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National Electrical Benefit Fund v. Omni Electrical Systems, Inc.

United States District Court, D. Maryland

February 26, 2018

NATIONAL ELECTRICAL BENEFIT FUND, Plaintiff,
v.
OMNI ELECTRICAL SYSTEMS, INC., Defendant.

          REPORT AND RECOMMENDATION

          Timothy J. Sullivan United States Magistrate Judge

         This Report and Recommendation addresses the Motion for Default Judgment (“Motion”) (ECF No. 11) filed by Plaintiff National Electrical Benefit Fund (“NEBF”). Defendant Omni Electrical Systems, Inc. (“Omni”) has not filed a response, and the time for doing so has passed. See Loc. R. 105.2(a). On November 29, 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 NEBF's Motion. (ECF No. 12.) 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 NEBF's Motion be granted.

         I.FACTUAL AND PROCEDURAL HISTORY

         In this case, NEBF filed suit against Omni 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.) Omni was personally served with the Complaint and summons but did not file an answer or responsive pleading within the requisite time period. On June 29, 2017, NEBF moved for the Clerk's entry of default (ECF No. 5), and the Clerk entered default against Omni on July 6, 2017 (ECF No. 8). On July 25, 2017, NEBF filed the Motion, to which Omni has not responded.

         II. LEGAL ANALYSIS

         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, NEBF alleges that it is a multiemployer employee pension benefit plan within the meaning of 29 U.S.C. § 1002(2). (ECF No. 1 ¶ 4.) Omni is an employer that has agreed to participate in the NEBF pursuant to collective bargaining agreements with the International Brotherhood of Electrical Workers Local Union 98 (“Collective Bargaining Agreements”). (Id. ¶ 6.) Pursuant to the Collective Bargaining Agreements, Omni is required to submit contributions to the NEBF on behalf of Omni's covered employees. (Id.) In addition to its obligations under the Collective Bargaining Agreements, Omni is also bound to the terms and conditions of the Restated Employees Benefit Agreement and Trust for the NEBF (“Trust Agreement”). (Id. ¶ 7.) Notwithstanding its obligations, Omni has failed to make the contributions required by the Collective Bargaining Agreements and the Trust Agreement to the NEBF for its covered employees. (Id. ¶ 8.) NEBF alleges that Omni owes $14, 897.11 in delinquent contributions in connection with work performed by Omni's covered employees in August 2016 and September 2016. (Id. ¶ 9.) Despite NEBF's demands for payment, Omni remains delinquent in its payment obligations. (Id. ¶ 10.)

         On January 25, 2018, the Court ordered NEBF to supplement its Motion with proof that Omni is a signatory to the Collective Bargaining Agreements and the Trust Agreement, as has been required in other cases. (ECF No. 13.) See Trustees of the Electrical Workers Local No. 26 Pension Trust Fund v. Control Specialties, LLC, No. TDC-16-0220 (ECF No. 35); Trustees of Nat'l Auto. Sprinkler Indus. Fund v. Sprinkler Contractors, LLC, No. TDC-16-2639 (ECF No. 14). In response, NEBF submitted an affidavit of Angel Losquadro (“Losquadro”), the Director of the Audit and Delinquency Department of NEBF. (ECF No. 14.) Losquadro states that Omni is bound to contribute to the NEBF because it executed a Letter of Assent, which is attached at ECF No. 14-1. Through the Letter of Assent, Omni agreed to “comply with, and be bound by, all of the provisions contained in” the “current and subsequent approved labor agreements” between the “Philadelphia Division, Penn-Del-Jersey Chapter NECA and Local Union 98, IBEW.” (Id. at 2.)

         The inside commercial labor agreement (“Labor Agreement”) for the relevant period is attached at ECF No. 14-2. It applies to “ALL FIRMS who sign a LETTER OF ASSENT to be bound” by it. (Id. at 5.) And specifically, in Section 6.01, it provides that each employer that has assented to the Labor Agreement “accepts, and agrees to be bound by, the Restated Benefit Agreement and Trust.” (Id. at 33.) A copy of the Trust Agreement, which is discussed below, is attached at ECF No. 14-3. Through Losquadro's Affidavit and the exhibits attached thereto, NEBF has established that Omni is bound by the Labor Agreement (the operative Collective Bargaining Agreement for the relevant time) and the Trust Agreement.

         Accepting as true the unchallenged allegations of the Complaint, along with the evidence submitted in NEBF's supplement to its Motion, NEBF has established Omni's liability for failure to pay the ...


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