Schueler v. Rayjas Enterprises, Inc., No. 93 Civ. 6979 (VLB).

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtVINCENT L. BRODERICK
PartiesElmore V. SCHUELER, as Chairman of the Board of Teamsters, Local 445, Construction Division Health and Welfare Fund, Local 445 Construction Division Pension Fund, and Local 445 Construction Division Annuity Fund, Plaintiffs, v. RAYJAS ENTERPRISES, INC., Defendant.
Decision Date04 April 1994
Docket NumberNo. 93 Civ. 6979 (VLB).

847 F. Supp. 1147

Elmore V. SCHUELER, as Chairman of the Board of Teamsters, Local 445, Construction Division Health and Welfare Fund, Local 445 Construction Division Pension Fund, and Local 445 Construction Division Annuity Fund, Plaintiffs,
v.
RAYJAS ENTERPRISES, INC., Defendant.

No. 93 Civ. 6979 (VLB).

United States District Court, S.D. New York.

April 4, 1994.


847 F. Supp. 1148

Elizabeth Cowit, Law Offices of Donald L. Sapir, White Plains, NY, for plaintiffs.

Rayjas Enterprises, Inc., pro se.

MEMORANDUM ORDER

VINCENT L. BRODERICK, District Judge.

Plaintiffs are seeking a default judgment in this case brought under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1132, 1145, involving nonpayment of contributions allegedly due to employee benefit funds pursuant to a collective bargaining agreement. Jurisdiction over this case arises under 28 U.S.C. § 1331.

Plaintiffs appear to be entitled to a default judgment, defendant not having answered or otherwise moved with respect to the complaint served on October 20, 1993, but the amount of attorney's fees sought exceeds the principal amount in dispute although no active litigation apart from settlement negotiations appears to have taken place.

For the reasons indicated in Schueler v. Roman Asphalt Corp., 827 F.Supp. 247, 253-58 (S.D.N.Y.1993), this amount is difficult to justify. The relevance of the Government's analysis of the bill which later became the Federal Debt Collection Procedures Act of 1990 (the "Act"), 28 U.S.C. § 3001 et seq., in regard to creditors' attorney's fees appears to have been overlooked.

While not directly binding, the Act is persuasive as the most recent Congressional declaration of an approach to debt collection viewed as appropriate. The most relevant section of the Act is 28 U.S.C. § 3011, which establishes a flat 10% (ten per cent) creditor's attorney fee as a backup or default option where other amounts are not fixed by statute. The Government's Section-by-Section Analysis of S 1961, 100th Cong., 2d Sess (1987) states in regard to initial legislation similar to the final enactment of 28 U.S.C. § 3011:

This section provides that the United States may recover a designated percentage of the debt ... no defendant will be penalized for contesting a claim by incurring additional costs, thus exerting a chilling effect on the exercise of the defendant's constitutional right to a day in court.

That statement in its entirety is attached to this memorandum order as Appendix A, including editorial material explaining the chronology of this document and cross-references to the relevant provisions of the statute as passed by Congress.

This matter is referred to United States Magistrate Judge Mark D. Fox for a Report

847 F. Supp. 1149
and Recommendation concerning the amounts due for the underlying debts and reasonable attorney's fees under 29 U.S.C. § 1132(g) and the principles set forth in Schueler v. Roman Asphalt, 827 F.Supp. 247 (S.D.N.Y.1993)

SO ORDERED.

APPENDIX A

The editorial material which follows is reprinted from Manual of Federal Practice, by permission of Shepard's/McGraw-Hill, Inc., copyright by Shepard's/McGraw-Hill, Inc. Further reproduction of any kind is strictly prohibited. For subscription information, please contact Shepard's/McGraw-Hill, Inc., 555 Middle Creek Parkway, Colorado Springs, Colorado 80921; 1-800-525-2474.

The text of the Government's statement itself is of course in the public domain and therefore not editorial material.

Government's Statement and Section-by-Section Analysis Concerning Senate Hearings on S 1961, 100th Cong, 2d Sess (1988)

The following Appendix consists of the Government's Statement including section-by-section analysis concerning S 1961, 100th Cong, 2d Sess (1987), submitted to the Senate Judiciary Committee and referred to in The Federal Debt Collection Procedures Act of 1988, Senate Judiciary Committee, Hearing before the Subcommittee on Courts and Administrative Practice, on S 1961, S Hrg 100-1047, 100th Cong, 2d Sess 196, 199 (1988). It is presented in the form of proposed committee report language which was not acted upon by the Committee which reported the bill favorably without a written report.

The amended S 1961 reflecting changes explained in the Government's Statement served as the basis for S 84, 101st Cong, 1st Sess (1989), also reported favorably without a written report. S 1961 was passed by the Senate on October 14, 1988 and S 84 on November 3, 1989. S 84 was revised in HR 5640, and enacted in further revised form in 1990 as explained in § 12.1. HR 5640 is discussed in HR Rep No 736, 101st Cong, 2d Sess, reprinted in 1990 US Code Cong & Admin News 6630, and in Representative Brooks' floor statement, 136 Cong Rec H13288 (daily ed Oct 27, 1990). Many aspects of the final provisions are discussed only in the statement set forth below. Others were changed substantially as reflected in HR Rep No 736 or H13288.

Sections of Title 28 as added in 28 USC ch 176 comparable to those referred to in the Government's Statement concerning various sections of S 1961 are cited in bracketed italics; in most instances the 28 USC provisions are related to but not identical to those contained in S 1961 as amended and passed by the Senate on October 14, 1988.

2

I. STATEMENT

At the present time, there are over $32 billion dollars of outstanding non-tax delinquent debts due the United States. With the inclusion of unpaid taxes, penalties and interest, the amount of these delinquent debts approaches $88 billion. In the present era of large budget deficits and resulting difficult budget choices, any improvement in the government's ability to collect these sums is not only appropriate, but overdue.

The present law governing collection of Federal debts is hamstrung by a multitude of inadequate, non-existent or conflicting state statutes. This diverse collection of laws impedes the efficient and effective collection of debts. Without this statute, the present situation can only be expected to worsen.

Moreover, the present system for collection of Federal debts is inherently unfair. This proposed legislation aims to correct the inequities that exist for Federal debtors, the Federal government and the American taxpayer. The proposal creates a firm but fair comprehensive statutory scheme for the collection of all Federal debts. Every provision in the Act is based upon existing law of some state.

Federal loans are made under uniform Federal standards, Federal taxes are imposed under a uniform Federal tax code and civil penalties and criminal fines are imposed under Federal laws and regulations. However, pursuant to the Federal Rules of Civil Procedure, after a civil money judgment is rendered or a Federal criminal fine imposed, the United States must look to the law of the state where a debtor resides to determine

847 F. Supp. 1150
what collection remedies are available to collect the debts owed to the Federal government

There is inherent unfairness in a system which requires borrowers to compete for monies under uniform Federal requirements, but leaves some more and others less obligated to pay those debts based upon the law of the state in which they choose to locate. The same is true of those who are fined by the government, with the success of collection efforts then depending upon the laws of the state where the debtor is located. Some states have strong collection remedies, while others are havens for debtors. Those who reside in states that have strong debt collection statutes bear a disproportionate amount of the burden.

The United States must treat all its citizens equally; whether it be the student who needs money for school, an entrepreneur who cannot get a loan for his business from a bank or a veteran who wants to buy a home. Proposed in the Federal Debt Collection Procedures Act is a system whereby those who benefit from the Federal largess are required to pay back their obligations under a uniform Federal system.

The Federal Debt Collection Procedures Act will provide the necessary legal enforcement tools to assist the Federal government in its effort to recover the dramatically increasing number of debts owed to it.

3

This legislation does not interfere with the state law remedies in any way and does not affect the procedures in state courts. The focus of this legislation is the debtor-creditor relationship between the United States and the debtors who owe it money. The Federal Debt Collection Procedures Act merely creates a Federal procedural system so that the Federal government can better coordinate its debt management effort.

Currently, state law determines the remedies to be used in the collection of Federal debts merely because Federal Rules of Civil Procedure 64 and 69 adopt it.1

Every remedy set forth in this legislation exists in a similar form in one or more existing state statutes. These state provisions, upon which those in the Act are modeled, have withstood challenge in the courts. Careful consideration was given by the drafters to assure that the Act affords Federal debtors full due process protection.

The substitution of Federal procedural remedies for those remedies that exist in state statutes does not affect the applicability of state law theories of liability. State law will continue to govern, for example, as to treatment of property held by co-tenants, a corporation's liability for debts of a shareholder under the alter ego doctrine and a partner's liability for debts of the partnership.

It is entirely appropriate for the Congress to create a Federal scheme for the collection of debts owed the United States. Under Article III, Sections 1 and 2 of the United States Constitution, Congress has the exclusive power to legislate regarding the forms of action and writs to be used in the courts of the United States.2

In Fink v. O'Neil, this power of Congress was discussed in the context of legislation with a provision similar...

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4 practice notes
  • Cablevision Systems v. 45 Midland Enterprises, Inc., No. 93 Civ. 2590 (VLB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 25, 1994
    ...Government's section-by-section analysis of the same provision in the predecessor of the Act, quoted in Schueler v. Rayjas Enterprises, 847 F.Supp. 1147, 1164 (S.D.N.Y.1994), states in This section ... invokes the powers of the court as a court of equity to take whatever action may be neces......
  • Sec. & Exch. Comm'n v. ICP Asset Mgmt. LLC, 10 Civ. 4791 (LAK)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 24, 2012
    ...if its claim has not matured or has yet to be reduced to judgment until after the conveyance). 39.See Schueler v. Rayjas Enters., Inc., 847 F. Supp. 1147, 1170-71 (S.D.N.Y. 1994) (quoting a statement to the Senate that Subchapter D "is modeled on [the UFTA] . . . [and] can be used both befo......
  • United States v. Wyatt, Criminal Action No. 96-cr-00468-RBJ
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • January 12, 2015
    ...to an execution or order is relieved from liability to pay the debtor for the amounts paid." Schueler v. Rayjas Enterprises, Inc., 847 F. Supp. 1147, 1170 (S.D.N.Y....
  • MCI Communications Corp. v. Russell, No. 93 Civ 0676 (VLB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 29, 1994
    ...most recent expression of congressional evaluation of fair and effective debt collection processes. See Schueler v. Rayjas Enterprises, 847 F.Supp. 1147, 1164 IV The attorney's fees now claimed by the plaintiff are $595.00, which appear to fall 861 F. Supp. 282 within the legal costs necess......
4 cases
  • Cablevision Systems v. 45 Midland Enterprises, Inc., No. 93 Civ. 2590 (VLB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 25, 1994
    ...Government's section-by-section analysis of the same provision in the predecessor of the Act, quoted in Schueler v. Rayjas Enterprises, 847 F.Supp. 1147, 1164 (S.D.N.Y.1994), states in This section ... invokes the powers of the court as a court of equity to take whatever action may be neces......
  • Sec. & Exch. Comm'n v. ICP Asset Mgmt. LLC, 10 Civ. 4791 (LAK)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 24, 2012
    ...if its claim has not matured or has yet to be reduced to judgment until after the conveyance). 39.See Schueler v. Rayjas Enters., Inc., 847 F. Supp. 1147, 1170-71 (S.D.N.Y. 1994) (quoting a statement to the Senate that Subchapter D "is modeled on [the UFTA] . . . [and] can be used both befo......
  • United States v. Wyatt, Criminal Action No. 96-cr-00468-RBJ
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • January 12, 2015
    ...to an execution or order is relieved from liability to pay the debtor for the amounts paid." Schueler v. Rayjas Enterprises, Inc., 847 F. Supp. 1147, 1170 (S.D.N.Y....
  • MCI Communications Corp. v. Russell, No. 93 Civ 0676 (VLB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 29, 1994
    ...most recent expression of congressional evaluation of fair and effective debt collection processes. See Schueler v. Rayjas Enterprises, 847 F.Supp. 1147, 1164 IV The attorney's fees now claimed by the plaintiff are $595.00, which appear to fall 861 F. Supp. 282 within the legal costs necess......

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