DeVito v. Hempstead China Shop, Inc.
| Decision Date | 13 September 1993 |
| Docket Number | No. CV 91-5077 (ADS).,CV 91-5077 (ADS). |
| Citation | 831 F. Supp. 1037 |
| Parties | Gina DeVITO, Charles Castelli, Ralph Vampini, and Ruth Gordon, as Trustees of Local 1245 General Benefits Funds, Plaintiffs, v. HEMPSTEAD CHINA SHOP, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
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Vladeck, Waldman, Elias & Engelhard, P.C., New York City, for plaintiffs (Patricia McConnell, of counsel).
Rains & Pogrebin, P.C., Mineola, NY, for defendant (Mark N. Reinharz, of counsel).
The plaintiffs brought this action pursuant to 29 U.S.C. §§ 1132 and 1145 ("ERISA") to collect delinquent contributions to the plaintiff Funds under the terms of a collective bargaining agreement with the defendant. The plaintiffs previously moved for summary judgment, seeking an order granting them mandatory relief under 29 U.S.C. § 1132(g)(2). The defendant cross-moved for summary judgment dismissing the complaint and for leave to file a counterclaim.
This Court issued a Memorandum Decision and Order on October 22, 1992, granting summary judgment in favor of the plaintiffs 804 F.Supp. 481. The Court further determined that the defendant was required to pay interest on the unpaid contributions. In that same Order, the Court directed counsel for the plaintiffs to submit an affidavit by November 4, 1992, concerning the issue of attorney's fees as provided in section 502(g)(2)(D) of ERISA. The Court advised counsel for the defendant that he had until November 13, 1992 to respond to the plaintiffs' affidavit.
Based upon questions which arose concerning the issues of interest and attorney's fees, the Court conducted a status conference on November 24, 1992. At that time, counsel for both sides advised the Court of the parties' agreement that the amount of delinquent contributions due the plaintiff Funds, pursuant to the Court's October 22, 1992 decision, was $55,302.00, covering the period from April, 1989 through March, 1992. However, the parties were unable to agree on the amount of interest and attorney's fees. The Court gave both sides additional time to submit papers. The Court now addresses the two issues of attorney's fees and interest.
The Employee Retirement Income Security Act ("ERISA") in its enforcement section provides as follows:
The language of Section 1132(g) is mandatory, and once the provision applies, the district court must award liquidated damages (see Benson v. Brower's Moving & Storage, Inc., 726 F.Supp. 31, 36 E.D.N.Y.1989, aff'd, 907 F.2d 310 2d Cir., cert. denied, 498 U.S. 982, 111 S.Ct. 511, 112 L.Ed.2d 524 1990; McDonald v. Centra, Inc., 946 F.2d 1059, 1065 4th Cir.1991, cert. denied, ___ U.S. ___, 112 S.Ct. 2325, 119 L.Ed.2d 244 1992; Michigan Carpenters Council v. C.J. Rogers, Inc., 933 F.2d 376 6th Cir.1991; Idaho Plumbers & Pipefitters v. United Mechanical Contractors, Inc., 875 F.2d 212, 215 9th Cir.1989). Therefore, based upon the language of 29 U.S.C. § 1132(g)(2)(A) and (B), once judgment in favor of the plan has been awarded by the Court, the plan is entitled to both the unpaid contributions and interest on the unpaid contributions.
In discussing the "interest" provision of the statute, the Second Circuit has noted the following:
(O'Hare v. General Marine Transport Corp., 740 F.2d 160, 170 2d Cir.1984, cert. denied, 469 U.S. 1212, 105 S.Ct. 1181 84 L.Ed.2d 329 1985).
The statute therefore provides for a double interest payment or alternative liquidated damages to compensate a multiemployer benefit fund plan for costs incurred in connection with delinquencies (O'Hare, supra, at p. 171).
In this case, the plaintiff states that the plan of the General Benefits Fund of Local 1245 does not provide a rate of interest. Nor does it appear that there is any applicable provision in the collective bargaining agreement. Counsel for the plaintiff fund has therefore applied the rate prescribed in 26 U.S.C. § 6621, and has arrived at the following rates for the periods in question:
. Apr. 1, 1989-June 30, 1989 12%
. Jul. 1, 1989-Sep. 30, 1989 12%
. Oct. 1, 1989-Dec. 31, 1989 11%
. Jan. 1, 1989-March 31, 1990 11%
. Apr. 1, 1990-June 30, 1990 11%
. Jul. 1, 1990-Sep. 30, 1990 11%
. Oct. 1, 1990-Dec. 31, 1990 11%
. Jan. 1, 1991-March 31, 1991 11%
. Apr. 1, 1991-June 30, 1991 10%
. Jul. 1, 1991-Sep. 30, 1991 10%
. Oct. 1, 1991-Dec. 31, 1991 10%
. Jan. 1, 1992-March 31, 1992 9%
. Apr. 1, 1992-June 30, 1992 8%
. Jul. 1, 1992-Sep. 30, 1992 8%
. Oct. 1, 1992-Dec. 31, 1992 7%
The defendant has not contested these rates.
However, the parties do have opposing viewpoints with regard to when interest on the unpaid contributions begins to run. The plaintiff contends that interest is to be calculated from the date of the deficiency until the deficiency is paid and relies on the Sixth Circuit's holding to that effect in Laborers' Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d 702, 706 (6th Cir.1988). The defendant, on the other hand, argues that interest on the contributions begins to run only when the Fund demands payment of the contributions, relying on New York State Teamsters Council Health and Hospital Fund v. City of Utica, 643 F.Supp. 619 (N.D.N.Y.1986). Acknowledging that there is a split in authority in determining when interest on contributions begins to run, counsel for the defendant urges the Court to exercise its discretion and calculate interest from the date of demand. So far as the defendant is concerned, no "demand" was made until April 17, 1991, when counsel for Local 1245 wrote a letter to Henry Ponoroff of Hempstead China stating that Local 1245 was demanding payment of the full indebtedness of $19,732.00.
The Court looks to the terms of the collective bargaining agreement, and in particular to Section 14, which provides as follows:
"Health Contributions A. The Employer shall on the tenth (10th) day of each and every month during the period of this Agreement contribute to Local 1245 General Benefit Fund the following amounts to insure and protect the health benefits presently enjoyed by the employees...." (emphasis supplied).
Clearly, by its terms, the agreement mandates that contributions are due on the date that they are required to be received by the Fund. It follows, then, that the contributions are delinquent once that date has come and gone. Since interest is available on unpaid or delinquent contributions, it is this "due date" which is the applicable commencement date for the accrual of interest (see New York State Teamsters Conference and Retirement Fund v. Erick Sanitation, 1992 WL 246880 *2 N.D.N.Y. Sept. 18, 1992; Local No. 626 v. M & L Construction Corp., 1990 WL 44939, LEXIS 4282 E.D.Pa. April 11, 1990).
Contrary to the defendant's position, the Court can find no language in the ERISA statute nor in the agreement that requires a written demand . Even if such a demand were to be read into the statute, the Court finds that the plaintiff has satisfied such a demand by the monthly written notices sent by the Fund stating the specific amounts due (see Declaration of Frank DeVito). In addition, the Court finds the circumstances in New York State Teamsters Council Health and Hospital Fund v. City of Utica, 643 F.Supp. 619 (N.D.N.Y.1986) clearly distinguishable. In City of Utica, the plaintiff Fund was authorized to audit the defendant's payroll records at a mutually convenient time in order to determine whether the defendant was complying with the terms of the agreements (id. at p. 621). During one of those audits, the Fund became aware of certain unpaid contributions, one segment of which was the result of alleged bookkeeping errors. In awarding judgment for the Fund, the District Court held that the plaintiffs were entitled to interest and liquidated damages, but that the interest would run from the date on which the Fund first notified the defendant of the discrepancies. Unlike Hempstead China, the defendant in City of Utica had been making the required contributions, but the amount was contested. The defendant became aware of the problem through an audit and...
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