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Laborers'pension Fund v. Superior Performance Coatings, Inc.

United States District Court, N.D. Illinois, Eastern Division

February 7, 2014

LABORERS' PENSION FUND and LABORERS' WELFARE FUND OF THE HEALTH AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL LABORERS' DISTRICT COUNCIL OF CHICAGO AND VICINITY, and JAMES S. JORGENSEN, Administrator of the Funds, Plaintiffs,
v.
SUPERIOR PERFORMANCE COATINGS, INC. Defendant.

Jason McGaughy, ALLISON, SLUTSKY & KENNEDY, P.C., Chicago, IL, One of plaintiffs' attorneys.

PLAINTIFFS' MOTION FOR DAMAGES

Plaintiffs, Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (collectively the "Funds"), and James S. Jorgensen, by their attorneys, state:

1. On November 2, 2012, plaintiffs filed a complaint under Section 301(a), Labor Management Relations Act, 29 U.S.C. §185(a), as amended, and Section 502(a)(3) of the Employee Retirement Income Security Act, 29 U.S.C. §1132(a)(3), as amended, alleging that at all material times the defendant has an obligation, arising from a collective bargaining agreement to make contributions to plaintiffs' Funds and to submit to an audit upon demand.

2. On November 19, 2012, plaintiffs' process server, Don Johnson, personally served Patrice C. Schmidt, President and Registered Agent for the defendant, at the location of 612 Bluff Street, Waukegan, Illinois 60085. A copy of the return of service is attached hereto as Exhibit 1.

3. On March 19, 2013, this court entered a default judgment against defendant as well as an order compelling an audit of the Company's books and records for the period from May 23, 2012 to the present. A copy of the Order of Default is attached hereto as Exhibit 2.

4. On March 26, 2013, plaintiffs' special process server, Don Johnson, personally served a copy of the Court's March 19, 2013 order upon Patrice C. Schmidt, President and Registered Agent for the defendant, at the location of 612 Bluff Street, Waukegan, Illinois 60085. Mr. Johnson's Affidavit of Service is attached hereto as Exhibit 3.

5. As established by the affidavit of the Funds' Field Representative, Jim Fosco, which is attached hereto as Exhibit 4, an audit report covering the period from May 23, 2012 through July 17, 2013, was prepared by the Funds' auditors, Richard J. Wolf and Company, Inc. As shown by the report, principal contributions are owed to the Welfare, Pension, Training, LECET, CAICA, LMCC/LDCLMCC Funds and for Union dues in the amount of $11, 315.21.

6. On August 12, 2013, plaintiffs' counsel sent a letter to the defendant enclosing a copy of the audit report. The letter requested that the defendant either submit payment of the amounts owed pursuant to the report, or present challenges to the report, along with supporting documentation on or before August 26, 2013. The defendant failed to submit payment of the amounts owed pursuant to the report, or to present challenges to the report. A true and correct copy of the August 12, 2013 letter is hereto attached as Exhibit 5.

7. Liquidated damages and interest are due as established by paragraphs 4 and 5 of Fosco's affidavit. Liquidated damages are owed in the amount of $2, 194.12, with respect to the contribution amounts set forth in the Richard J. Wolf and Company, Inc., audit report. Interest is also owed. In this matter, interest has been calculated by Mr. Fosco in the amount of $2, 044.96.

7. As established by Paragraph 6 of Mr. Fosco's affidavit, the audit fees in this matter are $600.00.

8. Plaintiffs are entitled to attorneys' fees and costs under ERISA, 29 U.S.C.§1132(g)(2)(B). The affidavit of Karen I. Engelhardt, attached hereto as Exhibit 6, establishes the amount of attorneys' fees incurred in this matter for the period from November 1, 2012 through February 6, 2014 as $3, 499.50, and Plaintiffs' costs, including filing fees, as $605.00.

WHEREFORE, Plaintiffs request entry of a judgment against defendant, Superior Performance Coatings, Inc. in the amount of $20, 258.79, as well as an order requiring the Company to report and pay contributions for the period from July 18, 2013 through the present.

Exhibit 1

YOU ARE HEREBY SUMMONED and required to serve upon PLAINTIFF'S ATTORNEY (name and address)

an answer to the complaint which is herewith served upon you, within 21 days after service of this summons upon you, exclusive of the day of service. if you fail to do so, judgment by default will be taken against you for the relief demanded in the complaint. You must also file your answer with the Clerk of this Court within a reasonable period of time after SerViCe.Thom

Exhibit 2

ORDER

This cause coming to be heard before the Court on Plaintiffs' Motion for Default and to Compel an Audit; due notice having been given to the defendant, and the Court being fully advised in the premises:

IT IS HEREBY ORDERED:

1. A default is entered against the defendant, Superior Performance Coatings, Inc.

2. The defendant, Superior Perfounance Coatings, Inc., through its President, Patrice C. Schmidt, shall permit inspection by the Funds' auditors of the books and records for the period from May 23, 2012 through the present including but not limited to the following:

1. Quarterly and annual payroll tax returns, including, but not limited to, federal quarterly form 941's, federal annual form W-2's, W-3's, 940's, 1099's and state quarterly unemployment returns (form UC-3).
2. Payroll journals and/or registers which include or identify employees' social security numbers, hourly rates of pay, hours worked and the time period in which the work was performed.
3. Individual earnings records for all employees of the employer not shown on payroll journals or registers, including social security numbers and work classifications (or code or clock or ID number), hourly rates of pay, hours worked and the time period in which the work was performed.
4. Cash disbursement journals and general ledgers.
5. Copies of all contribution reports and proof of payment (canceled checks or records of canceled checks) of all contributions to the Laborers' Funds and to all other trade union fringe benefit funds to which the employer contributed.
6. Copies of all dues records and proof of payment (canceled checks or records of canceled checks) of all union dues submitted to the Laborers' District Council.
7. Records showing all amounts paid to all persons or entities that performed work for the employer as independent contractors or subcontractors, if any, including copies of any federal form 1099's issued by the employer.
8. Daily time records filed by employees or supervisors.
9. Source documents and lists of job codes and equipment codes.
10. Certified payrolls for public sector jobs where such payrolls are required.
11. Employee personnel files including, but not limited to, last known addresses and telephone numbers, any documents which demonstrate employees' job classifications and/or status as an apprentice, journeyman, foreman, superintendent, or supervisor, (confidential medical records or other private records not relevant to the establishment of an employee's job classification shall not be disclosed.)
12. Bank account statements and canceled checks from any account used in conjunction with the employer's business.
13. Records of all hours worked, rates of pay and classifications are not provided in the records listed in items I through 10, the employer shall maintain monthly lists of all employees not shown on payroll records, showing social security numbers and work classifications (or code or clock or ID number), rates of pay and hours worked.

3. Defendant, through Company President Patrice C. Schmidt, shall permit plaintiffs' auditors access to the books and records at a mutually convenient time and place within ten days of service of this order. To comply with this order, Patrice C. Schmidt shall contact plaintiffs' counsel, Jason McGaughy at Allison, Slutsky & Kennedy, P.C., 230 W. Monroe Street Suite 2600, Chicago, IL 60606 at (312)364-9400 to arrange at time for plaintiffs' auditors to review the Company documents within ten days of service of this order.

4. This Court orders Superior Performance Coatings, Inc. to obtain and maintain a surety bond in the amount of $5, 000.00, to guarantee the payment of wages, pension and welfare contributions as required by the collective bargaining agreement. It is further ordered that within 60 days of the date of this judgment order, Superior Performance Coatings, Inc., shall provide written proof that it has obtained such a surety bond to plaintiffs' counsel, Jason MeGaughy, Allison, Slutsky & Kennedy, P.C., 230 W. Monroe Street, Chicago, IL 60606.

Exhibit 3

I hereby certify, under penalty of perjury, that on the 26th day of March, 2013, I received this Order, dated March 19th, 2013, and then served it herein as follows:

On the defendant, Superior Performance Coatings, Inc., by personally handing a copy of this Order to Ms. Patrice C. Schmidt, the President and Registered Agent for the defendant, Superior Performance Coatings, Inc.

This service was effected at the address of 612 Bluff Street, in Waukegan, Illinois on April 2nd, 2013 at the hour of 6:40 p.m.

That the sex, race, approximate age and physical description of the person with whom this Order was handed to is described as follows: Female, White/Hispanic, Approximately 35-40 years of age, 5'06", 130lbs, with black colored hair.

Signed and sworn to, before me, a Notary Public on this 3rd day of April, 2013

Exhibit 4

Jim Fosco, first duly sworn on oath, deposes and states as follows:

1. I am a Field Representative employed by the Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (the "Laborers' Funds"), the plaintiffs in the above referenced action. My responsibilities include oversight of the collection of amounts owed by Superior Performance Coatings, Inc. This affidavit is submitted in support of the Laborers' Funds' motion for damages.

2. On or about May 23, 2012, Superior Performance Coatings, Inc. assigned its collective bargaining rights to the Mid-America Regional Bargaining Association and thereby entered into a collective bargaining agreement with the Construction and General Laborers' District Council of Chicago and Vicinity and its affiliated local ("Union"). The Mid-America Regional Bargaining Association and the Union adopted and incorporated a Master Agreement between the Union and various employer associations. That Master Agreement also binds Superior Performance Coatings, Inc. to the Laborers' Funds respective Agreements and Declarations of Trust,

3. I am aware that the Company submitted its books and records to the Funds' designated auditors from the firm of Richard J. Wolf and Company, Inc., who prepared an audit a report dated July 30, 2013, reflecting unpaid contributions owed for the period from May 23, 2012 through July 17, 2013. 1 reviewed the report which shows that principal contributions are owed to the Welfare, Pension, Training, LECET, CA/CA, LMCC/LDCLMCC Funds and for Union dues in the amount of $11, 315.21. A true and correct copy of the audit report is attached to this affidavit.

4, The respective Agreements and Declarations of Trust of the Laborers Fends, to which Superior Performance Coatings, Inc., is bound require payment of liquidated damages in the amount of 20 percent of the principal for the Welfare, Pension and Training Funds and 10 percent for the LMCC/LDCLMCC, CAICA, LECET Funds and for Union dues. Interest is owed at the rate of 12% on all delinquent amounts owed front the date of the delinquency forward. It is my responsibility to prepare the damage and interest calculation for audit reports. With respect to the report covering the period from May 23, 2012 through July 17, 2013, liquidated damages are owed in the amount of $68.93 for the LMCC/LDCLMCC, CAICA, LECET and for Union dues. With respect to the Pension, Welfare and Training Funds liquidated damages are owed in the amount of $2, 125.19.

5. Interest has been determined for unpaid Funds' contributions ha the amount of $2, 044.96, through January 31, 2014.

6. Audit fees paid by the Funds in connection with this matter are $600.00.

7. This Company does not have a bond nor has this Company posted any amount in lieu of a surety bond.

FURTHER AFFIANT SAYETH NOT.

Subscribed and sworn to before me this 6 day of February 2014

Exhibit 5

Dear Ms. Schmidt:

We are in receipt of a report on a payroll audit by the Funds' designated auditors for the period May 23, 2013 through July 17, 2013, reflecting delinquent contributions for the audit period; a copy of the original report is also enclosed. In addition to these principal amounts, the collective bargaining agreement and the Funds' Agreements and Declarations of Trust, to which Superior Perfounance Coatings, Inc. is bound, provide for the payment of liquidated damages for all contributions paid late, plus interest, audit costs and attorneys' fees.

The following amounts are owed to the enumerated funds pursuant to the audit report for the period May 23, 2013 through July 17, 2013:

Welfare $ 6, 089.67 Pension $ 4, 298.03 Training $ 238.25 LECET $ 33.36 CAICA $ 38.12 Dues $ 560.60

Additionally, audit costs in the amount of $600.00, and liquidated damages in the amount of $2, 194.12 are also owed. In the absence of reliable evidence to the contrary, the Funds are required to pursue collection of all amounts owed pursuant to the auditors' report. If you contest the results of the audit, a statement of the nature of the challenge, and any supporting evidence must be submitted to the Funds. Please provide all challenges to the audit report on or before August 26, 2013. In the absence of prompt payment of the amounts reflected by the report, together with interest and liquidated damages, or evidence in support your challenges to the report, we will move for judgment in the pending court matter to collect all such amounts, together with attorneys' fees and costs.

Please feel free to contact me if you have any questions. Thank you for your attention to this matter.

Exhibit 6

Karen I. Engelhardt being first duly sworn on oath, deposes and states as follows:

1. I am an attorney and a shareholder at the law firm of Allison, Slutsky & Kennedy, P.C., counsel for plaintiffs Laborers' Pension Fund and Laborers' Welfare Fund of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity (the "Laborers' Funds") in the action against Superior Performance Coatings, Inc. This affidavit is submitted to document attorneys' fees and costs incurred bythe Laborers' Funds for work performed in connection with obtaining contributions owed for the period from May 2012 to the present.

2. For all attorney time included in the fee affidavit for the period from November 1, 2012 through September 30, 2013, services were rendered to the Funds at the rate of $200.00 per hour for shareholder, $175.00 per hour for associates, and $100.00 per hour for clerks/paralegals, For all attorney time included in the fee affidavit for the period from October 1, 2013 through February 6, 2014, services were rendered to the Funds at the rate of $225.00 per hour for shareholder, $195.00 per hour for associates, and $110.00 per hour for clerks/paralegals In this cause, records for legal work on this matter were kept contemporaneously and are attached hereto.

3. In the fee exhibit attached hereto the amount of time is set forth reflecting the period from November 1, 2012 through February 6, 2014 by the firm's attorneys and paralegals in this matter. As set forth in that attachment, the Laborers' Funds have incurred legal fees to my film in this matter in the amount of $3, 499.50.

4. In addition, the Laborers' Funds have incurred costs in the prosecution of this matter totaling $605.00.

FURTHER AFFIANT SAYETH NOT.


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