Board of Trustees of the Southern Ohio Painters Health & Welfare Fund v. Sixth Region Remodeling, LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION AT DAYTON

BOARD OF TRUSTEES OF THE

SOUTHERN OHIO PAINTERS

HEALTH & WELFARE FUND,

Plaintiff, Case No. 3:21-cv-300

vs.

SIXTH REGION REMODELING, LLC, District Judge Michael J. Newman

Magistrate Judge Peter B. Silvain, Jr.

Defendant.

ORDER: (1) GRANTING PLAINTIFF’S MOTION FOR A DEFAULT JUDGMENT

(DOC. NO. 7); (2) AWARDING IT (A) $694,531.72 IN DAMAGES AND INTEREST AND

(B) $3,213.42 REASONABLE ATTORNEY’S FEES AND COSTS; (3) ORDERING

DEFENDANT, WITHIN 10 DAYS OF THE COURT’S ORDER, TO SUBMIT ITS

FINANCIAL RECORDS TO PLAINTIFF FOR AN AUDIT; AND (4) TERMINATING

THIS CASE ON THE DOCKET

This civil case is before the Court on Plaintiff’s motion for a default judgment. Doc. No.

7; Fed. R. Civ. P. 55. Plaintiff sues under the Employee Retirement Income Security Act

(“ERISA”), 29 U.S.C. § 1132(g)(2)(E), and the Labor Management Relations Act (“LMRA”), 29

U.S.C. § 185, to recover unpaid contributions from, and conduct an audit on, Defendant pursuant

to the parties’ collective-bargaining agreement. Doc. No. 1 at PageID 3-7; Doc. No. 1-3.

Defendant has failed to answer Plaintiff's complaint or otherwise appear in this matter. Plaintiff

has followed the steps described in Fed. R. Civ. P. 55 to obtain a default judgment. Therefore, the

Court GRANTS Plaintiffs motion.

I.

Plaintiff served Defendant with its complaint on November 12, 2021. Doc. No. 5 at PageID

Doc. No. 7 at PageID 80; Doc. No. 7-1 at PageID 82. Defendant had until December 3, 2021

to answer or move in response to Plaintiff's complaint. Doc. No. 7 at PageID 80. Defendant failed

to do so and has otherwise not appeared in this matter. Doc No. 8 at PageID 97; see Fed. R. Civ.

P. 12(a)(1)(A)(i).

The Clerk entered Defendant’s default into the record on December 22, 2021. Doc. No. 8.

“Once default is entered against a defendant that party is deemed to have admitted all of the well

pleaded allegations in the complaint.” Ford Motor Co. v Cross, 441 F. Supp. 2d 837, 846 (E.D.

Mich. 2006) (citing Visioneering Constr. v. U.S. Fidelity & Guaranty, 661 F.2d 119, 124 (6th Cir.

1981)). Therefore, Defendant admits as true the facts in Plaintiff's complaint. Doc. No. 1 at

PageID 3-6. However, the Court must still consider whether Plaintiff's allegations as admitted by

Defendant state a claim for relief. See, e.g., Lucas v. Monitronics Int’l Inc., No. 1:17-cv-374, 2020

WL 6440255, at *1 (S.D. Ohio Nov. 3, 2020).

Plaintiff is a fiduciary of a benefit trust created and administered on behalf of members of

local unions affiliated with the International Union of Painters and Associated Trades (“IUPAT”).

Doc. No. | at PageID 2. The trust fund is administered through a Trust Agreement. Doc. No. 1-

4 at PageID 29-68. Plaintiff is empowered by the Trust Agreement to “demand, collect, and

receive Employer contributions to the trust fund.” Doc. No. 1-4 at PageID 39-40.

Defendant and IUPAT are parties to a collective bargaining agreement (“CBA”). Doc 1-3

at PageID 11-28. The CBA requires Defendant to make contributions into a fringe benefit fund

(the “Fund”). Doc. No. 1-3 at PageID 20. Defendant must “make such contributions in accordance

with the terms and conditions of [the CBA].” 29 U.S.C. § 1145. Further, Plaintiff may require

Defendant, upon request and within ten days, to submit its financial records for an audit. Doc. No.

1-4 at PageID 40. Plaintiff's complaint seeks to recoup certain delinquent unpaid contributions

from Defendant and asks this Court to order Defendant to submit its financial records for an audit

by Plaintiff. Doc. No. 1 at PageID 6.

Il.

Rule 55(b)(2) permits a court, at its discretion, to enter default judgment following an entry

of default by the Clerk. The Sixth Circuit has held that a court should take into account the

following factors when considering whether to enter default judgment: “(1) possible prejudice to

the plaintiff; (2) the merits of the claims; (3) the sufficiency of the complaint; (4) the amount 0 of

money at stake; (5) possible disputed material facts; (6) whether the default was due to excusable

neglect; and (7) the preference for decision on the merits.” Russell v. City of Farmington Hills, 34

F. App’x 196, 198 (6th Cir. 2002). The Court must also demonstrate that it has personal

jurisdiction over the defaulted defendant. See, e.g., Citizens Bank v. Parnes, 376 F. App’x 496,

501 (6th Cir. 2010).

A party in default is considered to have admitted all material allegations in the complaint.

Fed. R. Civ. P. 8(b)(6). Here, Defendant’s admissions raise a plausible claim that Defendant is

delinquent in its contributions to the Fund in violation of 29 U.S.C. § 1145 and the CBA. Doc.

No. 1 at PageID 3-5. There is no indication in the record that Defendant’s failure to respond was

due to excusable neglect. As a result, Plaintiff is entitled to a default judgment as to Defendant’s

liability for failure to timely contribute to the Fund and to submit its financial records to Plaintiff

for an audit. Doc. No. 1 at PageID 3-6.

The Court has subject matter pursuant to ERISA. 28 U.S.C. § 1331. ERISA provides that

United States Districts Courts have exclusive jurisdiction, without regard to the amount in

controversy or citizenship of the parties, to enforce the terms of the plan or address violations of

29 USS.C. § 1145. See 29 U.S.C. §§ 1132(a), (e)(1), and (f).

A federal court has personal jurisdiction over a defendant that is properly served and

“subject to the jurisdiction of a court of general jurisdiction in the state where the district court is

located.” Fed. R. Civ. P. 4(k)(1)(A). Proper service of a limited liability corporation (“LLC”)

may be affected by either serving an individual according to Fed. R. Civ. P. 4(e)(1) or “by

delivering a copy of the summons and of the complaint to an . . . agent authorized by appointment

or by law to receive service of process and—if the agent is one authorized by statute and the statute

so requires—by also mailing a copy of each to the defendant.” Fed. R. Civ. P. 4(h)(1)(B).

Here, Plaintiff alleges that Defendant is “a business organized under the laws of the State

of Ohio, . .. and has principal office located in Columbus, Ohio.” Doc. No. 1 at PageID 2. Plaintiff

served Defendant’s statutory agent with a copy of the summons and complaint at his address of

record. Doc. No. 5 at PageID 75-76; Doc. No. 7-1 at PageID 82-83. Therefore, Defendant was

properly served under both Fed. R. Civ. P. 4(e)(1) and 4(h)(1).

Defendant is an LLC formed, headquartered, and operated in Ohio. Doc. No. | at PageID

2. LLCs are persons under Ohio law. Ohio Rev. Code § 2307.38. Hence, Plaintiff has

demonstrated that the Court has general personal jurisdiction over Defendant, an Ohio-based LLC.

Doc. No. 1 at PageID 2; Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012) (“[B]ecause

defendants who reside in the forum state will always be subject to the personal jurisdiction of the

court, [further] inquiry is in most cases restricted to non-resident defendants’’).

Hil.

By failing to respond, Defendant admits that: (1) it violated the CBA by failing to make

timely contributions to the Fund; and (2) it has breached the Trust Agreement’s audit provision.

Doc. No. 1 at PageID 3-6. However, Rule 8’s consequence for unchecked admissions applies

only to liability. Fed. R. Civ. P. 8(b)(6). It is Plaintiff's burden to “establish the extent of

damages.” Antoine v Atlas Turner, Inc., 66 F.3d 105, 100 (6th Cir. 1995). The Court “must

conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” DT

Fashion, LLC vy. Cline, No. 2:16-cv-542268, 2018 WL 542268, at *2 (S.D. Ohio Jan. 24, 2018)

(quotation omitted) (cleaned up).

A. Damages

Under the terms of the CBA and Trust Agreement, Plaintiff is empowered to collect

delinquent contributions, “including interest thereon and all costs incurred in affecting said

collection, including reasonable attorney’s fees” by “[commencing] legal proceedings in the name

of the Trust Fund.” Doc. No. 1-4 at PageID 39. The Trust Agreement includes a formula to

determine the extent of Defendant’s delinquent contributions. /d. To calculate the number of

hours for which delinquent contributions are owed, the Trust Agreement explains that the highest

number of reported hours from the last twelve reports should be multiplied by ten percent. /d. at

PageID 40. This number of hours is then multiplied by the per hour contribution rate specified by

the CBA. Doc. No. 1-3 at PageID 20. Further, under ERISA, Defendant is liable for liquidated

damages in the amount of 20% of the unpaid contributions, plus interest. 29 U.S.C. § 1132(g).

Finally, Plaintiff must be awarded costs and reasonable attorney’s fees related to this matter. 29

U.S.C. § 1132(g)(2).

1. Delinquent Contributions, Liquidated Damages, and Interest

Plaintiff seeks $694,531.72 in damages and interest from Defendant. Doc. No. 1 at PageID

6. It alleges that Defendant owes contributions for 5,051 hours per month for the 21 months it

failed to make a contribution. Doc. No. 7-4 at PageID 92. Plaintiff multiples this figure by $5.27

(the per hour contribution rate specified in the CBA and Trust Agreement) for a delinquent

contribution amount of $558,994.17. Id.

Plaintiff then applies a 3.54% interest rate to this damages figure. Jd.' “The determination

of the prejudgment interest rate is within the sound discretion of the district court.” Pfenning v.

Liberty Life Assurance Co. of Boston, 282 F. Supp. 3d 1027, 1033 (S.D. Ohio 2017) (citing Ford

v. Uniroyal Pension Plan, 154 F.3d 613, 619 (6th Cir. 1998)) “The award of interest must not be

punitive in nature, but rather should compensate the affected participants for lost interest they

could have earned if the money had not been improperly withheld.” Cage v. Gen. Motors Defined

Ben. Salaried Plan, 98 F. Supp. 2d 803, 810 (E.D. Mich. 1999) (citing Ford, 154 F.3d at 619).

The Court finds Plaintiff's proposed interest rate to be reasonable. See Pfenning, 282 F.

Supp. 3d at 1033 (“[U]tilization of an interest rate that is either excessive or inadequate frustrates

ERISA’s remedial scheme”). Under Ohio law, prejudgment interest is computed by taking the

federal short-term interest rate in July of a given year, “round[ing] to the nearest whole number

per cent,” and adding 3%. Ohio Rev. Code §§ 1343.03(B), 5703.47(A); see also Ford, 154 F.3d

at 619 (observing that a district court may look to state law for a prejudgment interest formula or

rely on the post-judgment interest framework set forth in 28 U.S.C. § 1961). For the three years

Defendant failed to make contributions (2018-2020), the relevant federal short-term interest rates

were 2.36%, 2.11%, and 0.18%, respectively. Rev. Rul. 2018-19, 2018-27 ILR.B. 1; Rev. Rul.

2019-16, 2019-28 ILR.B. 96; Rev. Rul. 2020-14, 2020-28 I.R.B. 33. After adding 3% to each

rounded figure, the average prejudgment interest rate was 4.33%. Therefore, Plaintiff's proposed

3.54% interest rate is neither excessive, inadequate, nor contrary to ERISA’s remedial goals.

' Plaintiff did not identify the interest rate it applied, and the CBA and Trust Agreement are silent on a

standard prejudgment interest rate. Doc. No. 1 at PageID 6; Doc. No. 1-3 at PageID 20; Doc. No. 1-4 at

PageID 39; Doc. No. 7-4 at PageID 90-93. But, after subtracting Plaintiff's delinquent contribution

calculation ($558,994.17)—less liquidated damages, attorney fees, and costs—from its total damages

request ($694,531.72) and cross-multiplying, the Court finds Plaintiff assessed a 3.54% interest rate on

Defendant’s unpaid contributions.

Once liquidated damages of $111,798.83 are added, Defendant is liable for $694,531.72.

See Mich. Carpenters Council Health & Welfare Fund v. C.J. Rogers Inc., 933 F.2d 376, 388 (6th

Cir. 1991) (“The language of Section 1132(g) is mandatory, and once the provision applies, the

district court must award liquidated damages”).

Accordingly, the Court adopts Plaintiff's damages calculation as reasonably certain, Cline,

2018 WL 542268, at *2, and AWARDS Plaintiff $694,531.72 in damages and interest.

2. Attorney’s Fees and Costs

Plaintiff requests $2,577.10 in attorney fees and $636.32 in costs. Doc. No. 7-3 at PageID

89. Under 29 U.S.C. § 1132(g)(2), “the award of reasonable attorney fees is mandatory where a

fiduciary has sued successfully to enforce an employer’s obligation to make contributions to a

multi-employer plan.” Foltice vy. Guardsman Prods., Inc., 98 F.3d 933, 936 (6th Cir. 1996). While

29 U.S.C. § 1132(g)(2) does not define “reasonable attorney’s fees,” the lodestar method—“the

reasonable number of hours billed [multiplied] by a reasonable billing rate,” Paschal v. Flagstar

Bank, 297 F.3d 431, 434 (6th Cir. 2002)—provides suitable guidance. Hensley v. Eckerhart, 461

U.S. 424, 433 (1983).

Plaintiff's counsel and their paralegal billed 11.8 hours to this matter. Doc. No. 7-3 at

PageID 87-89. They charged hourly rates of $339, $200, and $139, respectively. /d. Considering

Defendant’s failure to object or otherwise respond, the court finds that Plaintiff's counsel and

paralegal spent a reasonable amount of time on this matter. /d.

Plaintiff's counsel’s fee request is reasonable. “A district court is permitted to ‘rely on a

party’s submissions, awards in an analogous case, state bar association guidelines, and its own

knowledge and experience in handling similar fee requests.’” Waldo v. Consumers Energy Co.,

726 F.3d 802, 821-22 (6th Cir. 2013) (quoting Van Horn v. Nationwide Prop. & Cas. Ins. Co.,

436 F. App’x 496, 499 (6th Cir 2011)). Plaintiff's counsel’s fee request is consistent with awards

in analogous cases. See, e.g., Bd. of Trs. of Ohio Laborers’ Fringe Benefits Programs v. Dan Ray

Constr., No. 2:17-cv-180, 2018 WL 2435184, at *2 (S.D. Ohio May 30, 2018) (awarding $1,540

in attorney’s fees for 5.5 hours billed).

Finally, Plaintiff seeks $636.32 in costs. Doc. No. 7-3 at PageID 89. Because Defendant

failed to object or otherwise respond, this Court finds the request reasonable. Therefore, the Court

AWARDS Plaintiff $3,213.42 in attorney’s fees and costs.

B. Audit

Under the terms of the Trust Agreement, Defendant must submit to an audit of its financial

records by Plaintiff within 10 days of its request. Doc. No. 1-4 at PageID 39-40. Defendant—by

failing to timely contest Plaintiffs allegations—admits it is in breach of this provision. Doc. No.

1 at PageID 4-5; Fed. R. Civ. P. 8(b)(6). Accordingly, this Court ORDERS Defendant to submit

its financial records to Plaintiff for an audit. 29 U.S.C. § 1132(g)(E) (authorizing “such other legal

or equitable relief as the court deems appropriate”). Defendant SHALL DISCLOSE to Plaintiff

all necessary financial records within 10 days from the date of this Order.

IV.

For the foregoing reasons, the Court hereby: (1) GRANTS Plaintiff's Motion for a default

judgment (Doc. No. 7); (2) AWARDS it (a) $694,531.72 in damages and interest and (b) $3,213.42

in reasonable attorney’s fees and costs; and (3) ORDERS Defendant within 10 days of the Court’s

Order to submit its financial records to Plaintiff for an audit. The Clerk is ordered to enter

judgment accordingly and to TERMINATE this case on the docket.

IT IS SO ORDERED.

Date: _April 11, 2022 s/Michael J. Newman

Hon. Michael J. Newman

United States District Judge