Rules and Guidelines set forth at Loc. R. 109 and Appendix B (D. Md. July 1. 2016).

         I. BACKGROUND

         The following facts are established by the Complaint, ECF No. 1, and by Plaintiffs . memorandum and exhibits in support of the Motion for Default Judgment, ECF Nos. 13-16. The Fund is a multiemployer pension plan within the meaning of Sections 3(37) and 4001(a)(3) of ERISA. 29 U.S.C. §§ 1002(37) and 1301(a)(3). ECF No. 1 ¶ 4; ECF No. 15 ¶ 2. The Trustees of the Fund are "fiduciaries" with respect to the Fund, as defined in Section 3(21)(A) of ERISA. 29 U.S.C. § 1002(21)(A). and are collectively the "plan sponsor" within the meaning of Section 4001(a)(10)(A)of ERISA, 29 U.S.C. § l301(a)(10)(A). ECF No. 1 ¶3. Plaintiffs are authorized to bring this action on behalf of the Fund, its participants, and its beneficiaries for the purpose of collecting withdrawal liability. See Id. ¶ 5 (citing Sections 502(a)(3). 4221(b)(1). and 43Ol(a)(1) of ERISA. 29 U.S.C. §§ 1132(a)(3), 1401(b)(1), and 1451(a)(1)). The Trustees administer the Fund at 4301 Garden City Drive, Suite 201, Landover, Maryland, 20785. Id. ¶ 6; ECF No. 15.¶ 2.

         Defendant Magruder Holdings, Inc. is a Maryland corporation with its principal place of business at 11820 Parklawn Drive. Suite 200, Rockville, Maryland 20852. and is a "trade or business" within the meaning of ERISA §4001 (b)(1). 29 U.S.C. § 1301(b)(1). ECF No. 1 ¶ 8. Defendant Magruder is an employer within the meaning of 29 U.S.C. §152(2) and Section 3(5) of ERISA. 29 U.S.C. § 1002(5). and has been engaged in an industry affecting commerce, within the meanings of Sections 3(11) and (12) of ERISA. 29 U.S.C. §§ 1002(11) and (12). Id. ¶ 7. At all times relevant to the action, Magruder owned and operated a chain of grocery stores in the Washington. DC. metropolitan area, and employed employees represented for the purposes of collective bargaining by the United Food and Commercial Workers Union Local 400 (the "Union"), a labor organization representing employees in an industry affecting interstate commerce. Id. ¶ 12.

         At all times pertinent to the action. Defendant Magruder was bound by a collective bargaining agreement with the Union (the "Agreement"). ECF No. 1 ¶ 13; ECF No. 15 ¶ 5; see ECF No. 15-1 at 2-34.[1] The Agreement obligated Magruder to contribute to the Fund on behalf of Magruder"s employees. ECF No. 1 ¶ 14; ECF No. 15 ¶ 5. Additionally. Magruder was required to abide by the terms and conditions of the Fund's Amended and Restated Agreement and Declaration of Trust (the "Trust Document") and to submit monthly reports and payments to the Fund. ECF No. 1 ¶ 15; ECF No. 15 ¶ 6; see ECF No. 15-2 at 2-20. In January 2013, the Fund determined that Defendant Magruder was no longer contributing to the Fund, and thus had effected a "complete withdrawal" from the Fund, as defined in Section 4203 of ERISA. 29 U.S.C. § 1383. ECF No. 1 ¶ 16; ECF No. 15 ¶ 7. The Fund further determined that, as a result of the complete withdrawal, the Magruder Controlled Group[2] had incurred withdrawal liability to the Fund in the amount of $1, 980, 709.00. as determined under Section 4201(b) of ERISA, 29 U.S.C. § 1381(b). ECF No. 1 ¶ 18; ECF No. 15 ¶ 13.

         On or about August 9, 2013. the Fund sent the Magruder Controlled Group a revised Notice and Demand for payment of withdrawal liability, [3] informing Magruder that its revised withdrawal liability was $1, 980, 709.00, payable in a single payment or sixty-one quarterly payments of $52, 996.00 and a final payment of $13, 869.00. ECF No. 1 ¶¶ 22-23: see ECF No. 15-5 at 2 8.[4]

         The Magruder Controlled Group failed to pay the withdrawal liability payments when due. ECF No. 1 ¶ 24. By letter dated November 12. 2013, the Fund informed the Magruder Controlled Group that it was in default, and that its withdrawal liability would be accelerated pursuant to ERISA Section 4219(c)(5)(A) of ERISA, 29 U.S.C. § 1399(c)(5)(A) and the Fund's Withdrawal Liability Rules. Id. ¶ 25; ECF No. 15 ¶ 14; see ECF No. 15-6 at 2-3. The Trustees declared the Magruder Controlled Group to be in immediate default within the meaning of Section 4219(c)(5)(A) of ERISA, 29 U.S.C. § 1399(c)(5)(A). and that the entire amount of the Magruder Controlled Group's withdrawal liability, plus interest accruing from August 28, 2013 through the date paid, and liquidated damages of at least $396, 141.00. were now owed to the Fund. ECF No. 1 ¶25.

         Plaintiff filed the instant Complaint against Defendants Magruder Holdings, Inc. and Fanaroff & Steppa. LLC, on August 17, 2016. ECF No. 1. Fanaroff & Steppa filed an Answer on October 24, 2016. ECF No. 7. Following Defendant Magruder's failure to answer or otherwise defend in the action. Plaintiff filed a Motion for Clerk's Entry of Default against Magruder on November 2. 2016. ECF No. 12; and the Clerk entered default against Magruder on December 9. 2016. ECF No. 20. Plaintiff also concurrently filed a Motion for Default Judgment. ECF No. 13, along with an accompanying Memorandum and exhibits. ECF Nos. 14-16. Magruder has not entered an appearance or otherwise defended in this matter, and the time to respond to Plaintiffs Motion for Default Judgment has passed. The Court has reviewed the record and relevant authorities, and now grants the Motion for Default Judgment for a total amount of $2, 760, 573.07 - representing $1, 980, 709.00 in withdrawal liability. $383, 722.27 in interest accrued, and $396, 141.80 in liquidated damages pursuant to Section 502(g)(2) of ERISA. 29 U.S.C. § 1132(g)(2). However, because the request for attorneys' fees and costs in the current amount of $18, 537.44 in attorneys* fees and costs does not comply with the Local Rules and Guidelines set forth at Loc. R. 109 and Appendix B. Plaintiff shall be directed to re-submit this request.

         II. STANDARD OF REVIEW

         "When 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). "A defendant's default does not automatically entitle the plaintiff to entry of a default judgment: rather, that decision is left to the discretion of the court." Educ. Credit Mgmt. Corp. v. Optimum Welding. 285 F.R.D. 371. 373 (D. Md. 2012). Although ""[t]he Fourth Circuit has a "strong policy" that 'cases be decided on their merits."" Choice Hotels Intern.. Inc. v. Savannah Shakti Carp.. No. DKC-11-0438. 2011 WL 5118328 at *2 (D. Md. Oct. 25, 2011) (citing United States v. Shaffer Equip. Co.. 11 F.3d 450, 453 (4th Cir. 1993)), "default judgment may be appropriate when the adversary process has been halted because of an essentially unresponsive party[.]" Id. (citing S.E.C v. Lawbaugh, 359 F.Supp.2d 418.421 (D. Md. 2005)).

         "Upon default, the well-pled allegations in a complaint as to liability are taken as true, although the allegations as to damages are not." Lawhaugh, 359 F.Supp.2d at 422; see also Ryan v. Homecomings Fin. Network. 253 F.3d 778. 780 (4th Cir. 2001) (noting that "[t]he defendant, by [its] default, admits the plaintiffs well-pleaded allegations of fact." which provide the basis for judgment). Upon a finding of liability, "[t]he court must make an independent determination regarding damages . .." Int'l Painters & Allied Trades Indus. Pension Fund v. Capital Restoration & Painting Co., 919 F.Supp.2d 680. 684 (D. Md. 2013). Fed.R.Civ.P. 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." While the Court may hold a hearing to prove damages, it is not required to do so; it may rely instead on "detailed affidavits or documentary evidence to determine the appropriate sum." Adkins. 180 F.Supp.2d at 17 (citing United Artists Corp. v. Freeman. 605 F.2d 854, 857 (5th Cir. 1979)).

         III. ANALYSIS

         The Court has subject matter jurisdiction over this action pursuant to Section 502 of ERISA. 29 U.S.C. § 1132 and 1451(c). Personal jurisdiction and venue are proper under 29 U.S.C. §§ 1132(e)(2), 1451(d), as the Fund is administered in Landover, Maryland. See Bd. of Trs., Sheet Metal Workers' Nat 7 Pension Fund v. McD Metals. Inc..964 F.Supp. 1040 (E.D. Va. 1997); Trustees of Nat. ...


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