Bricklayers & Allied Craftworkers Local 2, Albany v. Moulton Masonry & Constr., LLC

• Decision Date: 26 February 2015
• Docket Number: Docket No. 14–295.
• Citation: 779 F.3d 182
• Court: U.S. Court of Appeals — Second Circuit
• Parties: BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK PENSION FUND, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2, Albany, New York Health Benefit Fund, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2 Annuity Fund, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2, Albany, New York Education & Training Fund, by its Trustees, Robert Mantello, Pasquale Tirino, Luke Renna, Michael Suprenant, J.D. Gilbert, Thomas Marinello, Todd Helfrich and Laura Regan; Bricklayers and Trowel Trades International Pension Fund, by David Stupar, Executive Director; Bricklayers and Allied Craftworkers Local 2, Albany, New York; Aflcio, by Robert Mantello, President, Plaintiffs–Appellees, v. MOULTON MASONRY & CONSTRUCTION, LLC and Duane E. Moulton, Individually and as an Officer of Moulton Masonry & Construction, LLC, Defendants–Appellants.

779 F.3d 182

BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK PENSION FUND, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2, Albany, New York Health Benefit Fund, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2 Annuity Fund, by its Administrator, Stephen J. O'Sick; Bricklayers and Allied Craftworkers Local 2, Albany, New York Education & Training Fund, by its Trustees, Robert Mantello, Pasquale Tirino, Luke Renna, Michael Suprenant, J.D. Gilbert, Thomas Marinello, Todd Helfrich and Laura Regan; Bricklayers and Trowel Trades International Pension Fund, by David Stupar, Executive Director; Bricklayers and Allied Craftworkers Local 2, Albany, New York; Aflcio, by Robert Mantello, President, Plaintiffs–Appellees,

v.MOULTON MASONRY & CONSTRUCTION, LLC and Duane E. Moulton, Individually and as an Officer of Moulton Masonry & Construction, LLC, Defendants–Appellants.

Docket No. 14–295.

United States Court of Appeals, Second Circuit.

Argued: Jan. 12, 2015

Decided: Feb. 26, 2015

Affirmed in part, vacated in part, and remanded. Jennifer A. Clark (Daniel Kornfeld, on the brief), Blitman & King LLP, Syracuse, NY, for Plaintiffs–Appellees.

Brian M. Quinn, Tabner, Ryan and Keniry, LLP, Albany, NY, for Defendants–Appellants.

Before: KATZMANN, Chief Judge, KEARSE and RAGGI, Circuit Judges.PER CURIAM:

Defendants–Appellants Moulton Masonry & Construction, LLC (“the corporate defendant”), and Duane E. Moulton (“the individual defendant”), appeal from an amended judgment entered on January 16, 2014 by the United States District Court for the Northern District of New York (Hurd, J.). In that order, the district court denied defendants' cross-motion to vacate the default entered on April 24, 2013, and granted plaintiffs' motion for a default judgment against both defendants for $662,135.21. This amount—for which the defendants were held jointly and severally liable—accounts for $451,300.52 in withheld fringe benefit contributions and deductions, $104,628.81 in prejudgment interest through October 21, 2013, $99,203.93 in liquidated damages, and $7,001.95 in attorney's fees and costs. We AFFIRM the denial of the defendants' motion to vacate the entry of default. We further AFFIRM the entry of a default judgment for $662,135.21 against the corporate defendant. Because the district court erred in calculating the damages entered against the individual defendant, however, we VACATE the default judgment entered against the individual defendant and REMAND for further proceedings in accordance with this Opinion.

The defendants' primary justification for failing to file a responsive pleading, or participate in the litigation in any way, is that Moulton believed his participation in the audit was sufficient to discharge the defendants' duties. In his view, therefore, his failure to file a responsive pleading was a mere mistake and, therefore, excusable. A defendant's responsibility to file a responsive pleading, however, is not obviated by participating in efforts which could, in theory, later resolve the case. See McNulty, 137 F.3d at 734–35, 739 (settlement discussions that proved fruitless did not render a default unwillful); cf. 24 Am.Jur. Proof of Facts 2d 705 (“[T]he mere belief on the part of a defendant that matters will be settled [is not] a sufficient excuse for default.”). Moreover, the defendants' request for an extension of time, through counsel, belies any inference that the failure to file a responsive pleading was a mere mistake.

While defendants' arguments, if credited, might give rise to an inference that their failure to file a responsive pleading was not in bad faith, “a finding of bad faith is [not] a necessary predicate to concluding that a defendant acted ‘willfully.’ ” Gucci Am., Inc. v. Gold Ctr. Jewelry, 158 F.3d 631, 635 (2d Cir.1998) Rather, “it is sufficient” to conclude “that the defendant defaulted deliberately.” Id. Defendants' conduct, in our view, indicates just such a clear pattern of willful and deliberate disregard for the litigation. See Guggenheim Capital, LLC, 722 F.3d at 455 (noting that where defendant “does not deny that he received the complaint, the court's orders, or the notice of default judgment” and “does not contend that his non-compliance was due to circumstances beyond his control,” an inference of willful default is justified).

Second, the defendants fail to meet their burden of offering evidence sufficient to establish a complete defense. See State St. Bank & Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 167 (2d Cir.2004). To the contrary, the conclusory assertions in Moulton's affidavit, at most, merely offer excuses for failing to file a responsive pleading and dispute the amount of damages. Such statements are insufficient to compel vacatur of an entry of default. See New York v. Green, 420 F.3d 99, 110 (2d Cir.2005) (“We have previously held that a ‘defendant must present more than conclusory denials when attempting to show the existence of a meritorious defense.’ ”) (quoting Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 173 (2d Cir.2001)); Sony Corp., 800 F.2d at 320–21 (“Although in an answer general denials normally are enough to raise a meritorious defense, the moving party on a motion to reopen the default must support its general denials with some underlying facts.”).

We need not reach the question of whether the plaintiff would suffer prejudice as we are “persuaded that the default was willful and ... [are] unpersuaded that the defaulting party has a meritorious defense.” McNulty, 137 F.3d at 738. Accordingly, we hold that the district court did not abuse its discretion in denying the defendants' motion to vacate the entry of default.

II. DEFAULT JUDGMENT: LIABILITY

A court's decision to enter a default against defendants does not by definition entitle plaintiffs to an entry of a default judgment. Rather, the court may, on plaintiffs' motion, enter a default judgment if liability is established as a matter of law when the factual allegations of the complaint are taken as true. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir.2011). We review the district court's decision for abuse of discretion. Id. at 131. Under this rubric, the district court concluded that the defendants were liable as a matter of law. We agree.

Although plaintiffs contend that the defendants waived any argument that they were not liable as a matter of law by failing to present any such argument below, we need not decide that issue because defendants' arguments on the point are wholly without merit. Under Section 515 of ERISA, 29 U.S.C. § 1145, any “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.” If such an employer fails to make the required contributions, the court “shall award the plan”: “unpaid contributions,” “interest,” “liquidated damages provided for under the plan,” “attorney's fees and costs,” and “such other legal or equitable relief the court deems appropriate.” Id. at § 1132(g)(2).

The allegations in the complaint when accepted as true, as we are required to do in deciding whether a default judgment is appropriate, establish the following facts: (1) the corporate defendant was bound to a Collective Bargaining Agreement with the Union; (2) it was obligated to remit contributions and deductions to the Funds and Union for hours worked by bricklayers, masons and plasterers in the Union's jurisdiction; and (3) it was bound by the Funds' Agreements and Declarations of Trust and Collections Policy. In addition, documentary evidence submitted by the plaintiffs, which the defendants did not contest, establishes that the corporate defendant failed to remit at least some contributions. These facts are sufficient to render the corporate defendant liable under ERISA. See 29 U.S.C. § 1145; Finkel v. Romanowicz, 577 F.3d 79, 85 (2d Cir.2009).

The corporate defendant argues that it cannot be found liable as a matter of law under sections 1132 and 1145, because “[t]here was ... no evidence that [it] received any monies from any union labor.” Yet, a well-pleaded factual allegation in the complaint belies this claim. Plaintiffs alleged that the corporate defendant did, in fact, receive payment for union labor, and that allegation is accepted as true. See J.A. 16.

The district court never expressly articulated the legal theory under which it found Duane Moulton liable in his individual capacity. See generally Sasso v. Cervoni, 985 F.2d 49, 50 (2d Cir.1993) (holding that an individual cannot be held “liable for corporate ERISA obligations solely by virtue of his role as officer, shareholder, or manager”); Leddy v. Standard Drywall, Inc., 875 F.2d 383, 387 (2d Cir.1989). Here, because Moulton never entered into a collective bargaining agreement with the union, and because no other evidence suggested that the individual and corporate defendants are alter egos, Moulton could not have been found to be an “employer” under Section 515 of ERISA.

But Section 409 of ERISA, 29 U.S.C. § 1109, provides an independent basis for Moulton's liability in his individual capacity as a “fiduciary.” A fiduciary, under ERISA is “someone who ‘exercises any discretionary authority or discretionary control respecting management of [an ERISA benefit] plan or exercises any authority or control respecting management or disposition of its assets.’ ” Finkel, 577 F.3d at 85 (alteration and emphasis in the original) (quoting 29 U.S.C. § 1002(21)(A)(i)). A fiduciary that unlawfully withholds plan assets is “personally liable to make good to such plan any losses to the plan.” 29 U.S.C. § 1109(a). Though not all corporate officers are...