Bd. of Trs. of Kern Cnty. Elec. Workers Health & Welfare Tr. v. McCaa
| Docket Number | 1:20-cv-01610-NONE-JLT |
| Decision Date | 27 August 2021 |
| Parties | BOARD OF TRUSTEES OF THE KERN COUNTY ELECTRICAL WORKERS HEALTH & WELFARE TRUST, et al., Plaintiffs, v. ALAN BRADY MCCAA, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
FINDINGS AND RECOMMENDATION TO GRANT MOTION FOR DEFAULT JUDGMENT
(DOC. 28)
Plaintiffs seek default judgment against defendants Alan Brady McCaa Kinley McCaa, McCaa Electrical Construction, Inc., and McCaa Electrical Consultants (Doc. 28), and the defendants have not opposed this motion. For the following reasons, the Court recommends the motion for default judgment against defendants be GRANTED.
On November 12, 2020, plaintiffs filed its complaint. (Doc. 1.) On December 26, 2020, defendant Kinley Lynne McCaa was personally served. (Doc. 5.) Defendant failed to file a responsive pleading as required by Federal Rule of Civil Procedure 12(a)(1)(A)(i). Upon motion by the plaintiffs, the Court entered the Clerk's Certificate of Entry of Default against defendant Kinley Lynne McCaa on January 20, 2021. (Docs. 6, 7.)
On January 25, 2021, defendants McCaa Electrical Construction, Inc. (Doc. 11), McCaa Electrical Consultants (Doc. 12), and Alan Brady McCaa (Doc. 13) were personally served. Defendants failed to file a responsive pleading as required by Federal Rule of Civil Procedure 12(a)(1)(A)(i). Upon motion by the plaintiffs, the Court entered the Clerk's Certificate of Entry of Default against defendants on January 27, 2021. (Docs. 16, 17.)
On July 30, 2021, plaintiffs filed the motion now pending before the Court seeking default judgment against defendants Alan Brady McCaa, Kinley McCaa, McCaa Electrical Construction, Inc., and McCaa Electrical Consultants. (Doc. 28.)
The Federal Rules of Civil Procedure govern the entry of default judgment. After default is entered because “a party against whom a judgment for relief is sought has failed to plead or otherwise defend, ” the party seeking relief may apply to the court for a default judgment. Fed.R.Civ.P. 55(a)-(b). Upon the entry of default, well-pleaded factual allegations regarding liability are taken as true, but allegations regarding the amount of damages must be proven. Pope v. United States, 323 U.S. 1, 11 (1944); see also Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977). In addition, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of North Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).
Entry of default judgment is within the discretion of the Court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The entry of default “does not automatically entitle the plaintiff to a court-ordered judgment.” Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal 2002), accord Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986). The Ninth Circuit determined:
Factors which may be considered by courts in exercising discretion as to the entry of a default judgment include: (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). As a general rule, the issuance of default judgment is disfavored. Id. at 1472.
On November 12, 2020, Plaintiffs filed a complaint against Alan McCaa, Kinley McCaa, McCaa Electrical Construction, Inc., and McCaa Electrical Consultants for failure to make all required contributions as set forth in the collective bargaining agreement between the Defendants and Plaintiffs. (Doc. 28 at 3.) By virtue of their signatory status, the Defendants are also bound to the terms of the collective bargaining agreement and declarations of trust setting forth the terms by which signatory contractors make contributions to the trust funds. (Id.)
Although McCaa Electrical Construction, Inc. is the signatory contractor to the agreements, Plaintiffs named officers and directors, Alan and Kinley McCaa as alter ego defendants based on their unilateral dissolution of the signatory corporation prior to the dates for which the contributions were sought. (Doc. 28 at 3.) Plaintiffs also named McCaa Electrical Consultants as a defendant and business successor of McCaa Electrical Construction, Inc. and Romero Electric, LLC and Albert Romero as alter ego defendants.[1] (Id.) Plaintiffs further alleged that all Defendants were engaged in a scheme of “illegal double-breasting” and that the business defendants did constitute a single employer in violation of the agreements. (Id.; Doc. 1, Complaint at ¶¶ 49-50.) The complaint seeks payment of contributions, liquidated damages, and interest which Defendant McCaa Electrical Construction, Inc. was required to make pursuant to the agreements. (Doc. 28 at 4.)
Applying the factors articulated by the Ninth Circuit in Eitel, the Court finds the factors weigh in favor of granting plaintiffs' motions for default judgment.
The first factor considers whether the plaintiff would suffer prejudice if default judgment is not entered. See Pepsico, Inc., 238 F.Supp.2d at 1177. Generally, where default has been entered against a defendant, a plaintiff has no other means by which to recover damages. Id.; Moroccanoil, Inc. v. Allstate Beauty Prods., 847 F.Supp.2d 1197, 1200-01 (C.D. Cal. 2012). Therefore, the Court finds plaintiffs would be prejudiced if default judgment is not granted.
Given the kinship of these factors, the Court considers the merits of plaintiff's substantive claims and the sufficiency of the complaint together. See J & J Sports Productions v. Hernandez, 2010 U.S. Dist. LEXIS 48191, at *3, n. 4 (E.D. Cal. May 17, 2010). The Ninth Circuit has suggested that, when combined, these factors require a plaintiff to “state a claim on which the plaintiff may recover.” Pepsico, Inc., 238 F.Supp.2d at 1175 (citing Kloepping v. Fireman's Fund, 1996 U.S. Dist. LEXIS 1786, at *6 (N.D. Cal. Feb. 14, 1996)).
Plaintiffs filed this action to recover the contributions and statutory liquidated damages, interest and attorney's fees and costs owed to Plaintiffs. (Doc. 28 at 9.) Plaintiffs assert that the payment of these contributions is governed by federal law and the contributions are used to provide health and other benefits to the working members of the Union. (Id.) According to Plaintiffs, the terms of the agreements require Defendants to timely pay the contributions owed by Defendants and assess contractual liquidated damages and interest for failure to do so. (Id.) Plaintiffs allege that the complaint filed in this action includes the proper allegations of unpaid contributions due pursuant to the agreements, 502(e)(1) of ERISA (29 U.S.C. §1132 (e)), and §301(a) of the Labor Management Relations Act of 1947, as amended (29 U.S.C. §185(a)). (Doc. 28 at 9.) Plaintiffs claims that the complaint also properly alleges illegal alter ego and double-breasting activities by the Defendants through supporting exhibits demonstrating how Defendants methodically cancelled their contractor's licenses, dissolved their corporation, declared personal bankruptcy, and moved work covered under the agreements to one or more, non-signatory contractor in a deceitful effort to avoid paying their fringe benefit contributions. (Id.)
Notably, 29 U.S.C. § 1145 states that “[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.” Section 1145 creates a cause of action against employers who do not make timely contributions that are required under a collective bargaining agreement. Bd. of Trs. v. RBS Wash. Blvd, LLC, No. C 09-0660 WHA, 2010 WL 145097, at *2 (N.D. Cal. Jan.8, 2010).
The plaintiffs must prove the following: (1) the trusts are multiemployer plans as defined by 29 U.S.C. § 1002(37); (2) the collective bargaining agreements obligated the defendant to make contributions; and (3) he did not make the required contributions. 29 U.S.C. § 1145; Bd. of Trs. v. Gervasio Envtl. Sys., No. C 03-4858 WHA, 2004 WL 1465719, at *2 (N.D. Cal. May 21, 2004).
The allegations and declarations set forth by the Plaintiffs establish they are multiemployer plans as defined by 29 U.S.C. § 1002(37) and that the Defendants breached the bargaining agreements and his statutory duties under ERISA § 515, 29 U.S.C. § 1145, by failing to timely pay contributions. Defendants are an “employer” under ERISA, signed and are a party to the bargaining agreements (and the incorporated trust agreements), owed contributions under the agreements, and are liable under the agreements for the unpaid contributions, liquidated damages, interest, and reasonable attorney's fees and expenses. See Trustees of S. Cal. IBEW-NECA Pension Plan v. Pro Tech Eng'g Corp., No. SACV 150637-DOC (Ex), 2017 WL 10573806, at *3 (C.D. Cal. Aug. 28, 2017) (...
To continue reading
Request your trial