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U.A. Local 322 Pension Fund v. Direct Air LLC

United States District Court, D. New Jersey

November 21, 2017

U.A. LOCAL 322 PENSION FUND, NO. 322 PENSION FUND, et al. Plaintiffs,
DIRECT AIR LLC, d/b/a Direct Air, LLC d/b/a Direct Air Heating & Cooling, Defendant.


          JEROME B. SIMANDLE, U.S. District Judge

         This matter comes before the Court on the motion of Plaintiffs U.A. Local 322 Pension Fund[1], its associated benefit funds[2] and South Jersey Mechanical Contractors Association, Inc. (hereinafter, “Plaintiffs”) for default judgment.[3] Plaintiffs brought this suit against Defendant Direct Air, LLC, alleging that Defendant failed to submit timely remittance reports and contributions, due under a collective bargaining agreement between the parties, for the periods August 2015 through January 2016, June 2016, December 2016 and January 2017. Because Defendant has not answered or otherwise responded to Plaintiffs' Complaint, Plaintiffs now seeks default judgment against it under Fed.R.Civ.P. 55(b). For the reasons that follow, Plaintiffs' unopposed motion for default judgment will be granted, and the Court will enter a Default Judgment in favor of Plaintiff and against Defendant in the amount of $10, 498.73. Moreover, the Court will order that Defendant submit to an audit in order to ascertain any remaining delinquent contributions owed to Plaintiffs.

         The Court finds as follows:

         1. Factual and Procedural Background.

         Plaintiffs filed a Complaint [Docket Item 1] on June 27, 2016, alleging that Defendant employer Direct Air LLC neglected to make timely contributions to employee benefit plans as required under the terms of a Collective Bargaining Agreement ("CBA"), in violation of Section 515 of ERISA, 29 U.S.C. § 1145. [Docket Item 6-2 ¶ 10.] The Labor Agreement[4] requires all signatory employers to submit monthly contributions to the Benefit Plans by the fifteenth (15th) of every month following the month in which the work has been performed. The Labor Agreement further provided for interest, costs and reasonable attorneys' fees, stating that:

“if the contributions are not submitted by that date, that interest on the outstanding contributions accrue from the due date of the delinquent contributions at the rate of prime plus two percent (2%) which rate shall be established and reestablished on January 1 and July 1 of each year as published by the Wall Street Journal. Delinquent companies are also responsible for all costs of collection including reasonable attorneys' fees incurred in collection efforts. If the delinquent contributions are still outstanding for ten (10) days or more from the date of the first notice of delinquency, liquidated damages in the amount of ten percent (10%) of the delinquent contributions are immediately assessed.”

[Docket Item 6-2 ¶ 7](internal citations omitted). Plaintiffs allege that they are without sufficient information or knowledge to plead the precise nature, extent and amount of the Defendant's delinquency because the books, records and information necessary to determine this liability are in the exclusive possession, custody and control or knowledge of the Defendant. As a result of these allegations, Plaintiffs seek both legal and equitable relief. Plaintiffs seek at least the amount of $4, 610.29[5] in liquidated damages and interest plus any additional amounts which may become due during the pendency of this lawsuit together with any amounts revealed by an audit, late charges, interest at the rates prescribed by 26 U.S.C. §6621 from the due date for payment until the date of actual payment, liquidated damages equal to the greater of the interest on the unpaid contributions or liquidated damages at ten percent as provided by the documents governing the Funds or statute, the cost of an audit and reasonable attorneys' fees and costs incurred in this action or the collection or enforcement of any judgment as provided under the Labor Agreement.

         In order to determine the precise amount of delinquent contributions owed to Plaintiffs, Plaintiffs specifically seek equitable relief in the form of an injunction enjoining “Defendant, its officers, agents, servants, employees, attorneys and all others in active concert or participation with them to permit an audit of all records under the actual or constructive control of the Defendant and, in the absence of records, to cooperate in alternative methods for the determination of work for which contributions are due for the period January 1, 2012 through the present.” (Compl. ¶¶ 26-33.)[6]

         2. The Complaint together with the summons was served upon Sal Toarmina, the purported owner of Direct Air LLC, on August 17, 2016 at 2431 Reed Street, Philadelphia, PA 19146. [See Docket Item 4.] Defendant filed no response to Plaintiffs' Complaint, and the Clerk of Court accordingly entered default against Defendant on September 14, 2016.[7] Plaintiffs' motion for default judgment followed, to which Defendant has not filed a response. [See Docket Item 7.]

         3. In support of the pending motion, Plaintiff filed an affidavit from John Shaloo, the Administrator of the benefits plans for Plumbers & Pipefitters Local Union 322 of Southern New Jersey. [Docket Item 6-2.] The affidavit provides that, in the course of his standard review of the business records, Shaloo identified that Defendant submitted June 2015 and July 2015 contributions on September 21, 2015. (Id. at ¶ 8.) Pursuant to the aforementioned provisions of the agreement, a total of $963.84 was assessed in liquidated damages and interest for the untimely submitted contributions and remittance reports. (Id.) Moreover, Shaloo noted that, since the filing of the Complaint, Defendant submitted remittance reports and contributions for the months of July 2016 through November 2016. (Id.) A total of $3, 646.36 was assessed for that time period in interest and liquidated damages. (Id.) Lastly, Shaloo noted that Defendant “failed to timely submit contractually-required contributions for the periods August 2015 through January 2016, June 2016, December 2016 and January 2017.” (Id. at ¶ 10.)

         4. Standard of Review.

         Federal Rule of Civil Procedure 55(b)(2) authorizes courts to enter a default judgment against a properly served defendant who fails to a file a timely responsive pleading. See Fed.R.Civ.P. 55(b)(2); see also Chanel v. Gordashevsky, 558 F.Supp.2d 532, 535 (D.N.J. 2008) (citing Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d 168, 177 n.9 (3d Cir. 1990)). A party seeking default judgment is not entitled to relief as a matter of right; the Court may enter default judgment “only if the plaintiff's factual allegations establish the right to the requested relief.” Ramada Worldwide Inc. v. Courtney Hotels USA, LLC, Case No. 11-896, 2012 WL 924385, at *3 (D.N.J. Mar. 19, 2012) (internal quotations and citation omitted). Thus, before granting default judgment, a court must determine: (1) whether the plaintiff produced sufficient proof of valid service and evidence of jurisdiction, (2) whether the unchallenged facts present a sufficient cause of action, and (3) whether the circumstances otherwise render the entry of default judgment “proper.” Teamsters Health & Welfare Fund of Phila. v. Dubin Paper Co., No. 11-7137, 2012 WL 3018062, at *2 (D.N.J. July 24, 2012) (internal citations omitted). A court must accept as true every “well-pled” factual allegation of the complaint, but no presumption of truth applies to the plaintiff's legal conclusions or factual assertions concerning damages. Comdyne I. Inc. v. Corbin, 908 F.2d 1149 (3d Cir. 1990); 10 C. Right, A. Miller, & M. Kane, Federal Practice and Procedure (2d ed. 1983), § 2688, at 444. The Court addresses each element in turn.

         5. Subject Matter Jurisdiction.

         Although a breach of contract would normally be a state law cause of action, see generally Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994), because this involves enforcement of rights under ERISA, this Court has federal question subject matter jurisdiction. See Bd. of Trustees of Hotel & Rest. Employees Local 25 v. Madison Hotel, Inc., 97 F.3d 1479, 1487 (D.C. Cir. 1996).

         6. Legitimate Cause of Action - Breach of Collective Bargaining Agreement.

         The Court readily finds that Plaintiff has asserted a valid cause of action for breach of contract. To make out a claim for breach of contract under New Jersey law, a plaintiff must allege that (1) there is a contract between the parties; (2) the contract was breached; (3) the breach caused damages; and (4) the party stating the claim performed its own contractual obligations. Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007) (citing Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc., 210 F.Supp.2d 552, 561 (D.N.J. 2002)). Here, Plaintiffs have alleged the existence of a contract, specifically the Collective Bargaining Agreement. (Compl. ¶ 15.) Plaintiffs have alleged that Defendant breached the terms of the Agreement by failing to make timely contributions to Plaintiffs on a monthly basis. (Compl. ¶ 20.) The Plaintiffs have sufficiently claimed resulting harm from this ...

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