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Boards of Trustees of the Operating Engineers Local 825 Welfare Fund v. Robert Silagy Landscaping Inc.

November 9, 2006

THE BOARDS OF TRUSTEES OF THE OPERATING ENGINEERS LOCAL 825 WELFARE FUND, OPERATING ENGINEERS LOCAL 825 PENSION FUND, OPERATING ENGINEERS LOCAL 825 ANNUITY FUND, OPERATING ENGINEERS LOCAL 825 SAVINGS FUND, OPERATING ENGINEERS LOCAL 825 SUPPLEMENTAL UNEMPLOYMENT FUND, OPERATING ENGINEERS LOCAL 825 APPRENTICESHIP AND TRAINING FUND, PLAINTIFFS,
v.
ROBERT SILAGY LANDSCAPING INC. D/B/A OR T/A SILAGY LANDSCAPING DEFENDANTS.



The opinion of the court was delivered by: Lifland, District Judge

OPINION

Plaintiffs, the Boards of Trustees of the Operating Engineers Local 825 Welfare Fund, Operating Engineers Local 825 Annuity Fund, Operating Engineers Local 825 Savings Fund, Operating Engineers Local 825 Supplemental Unemployment Fund, and Operating Engineers Local 825 Apprenticeship and Training Funds (collectively "Plaintiffs"), petition this Court for entry of default judgment pursuant to Federal Rule of Civil Procedure 55(b) against Defendant Robert Silagy Landscaping Inc. ("Silagy"). For the reasons stated herein, Plaintiffs' motion is granted in whole as to liability and in part as to damages.

I. Background

Local 825 is a New Jersey labor organization affecting commerce within the meaning of the Labor Management Relations Act ("LMRA") 29 U.S.C. § 4 et seq. (Compl. ¶ 3; Affidavit of Joseph Whittles*fn1 ("Whittles Aff.") ¶ 2.) Operating Engineers has its principal office in New Jersey and manages several fringe benefit plans (the "Funds") which are "welfare plans," "pension plans," and "employee benefit plans" within the meaning of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002(1), (2), and (3). (Compl. ¶ 5; Whittles Aff. ¶ 3.) The Funds are managed by a Board of Trustees whose Trustees are composed of Union and Employer representatives and are fiduciaries within the meaning of ERISA. (Compl. ¶¶ 5-6; Whittles Aff. ¶¶ 4-5.) Silagy is a corporation that conducts business in New Jersey and an employer in an industry affecting commerce within the meaning of the LMRA. (Compl. ¶ 7; Whittles Aff. ¶ 6.)

During the calendar year 2005, Local 825 and Silagy were parties to a collective bargaining agreement ("CBA") that required Silagy to remit weekly contributions to the Funds on behalf of all employees covered by the CBA. (Compl. ¶¶ 9, 10; Whittles Aff. ¶¶ 7, 8, Ex. A.) The CBA also required Silagy to deduct from its employees' wages and remit to Local 825 a work assessment for Local 825 union dues and contributions to Local 825's Political Action Committee. (Compl. ¶¶ 12, 13; Whittles Aff. ¶¶ 10, 11.) The CBA incorporated by reference the terms of the Trust Agreements of the Funds which allowed the Funds to audit the payroll and financial records of employers participating in the Funds. (Compl. ¶ 11; Whittles Aff. ¶¶ 9, 12.) In an action to collect delinquent contributions, the CBA and the Trust Agreement also entitled the Funds to collect interest (at a rate of 2% above prime rate), liquidated damages of 20%, attorneys' fees, costs and auditor's fees. (Whittles Aff. ¶ 13, Ex. B, C, D.)

The Funds audited Silagy's payroll records covering the periods from January 1, 2005 through December 31, 2005. (Whittles Aff. ¶ 14.) These audits revealed that Silagy was delinquent in its contributions to the Funds for the calendar year 2005, and the Funds so notified Silagy by letter dated February 23, 2006. ( Whittles Aff. ¶¶ 15-16, Ex. D.) Plaintiffs claim the audit demonstrated that Silagy owes the Funds $16,068.91. (Whittles Aff. ¶ 17.)

Plaintiff filed this action on April 18, 2006. They seek $16,068.91 in delinquent funds and $803.45 in interest for a total of $16,872.36.*fn2 Plaintiffs also seek attorney's fees and costs. The record indicates that Defendant was properly served with process on April 25, 2006. Defendants failed to answer or otherwise plead with respect to the Complaint as required by Rule 12(a). On June 19, 2006, Plaintiffs petitioned the Clerk of the Court for an entry of default against Defendants pursuant to Rule 55(a). On June 19, 2006, the Clerk of the Court entered Default against Defendant for failure to appear. On September 8, 2006, Plaintiffs submitted the instant motion, seeking default judgment against Defendant. The record indicates that Plaintiffs served Defendant with notice of its motion.

II. Discussion

A. Default Judgment

i. Standard of Review

Federal Rule of Civil Procedure 55(b)(2) governs the Court's entry of default judgment. The party against whom default judgment is requested must have been properly served with process. Fed. R. Civ. P. 55(b)(2); Local Union No. 98, Int'l Bd. of Elec. Workers v. Cableco, Inc., No. 99-755, 1999 WL 269903, at *1 (E.D. Pa. Apr. 28, 1999). Before a default judgment may be entered by the court, the moving party must have obtained an entry of default pursuant to Rule 55(a); see Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1226 (3d Cir. 1993); 10A Wright, Miller, & Kane, Federal Practice and Procedure, § 2682, at 13 (3d ed. 1998).

A party seeking default judgment is not entitled to such relief as a matter of right, however, even where the defendant was served with process, and where the default has been noted pursuant to Rule 55(a). See, e.g., Local Union No. 98, IBEW v. Cableco, Inc., No. 99-0755, 1999 U.S. Dist. LEXIS 7024, at *3 (E.D. Pa. Apr. 28, 1999) (citing Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1303 (3d Cir. 1995)). Rather, a court is "required to exercise sound judicial discretion in deciding whether to . . . enter default judgment." Id. Default judgment is generally disfavored because it prevents resolution of a plaintiff's claims on the merits. Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984). Thus, when considering a motion for default judgment, a court may consider the following factors: the potential amount of damages; whether issues of material fact or substantial public concern are implicated; whether the default is primarily technical; whether the moving party has been substantially prejudiced by the delay involved; whether the grounds for default are clearly established or in doubt; whether the default was attributable to good faith, mistake, or excusable neglect; and whether the court may later be obliged to set aside the default. Franklin v. Nat'l Maritime Union of Am., No. 91-0480, 1991 U.S. Dist. LEXIS 9819, at *1 (D.N.J. July 16, 1991) (citing 10 Wright, Miller & Kane, Federal Practice and Procedure § 2685 (1983)), aff'd, 972 F.2d 1331 (3d Cir. 1992). "A default judgment entered by the court binds the party facing the default as having admitted all of the well pleaded allegations in the plaintiff's complaint." Angelo Iafrate Constr., LLC v. Potashnick Constr., Inc., 370 F.3d 715, 722 (8th Cir. 2004) (citing Fed. R. Civ. P. 55(b)(2)).

ii. Plaintiffs are Entitled to Default Judgment as to Silagy's Liability

Here, the record indicates that Plaintiffs effectuated service of process on Defendant. Default was entered by the Clerk. Furthermore, although notice of the instant motion is not required in order to enter a default judgment under Rule 55(b)(2), the record indicates that Defendant was served with notice of the instant motion for default judgment and with supporting documents on or about September 8, 2006, via first class mail. Thus, the Court is satisfied ...


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