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Board of Trs. of the Bay Area Roofers Health & Welfare Trust Fund v. Westech Roofing

United States District Court, N.D. California

May 19, 2014

BOARD OF TRUSTEES OF THE BAY AREA ROOFERS HEALTH & WELFARE TRUST FUND, et al., Plaintiffs,
v.
WESTECH ROOFING, Defendant

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[Copyrighted Material Omitted]

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Re: Dkt. No. 41.

For Board of Trustees of the Bay Area Roofers Health & Welfare Trust Fund, Pacific Coast Roofers Pension Plan, East Bay/North Bay Roofers Vacation Trust Fund, Bay Area Counties Roofing Industry Promotion Fund, Bay Area Counties Roofing Industry Apprenticeship Training Fund, Trustee Doug Ziegler, Plaintiffs: Eileen Marie Bissen, LEAD ATTORNEY, Neyhart Anderson Flynn & Grosboll, APC, San Francisco, CA.

For Westech Roofing, a California corporation, Defendant: John Patrick McGill, Archer Norris, Walnut Creek, CA.

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ORDER GRANTING AMENDED MOTION FOR DEFAULT

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

This action was filed on November 2, 2012. On November 24, 2012, the Complaint and summons were personally served on Laurin Hunt, the agent who is designated by law to accept service of process on behalf of Westech Roofing. See Docket No. 12. Defendant did not answer or appear and on May 1, 2013, the Clerk entered default against Defendant. On January 6, 2014, the Court denied Defendant's request that the Court vacate the default. Currently before the Court is Plaintiff's Amended Motion for Default Judgment Against Defendant Westech Roofing (" Motion" ). A hearing on the Motion was held on March 21, 2014. At the request of the Court, Plaintiffs submitted supplemental materials on April 18, 2014. Defendant filed a response on April 28, 2014 and Plaintiffs filed a reply on May 5, 2014. For the reasons stated below, the Motion is GRANTED.[1]

II. BACKGROUND

Plaintiffs are the trustees of the Bay Area Roofers Health & Welfare Trust Fund, Pacific Coast Roofers Pension Plan, East Bay/North Bay Roofers Vacation Trust Fund, Bay Area Counties Roofing Industry Promotion Fund, and Bay Area Counties Roofing Industry Apprenticeship Training Fund. Complaint at 2. Plaintiffs allege that the trust funds are employee benefit plans within the meaning of § § 3(1) and (3), as well as § 502(d)(1) of ERISA, 29 U.S.C. § § 1002(1)[2] and (3),[3] and

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§ 1132(d)(1).[4] Id. [5]

Defendant Westech Roofing (" Westech" ), a California corporation, entered into a written collective bargaining agreement with Local Union 81 of the United Union of Roofers, Waterproofers and Allied Worker, AFL-CIO. Complaint at 3; Declaration of Sandy Stephenson in Support of Motion for Default Judgment Against Defendant Westech Roofing [Docket No. 19-1] (" July 12, 2013 Stephenson Decl." ) ¶ 2 & Ex. A (Individual Employer Agreement); id., Ex. 2 (Working Agreement) (" Collective Bargaining Agreement" or " CBA" ). The CBA incorporates the trust agreements of the Trust Funds and requires employers to make fringe benefit contributions to the Trust Funds on a regular basis for work performed by covered employees. Id., Ex. B, Articles XVIII - XXI.

Under the Trust Agreements, employers are required to submit a monthly report to the Trust Funds identifying the covered employees who worked for the employer that month as well as the fringe benefit contributions due for each covered employee. See Declaration of Sandy Stephenson in Support of Plaintiffs' Supplemental Briefing (" April 18, 2014 Stephenson Decl." ), Ex. HH (Trust Agreement of the Roofer's Local Union No. 81 Area Health and Welfare Trust Fund (" Health and Welfare Trust Agreement" )), Section III; id., Ex. II (Pacific Coast Roofers Pension Trust Agreement), Section III; id., Ex. JJ (Trust Agreement of the East Bay/North Bay Roofers Vacation Trust Fund, Section III; id., Ex. KK (Amended Agreement and Declaration of Trust Bay Area Counties Roofing Industry Apprenticeship Training Fund), Section III. The Trust Agreements provide for liquidated damages in the event contributions are delinquent; where legal action has been commenced to collect delinquent contributions the amount of liquidated damages is 20% of the late contribution. Id., Ex. HH (Health and Welfare Trust Agreement), Section III(C)(2); id., Ex. II (Pacific Coast Roofers Pension Trust Agreement), Section III(C)(2)(b)(i); id., Ex. JJ (Trust Agreement of the East Bay/North Bay Roofers Vacation Trust Fund), Section III(C)(2); id., Ex. KK (Amended Agreement and Declaration of Trust Bay Area Counties Roofing Industry Apprenticeship Training Fund), Section III(B) (incorporating liquidated damages policies and procedures of Health and Welfare Trust). The Trust Agreements also provide for interest on unpaid contributions (but not on liquidated damages) at a rate of 10%. Id., Ex.

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HH (Health and Welfare Trust Agreement), Section III(C)(3); id., Ex. II (Pacific Coast Roofers Pension Trust Agreement), Section III(C)(3); id., Ex. JJ (Trust Agreement of the East Bay/North Bay Roofers Vacation Trust Fund), Section III(C)(3); id., Ex. KK (Amended Agreement and Declaration of Trust Bay Area Counties Roofing Industry Apprenticeship Training Fund), Section III(B) (incorporating interest policies and procedures of Health and Welfare Trust).

Under the Trust Agreements, the trustees are given the authority to enact rules and regulations governing the collection of delinquent contributions. Id., Ex. HH (Health and Welfare Trust Agreement), Section III(H); id., Ex. II (Pacific Coast Roofers Pension Trust Agreement), Section III(H); id., Ex. JJ (Trust Agreement of the East Bay/North Bay Roofers Vacation Trust Fund), Section III(H); id., Ex. KK (Amended Agreement and Declaration of Trust Bay Area Counties Roofing Industry Apprenticeship Training Fund), Section III(B) (incorporating regulations of Health and Welfare Trust but reserving right of trustees to revoke that delegation of authority). However, employer liability is limited to the liabilities that are expressly set forth or authorized in the Trust Agreements, the CBA or the employers' individual contribution agreements. Id., Ex. HH (Health and Welfare Trust Agreement), Section III(I); id., Ex. II (Pacific Coast Roofers Pension Trust Agreement), Section III(I); id., Ex. JJ (Trust Agreement of the East Bay/North Bay Roofers Vacation Trust Fund), Section III(I); id., Ex. KK (Amended Agreement and Declaration of Trust Bay Area Counties Roofing Industry Apprenticeship Training Fund), Section II(C).

The rules and regulations for collecting employer contributions are set forth in a document entitled " Bay Area Roofers Trust Funds: Collection Policies" (hereinafter, " Collection Policies" ), which went into effect in June 2013. July 12, 2013 Stephenson Decl., Ex. D.[6] The Collection Policies provide that contributions for a particular month are delinquent if they are not paid by the last day of the subsequent month. Id. The Collection Policies, like the underlying Trust Agreements, provide for 20% liquidated damages where delinquent contributions have been referred to an attorney for collection. Id. The Collection Policies also provide for interest at a rate of 10% per annum, but in contrast to the Trust Agreements, the Collection Policies provide that interest will be imposed on not only delinquent contributions but also the associated liquidated damages for those contributions. Id.

In the Complaint, Plaintiffs alleged that Westech failed to make required payments to the Trust Funds and that there were contributions due and owing for the months of June through September 2012. Complaint at 3. The Complaint sought to recover these contributions, as well as any additional contributions that might become due and owing during the course of this litigation, under ERISA, 29 U.S.C. § 1132. Id. at 3-4. Plaintiffs also sought an award of liquidated damages, interest, attorneys' fees and costs. Id. at 4-5. Finally, the Complaint asked the Court to " enjoin the defendant from violating the terms of the collective bargaining agreement and the Trust Agreements for the full period for which defendant is contractually bound to

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file reports and pay contributions to the [Trust Funds]." Id. at 5.

After default was entered against Westech, on May 1, 2013, Plaintiffs filed a motion for default judgment. See Docket No. 19. As Westech continued to make payments on the delinquent contributions, rendering Plaintiffs' damages calculations moot, the Court denied Plaintiffs' motion without prejudice to refiling with updated damages calculations and supporting evidence. See Docket No. 33. In the meantime, the Court denied a motion by Westech to set aside the default, finding that Westech was properly served and that its failure to appear in this action was culpable. See Docket No. 40.

On January 23, 2014, Plaintiffs filed an amended motion for default judgment (the instant motion). During the course of briefing (both the normal prehearing briefing and the round of supplemental briefing that followed the motion hearing), the amounts sought by Plaintiffs have been revised several times. First, while the initial motion requested damages covering the period of June 2012 through November 2013, in Plaintiffs' most recent brief, filed on May 5, 2014, Plaintiffs request damages for the period of June 2012 through March 2014.[7] See Plaintiffs' Supplemental Reply Brief in Support of Motion for Default Judgment (" May 5, 2014 Reply Brief" ). Second, Plaintiffs revised their calculations following the motion hearing to exclude the contributions owed to the Bay Area Counties Roofing Industry Promotion Fund, which Plaintiffs have conceded is not covered by ERISA. See April 18, 2014 Supplemental Brief at 9. Third, Plaintiffs have requested additional attorneys' fees to cover the time spent preparing the post-hearing supplemental materials. Supplemental Declaration of Eileen M. Bissen in Support of Motion for Default Judgment Against Westech Roofing (" April 18, 2014 Bissen Decl." ) ¶ 2. Fourth, in their most recent brief, Plaintiffs have recalculated the interest amounts for the months prior to the adoption of the Collection Policies, in June 2013, requesting interest only on contributions and not on liquidated damages for those months. May 5, 2014 Reply Brief at 9. The Court addresses the specific amounts sought by Plaintiffs as to the various types of damages --as well as Westech's objections to those amounts -- in its analysis below.

III. ANALYSIS

A. Entry of Default Judgment

Plaintiffs have applied for a default judgment in this action on the basis that Defendant has failed to plead or otherwise defend or appear after valid service. Under Federal Rule of Civil Procedure 55(b)(2), the court may enter a default judgment once the Clerk, under Rule 55(a), has entered the party's default

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based upon a failure to plead or otherwise defend the action. Fed.R.Civ.P. 55(b)(2). " A default judgment may be entered against an infant or incompetent person only if represented by a general guardian, committee, conservator, or other like fiduciary who has appeared." If the court is satisfied that jurisdiction is proper and that service of process upon the defendant was adequate, courts are instructed to consider several facts in determining whether to grant default judgment:

(1) the possibility of prejudice to the plaintiff, (2) the merits of 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.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In making its decision, the court takes all factual allegations in the complaint, except those relating to damages, as true. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). Where a court finds that default should be granted, it may award damages if the plaintiff satisfies its burden of proving the damages through evidence. See id.

Westech is not exempt from default judgment on the basis that it is an infant, incompetent, soldier or sailor. The Court further finds that Plaintiffs' claims are well-pleaded. Plaintiffs have offered evidence that Westech entered into a collective bargaining agreement requiring it to make timely fringe benefit contributions to the Trust Funds and that Westech has failed to comply with this obligation. Consequently, Plaintiffs state a claim under ERISA, 29 U.S.C. § 1145.[8] Further, the Court finds no evidence of excusable neglect that would justify denying Plaintiffs' request for default judgment. To the contrary, the Court has found that Westech's failure to respond was culpable conduct. Therefore, entry of default judgment against Westech in this action is appropriate.

B. Remedy

1. Section 1132(g)

Once liability is established through a defendant's default, a plaintiff is required to establish that the requested relief is appropriate. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12, 65 S.Ct. 16, 89 L.Ed. 3, 102 Ct.Cl. 846 (1944)). Under ERISA, an employee benefit plan that obtains judgment in its favor in an action for unpaid contributions under 29 U.S.C. § 1145 is entitled to the following forms or relief:

A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of --
(1) interest on the unpaid contributions, or
(2) liquidated damages provided for under the plan in an amount not in excess of 20 percent . . . of the

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amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.

29 U.S.C. ยง 1132(g)(2). This section further provides that " [f]or purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the ...


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