Tr. of Local Union 531 IBEW v. NuCore Elec.

• Decision Date: 27 January 2023
• Docket Number: 3:22-CV-444 JD
• Parties: TRUSTEES OF THE LOCAL UNION 531 IBEW AND NECA MONEY PURCHASE PENSION PLAN, TRUSTEES OF LOCAL UNION 531 IBEW AND NECA PENSION FUND, Plaintiffs, v. NUCORE ELECTRIC INC, Defendant.
• Court: U.S. District Court — Northern District of Indiana

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TRUSTEES OF THE LOCAL UNION 531 IBEW AND NECA MONEY PURCHASE PENSION PLAN, TRUSTEES OF LOCAL UNION 531 IBEW AND NECA PENSION FUND, Plaintiffs, v. NUCORE ELECTRIC INC, Defendant.

No. 3:22-CV-444 JD

United States District Court, N.D. Indiana, South Bend Division

January 27, 2023

OPINION AND ORDER

JON E DEGUILIO Chief Judge.

The Court now considers a Motion for Entry of Default Judgment brought by Plaintiffs Trustees of the Local Union 531 I.B.E.W. and N.E.C.A. Pension Fund and the Trustees of the Local Union 531, I.B.E.W. and N.E.C.A. Money Purchase Pension Plan (collectively, “the Plaintiffs”). Plaintiffs seek a default judgment against Defendant Nucore Electric Inc. (“Nucore”). Given the discussion below, the Court DENIES, with leave to refile, Plaintiffs' motion for a default judgment. (DE 8.)

A. Background

Plaintiffs, according to the Complaint, are trustees of two funds: (1) the Local Union 531, I.B.E.W. and N.E.C.A. Pension Fund (“the Pension Fund”), which is an “employee pension benefit plan” as defined by the Employee Retirement Income Security Act of 1974 (ERISA) and is organized for the sole purpose of providing defined-benefit pensions to certain eligible employees; and (2) the Local Union 531, I.B.E.W. and N.E.C.A. Money Purchase Pension Plan (“MPP Plan”), which is an “employee pension benefit plan” as defined by ERISA and is organized for the purpose of providing retirement benefits to eligible employees. (DE 1 ¶¶ 6, 9.)^[1]Both the MPP and the Pension Fund are “multiemployer plans” within the meaning of ERISA. See 29 U.S.C. § 1002 (explaining that a “multiemployer plan” is a plan in which “more than one employer is required to contribute,” which is “maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer,” and which satisfies other regulatory requirements). Nucore is an employer bound by the terms of the collective bargaining agreement (CBA) between the Northern Indiana Chapter NECA, Inc. and Local Union 531, IBEW. (Id. ¶ 13.) As a party to the CBA, Nucore was also bound to the terms of the Pension and MPP Trust Agreements, including a Joint Collection Policy. (Id. ¶¶ 21-23.) Pursuant to the CBA, Pension Trust Agreements, and the Joint Collection Policy, Nucore was required to submit timely reports of hours paid to covered employees and to make contributions to the Pension and MPP Plans, as well as other employee benefit funds. (Id. ¶¶ 14, 23.) Contrary to these obligations, Nucore did not report all hours paid to covered employees and failed to timely remit all contribution payments for work performed by covered employees for the period of January 1, 2017, to December 31, 2019 (“the Audit Period”). (Id. ¶ 15.)

The Plaintiffs filed a Complaint on June 9, 2022, which alleges four causes of action: (1) Failure to Remit Contributions (ERISA § 515, 29 U.S.C. § 1145); (2) Breach of Contract & Failure to Remit Contributions/Reports (LMRA § 301, 29 U.S.C. § 185); (3) Failure to Pay Liquidated Damages, Interest and Audit Costs (ERISA § 515, 29 U.S.C. § 1145); and (4) Breach of Contract & Failure to Pay Liquidated Damages, Interest and Audit Costs (LMRA § 301, 29 U.S.C. § 185). In their Complaint, Plaintiffs requested damages in the following amounts:

• unpaid and delinquent contributions from the Audit Period in the amount of $6,193.16;

• liquidated damages in the amount of $1,238.63;

• accumulated interest through the date of judgment at the rate of 1% per month for late and/or unpaid contributions from the due date of such contributions;

• audit costs in the amount of $1,000;

• any unpaid contributions accruing during the pendency of this action; and

• reasonable attorney's fees.

(Id. at 11.)

Examination of the court files and record in this cause show that Nucore was properly served the complaint and summons by way of certified mail on June 13, 2022. (DE 5 at 3 (showing that an agent of Nucore signed upon delivery of the certified mail).) Under Rule 4(e), an individual may be served by “following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” Fed. R. Civ. P 4(e)(1). Indiana allows for service of an organization via certified mail if the certified mail is “sent to ‘an executive officer [or] an agent appointed or deemed by law to have been appointed to receive service' and that a written receipt be produced showing who accepted the certified mail.” Johnson, next friend of C.C. v. Hotel Mgmt. Servs. Inc., No. 3:21-CV-62 JD, 2021 WL 5177593, at *1 (N.D. Ind. Nov. 8, 2021) (quoting T.R. 4.6(A)(1)). Here, a receipt was submitted to the Court showing that an agent of Nucore signed upon delivery. (DE 5 at 3.) Service was therefore effective. See Fed.R.Civ.P. 4(e)(1) (permitting service pursuant to the law of the state in which the district court is located); Ind. R. Civ. P. 4.1(1) (permitting service upon an individual by registered or certified mail). Ind. R. Civ. P. 4.6 (permitting service on an organization by certified mail to the registered agent).

After service was perfected, Nucore failed to plead, otherwise appear in this action, or respond to the complaint as required by Fed.R.Civ.P. 12(a)(1)(A). On July 11, 2022, Plaintiffs filed an application for entry of default pursuant to Fed.R.Civ.P. 55(a). (DE 6.) The clerk entered a default against Nucore on July 12, 2022. (DE 7.) Nucore has continuously failed to file an answer or any other responsive pleading and have not sought to set aside the default. As a result, Plaintiffs filed the instant motion for default judgment. (DE 8.)^[2]

B. Legal Standard

Federal Rule of Civil Procedure 55 governs the entry of defaults and default judgments. See Lowe v. McGraw-Hill Cos., Inc., 361 F.3d 335, 339 (7th Cir. 2004). Prior to obtaining a default judgment under Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a). See Wolf Lake Terminals, Inc. v. Mat. Marine Ins. Co., 433 F.Supp.2d 933, 941 (N.D. Ind. 2005). In the instant case, the clerk has already made the entry of default. (DE 7.)

Accordingly, the Court may now enter a default judgment under Rule 55(b)(2). However, the Court must exercise its discretion in doing so. O'Brien v. R.J. O'Brien & Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1993). A default judgment is justified when “the defaulting party has exhibited a willful refusal to litigate the case properly,” as evinced by “a party's continuing disregard for the procedures of the court” and a “willful choice not to exercise even a minimal level of diligence.” Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003). In the present case, the Defendant has Aexhibited a willful refusal to litigate the case properly,@ based upon his Acontinuing disregard@ and failure to Aexercise even a minimum level of diligence.@ Id. Proper service has not prompted Nucore to plead, appear, or otherwise respond. (DE 5 (indicating that Nucore Electric Inc. was served on June 13, 2022).) Additionally, Defendant is a business and thus not an infant, incapacitated, or in the military. See, e.g., UMG Recordings, Inc. v. Stewart, 461 F.Supp.2d 837, 841 (S.D. Ill. 2006) (listing requirements that a party seeking default judgment must establish before being able to proceed) Thus, the entry of default is not based on a simple technicality, and there is no apparent reason why the Court should not proceed to considering a default judgment in favor of the Plaintiff.

“The basic effect of an entry of default (step one) is that ‘[u]pon default, the well-pleaded allegations of a complaint relating to liability are taken as true.'” VLMFood TradingInt'l, Inc. v. Illinois Trading Co., 811 F.3d 247, 255 (7th Cir. 2016) (quoting Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)). Even though the Court accepts the well-pleaded allegations of a complaint relating to liability as true, it still must inquire into whether those well-pleaded allegations state a prima facie case as to liability. See Heartland Footwear Sales Inc. v. 8215774 Canada, Inc., No. 3:19 CV 1142-PPS-MGG, 2021 WL 1732078, at *2 (N.D. Ind. May 3, 2021) (“[A]n entry of default judgment is only appropriate if the allegations, along with other evidence submitted, establish a cognizable claim for relief.”); Franko v. All About Travel Inc., No. 2:09-CV-233 JVB, 2014 WL 2803987, at *1 (N.D. Ind. June 19, 2014) (“Default judgment is appropriate only if the well-pleaded allegations of the complaint are sufficient to establish a legal claim.”); Ford Motor Credit Co. LLC v. Fincannon Ford, Inc., No. 1:19-CV-502-HAB, 2020 WL 6336209, at *1 (N.D. Ind. Oct. 29, 2020) (first determining whether “the well-pleaded facts establish liability” prior to turning to damages).

Once liability is determined, the “plaintiff still must establish his entitlement to the relief he seeks.” In re Catt, 368 F.3d 789, 793 (7th Cir. 2004). “Even when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint with respect to the amount of damages are not deemed true. The district court must instead conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Id. As a result, when considering a motion for default judgment, a court often must hold a hearing to determine damages. O'Brien, 998 F.2d at 1404. But if the damages are “capable of ascertainment from definitive figures contained in documentary evidence or detailed affidavits,” such a hearing is unnecessary. Id.

C. Discussion

(1) Liability

The Court first addresses liability as to Count 1 and Count 2. In Count 1, Plaintiffs allege that Nucore is liable for failing to...