13‐3018‐cv Gesualdi v. Quadrozzi Equipment Leasing Corp. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 2nd day of November, two thousand fifteen.
PRESENT: DENNY CHIN, CHRISTOPHER F. DRONEY, Circuit Judges, EDWARD R. KORMAN, Senior District Judge.* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY PIROZZI, DOMINICK MARROCCO, ANTHONY DʹAQUILA, FRANK FINKEL, JOSEPH FERRARA, MARC HERBST, THOMAS CORBETT, DENISE RICHARDSON, AS TRUSTEE AND FIDUCIARIES OF THE LOCAL 282 WELFARE, PENSION, ANNUITY, JOB TRAINING AND VACATION AND SICK LEAVE TRUST FUNDS, Plaintiffs‐Appellees,
* The Honorable Edward R. Korman, of the United States District Court for the Eastern District of New York, sitting by designation.
v. 13‐3018‐cv
QUADROZZI EQUIPMENT LEASING CORP., AMSTEL RECYCLING & CONCRETE CORP., Defendants‐Appellants.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFFS‐APPELLEES: THOMAS N. CIANTRA (Tzvi N. Mackson, Joseph J. Vitale, on the brief), Cohen, Weiss and Simon LLP, New York, New York.
FOR DEFENDANTS‐APPELLANTS: ERIC W. BERRY, Berry Law PLLC, New York, New York.
Appeal from the United States District Court for the Eastern District of
New York (Dearie, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the order of the district court is VACATED and the case is
REMANDED.
Defendants‐appellants Quadrozzi Equipment Leasing Corp.
(ʺQuadrozziʺ) and Amstel Recycling & Concrete Corp. (ʺAmstelʺ) appeal from a
memorandum and order entered July 12, 2013 (the ʺOrderʺ), in the United States
District Court for the Eastern District of New York, denying defendantsʹ motion to
vacate a default judgment entered against them in this funds collection case brought
pursuant to the Employment Retirement Income Security Act of 1974, as amended , 29
‐2‐ U.S.C. § 1132 (ʺERISAʺ). We assume the partiesʹ familiarity with the underlying facts,
the procedural history of the case, and the issues on appeal.
Plaintiffs‐appellees are Trustees and Fiduciaries (the ʺTrusteesʺ) of the
Local 282 International Brotherhood of Teamsters (ʺLocal 282ʺ) Welfare, Pension,
Annuity, Job Training, and Vacation and Sick Leave Trust Funds (the ʺFundsʺ). The
Trustees sued to recover contributions allegedly due under a number of collective
bargaining agreements between Quadrozzi and the Local 282. In 2009, after an audit,
the Trustees determined that Quadrozzi and Amstel owed money to the Funds.
On January 7, 2011, the Trustees filed this action below. The Trustees
alleged that Quadrozzi and Amstel were a single employer sharing common control or
that they were alter egos of each other. The complaint was served on Quadrozzi and
Amstel, and, with defendants proceeding pro se, the parties entered into settlement
discussions. On December 21, 2011, the district court (Bloom, M.J.) ordered defendants
to respond to the complaint by January 20, 2012. Defendants failed to do so.
On January 31, 2012, the Clerk of the Court entered defendantsʹ default,
notice of which was received by both Catherine Quadrozzi, Secretary and Treasurer of
Quadrozzi and Amstel, and John Quadrozzi, President of Quadrozzi and Amstel.
On February 2, 2012, plaintiffs informed the district court that defendants
intended to hire counsel. Accordingly, the district court extended the Trusteesʹ time to
file a motion for a default judgment until April 20, 2012. On April 6, 2012, however,
‐3‐ Catherine Quadrozzi informed the Trusteesʹ counsel that they would be proceeding pro
se.
On April 20, 2012, the Trustees filed a motion for default judgment
pursuant to Federal Rule Civil Procedure 55(b)(2). Neither defendant responded.
On December 12, 2012, the district court granted the Trusteesʹ motion for a
default judgment and entered judgment against defendants in the amount of
$1,613,008.66. On April 23, 2013, defendants moved to vacate the default judgment
pursuant to Rule 60(b)(1). On July 12, 2013, the district court denied the motion based
primarily on its untimeliness. This appeal followed. 1
DISCUSSION
Rule 60(b)(1) of the Federal Rules of Civil Procedure provides, in pertinent
part, that a court may relieve a party from a final judgment for ʺmistake, inadvertence,
surprise, or excusable neglect.ʺ Fed. R. Civ. P. 60(b)(1). This relief is available with
respect to default judgments. See Fed. R. Civ. P. 55(c). A motion to vacate a judgment
brought pursuant to Rule 60(b)(1) ʺis addressed to the sound discretion of the district
court and [this Court] will not reverse the denial of such a motion except for abuse of
discretion.ʺ State St. Bank & Tr. Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 166 (2d
Cir. 2004) (quoting SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998)); accord Ruotolo v.
1 Defendants argue that the December 12, 2012 default judgment is also currently before this Court. It is not. On its face, the Notice of Appeal only appeals ʺthe Memorandum and Order entered in this action on July 12, 2013, which denied the motion by defendants to vacate the default judgment entered against them.ʺ Joint Appendix at 1013‐14.
‐4‐ City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (ʺA denial of a motion to vacate a
judgment under Rule 60(b) is reviewed for abuse of discretion.ʺ).
Before a district court enters a default judgment, it must determine
whether the allegations in a complaint establish the defendantsʹ liability as a matter of
law. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). This is because ʺ[i]t is an
ʹancient common law axiomʹ that a defendant who defaults thereby admits all well‐
pleaded factual allegations contained in the complaint.ʺ City of New York v. Mickalis
Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (citation omitted). A default only
establishes a defendantʹs liability if those allegations are sufficient to state a cause of
action against the defendants. In addition, we have identified three factors relevant to
deciding a motion to vacate a default judgment pursuant to Rule 60(b): ʺ(1) whether the
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13‐3018‐cv Gesualdi v. Quadrozzi Equipment Leasing Corp. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 2nd day of November, two thousand fifteen.
PRESENT: DENNY CHIN, CHRISTOPHER F. DRONEY, Circuit Judges, EDWARD R. KORMAN, Senior District Judge.* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY PIROZZI, DOMINICK MARROCCO, ANTHONY DʹAQUILA, FRANK FINKEL, JOSEPH FERRARA, MARC HERBST, THOMAS CORBETT, DENISE RICHARDSON, AS TRUSTEE AND FIDUCIARIES OF THE LOCAL 282 WELFARE, PENSION, ANNUITY, JOB TRAINING AND VACATION AND SICK LEAVE TRUST FUNDS, Plaintiffs‐Appellees,
* The Honorable Edward R. Korman, of the United States District Court for the Eastern District of New York, sitting by designation.
v. 13‐3018‐cv
QUADROZZI EQUIPMENT LEASING CORP., AMSTEL RECYCLING & CONCRETE CORP., Defendants‐Appellants.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFFS‐APPELLEES: THOMAS N. CIANTRA (Tzvi N. Mackson, Joseph J. Vitale, on the brief), Cohen, Weiss and Simon LLP, New York, New York.
FOR DEFENDANTS‐APPELLANTS: ERIC W. BERRY, Berry Law PLLC, New York, New York.
Appeal from the United States District Court for the Eastern District of
New York (Dearie, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the order of the district court is VACATED and the case is
REMANDED.
Defendants‐appellants Quadrozzi Equipment Leasing Corp.
(ʺQuadrozziʺ) and Amstel Recycling & Concrete Corp. (ʺAmstelʺ) appeal from a
memorandum and order entered July 12, 2013 (the ʺOrderʺ), in the United States
District Court for the Eastern District of New York, denying defendantsʹ motion to
vacate a default judgment entered against them in this funds collection case brought
pursuant to the Employment Retirement Income Security Act of 1974, as amended , 29
‐2‐ U.S.C. § 1132 (ʺERISAʺ). We assume the partiesʹ familiarity with the underlying facts,
the procedural history of the case, and the issues on appeal.
Plaintiffs‐appellees are Trustees and Fiduciaries (the ʺTrusteesʺ) of the
Local 282 International Brotherhood of Teamsters (ʺLocal 282ʺ) Welfare, Pension,
Annuity, Job Training, and Vacation and Sick Leave Trust Funds (the ʺFundsʺ). The
Trustees sued to recover contributions allegedly due under a number of collective
bargaining agreements between Quadrozzi and the Local 282. In 2009, after an audit,
the Trustees determined that Quadrozzi and Amstel owed money to the Funds.
On January 7, 2011, the Trustees filed this action below. The Trustees
alleged that Quadrozzi and Amstel were a single employer sharing common control or
that they were alter egos of each other. The complaint was served on Quadrozzi and
Amstel, and, with defendants proceeding pro se, the parties entered into settlement
discussions. On December 21, 2011, the district court (Bloom, M.J.) ordered defendants
to respond to the complaint by January 20, 2012. Defendants failed to do so.
On January 31, 2012, the Clerk of the Court entered defendantsʹ default,
notice of which was received by both Catherine Quadrozzi, Secretary and Treasurer of
Quadrozzi and Amstel, and John Quadrozzi, President of Quadrozzi and Amstel.
On February 2, 2012, plaintiffs informed the district court that defendants
intended to hire counsel. Accordingly, the district court extended the Trusteesʹ time to
file a motion for a default judgment until April 20, 2012. On April 6, 2012, however,
‐3‐ Catherine Quadrozzi informed the Trusteesʹ counsel that they would be proceeding pro
se.
On April 20, 2012, the Trustees filed a motion for default judgment
pursuant to Federal Rule Civil Procedure 55(b)(2). Neither defendant responded.
On December 12, 2012, the district court granted the Trusteesʹ motion for a
default judgment and entered judgment against defendants in the amount of
$1,613,008.66. On April 23, 2013, defendants moved to vacate the default judgment
pursuant to Rule 60(b)(1). On July 12, 2013, the district court denied the motion based
primarily on its untimeliness. This appeal followed. 1
DISCUSSION
Rule 60(b)(1) of the Federal Rules of Civil Procedure provides, in pertinent
part, that a court may relieve a party from a final judgment for ʺmistake, inadvertence,
surprise, or excusable neglect.ʺ Fed. R. Civ. P. 60(b)(1). This relief is available with
respect to default judgments. See Fed. R. Civ. P. 55(c). A motion to vacate a judgment
brought pursuant to Rule 60(b)(1) ʺis addressed to the sound discretion of the district
court and [this Court] will not reverse the denial of such a motion except for abuse of
discretion.ʺ State St. Bank & Tr. Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 166 (2d
Cir. 2004) (quoting SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998)); accord Ruotolo v.
1 Defendants argue that the December 12, 2012 default judgment is also currently before this Court. It is not. On its face, the Notice of Appeal only appeals ʺthe Memorandum and Order entered in this action on July 12, 2013, which denied the motion by defendants to vacate the default judgment entered against them.ʺ Joint Appendix at 1013‐14.
‐4‐ City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (ʺA denial of a motion to vacate a
judgment under Rule 60(b) is reviewed for abuse of discretion.ʺ).
Before a district court enters a default judgment, it must determine
whether the allegations in a complaint establish the defendantsʹ liability as a matter of
law. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). This is because ʺ[i]t is an
ʹancient common law axiomʹ that a defendant who defaults thereby admits all well‐
pleaded factual allegations contained in the complaint.ʺ City of New York v. Mickalis
Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (citation omitted). A default only
establishes a defendantʹs liability if those allegations are sufficient to state a cause of
action against the defendants. In addition, we have identified three factors relevant to
deciding a motion to vacate a default judgment pursuant to Rule 60(b): ʺ(1) whether the
default was willful, (2) whether the defendant demonstrates the existence of a
meritorious defense, and (3) whether, and to what extent, vacating the default will
cause the nondefaulting party prejudice.ʺ State St. Bank & Tr. Co., 374 F.3d at 166‐67
(citations omitted). We have a ʺstrong ʹpreference for resolving disputes on the
merits.ʹʺ New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). As a result, in ruling on a
motion to vacate a default judgment, ʺall doubts must be resolved in favor of the party
seeking relief from the judgment in order to ensure that to the extent possible, disputes
are resolved on their merits.ʺ Id.
‐5‐ Here, plaintiffs allege that defendants are liable for unpaid and delinquent
contributions and related relief pursuant to Sections 502 and 515 of ERISA, 29 U.S.C.
§§ 1132 and 1145, based on single employer and alter ego theories. The district court
did not explain its conclusion that the complaint ʺestablishedʺ defendantsʹ liability.
Special Appendix at 2‐3. In its July 12, 2013, Memorandum and Order denying the
motion to vacate the default judgment, the district court addressed the timeliness of
defendantsʹ motion and whether their default was willful, but it did not opine on the
sufficiency of the complaint, nor did it address the merits of defendantsʹ defense or the
issue of prejudice to plaintiffs if the default judgment were vacated. In the absence of
explanations, it is difficult for us to properly review the district courtʹs exercise of its
discretion. Accordingly, we remand to give the district court an opportunity to
consider these issues and provide fuller explanations.
For the foregoing reasons, we VACATE the judgment of the district court
and REMAND for further proceedings consistent with this summary order.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk
‐6‐