Trustees of the Local 7 Tile Industry Welfare Fund, Trustees of the Local 7 Tile Industry Annuity Fund, Trustees of the Tile Layers Local Union 52 Pension Fund v. Gibraltar Contracting, Inc.

CourtDistrict Court, E.D. New York
DecidedMarch 31, 2021
Docket1:18-cv-03042
StatusUnknown

This text of Trustees of the Local 7 Tile Industry Welfare Fund, Trustees of the Local 7 Tile Industry Annuity Fund, Trustees of the Tile Layers Local Union 52 Pension Fund v. Gibraltar Contracting, Inc. (Trustees of the Local 7 Tile Industry Welfare Fund, Trustees of the Local 7 Tile Industry Annuity Fund, Trustees of the Tile Layers Local Union 52 Pension Fund v. Gibraltar Contracting, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Trustees of the Local 7 Tile Industry Welfare Fund, Trustees of the Local 7 Tile Industry Annuity Fund, Trustees of the Tile Layers Local Union 52 Pension Fund v. Gibraltar Contracting, Inc., (E.D.N.Y. 2021).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK -----------------------------------------------------------------X TRUSTEES OF THE LOCAL 7 TILE INDUSTRY WELFARE FUND, TRUSTEES OF THE LOCAL 7 TILE INDUSTRY ANNUITY FUND, TRUSTEES OF THE TILE LAYERS LOCAL UNION 52 PENSION FUND, TRUSTEES OF THE ORDER ADOPTING BRICKLAYERS & TROWEL TRADES INTERNATIONAL REPORT AND PENSION FUND, AND TRUSTEES OF THE RECOMMENDATION INTERNATIONAL MASONRY INSTITUTE, 18-CV-3042 (RRM) (RER)

Plaintiff,

- against -

GIBRALTAR CONTRACTING, INC.,

Defendants. ------------------------------------------------------------------X ROSLYNN R. MAUSKOPF, United States District Judge.

The dispute arises out of a collective bargaining agreement (“CBA”) that Defendant Gibraltar Contracting, Inc. (“Gibraltar”) signed as an Independent Employer with Local Union No. 7 of the Tile Setters and Tile Refinishers Union (“Local 7”). (Def.’s Mem. Doc. No. 20-16 at 1; R&R 1 (“R&R 1”) (Doc. No. 15) at 2.) Plaintiffs brought this action pursuant to the Employee Retirement Income Security Act (“ERISA”) and Labor Management Relations Act (“LMRA”) after Gibraltar failed to make timely fringe benefit fund contributions as required under the CBA. (Def.’s Mem.at 1–2; R&R at 3). Gibraltar failed to answer or otherwise respond to the complaint and Plaintiffs filed a motion for a default judgment, which the Court referred to Magistrate Judge Reyes for a report and recommendation. Magistrate Judge Reyes issued a report recommending that a default judgment be entered against Gibraltar in the total amount of $679,841.65, plus post judgment interest, (Doc. No. 15). Gibraltar did not object to this R&R, so the Court adopted it and entered judgment accordingly. (Doc. No. 16.) Four months after judgment was entered, Gibraltar served a motion to set aside the default judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. (Mot. to Vacate (Doc. No. 20-16).) When the fully briefed motion was filed, the Court referred that motion to Judge Reyes, who issued a second report and recommendation (“R&R 2”) (Doc. No.

21), recommending that the motion be denied. Gibraltar now objects to R&R 2, and Plaintiffs oppose those objections (Doc. No. 23). For the reasons stated below, the Court adopts R&R 2 in all respects. BACKGROUND During the relevant time period, Gibraltar was a small minority-owned business enterprise. (Def.’s Mem. at 1.) Gibraltar signed the CBA with Local 7 as a precondition to performing retiling work for the Brooklyn Battery Tunnel as a subcontractor of Tully Construction Co. Inc (“Tully”). (Id.; see Pls.’ Opp. (Doc. No. 20-17) at 7–8.) Thereafter, Tully fell behind in making payments to Gibraltar, and Gibraltar was then unable to meet the fringe benefit contribution requirement of the CBA. (Def.’s Mem.at 4.) These late payments

contributed to financial losses for Gibraltar, and near the end of the tunnel project, Gibraltar “ceased active business operations.” (Varela Decl. at ¶ 24). Gibraltar’s President, Christian Varela, received calls from Local 7 requesting that he urge Tully to make the outstanding payments. (Id.) Tully was not responsive, and Varela advised Local 7 to contact Tully directly. (Id.) “Gibraltar assumed that Local 7 . . . would work something out with Tully in order to obtain the payments that were due.” (Id.) In March 2019, Varela received a copy of an email exchange between a Tully representative and Plaintiffs’ counsel that contained the outstanding contribution amount and the subject line “Local 7 Tile Industry Funds v. Gibraltar Contracting –Contributions Owed.” (Def.’s Mem.at 21; Def.’s Mot., Ex. H; Varela Decl. ¶¶ 28, 30; see Pls.’ Opp. at 7.) Tully issued a check to Gibraltar in the amount specified in that email as the “outstanding amount.” (Varela Decl. ¶ 28.) Gibraltar then issued a check to Plaintiffs with the notation “Final Payment BB28 (Brooklyn Battery [Job Number]).” (Id. at ¶ 29; Def.’s Mot., Ex. D at 6, at 107.) The notation “was not challenged or

commented upon.” (Varela Decl. at ¶ 29.) Gibraltar “believed that its obligations had been satisfied, “in part because Local 7 never informed Gibraltar that “this action would be, or had been, commenced.” (Def.’s Mem. at 4, 12.) Until its receipt of the later default judgment, Gibraltar believed that “all fringe benefit obligations owing to Local 7 had been paid by Tully.” (Def.’s Mem. at 5.) Procedural History Plaintiff filed this action under ERISA on May 23, 2018 for amounts due under the CBA. Plaintiffs’ complaint demanded $527,314.90 in unpaid contributions, “plus interest at a rate of 10% to the Local 7 Benefit Funds and a rate of 15% to the International Benefit Funds; liquidated damages of 20% of the principal amount due; plus all reasonable attorneys’ fees,

expenses, and costs.” (Compl. at ¶¶ 5, 21.) In their subsequent motion for default judgment, Plaintiffs calculated interest by breaking down the unpaid principal contribution payments into separate amounts due to the Local Benefit Funds and amounts due to the International Benefit Funds and then charging those separate amounts at the rates of 10% and 15% per annum, respectively, as was provided for in the CBA. (See Hill Decls. D & E (Doc. Nos. 12-4, 12-5).) Gibraltar does not dispute that the complaint was properly served by personal service upon the New York Secretary of State (“the Secretary”) as its statutory agent. (Def.’s Mem.at 5, 10; see Doc. No. 7.) However, Gibraltar did not appear before this Court or otherwise answer the complaint, (see Doc. Entry dated 8/6/2018); and on August 14, 2018, the Clerk of Court entered default. (Doc. No. 9.) Plaintiffs served Gibraltar with the Motion for Default Judgment via first class and certified mail through the United States Postal Service (“USPS”) on October 3, 2018. (Doc. No. 14.) After Plaintiffs received no response from Gibraltar, this Court referred the Motion for Default Judgment to Magistrate Judge Reyes, who subsequently recommended

that the motion be granted. (R&R 1 at 7.) In that Report and Recommendation, Judge Reyes subtracted from the outstanding principal contributions $101,841.10 in partial payments received after the commencement of the action. (R&R 1 at 3.) To calculate the interest due until judgment, Judge Reyes charged the entire outstanding balance of contributions (less the partial payment) twice, first with the 10% interest rate that the CBA provided for local funds, then with the 15% interest the CBA provided for international funds. (R&R 1 at 6–7.) That Report and Recommendation was served on Gibraltar via first class and certified mail through the USPS on December 26, 2018. (Doc No. 16.) Although R&R 1 advised Gibraltar that objections to its recommendations had to be filed within fourteen days of Gibraltar’s receipt of the R&R 1, and that “[f]ailure to file timely objections may waive the right

to appeal” this Court’s adopting the R&R (R&R 1 at 8), Gibraltar did not file any objections. Accordingly, the Court adopted the Report and Recommendation on September 26, 2019, (Doc. No. 18). A copy of the order was mailed to Gibraltar the next day. A judgment was subsequently entered, (Doc. No. 19), and mailed to Gibraltar on September 30, 2019. All mailings, including of the R&R 1 were sent to the address that the Secretary of State had on file. (Def’s. Mot., Ex. C-2; Doc. Nos. 6, 14, 16.) Gibraltar’s Motion to Vacate the Default Judgment, and Magistrate Judge Reyes’ Report and Recommendation

On or about January 30, 2020, four months after judgment was entered, Gibraltar served Plaintiffs with a motion to set aside the judgment. (Pls.’ Opp. at 13; Def.’s Mot. at 2.) Gibraltar argued that its default should be excused under either Fed. R. Civ. P.

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Trustees of the Local 7 Tile Industry Welfare Fund, Trustees of the Local 7 Tile Industry Annuity Fund, Trustees of the Tile Layers Local Union 52 Pension Fund v. Gibraltar Contracting, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/trustees-of-the-local-7-tile-industry-welfare-fund-trustees-of-the-local-7-nyed-2021.