Mastropietro v. Burbank Elec. Contractor

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MICHAEL MASTROPIETRO, JOHN MOSHER, MICHAEL MARTELL, JOSEPH P. GROSS, CHRISTOPHER SPRARAGEN, and BRIAN HART, as Trustees of the I.B.E.W., Local 236 Health and Benefit Fund and I.B.E.W. Local 236 Annuity Fund, and I.B.E.W. Local 236, Plaintiffs, v. BURBANK ELECTRICAL CONTRACTOR, INC. and DEAN BURBANK, Defendants.

No. 1:21-cv-1129 (BKS/ML)

United States District Court, N.D. New York

October 17, 2022

For Plaintiffs: William Pozefsky, Pozefsky, Bramley & Murphy.

MEMORANDUM-DECISION AND ORDER

Hon Brenda K. Sannes, Chief United States District Judge.

I. INTRODUCTION

Plaintiffs Michael Mastropietro, John Mosher, Michael Martell, Joseph P Gross, Christopher Spraragen, and Brian Hart, as trustees of the I.B.E.W. Local 236 Health and Benefit Fund, the I.B.E.W. Local 236 Annuity Fund (collectively, the “Funds”), and I.B.E.W. Local 236 (the “Union”), filed this action against Defendants Burbank Electrical Contractor, Inc. (“Burbank”) and Dean Burbank, alleging that Defendants violated the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and the Labor-Management Relations Act of 1947 (“LMRA”), as amended, 29 U.S.C. § 141 et seq., and committed conversion under New York state law. (Dkt. No. 1). Defendants have not answered the complaint or otherwise appeared in this action. Presently before the Court is Plaintiffs' motion pursuant to Rule 55(b) of the Federal Rules of Civil Procedure for default judgment. (Dkt. No. 14). Plaintiffs seek a monetary judgment against Defendants for amounts due to the Funds and Union, as well as costs and attorney's fees. For the following reasons, Plaintiffs' motion for default judgment is denied without prejudice.

II. DISCUSSION

A. Standard of Review & Clerk's Entry of Default

“Rule 55 of the Federal Rules of Civil Procedure provides a two-step process for obtaining a default judgment.” Priestly v. Headminder, Inc., 647 F.3d 497, 504 (2d Cir. 2011). First, under Rule 55(a), the plaintiff must obtain a clerk's entry of default. Fed.R.Civ.P. 55(a) (“When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.”); see also N.D.N.Y. L.R. 55.1 (requiring a party seeking a clerk's entry of default to “submit an affidavit showing that (1) the party against whom it seeks a judgment . . . is not an infant, in the military, or an incompetent person[,] (2) a party against whom it seeks a judgment for affirmative relief has failed to plead or otherwise defend the action . . . [,] and (3) it has properly served the pleading to which the opposing party has not responded”). Second, under Rule 55(b)(2), the plaintiff must “apply to the court for entry of a default judgment.” Priestly, 647 F.3d at 505; see also N.D.N.Y. L.R. 55.2(b) (“A party shall accompany a motion to the Court for the entry of a default judgment, pursuant to Fed.R.Civ.P. 55(b)(2), with a clerk's certificate of entry of default . . ., a proposed form of default judgment, and a copy of the pleading to which no response has been made.”).

On November 23, 2021, Plaintiffs served Defendants with the summons and complaint. (Dkt. No. 6-1, ¶ 2; see Dkt. Nos. 4-5). On January 7, 2022, Plaintiffs requested a clerk's entry of default under Rule 55(a) for Defendants' “fail[ure] to answer or otherwise appear” in this action. (Dkt. No. 6). Plaintiffs' request was denied for failure to submit an affidavit which complied with Local Rule 55.1. (Dkt. Nos. 9-10). Plaintiffs renewed their request for a clerk's entry of default on February 23, 2022 accompanied by an affidavit, as required by Local Rule 55.1, showing that: Defendant Burbank is a corporation and thus is not an infant, in the military, or incompetent; Defendant Dean Burbank is not an infant, in the military, or incompetent; Defendants failed to appear in this action; and Plaintiffs properly served the summons and complaint. (Dkt. No. 11, at 3). On February 24, Plaintiffs received a clerk's entry of default against both Defendants. (Dkt. No. 12). Plaintiffs filed the instant motion for default judgment under Rule 55(b) on March 31. (Dkt. No. 14). Although Plaintiffs served the motion on Defendants, (see Dkt. No. 15 (certificate of service)), Defendants filed no response. Therefore, Plaintiffs have met the procedural requirements and are entitled to an order of default under Rule 55(b)(2) of the Federal Rules of Civil Procedure and Local Rule 55.2(b). Accordingly, the Court will address liability.

B. Liability

By failing to appear in this action or oppose this motion, Defendants are deemed to have admitted the factual allegations in the complaint. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded' factual allegations contained in the complaint.” (citation omitted)); Rolex Watch, U.S.A., Inc. v. Pharel, No. 09-cv-4810, 2011 WL 1131401, at *2, 2011 U.S. Dist. LEXIS 32249, at *5-6 (E.D.N.Y. Mar. 11, 2011) (“In considering a motion for default judgment, the court will treat the well-pleaded factual allegations of the complaint as true, and the court will then analyze those facts for their sufficiency to state a claim.”), report and recommendation adopted, 2011 WL 1130457, 2011 U.S. Dist. LEXIS 32246 (E.D.N.Y. Mar. 28, 2011). But before entering default judgment, the Court must review the allegations to determine whether Plaintiffs have stated a valid claim for relief. Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009); Telequip Corp. v. Change Exch., No. 01-cv-1748, 2004 WL 1739545, at *1, 2004 U.S. Dist. LEXIS 14892, at *3 (N.D.N.Y. Aug. 3, 2004).

1. ERISA Causes of Action

a. ERISA § 515 (29 U.S.C. § 1145)

Under Section 515 of ERISA:

[e]very 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.

29 U.S.C. § 1145.

According to the First Cause of Action, Defendant Burbank is liable under ERISA for failing to remit required payments and contributions to the Funds. (Dkt. No. 1, ¶¶ 13-23). Plaintiffs allege that Burbank is an “employer in an industry affecting commerce as defined in Section 3(5)(11) and (12) of ERISA,” (id. ¶ 12), and that the Funds are both multi-employer funds and employee benefit plans as defined under ERISA §§ 3(37) and (3), respectively, (id. ¶ 9). Plaintiffs also allege that Burbank “agreed to be bound by the Small Works Addendum to the Inside Agreement between Local 236 and the Albany Electric Contractors Association, NECA, Albany Chapter and the Union for the periods from January 1, 2007 to the present” (the “Agreement”). (Id. ¶ 12). Burbank's employees who were covered by the Agreement (“Covered Employees”) are participants in “employee benefit plans and multi-employer plans maintained pursuant to a collective bargaining agreement.” (Id.). The Agreement, as well as “Trust Agreements” and “rules and practices of the Funds,” obligated Burbank to “submit to the Funds monthly written reports . . . describing the employees of Defendant Burbank covered by the Agreement, the hours worked by such Covered Employees and the payments or contributions to be made for such Covered Employees,” and to file such reports and make payment to Plaintiffs “of all amounts due as shown” “no later than 15 calendar days following the end of each calendar month in which the work covered by the Agreement is performed.” (Id. ¶ 16). Burbank is also liable under the Agreement “for interest on [] unpaid contributions.” (Id. ¶ 17). The complaint alleges that Burbank filed the required monthly reports for the period of April 2019 through February 2020 but failed “to make the required payments and contributions shown to be due thereon.” (Id. ¶ 18). However, the complaint does not reflect any language or terms from the Agreement, Trust Agreements, or other Funds documents. The Court therefore declines to enter a finding of liability until after Plaintiffs have submitted the agreements at issue.^[1]

b. Dean Burbank

Plaintiff's Fourth Cause of Action alleges that individual Defendant Dean Burbank is personally liable, as a fiduciary of the Funds, for the delinquent contributions owed under ERISA and accrued interest. (Dkt. No. 1, ¶¶ 28-38).

Under ERISA, a person is a “fiduciary” with respect to a plan, in relevant part, to the extent he “exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets.” 29 U.S.C. § 1002(21)(A). To establish liability, Plaintiffs must “show both that (1) the unpaid contributions were plan assets and (2) [the defendant] exercised a level of control over those assets sufficient to make him a fiduciary.” In re Halpin, 566 F.3d 286, 289 (2d Cir. 2009). Under ERISA, a fiduciary with respect to a plan must discharge his duties “solely in the interest of the participants and beneficiaries” and is prohibited from “deal[ing] with the assets of the plan in his own interest or for his own account.” 29 U.S.C. §§ 1104(a)(1), 1106(b)(1).

First while the complaint alleges that “[a]mounts owing to the Funds, as ERISA Funds, became assets of the Funds on the dates that Defendant Burbank was required to contribute those amounts to the Funds,” (Dkt. No. 1, ¶ 30), this conclusory allegation does not indicate whether the relevant agreement(s) contractually provide that unpaid contributions are plan assets on the date...