Opinion ID: 2782336
Heading Depth: 2
Heading Rank: 2

Heading: default judgment: liability

Text: A court’s decision to enter a default against defendants does not by definition entitle plaintiffs to an entry of a default judgment. Rather, the court 11 may, on plaintiffs’ motion, enter a default judgment if liability is established as a matter of law when the factual allegations of the complaint are taken as true. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011). We review the district court’s decision for abuse of discretion. Id. at 131. Under this rubric, the district court concluded that the defendants were liable as a matter of law. We agree. Although plaintiffs contend that the defendants waived any argument that they were not liable as a matter of law by failing to present any such argument below, we need not decide that issue because defendants’ arguments on the point are wholly without merit. Under Section 515 of ERISA, 29 U.S.C. § 1145, any “employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.” If such an employer fails to make the required contributions, the court “shall award the plan”: “unpaid contributions,” “interest,” “liquidated damages provided for under the plan,” “attorney’s fees and costs,” and “such other legal or equitable relief the court deems appropriate.” Id. at § 1132(g)(2). 12 The allegations in the complaint when accepted as true, as we are required to do in deciding whether a default judgment is appropriate, establish the following facts: (1) the corporate defendant was bound to a Collective Bargaining Agreement with the Union; (2) it was obligated to remit contributions and deductions to the Funds and Union for hours worked by bricklayers, masons and plasterers in the Union’s jurisdiction; and (3) it was bound by the Funds’ Agreements and Declarations of Trust and Collections Policy. In addition, documentary evidence submitted by the plaintiffs, which the defendants did not contest, establishes that the corporate defendant failed to remit at least some contributions. These facts are sufficient to render the corporate defendant liable under ERISA. See 29 U.S.C. § 1145; Finkel v. Romanowicz, 577 F.3d 79, 85 (2d Cir. 2009). The corporate defendant argues that it cannot be found liable as a matter of law under sections 1132 and 1145, because “[t]here was . . . no evidence that [it] received any monies from any union labor.” Yet, a well‐pleaded factual allegation in the complaint belies this claim. Plaintiffs alleged that the corporate defendant did, in fact, receive payment for union labor, and that allegation is accepted as true. See J.A. 16. 13 The district court never expressly articulated the legal theory under which it found Duane Moulton liable in his individual capacity. See generally Sasso v. Cervoni, 985 F.2d 49, 50 (2d Cir. 1993) (holding that an individual cannot be held “liable for corporate ERISA obligations solely by virtue of his role as officer, shareholder, or manager”); Leddy v. Standard Drywall, Inc., 875 F.2d 383, 387 (2d Cir. 1989). Here, because Moulton never entered into a collective bargaining agreement with the union, and because no other evidence suggested that the individual and corporate defendants are alter egos, Moulton could not have been found to be an “employer” under Section 515 of ERISA. But Section 409 of ERISA, 29 U.S.C. § 1109, provides an independent basis for Moulton’s liability in his individual capacity as a “fiduciary.” A fiduciary, under ERISA is “someone who ‘exercises any discretionary authority or discretionary control respecting management of [an ERISA benefit] plan or exercises any authority or control respecting management or disposition of its assets.’” Finkel, 577 F.3d at 85 (alteration and emphasis in the original) (quoting 29 U.S.C. § 1002(21)(A)(i)). A fiduciary that unlawfully withholds plan assets is “personally liable to make good to such plan any losses to the plan.” 29 U.S.C. § 1109(a). Though not all corporate officers are fiduciaries under ERISA’s 14 expansive definition of the term, the Finkel court indicated that where a complaint alleges that an individual is “responsibil[e] for determining which of the company’s creditors would be paid or in what order’ . . . or otherwise enjoyed authority or control over [] management,” the individual is a fiduciary. Finkel, 577 F.3d at 86 (alteration in the original) (emphasis and internal citation omitted); see also LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir. 1997) (noting that “Congress intended ERISA’s definition of fiduciary ‘to be broadly construed,’” and concluding that an individual who signed checks and decided when creditors were paid was a fiduciary). Here, the factual allegations in the complaint, combined with uncontroverted documentary evidence submitted by plaintiffs, establish that Moulton was a fiduciary under ERISA and breached his fiduciary duty. See Au Bon Pain Corp. v. Artect, Inc., 653 F.3d 61, 65 (2d Cir. 1981) (explaining that plaintiff “is entitled to all reasonable inferences from the evidence offered” against the defaulting party). First, the complaint alleges that “Moulton . . . determined which creditors the [corporate defendant] would pay” and “exercised control over money due and owing to the Plaintiff Funds.” J.A. 16. Second, the complaint and the evidence establish that Moulton failed to remit 15 employer contributions under his control, see J.A. 17, 19, 404, 421–23, which contributions were designated as plan assets under the trust documents, see J.A. 190, 257, 313; see also In re Halpin, 566 F.3d 286, 290 (2d Cir. 2009). These facts constitute a sufficient basis to affirm the district court’s holding that the individual defendant was liable as an ERISA fiduciary.