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Trustees of Tile, Marble and Terrazzo Industry Insurance Fund v. Livonia Tile & Marble, Inc.

United States District Court, E.D. Michigan, Southern Division

September 18, 2017

Trustees of the Tile, Marble, and Terrazzo Industry Insurance Fund; Tile, Marble, and Terrazzo Industry Pension Fund, et al., Plaintiffs,
v.
Livonia Tile & Marble, Inc. and Ronald E. McKendrick, Defendants.

          R. STEVEN WHALEN U.S. MAGISTRATE JUDGE.

          ORDER REGARDING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT [14] AND CLOSING CASE

          ARTHUR J. TARNOW SENIOR UNITED STATES DISTRICT JUDGE.

         Plaintiffs, a collection of jointly trusteed funds in the Tile, Marble, and Terrazzo industry (collectively “the Funds”), established under and administered pursuant to provisions of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186, and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132 and 1145, filed a Complaint [Dkt. 1] on December 2, 2016 against Defendants Livonia Tile & Marble, Inc. (“LTM”) and Ronald E. McKendrick. Plaintiffs allege a violation of ERISA and Collective Bargaining Agreements (“CBA”) under 29 U.S.C. § 1145; violation of Michigan Building Contract Fund Act, M.C.L. § 570.151, et seq.; breach of fiduciary duties under 29 U.S.C. §§ 1145, 1104, and 1109; and state and common law conversion. Plaintiffs seek, among other things, entry of judgment in the amount of $14, 725.76 (a combination of delinquent fringe benefit contributions and liquidated damages); an order directing Defendants to produce the books and records of LTM for the updated audit period of July 2015 through the present; and a judgment against Defendants for all amounts found owing by such updated audit.[1] Since the commencement of this lawsuit, the above-named defendants have not retained counsel; no Notice of Appearance by an attorney has been filed on behalf of these Defendants, nor have they attempted to participate in the proceedings in any way.

         On June 16, 2017, the Court entered an Order for Plaintiffs to Show Cause [8] why the case should not be dismissed for a failure to prosecute. Plaintiffs timely responded on June 29, 2017 [9]. Plaintiffs informed the Court that although the parties attempted to resolve the matter informally, settlement discussions were ultimately unsuccessful. Plaintiffs thereafter filed a request for Clerk's Entry of Default as to all Defendants [10], which was entered on June 29, 2017 [11-12]. See Fed. R. Civ. P. 55(a) (“When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.”). Plaintiffs subsequently filed this Motion for Default Judgment [14] on July 21, 2017.

         Plaintiffs are entitled to default judgment against the Defendants. Generally, “[u]pon a party's default, the well-pleaded allegations of the complaint related to liability are taken as true.” IBEW Local 648 Pension Plan v. Butler County Elec., 2011 WL 3652487, at *3 (S.D. Ohio July 22, 2011); see also Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995).

         Accepting as true the facts set forth in the complaint, Defendants violated their contractual and statutory obligations by failing to make fringe benefit contributions and assessments due on behalf of all employees covered under the CBA. LTM also used the funds intended for fringe benefit contributions for purposes other than to pay the amounts owed to the Funds and their participants. In addition, Defendant McKendrick breached his fiduciary duties by failing to act solely in the interests of the participants. He also fraudulently and purposefully avoided paying required fringe benefit contributions to the Funds by converting monies paid to LTM for his personal use and/or use by LTM. Because of Defendants' failures, Plaintiffs have suffered significant financial losses.

         Defendants have failed to plead or otherwise defend on Plaintiffs' claims and are therefore liable on each count set forth in the complaint. Under ERISA, if judgment is awarded in favor of a plan in a suit brought on behalf of the plan pursuant to 29 U.S.C. § 1145, the Court shall award the plan -

(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of -
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by ...

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