Resilient Floor Covering Pension Fund v. Floor Covering Contracts

Background

The Resilient Floor Covering Pension Fund and its Board of Trustees sued Floor Covering Contracts, a sole proprietorship, to collect delinquent withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980. The opinion states that Floor Covering Contracts had participated in the pension fund since at least 2005, agreed in 2011 to be bound by a collective bargaining agreement requiring contributions, and completely withdrew from the fund effective July 1, 2015.

The pension fund determined that Floor Covering Contracts owed withdrawal liability, notified it of the assessment, and demanded payment. Floor Covering Contracts disputed the liability and referred to a construction-industry exemption, but it did not begin arbitration after the pension fund denied its request for review. It also did not make the required payments. The pension fund later sent a second withdrawal notice after its former administrator entered bankruptcy.

The plaintiffs served the summons and complaint on July 1, 2020. After Floor Covering Contracts failed to respond, the Clerk entered default on August 24, 2020. The plaintiffs then moved for default judgment. Floor Covering Contracts did not oppose the motion or appear at the December 1, 2020 hearing.

Court’s Analysis

The court first found that service was proper because a process server personally delivered the summons and complaint to Gerald Box, identified in the opinion as the owner of Floor Covering Contracts.

For a default-judgment motion, the court considered factors including the plaintiffs’ potential prejudice, the strength and sufficiency of their claims, the amount at stake, the possibility of disputed facts, whether the default resulted from excusable neglect, and the policy favoring decisions on the merits. The court concluded that these factors favored default judgment. It found that the plaintiffs had adequately stated their claims and supported them with evidence showing that the fund notified Floor Covering Contracts of the withdrawal liability and demanded payment. The court also noted that Floor Covering Contracts had not initiated arbitration.

The court held that the plaintiffs were entitled to the $56,376 in withdrawal liability stated in their demand letters. Under the pension statute, an employer that does not initiate arbitration owes the amounts demanded according to the payment schedule.

Damages and Disposition

The court awarded $56,376 in withdrawal liability. It also granted $9,230.12 in interest calculated through September 8, 2020. Because the liquidated damages calculated under the trust agreement—10 percent of the liability, or $5,637.60—were less than the interest amount, the court awarded an additional $9,230.12 in interest instead of liquidated damages.

The court granted the plaintiffs’ request for additional time to seek attorney’s fees and costs, allowing approximately four weeks to file that motion. It did not enter final judgment at that time. The order awarded a total of $74,836.24 and disposed of the default-judgment motion.