Trustees Of The New York City District Council Of Carpenters Pension Fund v…

Background

The plaintiffs—the Funds—act as a collection agent for the New York City District Council of Carpenters. They sued Abalene Decorating, Inc. and City View Blinds of N.Y., Inc. under the Employee Retirement Income Security Act and the Labor Management Relations Act. The Funds alleged that Abalene was bound by a collective bargaining agreement and failed to make required employer contributions. They also alleged that City View was Abalene’s alter ego, meaning a legally equivalent business that could be held responsible for Abalene’s obligations.

The Funds sought unpaid contributions, interest, liquidated damages, audit costs, attorney’s fees, an audit of City View’s records, and a declaration that City View was bound by the agreement. After defendants did not answer or otherwise appear, the court entered a default judgment on October 7, 2020, holding Abalene and City View jointly and severally liable for $92,589.86. A jointly and severally liable defendant may be required to pay the full amount, subject to the defendants’ rights between themselves.

Motions to Vacate the Default Judgment

Defendants separately moved under Federal Rules of Civil Procedure 55(c) and 60(b)(1) to vacate the default judgment. Rule 60(b)(1) permits relief from a judgment for mistake, inadvertence, surprise, or excusable neglect. The court considered whether each default was willful, whether the defendant had shown a meritorious defense, and whether vacating the judgment would prejudice the Funds.

Abalene

Abalene’s owner, Leopold Strulovic, stated that Abalene did not receive the Complaint from the New York Secretary of State. The court accepted, for purposes of the motion, Strulovic’s account that he contacted the Funds’ counsel after receiving the Funds’ motion for default judgment and did not receive a response. But the court found that Abalene knew about the lawsuit by late August 2020 and still waited more than two months, and until after entry of judgment, to retain counsel or seek relief from the court.

The court concluded that Abalene’s default was willful rather than the result of negligence or a good-faith mistake. It also found that Abalene had not shown a meritorious defense. Abalene did not seriously contest its delinquent contributions or the accuracy of the audit; its arguments mainly challenged City View’s alleged alter-ego status, which did not provide a defense to Abalene’s own liability under the agreement. The court therefore denied Abalene’s motion to vacate and did not need to decide prejudice.

City View

City View’s owner and president, Moshe Gold, stated that he did not recall receiving the summons, Complaint, or default-judgment papers and that the company’s office was largely closed during the COVID-19 pandemic. The court accepted, for purposes of the motion, that City View did not learn of the lawsuit until after judgment. Even so, the court found that City View had been grossly negligent because it did not explain why it could not check its mail during the litigation. That conduct weighed against vacating the judgment.

City View argued that it was not Abalene’s alter ego. The court explained that the collective bargaining agreement bound an alter ego and made it jointly and severally liable with Abalene. The court had previously found, based on the Complaint’s well-pleaded allegations, that City View was Abalene’s alter ego. Those allegations included shared ownership, business activities, locations, telephone number, employees, and industry identity.

The court found that City View’s proposed answer contained only conclusory denials and affirmative defenses. Gold’s declaration likewise provided general denials without evidence addressing the allegations. The court concluded that City View had not shown a meritorious defense and denied its motion to vacate. It also denied City View’s alternative request for more time to answer for the same reasons. The court did not need to decide prejudice.

Motions to Stay Enforcement and Disposition

After Abalene reported enforcement activity, both defendants moved to stay enforcement of the default judgment while their motions to vacate were pending. Because the court denied the motions to vacate, it also denied both motions to stay enforcement.

Judge Castel’s order denied defendants’ motions to vacate the default judgment, denied City View’s alternative request for an enlargement of time to answer, and denied defendants’ motions to stay enforcement. The Clerk was directed to terminate the motions.