United States District Court, N.D. California
October 6, 2005.
JOSE MORENO as CHAIRMAN and LARRY TOTTEN as CO-CHAIRMAN of the BOARD OF TRUSTEES FOR THE LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA, LABORERS VACATION-HOLIDAY TRUST FUND FOR NORTHERN CALIFORNIA, and LABORERS TRAINING AND RETRAINING TRUST FUND FOR NORTHERN CALIFORNIA, Plaintiffs,
SUMMIT ELECTRICAL CONSTRUCTION, INC., and GARY RICHARD BROWN, an individual, and ERIK BURDAN, an individual, Defendants.
The opinion of the court was delivered by: WILLIAM ALSUP, District Judge
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS'
APPLICATION FOR DEFAULT JUDGMENT
In this action alleging breach of a collective bargaining
agreement, plaintiffs Jose Moreno and Larry Totten, acting as
co-chairmen of the board of trustees for several laborers' trust
funds (collectively "Trust Funds"), apply for default judgment
against defendant Summit Electrical Construction, Inc. Summit has
never responded to this lawsuit in any way. Plaintiff's
application is therefore GRANTED IN PART. Summit is ORDERED
to pay a total of $42,915.54 to plaintiffs and to submit to an
audit, as detailed below. The Court reserves jurisdiction over
the case to enforce the injunction, and to entertain any motions
to increase the judgment if the audit reveals other liabilities or to award
additional attorney's fees. The Court DENIES the motions for a
judgment declaring that plaintiffs are entitled to attorney's
fees and costs to enforce this judgment, and for an order on
post-judgment interest. No part of this order is a judgment or
injunction enforceable against defendants Gary Brown or Erik
On March 17, 2005, plaintiffs filed this Employee Retirement
Income Security Act (ERISA) action. They alleged breach of a
collective bargaining agreement by Summit and Gary Brown. The
complaint was amended July 25, 2005, adding Erik Burdan as
another defendant. Plaintiffs sought unpaid contributions of
$24,406.69 to funds that provide workers with health, vacation,
holiday, pension and training benefits. They also wanted the
Court to order defendants to allow the Trust Funds to inspect
their records and thus determine how much more the defendants may
owe. Plaintiffs additionally asked for liquidated damages
($3,000), court costs ($857.92), attorney's fees ($12,847.50) and
Plaintiffs allege the following facts. The trust funds are
third-party beneficiaries to a collective bargaining agreement
between the Northern California District Council of Laborers and
an employer association that represents construction-industry
employers doing business in Northern California. Summit became a
signatory to the agreement about March 2, 2001. That agreement
never was terminated. It bound Summit to pay trust-fund
contributions each month, $150 in liquidated damages each time
they did not make a monthly contribution on time and certain
attorney's fees and costs in the event of a delinquency.
Defendant failed to pay $24,406.69 for the months of December
2004, and January and February 2005. Liquidated damages grew $150
for late payment between April 2003 and March 2005. Interest
accrued at a monthly rate of 1.5 percent of the
On June 15, 2005, the Clerk of the Court entered default as to
ANALYSIS In deciding whether to enter default judgment, courts deem true
all well-pleaded allegations in the complaint, except those
related to the amount of damages. Geddes v. United Fin. Group,
559 F.2d 557, 560 (9th Cir. 1977).
When a party does not defend against a claim for affirmative
relief, the clerk must enter the party's default. FRCP 55(a).
Upon such a failure to defend, the court then may enter, in its
discretion, a judgment by default. Yew v. Dulles, 236 F.2d 415,
416 (9th Cir. 1956). In making its decision, the court may
consider seven factors set forth in Eitel v. McCool:
(1) the possibility of prejudice to the plaintiff,
(2) the merits of the plaintiff's substantive claim,
(3) the sufficiency of the complaint, (4) the sum of
money at stake in the action, (5) the possibility of
a dispute concerning material facts, (6) whether the
default was due to excusable neglect, and (7) the
strong policy underlying the Federal Rules of Civil
Procedure favoring decisions on the merits.
782 F.2d 1470
, 1471-72 (9th Cir. 1986).
1. Eitel Factors Applied
The complaint is sufficient because it states the grounds upon
which the Court's jurisdiction depends, states a claim for breach
of a collective-bargaining agreement which would entitle
plaintiffs to relief, and demands a money judgment and an order
for injunctive relief (Amended Compl.). See also FRCP 8(a).
There is no reason to question the merits of plaintiffs'
substantive claims. According to the undisputed record, Summit
has failed to pay money it owes and has agreed to submit to an
audit in circumstances such as this.
Denying the Trust Funds' application would leave the plaintiffs
without a remedy.
In general, the fact that a large sum of money is at stake is a
factor disfavoring default judgment. Cf. Eitel,
782 F.2d at 1472 (stating that the fact that $3 million was at stake, when
considered in light of the parties' dispute as to material facts,
supported the court's decision not to enter judgment by default).
The Trust Funds have asked for a damages of $42,915.54. That
amount pales beside the $3 million at stake in Eitel.
Indications that there is a dispute of material fact weigh
against entry of default judgment. Eitel, 782 F.2d at 1471-72.
Summit has defaulted and the Court therefore must take as true all well-pleaded allegations in the complaint, thereby
negating the possibility of a present dispute.
Default judgment is less favored when due to excusable neglect.
Eitel, 782 F.2d at 1472. Gary Brown, an owner and the
responsible managing officer of Summit, appears to have dodged
the complaint purposefully until now. Plaintiffs' counsel
represented to the Court that Brown's counsel told her Brown was
aware of the complaint against the corporation and chose not to
have it reply.
Although the Federal Rules of Civil Procedure favor a decision
on the merits, such an outcome does not appear possible in this
case as to Summit. All of the other Eitel factors counsel in
favor of a default judgment. Only damages remain to be
3. DAMAGES AND INJUNCTIVE RELIEF
Damages allegations are not deemed true simply because of the
defendant's default. Geddes v. United Fin. Group 559 F.2d 557,
560 (9th Cir. 1977).
Defendant executed a binding contract obligating it to pay
contributions to the Trust Funds based upon the number of hours
worked by its employees. ERISA also requires payment. See
29 U.S.C. 1145. Defendant failed to pay for December 2004, and
January and February 2005. The delinquent contributions amount to
$24,406.69 (Hagan Decl. ¶ 3, Exhs. A (Laborers Master Agreement
Section 28A) & B (contributions statement)).
Congress requires courts to award liquidated damages, interest
and reasonable litigation costs to trust funds that prevail in
actions such as this one. 29 U.S.C. 1132(g)(2). A fiduciary is
entitled to these awards if the employer was delinquent at the
time the action was filed, a judgment is entered against it and
the plan provides for the award. Nw. Adm'rs, Inc. v.
Albertson's, Inc., 104 F.3d 253, 257 (9th Cir. 1996).
Those requirements are met here. Employer was delinquent when
plaintiffs sued on March 17, 2005. The Laborers' Master Trust
Agreement Section 28A provides for assessment of 1.5 percent per
month interest against all unpaid contributions and liquidated
damages of $150 per late payment. So far, $1,803.43 in interest
has accrued. Defendant owes $3,000 in liquidated damages for
missed payments between April 2003 and February 2005 (Hagan Decl. ¶¶ 11-13, Exhs. A, D & E). The Trust Agreement for the Laborers
Pension Trust Fund for Northern California, Article IV, Section 3
provides for attorney's fees. Counsel thoroughly itemized their
expenses, amounting to $12,847.50 through July 31, 2005, in
attorneys fees and another $857.92 for costs (Kirkpatrick Decl.
¶¶ 13 & 15, Exhs. D-F).
An audit of the employer's records is authorized by statute and
agreement. 29 U.S.C. 1132(g)(2)(E); Kirkpatrick Decl., Exh. D
(Article IV, Section 7, Trust Agreement for the Laborers Pension
Trust Fund)). The Court therefore orders Summit to submit to the
type of audit described in Section 7, and any identical
provisions in other trust agreements that are the subject of this
Plaintiffs also ask for this Court to reserve jurisdiction to
enforce the injunction and entertain motions for an increased
judgment based upon the audit.
The Court will not, however, grant plaintiffs' requests for
declaratory judgments confirming plaintiffs' entitlement to
post-judgment interest and to attorney's fees and costs to
enforce this judgment.
Post-judgment attorney's fees and costs are not ripe for
adjudication. The employer has a contractual obligation to pay
any attorney's fees and costs incurred by plaintiffs in enforcing
the judgment (Kirkpatrick Decl., Exh. D (Article IV, Section 3,
Trust Agreement for the Laborers Pension Trust Fund)). It is
uncertain, however, whether court involvement is necessary at
this point. The Court has reserved jurisdiction over this case
and can entertain any motions for additional fees and costs as
Plaintiffs overreach in asking for interest of 18 percent per
year on the judgment. The collective-bargaining agreement
provides only for 18 percent interest on delinquent
contributions, not on the entire judgment (Hagan Decl., Exh. A
(Section 28A, Laborers Master Agreement)). Plaintiffs are
authorized to seek the standard rate of post-judgment interest,
authorized in 28 U.S.C. 1961.
For the reasons above, the Court ORDERS default judgment to
be entered against Summit and in favor of plaintiffs in the
amount of $42,915.54. Summit is ordered to submit to the audit described above. The Court reserves jurisdiction over
the case. The Court DENIES the motions for judgments declaring
that plaintiffs are entitled to attorney's fees and costs to
enforce the judgment, and for an order on post-judgment interest.
Again, no part of this order is a judgment or injunction
enforceable against defendants Gary Brown or Erik Burdan,
IT IS SO ORDERED.
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