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National Electrical Benefit Fund v. Lighthouse Electric, Inc.

United States District Court, D. Maryland, Southern Division

December 23, 2019

NATIONAL ELECTRICAL BENEFIT FUND, Plaintiff,
v.
LIGHTHOUSE ELECTRIC, INC., Defendant.

          MEMORANDUM OPINION

          GEORGE J. HAZEL UNITED STATES DISTRICT JUDGE

         Plaintiff National Electrical Benefit Fund (“Plaintiff” or “NEBF”) brings this action against Defendant Lighthouse Electric, Inc. (“Defendant”) 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's failure to answer or otherwise defend in this action, the Clerk entered default against Defendant on March 26, 2019. ECF No. 7. Now pending before the Court is Plaintiff's Motion for Default Judgment against Defendant pursuant to Fed.R.Civ.P. 55(b). ECF No. 6. No. hearing is necessary. See Loc. R. 105.6 (D. Md.). For the following reasons, Plaintiff's Motion for Default Judgment is granted.

         I. BACKGROUND

         The following facts are established by the Complaint, ECF No. 1, and evidentiary exhibits in support of the Motion for Default Judgment, ECF Nos. 6-1, 6-2. The NEBF is a multiemployer employee pension benefit plan within the meaning of Section 3(2) of ERISA, 29 U.S.C. § 1002(2), which has been established pursuant to an agreement entered into between the International Brotherhood of Electrical Workers (“IBEW”) and the National Electrical Contractors Association (“NECA”). ECF No. 1 ¶ 4; ECF No. 6-2 ¶ 3. Employers agree to participate in the NEBF pursuant to collective bargaining agreements with the IBEW or one of its affiliated local unions. ECF No. 1 ¶ 4; ECF No. 6-2 ¶ 3. The NEBF is administered at 2400 Research Boulevard, Suite 500, Rockville, Maryland 20850-3238. ECF No. 1 ¶ 4.

         Plaintiff states, upon information and belief, that Defendant is an Illinois corporation whose business address and main place of business is 35 Country Manor Lane, Orland Park, Illinois 60467. Id. ¶ 5. Defendant is an employer within the meaning of Section 3(5) of ERISA, 29 U.S.C. § 1002(5), and is engaged in an industry affecting commerce. Id.

         At all times relevant to the action, Defendant was a signatory to collective bargaining agreements (“Collective Bargaining Agreements”) with IBEW Local Unions 134 and 461, the collective bargaining representatives of Defendant's employees. Id. ¶ 6; ECF No. 6-2 ¶¶ 4-6. The Collective Bargaining Agreements obligated Defendant to submit contributions to the NEBF through the NEBF's local collection agent on behalf of employees covered by the Agreements. ECF No. 1 ¶ 6; ECF No. 6-2 at 13, 16.[1] Defendant was also bound to the terms and conditions of the Restated Employees Benefit Agreement and Trust (“Trust Agreement”), which governed administration of the NEBF. ECF No. 1 ¶ 7; ECF No. 6-2 ¶ 8; id. at 19-20, 38.

         Notwithstanding its obligations pursuant to the Collective Bargaining Agreements and the Trust Agreement, Defendant has been delinquent in making contributions to the NEBF on behalf of its employees. ECF No. 1 ¶ 8; ECF No. 6-2 ¶ 9. According to reports that Defendant prepared and submitted to the NEBF's local collection agent, Defendant failed to pay the NEBF at least $14, 855.48 in contributions between May 2016 and December 2018, despite several demands from the NEBF and its counsel. ECF No. 1 ¶¶ 9-10; ECF No. 6-2 at 50-51. Interest on the delinquent contributions at the time the Complaint was filed was $1, 344.84, and liquidated damages totaled $2, 971.10. ECF No. 1 ¶¶ 11-12; ECF No. 6-2 at 50-51. By March 2019, interest on the reported delinquent contributions was $1605.70. ECF No. 6-2 at 50-51.

         Additionally, according to a 2018 independent audit of Defendant's books and records, Defendant owes the NEBF at least $478.22 in unpaid delinquent contributions for the period between October 1, 2016 and June 30, 2017. ECF No. 1 ¶ 13; ECF No. 6-2 ¶ 10. Defendant failed to submit the contributions despite several demands for payment by the NEBF and its counsel. ECF No. 1 ¶ 14; ECF No. 6-2 ¶ 10-11. Interest on the delinquent contributions revealed by the audit totals $113.85, while liquidated damages are $95.64. ECF No. 1 ¶¶ 15-16; ECF No. 6-2 at 56. The cost of the audit was $26.34. ECF No. 1 ¶ 17; ECF No. 6-2 at 56, 59-60.

         Plaintiff asserts that the Trustees to the NEBF (“Trustees”) will be required to provide benefits to Defendant's employees upon retirement based on their credited years of service, which includes the period in which Defendant has failed to contribute. ECF No. 1 ¶ 18. The Trust Agreement, pursuant to ERISA, authorizes the Trustees to take all necessary actions to recover delinquent contributions, interest on the delinquent contributions at the rate of ten percent per annum, liquidated damages in an amount of twenty percent of the delinquency, and all costs, including attorneys' fees and audit expenses, incurred in collecting the delinquency. Id. ¶ 22; ECF No. 6-2 ¶ 12.

         Plaintiff filed the instant Complaint against Defendant on January 28, 2019. ECF No. 1. The Complaint seeks the total amount of Defendant's known unpaid delinquent contributions, interest on the delinquent contributions, liquidated damages, the cost of the audit, and an award of attorney's fees and costs, in addition to an order that interest will accrue on all delinquent contributions at the rate of ten percent per annum until paid in full. Id. at 5. Defendant was served pursuant to Rule 4 of the Federal Rules of Civil Procedure on February 10, 2019. ECF No. 4 at 1. An Answer was due on or before March 4, 2019. ECF No. 6. No. Answer was filed, Plaintiff moved for default on March 20, 2019, ECF No. 5, and the Clerk entered default against Defendant on March 26, 2019, ECF No. 7. Concurrent with its motion for entry of default by the Clerk, Plaintiff filed the pending Motion for Default Judgment. ECF No. 6.

         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 Int'l, Inc. v. Savannah Shakti Corp., 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.” Lawbaugh, 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 plaintiff's 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). Federal Rule of Civil Procedure 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 “affidavits or documentary evidence in the record to determine the appropriate sum.” Int'l Painters & Allied Trades Indus. Pension Fund, 919 F.Supp.2d at 684 (citing Monge v. Portofino Ristorante, 751 F.Supp.2d 789, 794-95 (D. Md. 2010)).

         III. ...


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