Trs. of Mosaic & Terrazzo Welfare, Pension, Annuity, & Vacation Funds v. Elite Terrazzo Flooring, Inc.
| Decision Date | 03 March 2021 |
| Docket Number | 18 CV 1471 (CBA) (CLP) |
| Parties | TRUSTEES OF THE MOSAIC AND TERRAZZO WELFARE, PENSION, ANNUITY, AND VACATION FUNDS and TRUSTEES OF THE BRICKLAYERS & TROWEL TRADES INTERNATIONAL PENSION FUND, Plaintiffs, v. ELITE TERRAZZO FLOORING, INC. and PICNIC WORLDWIDE LLC, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
On March 9, 2018, plaintiffs, Trustees of the Mosaic and Terrazzo Welfare, Pension, Annuity and Vacation Funds, and Trustees of the Bricklayers & Trowel Trades International Pension Fund ("plaintiffs" or the "Funds"), commenced this action against defendants Elite Terrazzo Flooring, Inc. and Picnic Worldwide LLC ("defendants"), pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et seq., and Section 301 of the Labor Management Relations Act of 1947 ("LMRA"), as amended, 29 U.S.C. § 185, to collect delinquent employer contributions owed to a group of employee benefit plans, and for declaratory relief. (Compl.1 ¶ 1).
On March 31, 2020, the Clerk of Court entered a default against defendants, and thereafter, plaintiffs filed their motion for default judgment on April 28, 2020. On April 28,2020, the Honorable Carol B. Amon referred the motion for default judgment to the undersigned to prepare a Report and Recommendation and, if necessary, to conduct an inquest.
For the reasons set forth below, the Court respectfully recommends that the Funds' motion for default judgment be granted in part and denied in part.
Plaintiffs, the Trustees of the Mosaic and Terrazzo Welfare, Pension, Annuity, and Vacation Funds (the "Local Funds"), are employer and employee trustees of multiemployer labor-management trust funds organized and operated in accordance with section 302(c) of the LMRA, 29 U.S.C. § 186(c). (Compl. ¶ 4). The Local Funds are employee benefit plans within the meaning of Section 3(3) of ERISA, 29 U.S.C. § 1002(21), and they maintain an office at 45-34 Court Square, Long Island City, N.Y.2 (Id.) Plaintiffs, Trustees of the Bricklayers & Trowel Trades International Pension Fund (the "International Funds"), are also trustees of multiemployer labor-management trust funds and employee benefit plans within the meaning of ERISA. (Id. ¶ 5). The International Funds are located at 620 F Street N.W., Washington, D.C. (Id.)
According to the Complaint, at all relevant times, defendant Elite Terrazzo Flooring, Inc. ("Elite") was a New Jersey corporation, located at 185 5th Avenue, Paterson, N.J., and an employer within the meaning of ERISA. (Id. ¶ 6). Defendant Picnic Worldwide LLC ("Picnic Worldwide") is alleged to be a New Jersey corporation and an employer as defined in ERISA, located at 26 Overlook Avenue, North Haledon, N.J. (Id. ¶ 7).
The Complaint alleges that at all times, Elite was a party to a collective bargaining agreement ("CBA") with the Mosaic, Terrazzo and Chemical Product Decorative Finisher Masons Workers Association Local No. 7 of New York, New Jersey & Vicinity of the International Union of Bricklayers and Allied Craftworkers (the "Union"), which required the remittance of contributions to the Funds on behalf of the covered employees. (Id. ¶¶ 8-11).
According to the Complaint, when Elite failed to timely remit contributions to the Funds for its employees' Covered Work, the parties entered into a Settlement Agreement in or around May 2015, whereby Elite and Elite's principal, Chris Picinic, agreed to pay the Funds the sum of $874,236.01 over approximately two and a half years.3 (Id. ¶ 18). When Elite defaulted on the payments, the Funds obtained a judgment in state court on June 15, 2015, in the amount of $774,236.00, and on June 23, 2015, the Funds obtained a judgment in federal court for the same amount. (Id. ¶¶ 19-21). As of the date of the Complaint, plaintiffs allege that they continue to be owed $694,761.16. (Id. ¶ 22). Plaintiffs further allege that Elite owes contributions to the Funds for work performed during the period March 1, 2015 through June 7, 2015. (Id. ¶ 23).
Plaintiffs allege that Elite and Picnic Worldwide4 are alter egos and/or successors/predecessors of each other with the same ownership, management, business purpose, operation, equipment, customers, and supervision. (Id. ¶ 25). Plaintiffs assert that by virtue of their status as alter egos, successors, and/or predecessors of each other, Elite and Picnic Worldwide are and have at all relevant times been bound by the CBA and are jointly andseverally liable for the contributions owed to the Funds, and for the amounts owed as a result of the judgment. (Id. ¶ 41).
Following the filing of the Complaint, defendants filed an Answer that included counterclaims against plaintiffs under the Racketeer Influenced Corrupt Organization ("RICO") provisions of 18 U.S.C. § 1961 et seq., along with a third-party complaint, asserting claims against Marble Terrazzo and Specialty Contractors Inc., William Zonca, Local 7 Mosaic & Terrazzo and Chemical Product Finisher Mason Workers Association, and Michael Magnam. (See Picnic Answer;5 Elite Terrazzo Flooring Answer6).
On June 4, 2019, the Honorable Carol B. Amon, United States District Judge, granted plaintiffs' motion to dismiss the RICO counterclaims and dismissed the third-party complaint as well. (ECF No. 63). Also on June 4, 2019, Judge Amon denied the defendants' motion to compel arbitration and granted the Funds' motion for sanctions based on defendants' counsel's admission that he did not review the relevant caselaw before filing a frivolous motion to compel arbitration. (ECF No. 62). The court Ordered defendants' counsel, Richard J. Abrahamsen, Esq., to pay the Funds $11,784.19 within two weeks of the Order. (6/4/19 Order7 at 15).
On July 8, 2019, plaintiffs submitted a status letter in response to this Court's Order of June 6, 2019. In that letter, plaintiffs indicated that they had been unable to confer about adiscovery schedule because they had not been able to reach defendants' counsel in the prior thirty days. (Pls.' 7/8/19 Ltr.8 at 1). However, plaintiffs proposed their own discovery schedule with fact discovery to be completed by November 12, 2019. (Id.)
In that same July 8, 2019 letter, plaintiffs informed the Court that defendants' counsel had disobeyed Judge Amon's June 4, 2019 Order and had failed to pay the Funds $11,784.19 by the June 19, 2019 deadline the court had set. (Id. at 1-2). Based on defendants' counsel's failure to obey the court's Order and defendants' counsel's failure to return plaintiffs' emails and phone calls to discuss the matter, plaintiffs sought further sanctions pursuant to Fed. R. Civ. P. 37 for defendants' "brazen disobedience of the Court's Order." (Id. at 2 (citing Kingsway Fin. Servs. v. Pricewaterhouse-Coopers LLP, No. 03 CV 5560, 2008 WL 5336700, at *10-11 (S.D.N.Y. Dec. 23, 2008))). Specifically, plaintiffs sought an Order holding defendants and their counsel, Mr. Abrahamsen, in civil contempt and awarding plaintiffs sanctions in the amount of $23,568.38, representing the full costs of plaintiffs' fees associated with the response to the motion to compel arbitration. (Id.)
In response, defendants' attorney, Mr. Abrahamsen, submitted a letter, dated July 29, 2019, indicating that he had suffered some health issues and had not been able financially to pay the sanctions as ordered by the District Court. (Defs.' 7/29/19 Ltr.9 at 1). In the letter, counsel represented that he had paid half of the sanctions amount and intended to pay the balance "within 30 days." (Id.)
On July 31, 2019, plaintiffs served defendants with their discovery demands. (Pls.' 10/22/19 Ltr.10 at 1). When defendants failed to respond, plaintiffs served a motion to compel on September 20, 2019, to which defendants responded in opposition on October 15, 2019. (Id.) In their October 22, 2019 reply letter to the Court, plaintiffs complain that instead of responding to the issue of defendants' unresponsiveness to discovery, the defendants' counsel "submitted a response that reads more like an ill-fated motion to dismiss, filled with non sequiturs and red herrings," including arguments that "are either false or so meritless that Mr. Abrahamsen clearly did not perform a reasonable inquiry into whether they have a basis in fact or law." (Id. at 2). Plaintiffs requested authorization to move for sanctions under Rule 11. (Id.) Plaintiffs also noted that despite his representation to the Court in July, counsel for defendants still had not paid the total amount ordered by the District Court in sanctions. (Id. at 1).
In response to the plaintiffs' October 22, 2019 letter, defendants' counsel seemingly ignored the issue of the previously ordered and still unpaid sanctions award. Instead, counsel submitted a letter arguing that the Funds "must know who these employees are," that the Funds conducted an audit and have the payroll records and information about the employees, and "so it is not too difficult for the Fund[s] to identify those employees, produce the authorization cards in order to get the information sought in discovery in this case." (Defs.' 10/31/19 Ltr.11 at 1-2). The letter further argued that the defendants were not signatories to the CBA, and that "[i]t seems completely obvious that the Funds have filed this action without a legal predicate in the form of representing beneficiaries of the Fund who recognize Local 7 as their exclusiveCollective-Bargaining Representative." (Id. at 3). Other than contending that plaintiffs had "no right to conduct a fishing expedition," counsel for defendants did not address his failure to respond to discovery. (Id.) Counsel for defendants also argued that Rule 11 sanctions should be imposed on plaintiffs for filing a "frivolous" lawsuit and for counsel's attempt to apply Rule 11 to a discovery dispute. (Id. at 3).
On November 4, 2019, this Court held a conference with co...
To continue reading
Request your trial