Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-04604/USCOURTS-cand-4_09-cv-04604-2/pdf.json

Parties Involved:
Gentry Masonry Corporation
Defendant
Trustees of the Bricklayers Local No. 7 Pension Trust
Plaintiff

Document Text:

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

TRUSTEES OF THE BRICKLAYER LOCAL

NO. 7 PENSION TRUST,

Plaintiffs,

v.

GENTRY MASONRY CORP.,

Defendant.

_____________________________________/

No. C-09-04604 JCS

REPORT AND RECOMMENDATION RE

PLAINTIFFS’ MOTION FOR DEFAULT

JUDGMENT [Docket No. 14]

I. INTRODUCTION

In this ERISA enforcement action, Plaintiffs bring a Motion for Default Judgment (the

“Motion”) seeking entry of default judgment and an order awarding unpaid withdrawal liability, 

liquidated damages, attorneys’ fees and costs, and interest. The Motion came on for hearing on

Friday, May 7, 2010 at 1:30 p.m. Plaintiffs submitted additional materials in support of the Motion

on May 7, 2010 and May 27, 2010. For the reasons stated below, it is RECOMMENDED that the

Court GRANT Plaintiffs’ Motion and that Plaintiffs be awarded the following amounts: 

1) $123,469.89 in withdrawal liability; 2) $24,693.97 in liquidated damages; 3) $10,892.41 in

interest; 4)$4,808.50 in attorneys’ fees; and 5) $425.00 in costs.

II. BACKGROUND

This action is brought by the trustees of the Bricklayers Local No. 7 Pension Trust (“the

Trust”), which is an employee benefit plan within the meaning of § 3(3) of the Employee Retirement

Income Security Act (“ERISA”), 29 U.S.C. § 1002(3). Complaint ¶ 3. Plaintiffs bring this action

pursuant to Section 4301(d) of the Employee Retirement Income Security Act (“ERISA”) to collect

the withdrawal liability of Defendant Gentry Masonry Corporation (“Gentry”) arising from its

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 1 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

At oral argument, Plaintiffs’ counsel explained that the discrepancy between the names of the

Union (“No. 3”) and the Pension Plan (“No. 7”) is the result of a consolidation of Union Local No. 3

and Union Local No. 7.

2

In the Complaint, Plaintiffs alleged that “[b]y the notice attached hereto as Exhibit A, the Trust

. . .notified [Defendant] of its liability . . .of $135,286.35.” The notice was not, however, attached to

the Complaint. At oral argument, the Court requested that Plaintiffs provide a copy of the notice

referenced in the complaint. In response, on May 10, 2010, Plaintiffs provided a copy of a June 27,

2008 letter sent by the Plan Administrator to Gentry. See Second Declaration of Kent Khtikian in

Support of Plaintiff’s Application for Judgment by Court on Default of Defendant (“Khtikian Supp.

Decl.”), Ex. 5. That letter was entitled “Notice and Demand for Payment of Withdrawal Liability.” The

amount of withdrawal liability stated in the letter, however, was $145,134.58 rather than the amount

alleged in the complaint. Consequently, the Court requested an additional declaration by the Plan

Administrator explaining the discrepancy and verifying that the amount stated in the Complaint was

accurate. In response, Plaintiffs submitted a declaration by David Venuti, who has provided actuarial

services for the Plan since 1988 and who calculated the amount of the withdrawal liability. See Second

Declaration of David Venuti in Support of Plaintiff’s Application for Judgment by Court on Default of

Defendant (“Venuti Supp. Decl.”). Venuti explains that he initially calculated Gentry’s withdrawal

liability as $145,135.00 but that he adjusted the number downward, to the amount alleged in the

complaint, after Gentry’s counsel challenged the inclusion in the calculation of vested liability for

disability and preretirement death benefits. Id., ¶ 4. Venuti further states that the “calculation of

withdrawal liability, the quarterly payments schedule and the interest rate thereon were performed in

accordance and pursuant to the Employee Retirement Income Security Act of 194, Title IV, Subtitle E,

Part 1 and the regulations thereunder promulgated by the PBGC.” Id., ¶ 5.

2

complete withdrawal from the San Francisco Bricklayers Local No. 7 Pension Plan (“the Plan”),

pursuant to Sections 4201-4203 and 4219 [29 U.S.C. §§ 1381-1383 and 1399].

Plaintiffs allege that Gentry is a California Corporation based in Santa Rosa California. 

Complaint ¶ 4. Plaintiffs further allege that Gentry is a building and construction industry employer

and that it entered into a collective bargaining agreement with the Allied Craftworkers Union Local

No. 3 (“the Union”). Complaint ¶¶ 5- 6.1 Under that agreement, Gentry was required to make

employee benefit contributions to the Plan. Complaint ¶ 7-8. As of July 1, 2005, however, Gentry

permanently ceased its obligation to make employee benefit contributions under the Plan and

therefore experienced a complete withdrawal from the Plan within the meaning of Section 4203(b)

of ERISA. Complaint ¶ 8. 

Subsequently, Plaintiffs notified Gentry of its withdrawal liability. Id. ¶ 8.2

 According to

Plaintiffs, Gentry and the Trust agreed that Gentry would pay the withdrawal liability by making

twelve quarterly payments of $11,812.46, commencing February 15, 2009, and one final quarterly

payment in the amount of $5,103.73. Complaint ¶ 9. The sum of the installment payments included

interest on the declining principal balance calculated at an annual rate of 6.0%. Declaration of

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 2 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

David Venuti in Support of Plaintiffs’ Application for Judgment by Court on Default of Defendant

(“Venuti Decl.”) ¶ 3. Gentry paid the first installment, due February 15, 2009, but did not pay the

second quarterly payment, due May 15, 2009, or any payments thereafter. Complaint ¶¶ 9-10. 

Plaintiffs sent Gentry a Notice of Default in a letter dated June 12, 2009. Complaint, Exhibit 1.

Plaintiffs filed this action on September 29, 2009, seeking an award of Gentry’s unpaid

withdrawal liability, 20% liquidated damages, interest, attorneys’ fees and costs. The complaint was

served on Dennis Bryne, as Gentry’s registered agent for service of process, on November 5, 2009. 

Declaration of Kent Khtikian in Support of Plaintiff’s Application for Judgment by Court on Default

of Defendant (“Khtikian Decl.”), ¶¶ 3-4. Gentry did not answer or otherwise appear and the Clerk

entered Gentry’s default on December 18, 2009. Plaintiffs filed the instant motion seeking entry of

default judgment on February 3, 2010.

In the Motion, Plaintiffs ask the Court to enter default judgment against Gentry and award

the following damages: 1) $123,469.89 in unpaid withdrawal liability, that is, $135,286.35 minus the

installment payment of $11,812.46 that Gentry paid on March 6, 2009; 2) $24,693.97 in liquidated

damages; 3) $10,892.41 in interest (calculated at a rate of 10% per year, simple interest, on

$123,469.89 for the period May 15, 2009 to April 2, 2010); 4)$4,808.50 in attorneys’ fees; and 5)

$425.00 in costs.

 III. ANALYSIS 

A. Adequacy of Service of Process

As a preliminary matter, where entry of default judgment is requested, the Court must

determine whether service of process was adequate. Bank of the West v. RMA Lumber Inc.,

2008 WL 2474650 (N.D.Cal., 2008). Plaintiffs have presented evidence that the complaint was

served on Gentry’s agent for service of process, in accordance with Rule 4(h) of the Federal Rules of

Civil Procedure (providing that a corporation may be served “by delivering a copy of the summons

and of the complaint to an officer, a managing or general agent, or any other agent authorized by

appointment or by law to receive service of process”). Therefore, the Court finds that service of

process was adequate.

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 3 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

B. Entry of Default Judgment

Plaintiffs have applied for a default judgment in this action on the basis that Defendants have

failed to plead or otherwise defend or appear after valid service. Under Federal Rule of Civil

Procedure 55(b)(2), the court may enter a default judgment once the clerk, under Rule 55(a), has

entered the party’s default based upon a failure to plead or otherwise defend the action. The Court is

free to consider a wide range of factors in deciding whether to enter a default judgment, including:

“(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the

sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a

dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7) the

strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.” 

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986); see also Wright & Miller, Federal

Practice and Procedure, Civil § 2685. 

Where a default judgment is deemed appropriate, defendants “are deemed to have admitted

all well-pleaded factual allegations contained in the complaints.” DirecTV, Inc. V. Hoa Huynh, 503

F.3d 847, 851 (9th Cir. 2007) (citing Benny v. Pipes, 799 F.2d 489, 495 (9th Cir. 1986)). 

On balance, the Eitel factors favor entry of default judgment in this case. Plaintiffs made

several demands for payment before initiating this action, to no avail. Thus, failure to enter default

judgment would result in prejudice to Plaintiffs. Nor is there any evidence in the record suggesting

that Gentry’s failure to appear is a result of excusable neglect. 

Further, the claims are well-pleaded. In particular, Plaintiffs have brought their claim under

the Multiemployer Pension Plan Amendments (“MPPA”) to ERISA, which provide that “an

employer [that] withdraws from a multiemployer plan in a complete withdrawal or a partial

withdrawal . . . is liable to the plan in the amount determined under this part to be the withdrawal

liability.” 29 U.S.C. § 1381(a). Where an employer had an obligation under the Plan to make

contributions to a pension trust fund for work performed in the building and construction industry, as

is alleged here, a complete withdrawal occurs under the following conditions:

(b) Building and construction industry

(1) Notwithstanding subsection (a) of this section, in the case of an employer that has an

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 4 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

obligation to contribute under a plan for work performed in the building and construction

industry, a complete withdrawal occurs only as described in paragraph (2), if--

(A) substantially all the employees with respect to whom the employer has an obligation to

contribute under the plan perform work in the building and construction industry, and 

(B) the plan-- 

(i) primarily covers employees in the building and construction industry, or 

(ii) is amended to provide that this subsection applies to employers described in this

paragraph. 

(2) A withdrawal occurs under this paragraph if--

(A) an employer ceases to have an obligation to contribute under the plan, and 

(B) the employer-- 

(i) continues to perform work in the jurisdiction of the collective bargaining agreement of the

type for which contributions were previously required, or 

(ii) resumes such work within 5 years after the date on which the obligation to contribute

under the plan ceases, and does not renew the obligation at the time of the resumption.

29 U.S.C § 1383(b). Plaintiffs have alleged that pursuant to § 1383(b), Gentry’s obligations to

contribute ceased as of July 1, 2005 and have presented evidence that Gentry continues to perform

work in the jurisdiction of the collective bargaining agreement of the type for which contributions

were previously required. See Declaration of Dave Jackson in Support of Plaintiff’s Application for

Judgment by Court on Default of Defendant (“Jackson Decl.”). The Court concludes that Plaintiffs

have stated a claim for withdrawal liability under § 1381(a). 

Accordingly, it is recommended that default judgment be entered against Gentry.

C. Remedy

1. Overview of Scheme for Calculating and Collecting Withdrawal Liability 

The Supreme Court described the scheme for calculating and collecting withdrawal liability

under the MPPA as follows:

In brief, the Act sets the total amount of “withdrawal liability” at a level that roughly

matches “the employer's proportionate share of the plan's ‘unfunded vested benefits.’ ” R.A.

Gray & Co., 467 U.S., at 725, 104 S.Ct., at 2715 (quoting 29 U.S.C. § 1381(b)(1)); see §

1391. The employer must, at the least, make a series of periodic payments toward that total

liability. § 1399(c)(1)(C), (c)(3). Payments are set at a level that approximates the periodic

contributions the employer had made before withdrawing from the plan. § 1399(c)(1)(C).

Interest accrues from the first day of the plan year following withdrawal. See Milwaukee

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 5 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Brewery Workers' Pension Plan, 513 U.S., at 421, 115 S.Ct., at 987-988. Payments can run

for a period of up to 20 years, 29 U.S.C. § 1399(c)(1)(B), but the employer may prepay the

outstanding principal, plus accrued interest, at any time. § 1399(c)(4).

The Act does not call upon the employer to propose the amount of withdrawal liability.

Rather, it places the calculation burden on the plan's trustees. The trustees must set an

installment schedule and demand payment “[a]s soon as practicable” after the employer's

withdrawal. § 1399(b)(1). On receipt of the trustees' schedule and payment demand, the

employer may invoke a dispute-resolution procedure that involves reconsideration by the

trustees and, ultimately, arbitration. §§ 1399(b)(2), 1401(a)(1). If no party requests

arbitration, the installments become “due and owing” on the trustees' schedule. § 1401(b)(1).

Even if the employer challenges the trustees' withdrawal liability determination, however, it

still must pay according to the trustees' schedule in the interim under the statute's “ ‘pay now,

dispute later’ collection procedure.” Robbins v. Pepsi-Cola Metropolitan Bottling Co., 800

F.2d 641, 642 (C.A.7 1986) (per curiam). 

Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of California, 

522 U.S. 192, 196-197 (1997).

2. Damages Available for Failure to Pay Withdrawal Liability

In the Motion, Plaintiffs request an award of: 1) the unpaid withdrawal liability; 2) interest

on the unpaid withdrawal liability; 3) liquidated damages; and 4) attorney's fees and costs. Plaintiffs

are entitled to all of these types of damages under 29 U.S.C. § 1451(b), which provides that, “[i]n

any action under this section to compel an employer to pay withdrawal liability, any failure of the

employer to make any withdrawal liability payment within the time prescribed shall be treated in the

same manner as a delinquent contribution (within the meaning of section 515 [29 U.S.C. § 1145] ).” 

The following damages are available where an employer fails to pay required contributions: 1)

unpaid contributions; 2) interest on the unpaid contributions; 3) liquidated damages as provided by

the plan (not to exceed 20% of the unpaid contributions); and 4) reasonable attorney's fees and costs. 

29 U.S.C. § 1 132(g)(2). Therefore, Plaintiffs may recover these types of damages on their claim for

unpaid withdrawal liability. The appropriate amount of each type of damages is discussed below.

3. Unpaid Withdrawal Liability

Plaintiffs have presented evidence that upon Gentry’s complete withdrawal from the Plan,

they sent Gentry a notice of its withdrawal liability, in the amount of $145,135.00, along with a

payment schedule, calculated by actuary David Venuti. In addition, Plaintiffs have presented

evidence that Plaintiffs reduced the amount of withdrawal liability to the amount sought in the

complaint and the Motion, that is $135, 286.35, after Gentry’s counsel challenged Mr. Venuti’s

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 6 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

calculation. The Court concludes that this amount is correct based on the facts that: 1) Venuti has

more than 20 years of experience as an actuary for the Bricklayers Local No. 7 Pension Trust; 2)

Venuti states in his declarations that he calculated the withdrawal liability in accordance with

ERISA, Title IV, Subtitle E, Part 1 and the regulations thereunder promulgated by the PBGC; and 3)

Gentry implicitly conceded that it owed $135, 286.35 when it made the May 6, 2009 payment

discussed above. Thus, taking into account the installment payment of $11,812.46 made by Gentry

before it defaulted, Gentry owes Plaintiffs $123,469.89 in unpaid withdrawal liability, which should

be awarded in full.

4. Interest

Plaintiffs seek $10,892.41 in interest, calculated at a rate of 10% per year, simple interest, on

$123,469.89 for the period May 15, 2009 to April 2, 2010. This amount should be awarded in full

because both the starting date of May 15, 2009 and the 10% rate are correct. In particular, May 15,

2009 is consistent with the regulations for calculating interest on unpaid withdrawal liability, which

provide as follows:

Except as otherwise provided in rules adopted by the plan, the due date from which interest

accrues shall be, for an overdue withdrawal liability payment and for an amount of

withdrawal liability in default, the date of the missed payment that gave rise to the

delinquency or the default.

29 C.F.R. § 4219.32. As the first unpaid installment was due on May 15, 2009, that is the starting

date for the interest calculation. The rate of 10% is consistent with the Plan Trust Agreement,

Article V, Section A(2). See Khtikian Decl. ¶ 6 (quoting section ); see also 29 U.S.C. § 1132(g)(2)

(allowing for an award of interest at the rate specified under the plan). Therefore, Plaintiffs should

be awarded $10,892.41 in interest.

5. Liquidated Damages

Plaintiffs request $24,693.97 in liquidated damages, that is, 20% of the unpaid withdrawal

liability. This amount is consistent with the Trust Agreement, which provides for 20% liquidated

damages. See Khtikian Decl. ¶ 6. Further, ERISA permits an award of liquidated damages provided

under the plan up to 20% . 29 U.S.C. § 1132(g)(2)(C)(ii). Therefore, it is recommended that this

amount be awarded in full.

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 7 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

6. Attorneys’ Fees and Costs

Plaintiffs request $4,808.50 in attorneys’ fees and $425 in costs. The amount of attorneys’

fees is based on 16.3 hours of work by Mr. Khtikian, whose time sheets have been provided, at a rate

of $295.00/hour. See Khtikian Decl. ¶ 7 & Ex. 3. Costs consist of $350.00 for the filing fee and

$75.00 for service. Khtikian Decl. ¶ 8 & Ex. 4. These amounts should be awarded in full. First,

Plaintiffs are entitled to the attorneys’ fees and costs under ERISA and the provisions of the Trust

Agreement. See 29 U.S.C. § 1132(g)(2); Khtikian Dec..¶ 6. Second, with respect to attorneys’ fees,

the Court has reviewed the time sheets submitted by Plaintiffs and finds both the time expended on

the case and the hourly rate sought to be reasonable. Finally, the costs requested by Plaintiffs are

expressly allowed under Civil Local Rule 54-3(a). Therefore, it is recommended that the attorneys’

fees and costs requested by Plaintiffs be awarded in full. 

IV. CONCLUSION

For the reasons stated above, it is RECOMMENDED that default judgment be GRANTED. 

Plaintiffs should be awarded the following amounts: 1) $123,469.89 in unpaid withdrawal liability; 

2) $24,693.97 in liquidated damages; 3) $10,892.41 in interest; 4)$4,808.50 in attorneys’ fees; and

5) $425.00 in costs.

Dated: June 2, 2010

 

JOSEPH C. SPERO

United States Magistrate Judge

Case 4:09-cv-04604-PJH Document 26 Filed 06/02/10 Page 8 of 8