Constr. Laborers Trust Funds for S. Cal. Admin. Co. v. Anzalone Masonry, Inc.
316 F. Supp. 3d 1192
C.D. Cal.2018Background
- Plaintiff (administrator for multi-employer Trust Funds) sued Anzalone Masonry, Inc. and its principals KerryAnne and Blase Anzalone Jr. for unpaid fringe benefit contributions, breach of fiduciary duties under ERISA, and to compel an audit; other defendants were dismissed by settlement.
- Employer performed work on San Diego Unified School District (SDUSD) projects and was bound by a Project Stabilization Agreement and trust agreements requiring monthly contribution reports and remittances (and authorizing audits).
- Plaintiff alleges Employer withheld employee fringe deductions and failed to remit contributions (Oct 2016–Jan 2017), refused to cooperate with audit, and that the Anzalones, as controlling officers, exercised control over plan assets.
- The Clerk entered defaults against the Anzalones and Employer after they failed to respond; Court previously ordered an interlocutory accounting/audit.
- Plaintiff recovered the principal contribution amounts from third parties and now seeks attorneys’ fees ($2,043.15), costs ($1,770.10), and a final order compelling an audit; Court grants default judgment and orders an accounting and payment jointly and severally.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability for unpaid contributions under ERISA §515 | Employer was bound by SDUSD PSA and trust agreements and failed to pay required monthly contributions for covered hours | (No responsive defense; default) | Default admits liability; claim under §1132(d)(1) stated and sustained |
| Whether withheld wage deductions are plan assets and create fiduciary liability for principals | Deductions intended as plan contributions are plan assets; Anzalones controlled disposition and are fiduciaries who misappropriated assets | (No responsive defense; default) | Court finds withheld funds are plan assets and Anzalones are fiduciaries; breached ERISA duties; jointly and severally liable |
| Entitlement to equitable relief (audit/accounting) under §1132(g)(2)(E) and trust agreements | Trust agreements and ERISA authorize audits; interlocutory accounting already ordered; final audit relief appropriate | (No responsive defense; default) | Court orders final accounting and compels production of extensive payroll/business records |
| Award of attorneys’ fees and costs under §1132(g)(2) | Fees and costs are recoverable; requests $2,043.15 fees and $1,770.10 costs (based on Local Rule schedule and original claim amount) | (No responsive defense; default) | Court awards the requested attorneys’ fees and costs as reasonable and mandatory; directs costs to be taxed by clerk as appropriate |
Key Cases Cited
- Aldabe v. Aldabe, 616 F.2d 1089 (9th Cir. 1980) (standard for entry of default judgment)
- Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9th Cir. 1987) (well-pleaded allegations in complaint are accepted as true in default, except damages)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors for default judgment analysis)
- PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172 (C.D. Cal. 2002) (application of Eitel factors)
- Geddes v. United Fin. Grp., 559 F.2d 557 (9th Cir. 1977) (defaulting party admits well-pleaded allegations)
- IT Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415 (9th Cir. 1997) (any control over plan money can create fiduciary status)
- Kayes v. Pacific Lumber Co., 51 F.3d 1449 (9th Cir. 1995) (corporate officers can be liable as ERISA fiduciaries)
- Acosta v. Pacific Enters., 950 F.2d 611 (9th Cir. 1991) (individual fiduciary liability under ERISA)
- J.R.D. Mech. Servs., Inc. v. Bd. of Trustees of Airconditioning & Refrigeration Indus. Health & Welfare Tr. Fund, 99 F. Supp. 2d 1115 (C.D. Cal. 1999) (withheld wage deductions can be plan assets and give rise to fiduciary obligations)
- Arizona State Carpenters Pension Trust Fund v. Citibank, 125 F.3d 715 (9th Cir. 1997) (liberal construction of ERISA fiduciary definition)
- Phelps v. C.T. Enterprises, 394 F.3d 213 (4th Cir. 2005) (withheld funds are plan assets)
- United States v. Grizzle, 933 F.2d 943 (11th Cir. 1991) (same)
- LG Elec., Inc. v. Advance Creative Computer Corp., 212 F. Supp. 2d 1171 (N.D. Cal. 2002) (evidence required to support damage awards in default judgments)