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Trustees of National Automatic Sprinkler Industry Welfare Fund v. J.A. Fire Protection, Inc.

United States District Court, D. Maryland, Southern Division

November 20, 2018

TRUSTEES OF THE NATIONAL AUTOMATIC SPRINKLER INDUSTRY WELFARE FUND et al., Plaintiffs,
v.
J.A. FIRE PROTECTION, INC. et al., Defendants.

          MEMORANDUM OPINION

          GEORGE J. HAZEL United States District Judge

         Following Defendants' failure to answer or otherwise defend in this action, the Clerk of the Court entered default against Defendants on September 7, 2018. Pursuant to Fed.R.Civ.P. 55(b), 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, Trustees of the Metal Trades Welfare Fund, Trustees of the Metal Trades Pension Fund and Trustees of the International Training Fund (collectively, “Plaintiffs” or “NASI Funds”), then filed a motion for default judgment with supporting declarations and exhibits. ECF No. 8. No. hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the following reasons, Plaintiffs' Motion will be granted.

         I. BACKGROUND[1]

         Plaintiffs NASI Funds are “employee benefit plans” as that term is defined in the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1002(3). ECF No. 1 ¶ 1. The NASI Funds are established and maintained according to provisions of the Restated Agreements and Declarations of Trust (“Restated Agreements”) and the collective bargaining agreements between Sprinkler Fitters Local Union No. 669 and Defendant J.A. Fire Protection, Inc. (J.A. Fire). Id. The NASI Funds are administered at 8000 Corporate Drive, Landover, Maryland 20785. Id.

         Defendant J.A. Fire is a corporation existing under the laws of the State of Indiana with offices located in Indiana. ECF No. 1 ¶ 2. Defendant operates as a contractor or subcontractor in the sprinkler industry, and at all times relevant to the action was and is an employer in an industry affecting commerce as defined by ERISA, 29 U.S.C. §§ 1002(5), (9), (11), (12) and (14), the Labor-Management Relations Act (LMRA), 28 U.S.C. §§ 142(1), (3) and 152(2), the Multi-Employer Pension Plan Amendments of 1980, 29 U.S.C. § 1001(a). See Id. Defendant Patricia Abrams is the President of Defendant J.A. Fire and an Indiana resident. ECF No. 1 ¶ 3.

         Plaintiffs allege that Defendant J.A. Fire entered into a Collective Bargaining Agreement with Road Sprinkler Fitters Local Union No. 669, which, in turn, bound it to the Trust Agreements and Guidelines for Participation in the NASI Funds executed between the Union and the National Fire Sprinkler Association. ECF No. 1 ¶ 5-6; see also ECF Nos. 8-7-8-14 (agreements and guidelines between Defendant J.A. Fire and Local Union 669). Under the terms of the Restated Agreements, when an employer fails to submit the required contributions and file the properly completed report forms, the NASI Funds are permitted to determine the amount of the employer's delinquency using the following formula:

[T]he amount of the delinquency [is] the greater of (a) the average of the monthly payments or reports submitted by the Employer for the last three (3) months for which payments or reports were submitted, or (b) the average of the monthly payments or reports submitted by the Employer for the last twelve (12) months for which payments or reports were submitted . . . .

ECF No. 8-4 ¶ 13; see also ECF No. 8-7 at 26. The trust agreements further provide that an employer who fails to timely pay required contributions under the collective bargaining agreement is obligated to pay liquidated damages pursuant to the following calculations:

(1) If payment is not received . . . by the 15th of the month, 10% of the amount [owed] is assessed.
(2) An additional 5% is added if payment is not received . . . by the last working day of the month in which payment was due.
(3) An additional 5% is added if payment is not received by the 15th of the month following the month in which payment was due.

ECF No. 8-4 ¶ 16.

         Defendant J.A. Fire experienced difficulty making the required benefit contributions, and, in response to these difficulties, the NASI Funds and Defendants entered a settlement agreement and promissory note allowing Defendants to make systematic payment over time of all amounts owed to the NASI Funds. ECF No. 1 ¶ 8; ECF No. 8-4 ¶ 9. The principal amount owed pursuant to the settlement agreement was $165, 958.85, and liquidated damages had accrued to $113, 202.85. ECF No. 1 ¶ 8; ECF No. 8-4 ¶ 9; ECF No. 11-3 ¶ 3. Under the terms of the settlement, Defendants were permitted to pay the principal amount in monthly installments over twenty-four months. Id. Liquidated damages were waived, contingent upon Defendants remaining current on their payments under the settlement agreement and in all future monthly contributions owed during the duration of the settlement. ECF No. 1 ¶ 8. Defendant Abrams also agreed to “personally guarantee all terms of” the settlement agreement. ECF No. 8-4 ¶ 10; ECF No. 11-3 ¶ 10. Per the settlement, Defendants agreed that “in the event of a lawsuit to enforce payment of the Promissory Note and/or the terms of the Agreement, ” Defendants would be “jointly and severally liable to pay costs and attorneys' fees.” ECF No. 11-3 ¶ 13.

         Plaintiffs commenced this action on June 8, 2018, alleging that Defendants had defaulted on the terms of the settlement agreement by failing to pay contributions to the NASI Funds for the months of March through April 2018 and by failing to submit required reports for these months per the terms of the Collective Bargaining Agreement. ECF No. 1 ¶ 11; see also ECF No. 8-4 at ¶ 11-12. In the Complaint, Plaintiffs sought to recover $84, 714.88-the projected delinquency for these months calculated based on the terms (described above) of the Restated Agreement-and $16, 733.02 in liquidated damages assessed on late contributions. ECF No. 1 ¶ 13-15. They also sought “costs, interest, and reasonable attorneys' fees assessed pursuant to 29 U.S.C. § 1132(g) . . .” and the trust agreements and ...


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