Int'l Ass'n of Sheet Metal, Air, Rail & Transp. Workers v. Lovejoy Metals, Inc., 1:19-CV-00299 EAW

495 F.Supp.3d 174

INTERNATIONAL ASSOCIATION OF SHEET METAL, AIR, RAIL & TRANSPORTATION WORKERS, LOCAL UNION NO. 71, et al., Plaintiffs,

v.LOVEJOY METALS, INC. and David F. Zakroczemski, individually, Defendants.

1:19-CV-00299 EAW

United States District Court, W.D. New York.

Signed October 15, 2020

Robert L. Boreanaz, Lipsitz Green Scime Cambria LLP, Buffalo, NY, for Plaintiffs.

DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge

INTRODUCTION

This action was commenced by plaintiffs International Association of Sheet Metal, Air, Rail & Transportation Workers, Local Union No. 71 (the "Union"); John Helak, Jeffrey Meyer, Michael Emiliani, Paul Crist, Richard Wagner, Andrew Nowak, David Nieman, and Robert Beck, as Trustees of the Sheet Metal Workers Local Union No. 71 Health and Welfare Trust Fund (the "Health and Welfare Fund"), the Sheet Metal Workers Local Union No. 71 Pension Fund (the "Pension Fund"), and the Sheet Metal Workers Local Union No. 71 Annuity Fund (the "Annuity Fund"); and John Helak, Brian Handzlik, Edward Bender, Jr., Paul Crist, Richard Delotto, Andrew Nowak, Tom Debalski, and David Nieman, as Trustees of the Sheet Metal Contractors and Local No. 71 J.A.C. Education and Training Fund (the "Training Fund") (collectively "Plaintiffs").¹ (Dkt. 1). Plaintiffs seek relief from defendants Lovejoy Metals, Inc. ("Lovejoy") and David Zakroczemski ("Zakroczemski") (collectively "Defendants"), arising from alleged violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1002 et seq. ("ERISA"), Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 ("LMRA"), and New York State common law, based on Defendants’ failure to remit required contributions to the Union. (See id. ).

Because Defendants have not appeared in this action, upon Plaintiffs’ request (Dkt. 5), the Clerk of Court issued an entry of default as to Defendants on August 20, 2019 (Dkt. 6). On August 23, 2019, Plaintiffs filed their first motion for default judgment. (Dkt. 7). By Decision and Order dated December 18, 2019, the Court denied the motion without prejudice, finding that Plaintiffs’ motion failed to articulate sufficiently the factual and legal bases for the relief sought. (Dkt. 12). Currently before the Court is Plaintiffs’ second motion for default judgment. (Dkt. 13). For the reasons set forth below, the motion is granted in part and denied in part.

BACKGROUND

I. Factual Background

The following facts are taken from Plaintiffs’ Complaint and motion papers and are accepted as true in light of Defendants’ default. See Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contrs. Inc. , 699 F.3d 230, 234 (2d Cir. 2012) ("[A] party's default is deemed to constitute a concession of all well pleaded allegations of liability ...").

The Union, a labor organization representing employees, maintains an office in Erie County, New York. (Dkt. 1 at ¶ 7; Dkt. 13-1 at 2). The Funds are jointly administered, multi-employer, labor-management trust funds established and maintained in accordance with various collective bargaining agreements pursuant to 29 U.S.C. §§ 186(c)(5) and 186(c)(6), employee benefit plans within the meaning of 29 U.S.C. § 1002(1), (2) (3), and multi-employer plans within the meaning of 29 U.S.C. §§ 1002(37) and 1145. (Dkt. 1 at ¶¶ 9-13; Dkt. 13-1 at 2-3).² Various collective bargaining agreements between the Union and signatory employers permit the Union to collect Working Assessments, P.A.L. Political Fund contributions, Vacation and Holiday Account contributions, and other fringe benefit contributions, which are deducted by employers from their employees’ wages and remitted to the Union. (Dkt. 1 at ¶¶ 8, 11; Dkt. 13-1 at 2).

Lovejoy is a domestic corporation doing business in Erie County, New York, and Zakroczemski is the President of Lovejoy. (Dkt. 1 at ¶¶ 19, 21; Dkt. 13-1 at 3). On behalf of Lovejoy, Zakroczemski signed a signatory sheet to a Collective Bargaining Agreement ("CBA") with the Union. (Dkt. 1 at ¶ 22; Dkt. 1-4; Dkt. 13-1 at 3).³ By Zakroczemski's execution of the signatory sheet, Lovejoy became a signatory contractor with the Union, agreeing to: comply with, abide by, and be bound by all provisions of the CBA between it and the Union, including any modifications, extensions, or renewals of the CBA (Dkt. 1 at ¶¶ 23, 24; Dkt. 1-5 at 26; Dkt. 1-6 at 25; Dkt. 13-1 at 3); become a party to and be bound by all the terms and provisions of the Agreements and Declarations of Trust for the Funds (the "Trust Agreements"); and make its required payments to the Funds (Dkt. 1 at ¶¶ 28-37; Dkt. 1-5 at 11-19; Dkt. 1-6 at 12-18; Dkt. 13-1 at 3).

The Trust Agreements authorize the Trustees to demand employer contributions and to take any necessary steps to collect such payments, including the commencement of legal proceedings. (Dkt. 1 at ¶ 31; Dkt. 13-1 at 3). The Funds set forth the terms and conditions that govern the employers’ obligations to make contributions to the Funds. (Dkt. 1 at ¶ 37; Dkt. 13-1 at 3-4).

The Trustees executed a Collections Policy in 2014, which requires employers to remit payments due to the Funds by the 15^th day of the month immediately following the month during which the hours requiring contributions were worked. (Dkt. 1 at ¶¶ 38, 40; Dkt. 1-11 at 3; Dkt. 13-1 at 3-4). In 2017, the Trustees revised the Collections Policy, and required employers to remit payments due to the Funds by the 10^th day of the month immediately following the month during which the hours requiring contributions were worked. (Dkt. 1 at ¶¶ 39, 42; Dkt. 1-12 at 3; Dkt. 13-1 at 4). The 2017 Collections Policy directs that employers who fail to timely remit the requisite contributions to the Funds are assessed interest equal to one percent (1%) per month, compounded daily, to run from the due date on the amount of the delinquency until the delinquency is paid in full, in addition to ten percent (10%) of the entire delinquent amount in liquidated damages, and all fees and costs incurred by the Funds in collecting delinquent contributions. (Dkt. 1 at ¶ 43; Dkt. 1-12 at 3-4; Dkt. 13-1 at 4).

On April 18, 2016, Plaintiffs provided Zakroczemski with notice of Lovejoy being in default for failure to make payment of its required contributions. (Dkt. 1 at ¶ 46; Dkt. 1-14; Dkt. 13-1 at 4). In February 2017, an audit was performed of Lovejoy's payroll records by Arcara Zucarelli Lenda & Associates PC ("February 2017 Audit") for the periods of January 30, 2012, through April 22, 2012, and January 1, 2015, through September 30, 2016. (Dkt. 1 at ¶ 47; Dkt. 1-15; Dkt. 13-1 at 4). The February 2017 Audit found no delinquencies for the period of January 30, 2012 through April 22, 2012, but that for the period of January 1, 2015, through September 30, 2016 ("2015-2016 Period") Lovejoy owed a total of $54,092.77. (Dkt. 1 at ¶¶ 48-50 ($43,108.18 in unremitted employee fringe benefit contributions,⁴ $6,673.76 in interest calculated through April 30, 2017, and $4,310.83 in penalties); Dkt. 1-15 at 2; Dkt. 13-1 at 4-5; Dkt. 13-8 at ¶ 11). The February 2017 Audit also concluded that Lovejoy paid a total of $12,388.19 for overreported hours worked for that same period. (Dkt. 1 at ¶ 51; Dkt. 1-15 at 2; Dkt. 13-1 at 5; Dkt. 13-8 at ¶ 11). On March 20, 2017, Lovejoy was provided with a copy of the February 2017 Audit by e-mail, which included a summary of the audit and notice to Lovejoy that it owed $41,704.58 (calculated by $54,092.77 (unremitted contributions plus interest and liquidated damages) less $12,388.19 (in overpaid contributions)). (Id. at ¶ 52; Dkt. 1-16 at 2; Dkt. 13-1 at 5).

On May 25, 2017,⁵ Plaintiffs sent Zakroczemski a letter outlining Lovejoy's outstanding obligations and a proposed Forbearance Agreement and Affidavit of Confession. (Dkt. 1 at ¶ 53; Dkt. 1-17; Dkt. 13-1 at 5). On or about July 3, 2017, Tom Helak (Business Manager of the Union), the Trustees (on behalf of the Funds), and Zakroczemski (on behalf of Lovejoy) entered into the Forbearance Agreement. (Dkt. 1 at ¶ 54; Dkt. 1-18; Dkt. 13-1 at 5). Pursuant to the Forbearance Agreement, Lovejoy conceded that it is bound by the CBA and federal statute to pay the required contributions in addition to interest, penalties, liquidated damages, and attorneys’ fees if it did not timely pay the required contributions to the Funds and union dues as required. (Dkt. 1 at ¶¶ 56, 57; Dkt. 1-18 at ¶ 1; Dkt. 13-1 at 5). Lovejoy also admitted its indebtedness to the Union and the Funds for a total of $46,056.45 in required contributions and union dues, in addition to interest, fees, and audit costs. (Dkt. 1 at ¶ 57; Dkt. 1-18 at ¶ 1; Dkt. 13-1 at 5). As part of the Forbearance Agreement, Plaintiffs agreed to accept a "Settlement Amount" of $51,927.48, which included interest, but an agreement to forbear penalties, damages, and fees on the condition that Defendants complied with its obligations. (Dkt. 1 at ¶¶ 58-59; Dkt. 1-18 at ¶ 1). Lovejoy agreed to a payment schedule requiring eleven monthly payments of $4,327.00, and a final payment of $4,330.48. (Dkt. 1 at ¶ 60; Dkt. 1-18 at ¶ 3). Lovejoy failed to make the agreed payments, which constituted a default of the Forbearance Agreement, and Lovejoy currently remains in default of the Forbearance Agreement. (Dkt. 1 at ¶¶ 61-63).

As additional deficiencies, between February 1, 2018, and March 31, 2018 ("2018 Period"), Lovejoy failed to submit payments it owed pursuant to ERISA, the CBA, Trust Agreements, and the 2017 Collection Policy. (Id. at ¶ 66; Dkt. 13-1 at 5). On March 27, 2018, Plaintiffs provided Zakroczemski with notice via email that Lovejoy was delinquent in its obligations to pay remittance funds and forbearance payments. (Dkt. 1 at ¶ 67; Dkt. 1-20; Dkt. 13-1 at 5-6).

II. Procedural Background

Plaintiffs commenced this action against Defendants on March 7, 2019. (Dkt. 1). The Complaint contains six causes of action. The first, third, and fourth causes of action are...