Laborers' Int'l Union of N. Am. Local 91 v. Insulation Coatings & Consultants LLC

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LABORERS' INTERNATIONAL UNION OF NORTH AMERICA LOCAL 91, RICHARD PALLADINO, as Trustee of the Laborers' International Union of North America, Local No. 91 Welfare Fund and the Laborers' International Union of North America, Local 91 Pension Fund, MARIO NERI, as Trustee of the Laborers' International Union of North America, Local No. 91 Welfare Fund and the Laborers' International Union of North America Local 91 Pension Fund, RANDY PALLATINO, as Trustee of the Laborers' International Union of North America, Local No. 91 Welfare Fund and the Laborers' International Union of North America Local 91 Pension Fund, DOUGLAS MAY, as Trustee of the Laborers' International Union of North America, Local No. 91 Welfare Fund and the Laborers' International Union of North America Local 91 Pension Fund, RICHARD PALLATINO, as Trustee of the Laborers' International Union of North America, Local No. 91 Education and Training Fund, MARIO NERI, as Trustee of the Laborers' International Union of North America, Local No. 91 Education and Training Fund, WILLIAM GRACE, as Trustee of the Laborers' International Union of North America, Local No. 91 Education and Training Fund, ANGELO MASSARO, as Trustee of the Laborers' International Union of North America, Local No. 91 Education and Training Fund, and DOUGLAS MAY, as Trustee of the Laborers' International Union of North America, Local No. 91 Education and Training Fund, Plaintiffs, v. INSULATION COATINGS & CONSULTANTS LLC, and CHARLES SORCE, Defendants.

No. 20-CV-1586-JLS-LGF

United States District Court, W.D. New York

October 17, 2023

LIPSITZ GREEN SCIME CAMBRIA LLP Attorneys for Plaintiffs JOSEPH LEON GUZA, and ROBERT L. BOREANAZ, of Counsel

REPORT AND RECOMMENDATION

LESLIE G. FOSCHIO UNITED STATES MAGISTRATE JUDGE

JURISDICTION

This case was referred to the undersigned by Honorable John L Sinatra, Jr. on April 3, 2023, for a report and recommendation on damages to be awarded in connection with the entry of a default judgment (Dkt. 10).

BACKGROUND and FACTS^[1]

On October 28, 2020, Plaintiffs commenced this action pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132 and 1145, as well as Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185. Plaintiffs include Laborers' International Union of North America, Local No. 91 (“the Union”), the Trustees of the Union's Welfare Fund and Pension Fund, and the Trustees of the Union's Educational and Training Fund (“the Trustees”) (together “Plaintiffs”). Sued as Defendants are Insulation Coatings and Consultants LLC (“ICC”), and Charles Sorce (“Sorce”), ICC's controlling officer and managing agent. Plaintiffs alleged that Defendants ICC and ICC's controlling officer and management agent Sorce (together, “Defendants”), breached collective bargaining agreements and trust agreements by failing to make contributions to various employee benefits funds for the period January 1, 2015 through December 31, 2019.

According to Affidavits of Service filed on November 3, 2020 (Dkt. 3) and December 8, 2020 (Dkt. 4), summons and the Complaint were respectively served on ICC on October 30,2020, and Sorce on November 16, 2020. To date, neither ICC nor Sorce has appeared in this action. Upon motions by Plaintiffs, Dkts. 5 and 6, default was entered by the Clerk of Court on December 17, 2020 (Dkt. 7), and on December 18, 2020, Plaintiffs moved for default judgment (Dkt. 8).

In a Decision and Order filed April 3, 2023 (Dkt. 10) (“the D&O”), District Judge Sinatra granted Plaintiffs' motion for default judgment. District Judge Sinatra also observed that although Plaintiff seek damages for unpaid contributions and deductions from January 1, 2015 through December 31, 2019, the portions of the CBAs Plaintiffs submitted in support were in effect from 2015 to 2018 (“first CBA”) and 2018 to 2023 (“second CBA”) (“the CBAs”). Id. at 12 (citing Dkt. 1-1 at 1-13, and 1-1 at 14-24). The first CBA includes a signature page signed by Sorce as ICC's owner, but the second CBA does not. Judge Sinatra thus found Plaintiffs failed to adequately support the allegations that ICC was a party to the second CBA which, together with the first CBA, covers the entire period relevant to Plaintiffs' claims. Id. at 12-13. Further, Judge Sinatra found that portions of the Trust Agreements (“the Trust Agreements”) submitted by Plaintiffs to demonstrate such agreements classify unpaid employer contributions as trust assets were not in effect until August 5, 2015, and no other evidence in the record establishes the unpaid employer contributions were classified as trust assets prior to that date. Id. at 13. Because there then was an insufficient basis to assess damages, Judge Sinatra referred the matter to the undersigned for a report and recommendation on Plaintiffs' damages. D&O at 13 and Text Order dated April 3, 2023 (Dkt. 11).

Accordingly, by Text Order entered April 21, 2003 (Dkt. 12), the undersigned established June 20, 2023 as the deadline for Plaintiffs to file written submissions in support of Plaintiff's damages claims (Dkt. 12), which, based on Plaintiffs' unchallenged motion (Dkt. 12), on June 23, 2023 was extended by Text Order to August 4, 2023. (Dkt. 14). On August 3, 2023, Plaintiffs filed the Attorney Affidavit [of Robert L. Boreanaz, Esq.]^[2]Regarding Damages Pursuant to Court Order (Dkt. 15) (“Boreanaz Affidavit”), attaching the Independent Accountant's Report on Applying Agreed-Upon Procedures as exhibit A (Dkt. 15-1) (“Accountant's Report” or “Auditor's Report”), and the Auditor Affidavit [of David Arcara] Regarding Damages Pursuant to Court Order (Dkt. 15-2) (“Arcara Affidavit”), with exhibit A (Dkt. 15-3) (“Arcara Affidavit Exh. A”). Because Plaintiffs' written submissions filed August 4, 2023, did not include the missing documentation observed by Judge Sinatra in the D&O, an e-mail to Plaintiffs' counsel dated September 7, 2023 (“the September 7, 2023 e-mail”), requested the documentation, as well as clarification on several matters including, inter alia, interest on Plaintiffs' damages to be awarded and time records for the attorney fees and costs Plaintiff seek to be awarded.

On September 18, 2023, Plaintiffs submitted the Attorney Affirmation [of Robert L. Boreanaz, Esq.] (Dkt. 16) (“Boreanaz Affirmation”), with exhibits A through E (Dkt. 161 through 16-6) (“Plaintiffs' Supplemental Exh(s). ”), to respond to the September 7, 2023 e-mail. Included in Plaintiffs' Supplemental Exhibits is a copy of the Trust Agreement in effect as of August 5, 2015, Plaintiffs' Supplemental Exh. B, thereby satisfying that requirement stated in the D&O. Missing from the Boreanaz Affirmation and Plaintiffs' Supplemental Exhibits, however, were responses to two items in the September 7, 2023 e-mail including the signature page for the second CBA, which Judge Sinatra also observed was missing, D&O at 12-13, as well an explanation for the apparent discrepancy in the Auditor's Report regarding the number of underreported hours for which Plaintiffs seek damages in this action, an item specifically requested in the September 7, 2023 e-mail. On October 4, 2023, in response to the undersigned's telephonic communication to Plaintiffs' counsel requesting supplemental information concerning those issues, Plaintiffs filed the Supplemental Attorney Affirmation of Robert L. Boreanaz, Esq. (Dkt. 17) (“Supplemental Boreanaz Affirmation”), attaching exhibit A (Dkt. 17-1).

Plaintiffs seek as damages for the period January 1, 2015 through December 31, 2019,^[3] delinquent employee benefit contributions to three ERISA funds including the Welfare Fund, the Pension Fund, and the Education and Training Fund (“the ERISA Funds”). For the same period, Plaintiffs also seek unremitted union membership dues and organizing assessments (together, “the unremitted union dues”), as well as unremitted employee contributions to the non-ERISA funds established pursuant to the CBAs including the Laborers Local # 91 Laborers-Employers Cooperative and Education Trust (“LECET”), the Laborers Local #91Political Action Fund (“LPA”), the Laborers' Local #91 Scholarship Fund (“Scholarship Fund”), the New York State Laborer-Employers Cooperation and Education Trust Fund (“NYS LECET”), New York State Laborers' Health & Safety Fund (“NYS Health & Safety”), and the Building Industry Employer's Association of Niagara County, New York, Inc. Construction Industry Fund (“BIEA Fund”) (together, “the LMRA Funds”). Plaintiffs seek interest on such damages, as well as liquidated damages.

DISCUSSION

As stated, this case is before the undersigned for a report and recommendation on the damages and costs to be awarded Plaintiffs in connection with the default judgment entered on April 3, 2023 (Dkt. 10).

1. Documentation

Preliminarily the court addresses the two remaining items requested in the September 7, 2023 e-mail, specifically, the signature page for the second CBA, and an explanation for a discrepancy of 38 hours in the Accountant's Report of the number of underreported hours for which Plaintiffs seek damages in this action. Insofar as the second CBA does not include a signature page signed by Sorce as ICC's owner, Boreanaz avers that his client has been unable to locate the signature page for the second CBA, but that ICC's continued compliance with the provisions of the second CBA after the expiration of the period covered by the first CBA, i.e., March 31, 2018, including making the required benefit contributions into 2019, establish Defendants' intention to remain bound to and comply with the second CBA's terms. Supplemental Boreanaz Affirmation ¶ 4. Despite the absence of the relevant signature page, ICC's partial performance in accordance with the second CBA weighs heavily in...