Trustees of the Rochester Laborers Welfare-S.U.B. Fund, Rochester Laborers Pension Fund, Rochester Laborers Annuity Fund, Rochester Laborers Apprentice and Training Fund v. Sorce

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

_____________________________________

TRUSTEES OF THE ROCHESTER

LABORERS’ WELFARE-S.U.B. FUND,

ROCHESTER LABORERS’ PENSION

FUND, ROCHESTER LABORERS’

ANNUITY FUND, ROCHESTER LABORERS’ DECISION AND ORDER

APPRENTICE AND TRAINING FUND,

LABORERS’ INTERNATIONAL UNION 6:23-CV-06108 EAW

OF NORTH AMERICA, LOCAL UNION NO. 435,

Plaintiffs,

v.

CHARLES SORCE,

Defendant.

INTRODUCTION

Plaintiffs Trustees of the Rochester Laborers’ Welfare-S.U.B. Fund, Rochester

Laborers’ Pension Fund, Rochester Laborers’ Annuity Fund, Rochester Laborers’

Apprentice and Training Fund, and Laborers’ International Union of North America, Local

Union No. 435 (collectively, “Plaintiffs”) commenced an action on February 9, 2023,

alleging that Defendant Charles Sorce (“Defendant”) breached a collective bargaining

agreement in which Defendant’s LLC was required to make fringe benefit contributions

under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.

(Dkt. 1). Plaintiffs are suing Defendant in his individual capacity. (Id.).

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Currently before the Court is Plaintiffs’ motion for default judgment, filed on March

30, 2023. (Dkt. 7). Plaintiffs request judgment in the amount of $21,859.50 in employer

contributions, interest, and liquidated damages, $1,716.00 in attorney’s fees, and $527.00

in costs. (Id. at 4). Plaintiffs served the motion on Defendant via mail. (Dkt. 9). Defendant

has not appeared or filed an answer in this action. For the reasons set forth below,

Plaintiffs’ motion for default judgment is denied.

FACTUAL BACKGROUND

The following facts are taken from Plaintiffs’ complaint and motion papers and are

accepted as true in light of Defendant’s default. See Cement & Concrete Workers Dist.

Council Welfare Fund, Pension Fund, Annuity Fund, Educ. & Training Fund & Other

Funds v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012) (“[A] party’s

default is deemed to constitute a concession of all well pleaded allegations of

liability. . . .”).

Plaintiffs are the named trustees of labor-affiliated funds administered in Rochester,

New York. (Dkt. 1 at ¶¶ 1-3). A Joint Board of Trustees administers the funds, which

were established pursuant to a collective bargaining agreement between Local Union No.

435 (“the union”) and “certain [e]mployers and [e]mployer [a]ssociations” that employ

union members. (Id. at ¶ 6). The funds must be administered consistent with ERISA, the

Labor Management Relations Act (“LMRA”), and applicable federal and state laws. (Id.).

Defendant is the principal owner and officer of Insulation Coatings & Consultants,

LLC (“Insulation Coatings”) and is responsible for Insulation Coatings’ day-to-day

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operations as well as contribution payments to the funds. (Id. at ¶ 4). Insulation Coatings

filed a Chapter 11 bankruptcy petition and is not a party in this action. (Id. at ¶ 21).

Insulation Coatings was a signatory to a collective bargaining agreement with the

union.1 (Id. at ¶ 8; Dkt. 7 at ¶ 8). Under the agreement, Insulation Coatings agreed to pay

wages and employee fringe benefit contributions to the funds for each employee covered

by the agreement. (Dkt. 1 at ¶ 10). The trustees of the funds are authorized to examine

and copy the relevant business records of an employer that has signed the agreement to

ensure that the employer is making the required contributions for their employees. (Id. at

¶ 13).

The funds audited Insulation Coatings for the period between June 1, 2018 and June

30, 2021, and determined that the employer was responsible for $55,684.38 in delinquent

benefit contributions and deductions covering May-July 2022 and September 2022,

interest, and liquidated damages. (Dkt. 7 at ¶ 10). Insulation Coatings paid $33,824.88,

which reduced the outstanding audit balance to $21,859.50. (Id. at ¶ 11).

PROCEDURAL BACKGROUND

Plaintiffs commenced this action against Defendant on February 9, 2023, alleging

that they are entitled to damages pursuant to 29 U.S.C. §§ 1132(g)(2) and 1145. (Dkt. 1 at

1 The complaint and the instant motion each refer to both to a singular “Collective

Bargaining Agreement” and plural “Collective Bargaining Agreements” between the union

and Insulation Coatings. (See Dkt. 1 at ¶¶ 6-13; Dkt. 7 at ¶¶ 1, 8, 12-13). Since Plaintiffs

submit into evidence one collective bargaining agreement (Dkt. 7-2), the Court proceeds

under the impression that one agreement is applicable in this action.

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¶ 14). Defendant was personally served on February 20, 2023. (Dkt. 4). Defendant failed

to file a responsive pleading, and the Clerk of Court entered a default against Defendant on

March 20, 2023. (Dkt. 6).

Plaintiffs filed the instant motion for a default judgment ten days later. (Dkt. 7).

The Court ordered Defendant to respond by May 1, 2023. (Dkt. 8). Plaintiffs served a

copy of the Court’s Order and Plaintiffs’ motion papers on Defendant via mail sent to the

same address at which Defendant was personally served. (Dkt. 4; Dkt. 9). Defendant failed

to respond.

DISCUSSION

Federal Rule of Civil Procedure 55 sets forth the procedural steps for entry of a

default judgment. First, a plaintiff must seek entry of default where a party against whom

it seeks affirmative relief has failed to plead or defend in the action. Fed. R. Civ. P. 55(a).

As noted above, Plaintiffs obtained an entry of default in this case. (Dkt. 6).

“Having obtained a default, a plaintiff must next seek a judgment by default under

Rule 55(b).” New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005); see also Fed. R. Civ. P.

55(b). “[A] party’s default is deemed to constitute a concession of all well pleaded

allegations of liability. . . .” Cement & Concrete Workers, 699 F.3d at 234 (quotation

omitted); see also Philip Morris USA Inc. v. 5 Brothers Grocery Corp., No. 13-CV-2451

(DLI)(SMG), 2014 WL 3887515, at *2 (E.D.N.Y. Aug. 5, 2014) (“Once found to be in

default, a defendant is deemed to have admitted all of the well-pleaded allegations in the

complaint pertaining to liability.”) (citation omitted).

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However, a district court “need not agree that the alleged facts constitute a valid

cause of action.” City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir.

2011) (quotation omitted). “It is within the sound discretion of the District Court whether

to enter a default judgment pursuant to Rule 55(b)(2), based on the assessment of the

circumstances of the case and an evaluation of the parties’ credibility and good faith.”

Granite Music Corp. v. Ctr. St. Smoke House, Inc., 786 F. Supp. 2d 716, 726 (W.D.N.Y.

2011) (citation omitted). “[P]rior to entering default judgment, a district court is ‘required

to determine whether the plaintiff’s allegations establish the defendant’s liability as a

matter of law.’” Truck Ins. Exch. v. Paonessa, No. 18-CV-578, 2019 WL 451427, at *1

(W.D.N.Y. Feb. 5, 2019) (quoting Mickalis Pawn Shop, 645 F.3d at 137).

Here, Plaintiffs cannot establish that they have a valid cause of action based on this

record. The complaint alleges that Defendant is an employer, agent of an employer, or

agent acting in the interests of an employer under the LMRA and an employer under

ERISA, which obligates an employer to contribute to a multi-employer plan pursuant to 29

U.S.C. § 1145. (See Dkt. 1 at ¶ 5). Defendant’s personal liability is alleged to have arisen

from his role as “the principal owner and officer of Insulation Coatings . . . responsible for

all of its decisions pertaining to the payment of contributions to the [f]unds, including

whether to pay contributions.” (See Dkt. 7 at ¶ 9). Furthermore, “Defendant exercised

authority or control with respect to the management or disposition of assets of Plaintiff

[f]unds and is a fiduciary” under ERISA, pursuant to 29 U.S.C. § 1002(21)(A). (Dkt. 7 at

¶ 15). Plaintiffs argue that Defendant breached his fiduciary duty by failing to pay the

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balance of the audit that identified delinquent contributions to the funds for which Plaintiffs

are the trustees. (See Dkt. 7 at ¶¶ 16-18). Defendant’s breach of his fiduciary duty thus

makes him personally liable, according to Plaintiffs. (Id. at ¶ 19).

In support of their default judgment motion, Plaintiffs submit only a four-page

motion (Dkt. 7) with four supporting exhibits. Plaintiffs provide a one-sentence “brief” in

support of their motion, indicating that they are relying on their statements and allegations

in the motion. (Dkt. 7 at 5). Plaintiffs have not otherwise articulated how the allegations

in the complaint establish Defendant’s liability as a matter of law nor provided adequate

evidentiary support for the damages sought.

For example, Plaintiffs assert that Insulation Coatings is a party to a collective

bargaining agreement with the union and submit an agreement between “LOCAL UNION

No. 435 LABORERS INTERNATIONAL UNION OF NORTH AMERICA and the

CONSTRUCTION INDUSTRY ASSOCIATION OF ROCHESTER, N.Y., INC. AND

CERTAIN INDEPENDENT CONTRACTORS” as evidence of such. (See id. at ¶ 8; Dkt.

7-2). Yet nowhere in the agreement is Insulation Coatings named, nor is there any

indication that Insulation Coatings is a signatory. Only the signatures of Aaron A. Hilger,

Executive Director of the Construction Industry Association of Rochester, and Daniel

Kuntz, Business Manager of Laborers’ International Union of North America, Local No.

435, appear in the document. (Dkt. 7-2 at 46). The Court cannot conclude on this record

that Insulation Coatings—let alone Defendant—is obligated under this collective

bargaining agreement.

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Plaintiffs fall even shorter in establishing Defendant’s personal liability as a matter

of law in these circumstances. No evidence is offered to demonstrate that Defendant is the

owner and principal officer of Insulation Coatings. Plaintiffs submit no more than

conclusory allegations that Defendant is an employer, agent of an employer, or agent acting

in the interests of an employer as well as a fiduciary within the meaning of the LMRA and

ERISA. Plaintiffs also fail to cite any law to support the argument that an individual owner

of a limited liability corporation assumes personal liability in this situation. The Court

notes that state law dictates whether an individual signatory to a collective bargaining

agreement assumes personal liability for a breach. See Int’l Ass’n of Sheet Metal, Air, Rail

& Transp. Workers, Loc. Union No. 71 v. Lovejoy Metals, Inc., 495 F. Supp. 3d 174, 195

(W.D.N.Y. 2020). In New York, “[b]ecause a finding of personal liability is rare, there

must be overwhelming evidence of the signatory’s intention to assume personal liability.”

Id. (quotations omitted).

Finally, Plaintiffs offer scant evidence that Insulation Coatings was delinquent in

benefits contributions or that the outstanding amount is $21,859.50 based on an audit.

Aside from the factual allegations in their motion, Plaintiffs submit only an affidavit from

the administrative manager of the Rochester Laborers’ Local 435 Fringe Benefit Funds that

essentially repeats the allegations. (See Dkt. 7-3). Plaintiffs, for instance, do not offer

documents from the audit that would establish that a shortfall even exists.

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CONCLUSION

For the foregoing reasons, Plaintiffs’ motion for a default judgment (Dkt. 7) is

denied. Should Plaintiffs choose to again move for a default judgment, Plaintiffs must

submit a memorandum articulating the factual and legal bases for all aspects of the

judgment and articulate and fully support the damages sought.

Plaintiffs shall serve a copy of this Decision and Order on Defendant and shall file

proof of service of the same.

SO ORDERED.

(-olDAt_plc

[ XK 2QI2KLNOTF KH

LIZABETVH A..WOLFORD

tef Judge

United States District Court

Dated: December 19, 2023

Rochester, New York

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