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Trustees of Electrical Welfare Trust Fund v. Control Specialties, LLC

United States District Court, D. Maryland

November 22, 2017



          Timothy J. Sullivan, United States Magistrate Judge.

         This Report and Recommendation addresses the “Second Amended Motion for Entry of Default Judgment” (“Motion”) (ECF No. 28) filed by Plaintiffs, Trustees of the Electrical Welfare Trust Fund (“Welfare Fund”), Trustees of the Electrical Workers Local No. 26 (“Local 26”) Pension Trust Fund (“Pension Fund”), Trustees of the Local No. 26 Joint Apprenticeship and Training Trust Fund (“Apprenticeship Fund”), Trustees of the Local No. 26 Individual Account Fund (“Account Fund”), Trustees of the Labor Management Cooperation Committee, the Collection Agent for the National Electrical Benefit Funds (“NEBF”) and the Collection Agent for the Local No. 26, International Brotherhood of Electrical Workers (“the Union”) (collectively, the “Trustees” of their respective “Funds”). Defendant Control Specialties, LLC (“Defendant”) has not filed a response, and the time for doing so has passed. See Loc. R. 105.2(a). On July 31, 2017, in accordance with 28 U.S.C. § 636 and pursuant to Local Rule 301.6, Judge Chuang referred this case to me for a report and recommendation on Plaintiffs' Motion. (ECF No. 23.) I find that a hearing is unnecessary in this case. See Fed. R. Civ. P. 55(b)(2); Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that Plaintiffs' Motion be granted.


         Plaintiffs brought this action against Defendant under the Employee Retirement Security Act of 1974, as amended, (“ERISA”), 29 U.S.C. § 1132(e), to recover delinquent pension fund contributions and related relief. (ECF No. 1.) Defendant was personally served with the Complaint and summons but did not file an answer or responsive pleading within the requisite time period. On June 15, 2017, Plaintiffs moved for the Clerk's entry of default (ECF No. 9), and the Clerk entered default against Defendant on July 15, 2017 (ECF No. 10). On September 15, 2017, Plaintiffs filed the Motion, to which Defendants have not responded.[1]


         A. Standard for Entry of Default Judgment

         In determining whether to award a 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, 780-81 (4th Cir. 2001); United States ex rel. Durrett-Sheppard Steel Co. v. SEF Stainless Steel, Inc., No. RDB-11-2410, 2012 WL 2446151, at *1 (D. Md. June 26, 2012). Nonetheless, the Court must consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although 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), default judgment “is 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 Court determines that liability is established, the Court must then determine the appropriate amount of damages. CGI Finance, Inc., v. Johnson, No. ELH-12-1985, 2013 WL 1192353, at *1 (D. Md. March 21, 2013). The Court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Durrett-Sheppard Steel Co., 2012 WL 2446151 at *1.

         Rule 55 of the Federal Rules of Civil Procedure provides that “[i]f, 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 Fed.R.Civ.P. 55(b)(2).” A plaintiff's assertion of a sum in a complaint does not make the sum “certain” unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012). Rule 55(b)(2) provides that “the court may conduct hearings or make referrals . . . when, to enter or effectuate judgment, it needs to . . . determine the amount of damages.” The Court is not required to conduct an evidentiary hearing to determine damages, however; it may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md. 2010).

         B. Liability

         ERISA provides that “[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. ERISA further provides that employers who fail to make timely contributions are liable in a civil action for unpaid contributions, interest on the unpaid contributions, liquidated damages, reasonable attorney's fees and costs, and any other relief the Court deems appropriate. 29 U.S.C. § 1132(a), (g).

         In the Complaint, the Trustees allege that the Funds are “multi-employer plans” within the meaning of 29 U.S.C. § 1002(2). (Id. ¶ 4.) The Trustees are fiduciaries of the Plans within the meaning of 29 U.S.C. § 1002(21). (Id. ¶ 5.) Defendant is an employer that has agreed to participate in the Funds pursuant to a Collective Bargaining Agreement (“CBA”). (Id. ¶ 6.) The CBA, which is between Defendant and Local 26, International Brotherhood of Electrical Workers, and the National Electrical Contractors Association, Washington, D.C. Chapter, requires Defendant to “make contributions to the Funds at specified rates, and binds Defendant to the terms and conditions of the Agreements and Declarations of Trust (‘Trust Agreements') establishing the Funds.” (Id. ¶¶ 9-10.) Notwithstanding its obligations, Defendant has failed to make the contributions and to submit the reports to the Funds required by the CBA and the Trust Agreements. (Id. ¶ 12.) Plaintiffs have demanded payment by the Defendant, but Defendant remains delinquent in its payment obligations. (Id. ¶ 15.) Accepting as true the unchallenged allegations of the Complaint, Plaintiffs have established Defendant's liability for failure to pay the contributions and to submit the reports as required by the CBA and the Trust Agreements.

         C. Damages

         Having determined that Plaintiffs have established Defendant's liability, it is now appropriate to determine the damages to which Plaintiffs are entitled. The damages Plaintiffs seek in the Motion are appropriate under Rule 54(c) so long as “the record supports the damages requested.” See Laborers' Dist. Council Pension v. E.G.S., Inc., No. WDQ-09-3174, 2010 WL 1568595, at *3 (D. Md. Apr. 16, 2010). Here, Plaintiffs have provided sufficient evidence to support their claim for damages in the amount of $62, 685.15.

         In support of their claim for damages, Plaintiffs submit the affidavit of Michael McCarron (“McCarron”). (ECF No. 28-2.) McCarron is the Accounting Manager of the Accounting Department at the Local 26, IBEW-NECA Trust Fund Office. (Id. ¶ 1.) In this role, McCarron is responsible for “monitoring and maintaining records with respect to monthly contribution reports, payments made by participating electrical contractors, including those of the Defendant, the determination of whether payments were timely made and if not, the assessment of liquidated damages, interest and legal fees” in accordance with the CBA and the Trust Agreements. (Id. ¶ 2.) Pursuant to the CBA and the Trust Agreements, unpaid or late contribution payments are subject to a liquidated damages assessment in the amount of 20% of the monthly contribution balance due. (Id. ¶ 4.) In addition, interest is assessed on unpaid and late-paid contributions at the annual rate of 7%. (Id.) McCarron states that Defendant did not submit monthly contribution reports for the month of June 2017, and also failed to submit its contribution payment for that month. (Id. ¶ 8.) As such, and “[i]n accordance with the collections policies and procedures of the Joint Trust Funds, ” McCarron determined that Defendant's liability for the unpaid June 2017 contribution was $6, 873.78. (Id.) I recommend that ...

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