Copyright 2004 ALM Properties, Inc. All Rights Reserved.  
New York Law Journal
November 5, 2004, Friday
SECTION: DECISION OF INTEREST; Pg. 21

LENGTH: 1427 words

HEADLINE: Decision of Interest;
United States District Court, Southern New York;
Collective Bargaining Agreement Obligated Construction Firm to Audit Books, Post Bond

BODY:
Judge Carter

MASON TENDERS DISTRICT COUNCIL WELFAR FUND v. VAN SAN CONSTRUCTION CORP. - Plaintiffs commenced this action on June 11, 2001, against defendants Van San Construction Corp. and Peter D'Agostino in his individual capacity. Defendants failed to plead or otherwise defend against the complaint, and in accordance with Fed. R. Civ. P. 55[a], defaults were entered against defendants. On June 25, 2003, plaintiffs moved for the entry of default judgments and submitted a proposed judgment by default for the court's approval. On July 14, 2003, defendants filed a motion to set aside the default judgments under Fed. R. Civ. Pro. 55[c]. In an opinion dated July 28, 2004, the court entered default judgment against defendant Van San Construction Corp. but set aside the default judgment against defendant d'Agostino and dismissed the claims against him on the merits. Plaintiffs were requested to submit a proposed amended judgment by default as against defendant Van San Construction Corp.

Plaintiffs submitted the proposed amended judgment by default as to defendant Van San Construction Corp. on September 14, 2004. It orders that: [1] plaintiffs Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, Mason Tenders Training Fund, New York State Laborers-Employers Cooperation and Education Trust Fund, New York Laborers' Health and Safety Trust Fund and Buildings Contractors Association Industry Advancement Program and John J. Virga, in his fiduciary capacity as Director ["FUNDS"], receive judgment against defendant in the amount of $56,578.75; [2] plaintiff Mason Tenders District Council of Greater New York and Long Island ["UNION"], receive judgment against defendant in the amount of $1,028.81; [3] pursuant to the Collective Bargaining Agreement between defendant and plaintiff UNION, defendant post a bond of $20,000.00 within 30 days to guarantee payments to plaintiffs of all fringe benefit contributions, dues checkoffs and PAC contributions that become due and owing; and, [4] pursuant to the Collective Bargaining Agreement between defendant and plaintiff UNION, defendant cooperate in the conduct of an audit of its books and records for the purpose of ascertaining and verifying the amount of fringe benefit contributions, dues checkoffs and PAC contributions due plaintiffs, if any.

In a letter to the court dated September 20, 2004, defendant requested that the court modify plaintiffs' proposed amended judgment by default in three respects. First, defendant opposes the imposition of an audit. Second, defendant believes that there is no reason to include the requirement that a bond be posted. Finally, defendant claims that the proposed judgment should include a direction that the amount of $16,897.00 be tendered by a non-party retirement plan, the Contractors and Employees Retirement Plan and Trust. Defendant contends that it had, in error, made employee benefit fund contributions in that amount to the Contractors and Employees Retirement Plan and Trust when, in fact, those funds were required to be paid to plaintiffs' funds. The Contractors and Employees Retirement Plan and Trust recognized as much and agreed, in a letter dated February 11, 2002, to submit to the court's jurisdiction and to make payment upon receipt of a court order directing it to do so and making certain determinations. n1 Defendant asks that the proposed judgment be modified to include an order directing the Contractors and Employees Retirement Plan and Trust to pay plaintiffs and for the proposed judgment amount to be reduced by the funds actually received from that trust.

Plaintiffs, in a letter dated September 21, 2004, responded to defendant's contentions. Broadly, they contend that because defendant did not seek this relief in its motion practice the demands should be rejected. They also argue that, should the court agree with defendant that an order compelling the non-party retirement plan to pay monies over to plaintiffs is warranted, defendant should file a separate order.
 
Discussion

As concerns the first two points of contention, namely the posting of a bond and the audit, the court adopts the proposed amended judgment by default. Both the audit and the bond requirements are included in the Collective Bargaining Agreement as obligations that flow to defendant and the court is unpersuaded that defendant should be allowed to derogate from these obligations. Moreover, both the audit and bond provisions were included in the original proposed judgment by default submitted by plaintiffs and have hitherto not been objected to.

With regards to the third point of contention - the payment by third-party Contractors and Employees Retirement Plan and Trust - the court modifies the proposed amended judgment by default to include an order directing the Contractors and Employees Retirement Plan and Trust to pay plaintiffs and for the judgment amount to be reduced by the funds actually received from that trust. n2 The court thereby hopes to efficiently settle all claims involved.
 
Conclusion

For the foregoing reasons it is ordered that: [1] plaintiffs Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, Mason Tenders Training Fund, New York State Laborers-Employers Cooperation and Education Trust Fund, New York Laborers' Health and Safety Trust Fund and Buildings Contractors Association Industry Advancement Program and John J. Virga, in his fiduciary capacity as Director ["FUNDS"], have judgment against defendant Van San Construction Corp., in the liquidated amount of $56,578.75, which includes principal, statutory damages, interest, contractual audit fees, costs and attorneys' fees; [2] plaintiff The Mason Tenders District Council of Greater New York and Long Island ["UNION"] has judgment against defendant Van San Construction Corp. in the liquidated amount of $1,028.81, which includes dues, PAC contributions and interest; [3] non-party Contractors and Employees Retirement Plan and Trust pay to plaintiffs the amount of $16,897.00 and that the judgment amount against defendant Van San Construction Corp. be reduced by the funds actually received from the Contractors and Employees Retirement Plan and Trust; [4] defendant Van San Construction Corp. post within thirty [30] days after service of a copy of this judgment and maintain a bond in the amount of $20,000.00 to guarantee payments to plaintiffs FUNDS and plaintiff UNION of all fringe benefit contributions, dues checkoffs, and PAC contributions that become due and owing in accordance with the terms of the Collective Bargaining Agreement; and, [5] defendant Van San Construction Corp. permit and cooperate in the conduct of an audit of its books and records for the period December 1, 2000 to the present within thirty [30] days after service of a copy of this judgment as agreed to in the Collective Bargaining Agreement.

It Is So Ordered.



n1 The trustee and plan administrator to the Contractors and Employees Retirement Plan and Trust agreed to pay the contributions wrongly paid to the Contractors plan if the court issues an order finding that: [1] Van San Construction Corp. was not required to make contributions to the Contractor Plan pursuant to the amendment made to the Plan on October 1, 1999; [2] Van San Construction Corp. contributed to the Contractor Plan in the amount of $16,897.00 in August 1999 due to a mistake-in-fact; [3] a reversion of these amounts to Van San Construction Corp. would not violate §[10.01 of the Plan document and the Exclusive Benefit Rule of ERISA §[403[C][1]; and [4] the trustee may pay these amounts directly to plaintiffs. Jennifer Giotto Letter to the Court, dated 02/11/02, at 2.


n2 Based upon the record before the court, we deem that the four requirements outlined in the Contractors and Employees Retirement Plan and Trust's February 11, 2002 letter are satisfied - namely that [1] Van San Construction Corp. was not required to make contributions to the Contractor Plan pursuant to the amendment made to the Plan on October 1, 1999; [2] Van San Construction Corp. contributed to the Contractor Plan in the amount of $16,897.00 in August 1999 due to a mistake-in-fact; [3] a reversion of these amounts to Van San Construction Corp. does not violate §[10.01 of the Plan document and the Exclusive Benefit Rule of ERISA §[403[C][1]; and [4] the trustee may pay these amounts directly to plaintiffs. n