Copyright 2004 ALM Properties, Inc. All Rights Reserved.  
New York Law Journal
September 2, 2004, Thursday
SECTION: DECISION OF INTEREST; Pg. 24

LENGTH: 4479 words

HEADLINE: Decision of Interest;
United States District Court, Southern New York;
Failure to Make Benefit Fund Contributions Results in 20 Percent Liquidated Damages Award

BODY:
Judge Katz

Mingoia v. Crescent Wall Systems - Plaintiffs, the trustees and fiduciaries of the Operative Plasterers' and Cement Masons' International Association ["OPCMIA"], Local 530 Welfare Fund, Apprenticeship Fund, Vacation Fund, and Training Fund ["the Funds"], and the Operative Plasterers' and Cement Masons' International Association, Local 530 AFL-CIO ["the Union"], bring this action under Section 301 of the Labor Management Relations Act [the "LMRA"], 20 U.S.C. §[185, and Sections 515 and 502[a][3] of the Employee Retirement Income Security Act of 1974, as amended ["ERISA"], 29 U.S.C. §[§[1132[a][3] & 1145, against Defendants Crescent Wall Systems ["Crescent"] and Dennis Engelfried ["Engelfried"], an officer of Crescent, for failure to make benefit fund contributions and pay dues to the Funds as required by various Collective Bargaining Agreements ["the Trade Agreements"]. Presently before the Court is Plaintiffs' motion for [1] summary judgment, seeking a determination that Defendants are jointly and severally liable to the Funds for benefit fund delinquencies and dues contributions, in the amount of $76,824.96, plus interest and liquidated damages; [2] a preliminary injunction, requiring Defendants to immediately pay the delinquencies and dues contributions to either the Funds, the Court, or an escrow agent appointed by the Court; [3] permanent injunctive relief requiring Defendants to abide by the terms of the Collective Bargaining Agreement and to make prompt payments of benefit fund contributions and dues to the Funds for the duration of this action; and [4] an award of attorneys' fees and costs. In their response to the motion, contained in a two-page affidavit, Defendants merely contend that if Plaintiffs' motion for summary judgment is granted, Plaintiffs' motion for a preliminary injunction is "cumulative and unnecessary," because it inappropriately seeks the ultimate remedy sought in this proceeding. [See Affidavit of David Greenhaus, Esq., dated June 22, 2004 ["Greenhaus Aff."].] They have lodged no substantive opposition to the summary judgment motion.

The parties have consented to proceed before this Court pursuant to 28 U.S.C. §[636[c].
 
Discussion

I. Summary Judgment Standard

Summary judgment is appropriate only when the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56[c]. In deciding a motion for summary judgment, the Court "must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor." Am. Cas. Co. of Reading, Pa. v. Nordic Leasing, Inc., 42 F.3d 725, 728 [2d Cir. 1994] [quoting Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 [2d Cir. 1993]]; see also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097, 2110 [2000] ["Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge."] [quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513 [1986]]; Hayut v. State Univ. of New York, 352 F.3d 733, 743 [2d Cir. 2003]. The moving party must "inform[] the district court of the basis for its motion" and identify the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553 [1986]. If the moving party meets this burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56[e].

A party opposing a motion for summary judgment "may not rest on the pleadings but must further set forth specific facts in the affidavits, depositions, answers to interrogatories, or admissions showing a genuine issue exists for trial." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 [2d Cir. 1996]; see also Fed. R. Civ. P. 56 [c], [e]; Celotex, 477 U.S. at 324, 106 S. Ct. at 2553. "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249, 106 S. Ct. at 2511; see also Hayut, 352 F.3d at 743. The nonmoving party may not rely on conclusory allegations or speculation to create disputed factual issues. See D'Amico v. City of New York, 132 F.3d 145, 149 [2d Cir.], cert. denied, 524 U.S. 911, 118 S. Ct. 2075 [1998]; Lipton v. Nature Co., 71 F.3d 464, 469 [2d Cir. 1995]. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S. Ct. at 2511 [citations omitted].

If the non-moving party fails to respond to a motion for summary judgment, then "summary judgment, if appropriate, shall be entered against" that party. Fed. R. Civ. P. 56[e]. However, "[t]he fact that there has been no response to a summary judgment motion does not, of course, mean that the motion is to be granted automatically." Champion, 76 F.3d at 486. Rather, "[s]uch a motion may properly be granted only if the facts as to which there is no genuine dispute 'show that the moving party is entitled to a judgment as a matter of law.' " Id. [quoting Fed. R. Civ. P. 56[e]]; see also Vermont Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 [2d Cir. 2004].

Under Local Civil Rule 56.1[c], "[a]ll material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement [of material facts] required to be served by the opposing party." If the non-moving party fails to respond to a summary judgment motion, then "the statements in [the movant's] Local Civil Rule 56.1 Statement of Material Facts are deemed admitted. If those facts show that summary judgment is appropriate, summary judgment should be granted." Sanchez v. Nat'l Cleaning Co., 11 F. Supp. 2d 453, 454 [S.D.N.Y. 1998][citing Champion, 76 F.3d at 486-87].
 
II. Undisputed Facts

Plaintiffs' submissions establish the following facts, which Defendants have not disputed.

Defendant Crescent is a drywall contractor, whose employees are members of the Union. Defendant Engelfried is an officer of Crescent who signed the collective bargaining agreements with the Union and agreed to be personally bound by the terms of the Trade Agreements. [See Affidavit of John Campanella, dated May 21, 2004 ["Campanella Aff."] § 2 & Ex. A.] The Funds are jointly administered labor-management trust funds established and maintained pursuant to the Trade Agreements, statute, and Declarations of Trust ["Trust Agreements"]. The purpose of the Funds is to receive and collect required fringe benefit contributions, and to provide various fringe benefits to eligible employees for whom Crescent, among others, contribute to the Funds pursuant to the Agreements. [See Compl. § § 4-5.] The Funds are authorized to maintain suit as independent legal entities, under ERISA. [See id. § 5.]

Pursuant to the Agreements, Defendants are required to remit monthly contributions to the Funds, in agreed amounts, for each hour of wages earned by employees engaged in employment within the jurisdiction of the Union. The Funds performed two audits of Defendants' payroll records for the period covering July 1, 2003 through March 15, 2004. The first audit, for the period July 1, 2003 through December 31, 2003, determined a delinquency to the Funds, as well as in union dues, in the amount of $71,793.84. [See Campanella Aff. Exs. B & D.] n1 Another audit, for the period of January 1, 2004 through March 15, 2004, determined a delinquency to the Funds in the amount of $8,180.27, and a delinquency in working dues in the amount of $783.67, for a total delinquency of $8,963.94. [See id.] Defendants made some payments toward the required contributions, leaving a balance owed of $70,092.72 for benefits contributions, working dues, and pension benefits. [See id.] n2 Plaintiffs concede that the amounts owed by Defendants to the Local 60 Pension Fund cannot be claimed in this action, since the Local 60 Pension Fund is not a party to this action. Thus, eliminating this deficiency in contributions for the Fund from the unpaid contributions to which Plaintiffs are entitled, yields a contribution deficit of $68,824.96. [See Campanella Aff. § 2 & n.1; id. Ex. D.] As of March 2004, Defendants had not paid any of that deficiency. [See Campanella Aff. § 2.]
 
III. ERISA Liability and Relief

A. Applicable Law

Section 515 of ERISA, 29 U.S.C. §[1145, provides that:

Every 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.

Section 502 of ERISA grants the trustees of an ERISA plan the right to bring an action in federal district court to enforce an employer's duty under Section 515. See 29 U.S.C. §[1132[a][3]; see also Laborers Health and Welfare Trust Fund For Northern California v. Advanced Lightweight Concrete Co., 484 U.S. 539, 547, 108 S. Ct. 830, 835 [1988]; Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310, 312-13 [2d Cir. 1990].

Section 502[g] of ERISA provides for various remedies against employers who have been delinquent in the meeting their contractual obligations. That provision provides in relevant part:

In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan -

[A] the unpaid contributions,

[B] interest in the unpaid contributions,

[C] an amount equal to the greater of -

[i] interest on the unpaid contributions, or

[ii] liquidated damages provided for under the plan in an amount not in excess of 20 percent[or such higher percentage as may be permitted under Federal or State law] of the amount determined by the court under subparagraph [A],

[D] reasonable attorney's fees and costs of the action, to be paid by the defendant, and

[E] such other legal or equitable relief as the court deems appropriate.

For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26.

29 U.S.C. §[1132[g][2].

"The legislative history of these provisions explains that Congress added these strict remedies to give employers a strong incentive to honor their contractual obligations to contribute and to facilitate the collection of delinquent accounts." Laborers Health and Welfare Trust Fund, 484 U.S. at 547, 108 S. Ct. at 835.

Accordingly, pursuant to ERISA, the Trade Agreements, and the Trust Agreements, Plaintiffs are entitled to a judgment against Defendants, jointly and severally, for unpaid contributions in the amount of $68,824.96. n3
 
B. Liquidated Damages and Interest

Plaintiffs also seek interest on the delinquent payments and liquidated damages equal to 20 percent of the delinquency. Each of these remedies is provided for in the statute. In addition, Article 7, Section 11 of the Trade Agreement contains a clause whereby the employer [Crescent] agrees to be bound by the Funds' Declaration of Trust Agreements. [See Campanella Aff. Ex. A, Trade Agreement, effective July 1, 2002 to January 31, 2006, at 19.] Article VIII, Section 2 of the Trust Agreement for the OPCMIA Local 530 Welfare Fund provides:

In any action under subsection [A] [to compel payment of contributions] in which judgment is awarded in favor of the Welfare Fund, the Employer shall pay to the Welfare Fund, in accordance with the Court's award

[I] the unpaid contributions, plus

[II] interest on the unpaid contributions, determined at the rate of the Citibank prime rate, plus two percent [2 percent], plus

[III] liquidated damages equal to the greater of

a. the amount of interest charges of the unpaid contributions, or

b. twenty [20 percent] percent of the unpaid contributions, plus

[IV] reasonable attorneys' fees and costs of the action, and

[V] such other legal and equitable relief as the Court deems appropriate.

Moreover, Article VII, Section 8 of the Trade Agreement provides for increments of liquidated damages where [1] there is a failure by an employer to make timely contributions [5 percent], [2] an audit is required and there is a determination that there has been a deficiency in contributions which is not paid within thirty days after notice [5 percent], [3] the employer's account is referred to legal counsel for collection of delinquent payments [5 percent], and [4] litigation is commenced to secure the payment of delinquent contributions [5 percent]. Thus, the right to secure liquidated damages in the amount of 20 percent is consistent with the Agreements to which Defendants are bound, as well as with the remedial provision of ERISA. Accordingly, Plaintiffs are entitled to an award of liquidated damages in the amount of $13,764.99 [20 percent of $68,824.96].

Plaintiffs also seek, and are entitled to, interest on the delinquent contributions at the rate of 6 percent. [See Trade Agreement, Article VII, Sections 13 & 16; Trust Agreement, Article VIII, Section 2 [interest at the Citibank prime rate plus 2 percent]. n4 Accordingly, the interest owed on the delinquent contributions is $4,129.50 [6 percent of $68,824.96].

The total amount of statutory damages which Defendants are obligated to pay to the Funds for delinquent contributions, liquidated damages, and interest is $86,719.45.
 
IV. Attorneys' Fees

Finally, Plaintiffs seek attorneys' fees. In their motion, Plaintiffs sought fees in the amount of $7,000, based upon twenty hours of attorney time, at an hourly rate of $350. [See Plaintiffs' Memorandum of Law in Support of Motion for Summary Judgment, at 15 & notes 14 & 15.] However, contrary to the requirement in this Circuit, Plaintiffs failed to support their fee request with contemporaneous time records. That failure alone would have been sufficient reason for the Court to decline to award any attorneys' fees. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939 [1983]; Lewis v. Coughlin, 801 F.2d 570, 577 [2d Cir. 1986] New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 [2d Cir. 1983]. Nevertheless, the Court afforded Plaintiffs a further opportunity to supplement their fee request with supporting documentation. Rather than simply doing so, however, Plaintiffs chose to revise their fee demand to seek $30,275 in fees - more than four times the amount requested in their motion. In addition, Plaintiffs' counsel advised the Court that his client had been billed at the hourly rates of $250 and $325 respectively, in contrast to the $350 hourly rate sought in the motion. [See Letter from Raquel A. Williams, Esq., dated July 23, 2004.] Plaintiffs' attorneys have not even proffered an explanation for their inconsistent positions, and the Court declines to reward their casual indifference to the accuracy of representations made to the Court. n5 Accordingly, Plaintiffs will be awarded $10,400 in attorneys' fees, which is more than was originally requested, but is based upon thirty-one hours of compensable time [approximately one-third of the hours documented in counsel's records], at a rate of $325 per hour. n6 Counsel's billing rate falls comfortably within the range of hourly billing rates of attorneys who are partners in small to medium-sized firms in the New York area, and who, as does Plaintiffs' counsel, have at least ten years of ERISA litigation experience. See Trustees of the Eastern States Health and Welfare Fund v. Crystal Art Corp., No. 00 Civ. 0887 [NRB], 2004 WL 1118245, at 6 [S.D.N.Y. May 19, 2004] [approving $350 per hour for named partner with approximately thirty years of litigation experience; $275 per hour for another partner; and $200 per hour for associates with from four to ten years of experience]; Veltri v. Building Service 32B-J Pension Fund, No. 02 Civ. 4200 [HB], 2004 WL 856329, at 4 [S.D.N.Y. Apr. 20, 2004] [approving hourly rate of $325]; Trustees of the Elevator Division Retirement Benefit Plan v. Premier Elevator Co., No. 03 Civ. 2703 [RLC][AJP], 2003 WL 22127912, at 3 & n.4 [S.D.N.Y. Sept. 16, 2003][approving rate of $220 per hour]; I.L.G.W.U. Nat'l Retirement Fund v. ESI Group, Inc., No. 92 Civ. 0597 [PKL], 2003 WL 135797, at 3 [S.D.N.Y. Jan. 17, 2003] [approving rate of $350 per hour for partner with over twenty years of experience, where work was "first rate"].

The total attorneys' fee award is $10,400.
 
V. Injunctive Relief

Plaintiffs seeks a preliminary injunction requiring Defendants to immediately pay to the Fund, the Court, or to an escrow agent appointed by the Court, the outstanding delinquency, which the Court has determined to be $68,824.96. Plaintiffs further seek a permanent injunction requiring Defendants to make payments to the Funds as they become due, and restraining Defendants from violating the benefit fund contribution provisions of the Agreements with the Union, for the duration of this action. [See Campanella Aff. § § 1, 6.]

There can be no doubt that ERISA authorizes courts to provide injunctive relief for nonpayment of employee benefit fund contributions. See 29 U.S.C. §[1132[a][3][A] ["A civil action may be brought ... [3] by a participant, beneficiary, or fiduciary, [A] to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or [B] obtain other appropriate equitable relief."]; see also Demolition Workers Union v. Mackroyce Contracting Corp., No. 97 Civ. 4094 [LMM], 2000 WL 297244, at 8 [S.D.N.Y. Mar. 22, 2000]; Mason Tenders District Council v. Envirowaste and Transcontractors, Inc., No. 98 Civ. 4040 [DC], 1999 WL 370667, at 3 [S.D.N.Y. June 7, 1999]; Chartier v. J&F Mgmt. Corp., No. 92 Civ. 7272 [PNL], 1992 WL 367115, at 4 [S.D.N.Y. Nov. 25, 1992].

A party is entitled to a preliminary injunction if it demonstrates [1] it will suffer irreparable harm in the absence of an injunction, and [2] either [a] it will likely be successful on the merits, or [b] there are sufficiently serious questions on the merits making them fair ground for litigation, and the balance of hardships decidedly favors the moving party. See Rosen v. Siegel, 106 F.3d 28, 32 [2d Cir. 1997]; Inverness Corp. v. Whitehall Labs., 819 F.2d 48, 50 [2d Cir. 1987].

Plaintiffs have failed to demonstrate that preliminary relief is required in this action. By their motion, they have sought a determination that Defendants are liable to the Funds in a sum specific. As far as the Court can discern, and Plaintiffs have not demonstrated otherwise, by the instant decision Plaintiffs shall receive all of the relief in this action to which they are entitled under the Complaint. [See Compl. § § 13, 18, 22.] The amount which this Court has found to be owing to the Funds encompasses audits of Defendants' payroll records through March 15, 2004. Although Plaintiffs suggest that Defendants may be responsible for additional contributions for the period following March 15, 2004, any such liability has not yet been determined and is not the subject of the Complaint. Cf. Demolition Workers Union, 2000 WL 297244, at 10 ["The complaint in this action seeks the recovery of ... delinquencies arising under the CBA covering the period from February 15, 1993 through June 30, 1997. If the Funds wish to pursue later delinquencies, they must initiate a separate action."]. Indeed, in his moving affidavit, the Fund Administrator states that his affidavit is submitted "in support of the plaintiffs' motion for summary judgment or, if summary judgment is denied, preliminary injunctive relief requiring the defendants to immediately to pay all outstanding employee benefit fund delinquencies ... ." [Campanella Aff. § 1 [emphasis added].]

It follows that if this Court enters a judgment for Plaintiffs, which it intends to do upon the issuance of this Opinion, Plaintiffs will be unable to demonstrate any irreparable injury. Moreover, inasmuch as Defendants have represented that they recently made delinquency payments to the Funds in the amount of $58,808.92, and are prepared to assign a percentage of their accounts receivable to satisfy the remaining amounts owed to the Funds, the potential harm to the Funds and their beneficiaries, resulting from Defendants' delinquent payments, has diminished. [See Letter from David Greenhaus, Esq., dated Aug. 5, 2004.] Accordingly, Plaintiffs' motion for a preliminary injunction is denied.

In light of Defendants' past failures to make required contributions, including their failure to comply with a Consent Order providing for a payment schedule, and the threat of termination of employee benefits if employer contributions are not timely made [see Campanella Aff. § 6], permanent injunctive relief is justified. See I.B.E.W. Local No. 910 Welfare Annuity, and Pension Funds v. Dexelectrics, Inc., 98 F. Supp. 2d 265, 277 [N.D.N.Y. 2000]; Mason Tenders District Council, 1999 WL 370667, at 3 [providing for prospective injunctive relief]; Schuck v. Phoenix Service Techs., No. 96 Civ. 1575, 1996 WL 705267, at 4 [E.D.N.Y. Nov. 22, 1996][same]. Accordingly, Defendants are permanently enjoined from violating the employee benefit fund contribution provisions of the Trade Agreements, and are directed to pay the required contributions to the Funds as they become due.
 
Conclusion

For the reasons set forth above, Plaintiffs' motion for summary judgment is granted and a judgment shall be entered against Defendants, jointly and severally, in the amount of $96,719.45, less any delinquency payments which Defendants have remitted to the Funds since the instant motion was filed. Plaintiffs' motion for a preliminary injunction is denied, but its motion for permanent injunctive relief is granted. By August 30, 2004, Plaintiffs shall submit a proposed judgment, on notice to Defendants, setting forth the relief provided in this Opinion, with offsets for any delinquency payments which have been made since the motion was filed, as well as any other relief agreed to by the parties. Defendants shall submit any objections to the proposed judgment by September 3, 2004.

So Ordered.



n1 An earlier audit had determined a deficiency in contributions in the amount of $97,838.02, for the period of April 1, 2002 through December 31, 2002. Litigation was brought about that deficiency and a Stipulation and Consent Order was entered resolving the action. [See Campanella Aff. Ex. C.] It appears that Defendants breached the Consent Order and failed to make required payments to the Funds, but that dispute is not before this Court. [See Campanella Aff. § 4.]


n2 Although Plaintiffs contend that Defendants are liable for $76,824.96 in unpaid contributions [see Campanella Aff. § § 2-3], the audit reports indicate that for the period of July 1, 2003 through March 2004, Defendants owe unpaid contributions in the amount of $68,824.96. Plaintiffs seek an additional $8,000 based upon their estimate of how much Defendants will owe for the period of April through June 2004. The Court cannot enter a judgment based upon an estimate for an audit period which is not the subject of the Complaint.


n3 Although the Funds reserved the right to supplement their motion with evidence of additional deficiencies, they have not done so. Judgment will therefore be entered based upon the deficiencies determined in the audits.


n4 The prime rate over the past year has 4.00 percent. See Money Rates, Wall St. J., Mar. 31, 2004, at C15; Money Rates, Wall St. J., Dec. 31, 2003, at C11; Money Rates, Wall St. J., July 1, 2003, at C17.


n5 Defendants' counsel argues that Plaintiffs' counsel had represented on several occasions that the attorneys' fees incurred were approximately $10,000, and "that number was a factor [he] relied upon in not opposing the summary judgment motion." [Letter from David Greenhaus, Esq., dated July 27, 2004.]


n6 Although counsel now represents that prior to January 2004, Plaintiffs were billed at the rate of $250 per hour, the vast majority of the work on this action, as reflected in the time records, occurred after January 2004, when Plaintiffs were billed at the rate of $325 per hour. n