Summary
granting an injunction requiring defendant to cooperate in audit
Summary of this case from Lanzafame v. Toquir Contracting, Inc.Opinion
No. 03 Civ. 6491 (JCF).
December 2, 2004
MEMORANDUM OPINION AND ORDER
This is an action brought pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1132 and 1145, and Section 301 of the Labor-Management Relations Act of 1947 (the "LMRA"), 29 U.S.C. § 185. The suit was commenced by Carmine Mingoia, Joseph Olivieri, and George Nickoletos as trustees or fiduciaries of the Operative Plasterers' and Cement Masons' International Association, Local 530 Welfare Fund, Apprenticeship Fund, Vacation Fund, and Training Fund (collectively, the "Funds"), and by the Operative Plasterers' and Cement Masons' International Association, Local 530 AFL-CIO (the "Union"). They assert claims arising out of the failure of American Lath Plaster Co. Inc. ("American Lath") and its President, Douglas Schwartz, to pay contributions required by a collective bargaining agreement between American Lath and the Union.
The parties consented to proceed before me for all purposes pursuant to 28 U.S.C. § 636(c). Following the completion of discovery, the plaintiffs moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Although the defendants requested and received an extension of their time to answer the motion, they have never done so. The consequence is not simply judgment by default; rather, I must determine whether the evidence submitted by the plaintiffs demonstrates that there are no disputed issues of fact and that the plaintiffs are entitled to judgment as a matter of law. Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).
The plaintiffs have met this standard with respect to their claims against American Lath but not with respect to their claims against Mr. Schwartz. Therefore, summary judgment is granted in part and denied in part.
Background
Since July 1, 2002, American Lath has been a party to a collective bargaining agreement with the Union (the "CBA"). (Affidavit of John Campanella dated July 1, 2004 ("Campanella Aff."), Exh. A). Mr. Schwartz signed the agreement as President of American Lath and represented that he agreed to be personally liable for all obligations of the company. (CBA at 25). Pursuant to the CBA, American Lath is required to make specified contributions to each of the Funds, based on the number of hours worked by each covered employee. (CBA, Art. VII, § 1(b)). Likewise, American Lath is required to remit dues to the Union for each employee who authorizes such deductions. (CBA, Art. VII, § 1(c)).
Beginning in June 2003, American Lath began to fall behind in its payment of fringe benefits and dues to the Union. As of May 11, 2004, it owed at least $22,176.34 in total. (Campanella Aff., ¶ 2 Exhs. B, C). This figure is indeterminate because American Lath failed to cooperate by fully opening its books to the auditors for the Union and the Funds. (Campanella Aff., ¶ 2).
Discussion
A. Jurisdiction
As this case arises under ERISA, the Court has jurisdiction pursuant to 29 U.S.C. § 1132(e)(1) and (f), as well as federal question jurisdiction under 28 U.S.C. § 1331. This Court also has jurisdiction under Section 301 of the Taft-Hartley Act, 29 U.S.C. § 185, and under 28 U.S.C. § 1337, as this is a civil action arising under an act of Congress regulating commerce. In addition, American Lath and Mr. Schwartz are subject to personal jurisdiction in this Court since they were doing business in New York at all relevant times. See New York Civil Practive Law and Rules ("CPLR") § 301.
B. Liability
1. American Lath
The Funds are employee benefit plans under ERISA, 29 U.S.C. §§ 1002(1), (2), (3) and 1132(d)(1), while American Lath was an employer under the terms of that statute, 29 U.S.C. §§ 1002(5), 1145. Accordingly, American Lath's obligations to the Funds under the Labor Contract are enforceable through ERISA. 29 U.S.C. § 1132(a)(3). Similarly, its obligations to the Union under the CBA are enforceable through the LMRA. 29 U.S.C. § 185.
American Lath was required by the CBA to pay fringe benefit contributions to the Funds and dues checkoffs to the Union. It failed to comply with these requirements for at least the period February 6, 2004 through May 11, 2004. American Lath also failed to meet its obligation to permit an audit of its books and records for the same period. Consequently, American Lath is liable to the Funds under ERISA and to the Union under the LMRA.
2. Douglas Schwartz
The Second Circuit has held that in applying New York law to evaluate individual liability under ERISA, there must be "clear and explicit evidence of [an individual] defendant's intent to add personal liability to the liability of the entity." Mason Tenders District Council Welfare Fund v. Thomsen Construction Co., 301 F.3d 50, 53 (2d Cir. 2002) (internal quotation marks and citation omitted). The factors to be considered in determining such intent include "the contract's length, the location of the liability provision relative to the signature line, the presence of the name of the signatory in the contract itself, `the nature of the negotiations leading to the contract,' and the signatory's role in the corporation." Id. "[T]he mere presence of a personal liability clause in the signed agreement" is insufficient. Id. at 54; accord Mingoia v. Giamboi Brothers, Inc., No. 02 Civ. 6732, 2003 WL 22137987, at *2 (S.D.N.Y. Sept. 17, 2003).
Other than quoting a personal liability clause similar to that which the Court in Thomsen deemed insufficient to hold a corporate president liable, the plaintiffs in this case have presented little evidence to demonstrate Mr. Schwartz's intent to accept liability for American Lath's contractual obligations. They have not, for example, addressed the negotiations that led to execution of the CBA. Therefore summary judgment may not be granted with respect to the claims against Mr. Schwartz individually.
c. Damages
The Funds are entitled to recover unpaid contributions as damages under the CBA and ERISA, 29 U.S.C. § 1131(g)(2)(A), while the Union is entitled to such damages under the CBA. The plaintiffs have presented evidence that American Lath owes an outstanding balance of $22,176.34 in unpaid fringe benefits and dues. Pursuant to the CBA, the plaintiffs are entitled to interest on this amount at the rate of 10 percent per year. (CBA, Art. VII, § 8). In addition, under ERISA, American Lath is liable to the Funds for statutory damages equal to the amount of interest for unpaid fringe benefits. 29 U.S.C. § 1132(g)(2)(C)(i).
D. Attorneys' Fees and Costs
Where an employer fails to make required fringe benefit contributions, ERISA mandates an aware of "reasonable attorneys' fees and costs of the action." 29 U.S.C. § 1132(g)(2)(D). Here, plaintiffs' counsel seek $2,100.00 in fees, which represents six hours of attorney time, billed at $350.00 per hour. (Declaration of Christopher Smith dated July 1, 2004, ("Smith Decl."), ¶ 2). However, it has long been the law in this circuit that a party seeking an award of statutory attorneys' fees must support the application with contemporaneous time records. See New York State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983). Plaintiffs' counsel have failed to do so in this case, and the fee application must therefore be denied. See Riordan v. Nationwide Mutual Fire Insurance Co., 977 F.2d 47, 53 (2d Cir. 1992); Kingvision Pay-Per-View Ltd. v. Jasper Grocery, 152 F. Supp. 2d 438, 443 (S.D.N.Y. 2001).
The plaintiffs also seek to recoup disbursements of $150.00 for the filing fee and $191.75 for the costs of serving process. (Smith Decl. ¶ 2). These were necessary expenses which the plaintiffs are entitled to recover.
E. Injunctive Relief
Finally, the CBA provides that "[i]t shall be a violation of this Agreement for any [employer] bound by this Agreement, to fail to furnish proper records when requested, for the purpose of conducting an audit." (CBA, Art. VII, § 7). In this case, American Lath failed to cooperate fully in the audit process. (Campanella Aff. ¶ 2). Accordingly, an injunction shall issue requiring American Lath to permit and cooperate in an audit of its books and records for any period to the date on which its obligations under the CBA terminate.
Conclusion
For the reasons stated above, the plaintiffs' motion for summary judgment is granted with respect to American Lath and denied as to Douglas Schwartz. Within ten days, either the parties shall either submit a joint pretrial order with respect to the claims against Mr. Schwartz, or, if the plaintiffs elect to abandon those claims, they shall submit a judgment on notice consistent with the findings in this opinion.
SO ORDERED.