The Mineo Corporation et al v. Rowe et al, No. 2:2007cv00057 - Document 133 (E.D.N.C. 2011)
Court Description: ORDER granting in part and denying in part 114 Motion for Default Judgment. Signed by Senior Judge Malcolm J. Howard on 3/3/2011. (Heath, D.)
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The Mineo Corporation et al v. Rowe et al Doc. 133 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA NORTHERN DIVISION NO. 2:07-CV-57-H THE MINEO CORPORATION, THE MINEO CORPORATION EMPLOYEE WELFARE BENEFIT PLAN, FRANCESCO MINEO and BEVERLY MINEO, Plaintiffs, v. ORDER PHILIP D. ROWE, JUDI CARSRUD, NICHE MARKETING, INC., NICHE PLAN SPONSORS, INC. and 419 TRUST ADMINISTRATORS, INC., Defendants. This matter is before the court on plaintiffs' motion for default judgment against defendants Philip D. Rowe, Judi Carsrud, Niche Marketing, Inc., Administrators, Inc. January 13, 2011. Niche Plan Sponsors, Inc., and 419 Trust A hearing was held on plaintiffs' motion on Present at the hearing were plaintiff Francesco Mineo and counsel for the plaintiffs. Dockets.Justia.com BACKGROUND This action concerns a multiple employer welfare benefit plan marketed as the National Benefit Plan & Trust ("the plan"). Plaintiffs brought this action against the individuals and entities involved in marketing the Plan, alleging that plaintiffs were induced to participate in the plan by the defendants' representations that participating employers could deduct their contributions and that employees would recei ve tax-favored severance benefits representations that turned out to be false and that the defendants knew to be false or at least highly suspect at the time made. Plaintiffs assert that the IRS conducted an audit and found the plan was not tax deductible, resulting in significant tax consequences to plaintiffs, including the assessment of back taxes, interest, and penalties. Claims against American General Life Insurance Company, Bryan Cave, LLP and Richard C. Smith have previously been dismissed, and the only parties remaining as defendants to this action are Philip D. Rowe, Judi Carsrud, Niche Marketing, Inc., Niche Plan Sponsors, Inc., and 419 Trust Administrators, Inc. defendants") . (collectively "the Niche Although the Niche defendants filed a motion to dismiss plaintiffs' claims, they have not answered plaintiffs' complaint and have made no appearance following the denial of their motion to dismiss. On November 2, 2 2009, counsel for the Niche defendants was allowed to withdraw, and default was entered against them. 1 Plaintiffs now seek default judgment against the Niche defendants. COURT'S DISCUSSION Rule 55 (b) (2) of the Federal Rules of Civil Procedure authorizes the court to enter default judgment against a party where default has been entered upon the party's failure to plead or otherwise defend. facts Fed. R. Civ. P. 55(b) (2). alleged Homecomings in Fin. the Upon default, the well-pleaded complaint are Network, 253 F.3d deemed admitted. 778, 780 (4th Cir. Ryan v. 2001). However, "a default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover." rd. (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Judgment may be entered only if the allegations support the relief sought. DIRECTV, Inc. v. Pernites, 200 Fed. App'x 257, 258 (4th Cir. 2006). Counsel's motion to withdraw indicated that the Niche defendants did not intend to further defend the action and consented to the entry of default against them. (Mot. Withdraw Counsel DE #87. ) 1 3 A. ERISA claims The facts alleged in plaintiffs' complaint support a claim for relief under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et ~ appropriate as to this claim. ("ERISA"), and default judgment is Plaintiffs having demonstrated at the hearing of this matter that they sustained compensatory damages of $172,733.10 as a result of the ERISA violations, judgment is entered against the Niche defendants in that amount as to plaintiffs' ERISA claims. B. State-law claims Default judgment is not appropriate as to plaintiffs' state-law claims, however. As set forth in this court's September 16, 2009, order, all of plaintiffs' state-law claims arise out of and concern the same conduct as their ERISA claims. are preempted by ERISA. of See 29 U.S.C. § As a matter of law, they 1144(a) ("[T]he provisions [ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan [governed by ERISA] ."); FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990) pre-emption clause is conspicuous for its breadth. ("The It establishes as an area of exclusive federal concern the subject of every state law that 'relate [s] to' an employee benefit plan governed by ERISA." (alteration plaintiffs' in original)). complaint, The well-pleaded allegations of although admitted by the Niche defendants 4 upon their default, do not support a claim for relief under state law because they are preempted by ERISA. Accordingly, plaintiffs' motion for default jUdgment as to the state-law claims and their corresponding request for treble damages must be denied. C. Attorney's Fees & Costs Having determined that plaintiffs are entitled to default judgment on their ERISA claims, the court finds that plaintiffs are eligible to recover their litigation costs pursuant to Rule 54 (d) (1) of the Federal Rules of Civil Procedure, as well as reasonable at torney's fees and other expenses under 29 U. S. C. § 1132 (g) (1). Fed. R. Civ. P. 54 (d) (1) See (establishing presumption in favor of awarding costs to prevailing party); Williams v. Metropolitan Life Ins. Co., 609F.3d622 (4thCir. 2010) ("In an ERISA action, a district court may, in its discretion, award costs and reasonable attorney's fees to either party under 29 U.S.C. § 1132 (g) (1), so long as that party has achieved' some degree of success on the merits. '" (quoting Hardt v. Reliance Std. Life Ins. Co" 130 S.Ct. 2149 (2010))) Costs include such expenses as filing and service fees and transcript costs and are taxed by the clerk upon submission of a bill of costs. U.S.C. §1920; Fed. R. Civ. P. 54(d)(1). 28 Aclaimforattorney'sfees and expenses not taxable by the clerk must be made by motion pursuant to Rule 54 (d) (2) . 5 At the hearing on plaintiffs' motion, the court held in abeyance plaintiffs' request for attorney's fees and directed counsel to present an itemized statement in support of their request on or before February 7, 2011. On February 7, 2011, counsel submitted a memorandum requesting an award of $304,982.29 in attorney's fees, costs and other expenses against the Niche defendants. In support of their request, plaintiffs have submitted affidavits from their attorneys in New Jersey and Local Civil Rule 83.1 Counsel, as well as an affidavit from a certified pUblic accountant hired to assist with the IRS audit and to provide litigation assistance in this matter. costs Although counsel submitted a list of hours expended and the and information other expenses submitted incurred provides provided or expenses incurred. no on particular description of dates, the the services Additionally, plaintiffs appear to be requesting reimbursement of attorney's fees and expenses incurred in connection with litigation in North Carolina state court but have provided no information concerning that litigation or any basis for recovery of those fees and expenses. "The starting point for establishing the proper amount of an [attorney fee] award" is the lodestar amount - "the number of hours reasonably expended, multiplied by a reasonable hourly rate." Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169,174 (4th Cir. 1994). Because plaintiffs' documentation fails to include the information 6 needed for this plaintiffs' court request without prejudice. to make its for attorney's fees lodestar determination, and expenses is DENIED Plaintiffs may renew their request within the time permitted by Rule 54 (d) (2). Any requests for costs of this action should be directed to the clerk pursuant to Rule 54 (d) (1) and this court's local rules. CONCLUSION For the foregoing reasons, plaintiffs' judgment is GRANTED in part and DENIED in part. motion for default The clerk is directed to enter judgment in favor of plaintiffs and against the Niche defendants in the amount of $172,733.10 on plaintiffs' ERISA claim. Plaintiffs' request for attorney's fees and expenses is DENIED without prejudice. This '} ~day of March 2011. 6£~~ Senior United States District Judge At Greenville #31 7
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