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Trustees of Operating Engineers Pension Trust v. Diversified Concrete Cutting, Inc.

United States District Court, D. Nevada

April 27, 2018

TRUSTEES OF THE OPERATING ENGINEERS PENSION TRUST; TRUSTEES OF THE OPERATING ENGINEERS HEALTH AND WELFARE FUND; TRUSTEES OF THE OPERATING ENGINEERS JOURNEYMAN AND APPRENTICE TRAINING TRUST; and TRUSTEES OF THE OPERATING ENGINEERS VACATION-HOLIDAY SAVINGS TRUST, Plaintiffs,
v.
DIVERSIFIED CONCRETE CUTTING, INC., a Domestic Corporation; SPECIALTY CONTRACTING CO. d/b/a DIVERSIFIED DEMOLITION CO.; and KENNETH M. MERCURIC, an individual, Defendant.

          ORDER GRANTING DEFAULT JUDGMENT AGAINST DIVERSIFIED CONCRETE CUTTING, INC. AND KENNETH M. MERCURIC (ECF NO. 12)

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE

         The plaintiffs move for default judgment against defendants Diversified Concrete Cutting, Inc. (DCC) and Kermeth M. Mercuric (collectively hereinafter "Defendants"). Based on the record before me, good cause exists to grant the motion and enter default judgment.

         FINDINGS OF FACT

         The Plaintiffs are the Trustees of collectively bargained fringe benefit trusts. They brought this action under Section 301(a) of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185(a), and Section 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended 29 U.S.C. § 1132. The Plaintiffs' complaint seeks unpaid fringe benefit contributions owing to the Trusts from the Defendants. The contributions are owed pursuant to a collective bargaining agreement between the Defendants and the International Union of Operating Engineers, Local 12. The claim on the motion for default judgment is based upon DCC's failure to pay the amount of fringe benefit contributions shown on fringe benefit contribution reports provided by DCC to the Trusts and an audit of DCC's records by the Plaintiffs. The Plaintiffs also seek liquidated damages, prejudgment interest, attorneys' fees, and costs from DCC and Mercurio based on the unpaid contributions shown on the audit and monthly report:s. These additional amounts are required under the collective bargaining agreement and are mandated under 29 U.S.C. § 1132(g)(2).

         A. DCC Failed to Pay Required Contributions.

         Despite DCC's obligations under its agreements, it failed to timely pay fringe benefit contributions for the months of June - November 2017. Additionally, DCC owes additional amounts to the Plaintiffs based on the audit of its payroll records. The total contributions shown in the audit are $8, 183.70.

         B. DCC and Mercuric Failed to Answer the Complaint, and Default was Entered by the Clerk.

         On October 19, 2017, the Plaintiffs commenced this action by filing their Complaint against defendants DCC, Mercurio, and Specialty Contracting Co. d/b/a Diversified Demolition Co. (Specialty Contracting Co. filed bankruptcy on January 11, 2018 and has been dismissed). The Plaintiffs asserted claims for breach of written collective bargaining agreements and related trust agreements, and breach of fiduciary duties. The Plaintiffs' agents personally served DCC with the summons and complaint on October 25, 2017, by service upon its registered agent. The Plaintiffs' agents personally served Mercurio with the summons and complaint on October 25, 2017. Under Federal Rule of Civil Procedure 12(a), DCC and Mercurio's responses were due no later than November 15, 2017.

         DCC and Mercurio failed to respond to the summons and complaint within the time allotted, and on November 16, 2017, the Plaintiffs moved for entry of default against them. On November 17, 2017, the Clerk of Court entered default against DCC and Mercurio.

         The Defendants did not appear in this case, and on April 10, 2018 the Plaintiffs moved for default judgment and served DCC and Mercurio with the motion via U.S. Mail.

         CONCLUSIONS OF LAW

         The Plaintiffs are entitled to default judgment against DCC and Mercurio because the Defendants failed to abide by the terms of the collective bargaining agreements and related trust agreements. In addition to breaching the collective bargaining agreements and related trust agreements, the Defendants are liable to the Plaintiffs for breaching fiduciary duties to the Trusts, their participants, and beneficiaries.

         A. DCC BREACHED THE COLLECTIVE BARGAINING AGREEMENT, RELATED TRUST AGREEMENTS AND VIOLATED ERISA.

         When considering a motion for default judgment, I must accept as true all allegations in the complaint except those relating to the amount of damages. Geddes v. United Financial Coip.. 559 F.2d 557, 560 (9th Cir. 1977); Fed.R.Civ.P. 8(d). In their complaint, the Plaintiffs alleged DCC agreed to the terms of collective bargaining agreements with Local 12. The Plaintiffs also submitted signed documents showing DCC's written agreement to be a party to the collective bargaining agreement. DCC and Mercurio failed to respond to the complaint. It is therefore established that DCC is bound by the terms of the collective bargaining agreements and related trust agreements.

         The collective bargaining agreement in this case requires DCC to make fringe benefit contributions for each hour worked by or paid to any of its employees. It is well-established in this Circuit that similar contractual provisions for the collection of fringe benefit contributions are approved of and well within the mandates of ERISA. Waggoner v. Wm. Radkovich Co.. Inc., 620 F.2d 206 (9th Cir. 1980); Burke v. Lenihan. 606 F.2d 840 (9th Cir. 1979); Waggoner v. C & D Pipeline Co.. 601 F.2d 456 (9th Cir. 1979). In fact, the collective bargaining agreements approved of in Wm. Radkovich Co.. Inc.. Burke, and C & D Pipeline Co. are substantially similar to the collective bargaining agreement at issue here, though, with minor differences. In C & D Pipeline. the Ninth Circuit stated:

[t]he agreement requires employers to make contributions for all hours worked by employees who perform any work covered by the agreement.
A requirement that contributions be based on all hours worked or paid permits the trustees to rely on payroll records to determine if employers are making proper ...

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