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Painters District Council No. 2 v. Commercial Drywall Construction

United States District Court, E.D. Missouri, Eastern Division

July 30, 2014

PAINTERS DISTRICT COUNCIL NO. 2, et al., Plaintiffs,
v.
COMMERCIAL DRYWALL CONSTRUCTION, et al., Defendants.

MEMORANDUM AND ORDER

CHARLES A. SHAW, District Judge.

This matter is before the Court on defendants Commercial Drywall Corporation ("CD Corp.") and Thomas E. Wilkerson's motion to extend the time to answer or, in the alternative, file a responsive pleading out of time. The Court will construe defendants' motion as a motion to set aside the Clerk's entry of default pursuant to Federal Rule of Civil Procedure 55(c). For the following reasons, defendants' motion will be denied.

Background

Plaintiffs bring this action pursuant to Section 301 of the Labor Management Relations Act of 1947, as amended ("LMRA"), 29 U.S.C. § 185, and pursuant to Section 502 and 505 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1132, 1145 to collect delinquent fringe benefit contributions. Defendants CD Corp. and Thomas Wilkerson were served with the summons and complaint on March 27, 2013. Defendants Commercial Drywall Construction ("CD Construction") and Peter Dooley were served with the summons and complaint on March 31, 2013. Defendants did not file answers or otherwise respond to the complaint.

Plaintiffs' complaint alleges that defendant CD Corp. is the alter ego of defendant CD Construction. Plaintiffs allege these defendant entities share the same officers, participate in the same industrial market, retain the same employees, have the same customers, and have a unity of labor relations. (Compl. at ¶¶56-57). As such, plaintiffs allege CD Corp. is bound to the collective bargaining agreements as a single and joint employer with CD Construction. ( Id. at ¶¶ 59-60). Additionally, plaintiffs allege that the defendant companies acted under the authority of defendant Thomas Wilkerson in such a manner that Mr. Wilkerson should be held personally liable for the debts of the companies. ( Id. at ¶¶ 73-75).

On May 9, 2013, a Clerk's entry of default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure was entered against all four defendants. On December 5, 2013, the Court ordered the corporate defendants, CD Corp. and CD Construction, to submit to an audit so plaintiffs could determine the amounts owed to plaintiffs. On December 27, 2013, counsel for defendants CD Corp. and Thomas Wilkerson entered an appearance and filed the instant motion "to extend time and or file responsive pleadings out of time." See Doc. 21.

Because the Clerk of Court has already entered default against all defendants and has already entered a default order of an accounting against defendants CD Corp. and CD Construction, the motion is properly considered a motion to set aside Clerk's entry of default pursuant to Federal Rule of Civil Procedure 55(c).[1]

Discussion

An entry of default under Rule 55(a) will not automatically be set aside. Rule 55(c) provides that a court may set aside an entry of default for good cause. The Eighth Circuit Court of Appeals has explained that when "examining whether good cause exists, a district court should weigh whether the conduct of the defaulting party was blameworthy or culpable, whether the defaulting party has a meritorious defense, and whether the other party would be prejudiced if the default were excused.' Johnson v. Dayton Elec. Mfg. Co. , 140 F.3d 781, 784 (8th Cir. 1998)." Stephenson v. El-Batrawi , 524 F.3d 907, 912 (8th Cir. 2008). The Court is mindful of the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits rather than resolution of cases through default judgment. See United States ex rel. Time Equip. Rental & Sales, Inc. v. Harre , 983 F.2d 128, 130 (8th Cir. 1993).

(1) Culpability of Defaulting Party

In applying the more lenient "good cause" standard, the Eighth Circuit has focused heavily on the first factor, that is the blameworthiness of the defaulting party. Johnson , 140 F.3d at 784. The Eighth Circuit has "consistently sought to distinguish between contumacious or intentional delay or disregard for deadlines and procedural rules, and a marginal failure to meet pleading or other deadlines." Id . (internal quotations omitted). It has "rarely, if ever, excused the former." Id . Relief has been granted, however, for marginal failures when there were meritorious defenses and no prejudice to plaintiffs. Id.

Defendants' reply brief states that "despite the service returns, [the responding defendants] do not have any recollection of being personally served in this matter." (Defs.' Reply at 1). The affidavit of service for defendant Thomas Wilkerson states that he was personally served with the summons and complaint at his home on Wednesday, March 27, 2013 at 8:35 p.m. See Doc. 14. Mr. Wilkerson is also the registered agent for CD Corp., and he was served the summons and complaint for CD Corp. at the same time. See Doc. 13.

As defendants point out, Mr. Wilkerson is no stranger to the courts and court procedure. He was named as an individual defendant in at least two ERISA cases pending in this Court against his former company, Master Craftsman Services, Inc.: Carpenters' District Council of Greater St. Louis and Vicinity v. Master Craftsman Services, Inc., No. 4:06-CV-1251 FRB (E.D. Mo. filed Aug. 18, 2006), and Carpenters' District Council of Greater St. Louis and Vicinity v. Master Craftsman Services, Inc. No. 4:07-CV-1976 AGF (E.D. Mo. filed Nov. 27, 2007). In both cases, consent judgments were entered against defendant Master Craftsman Services, Inc., for $216, 208.26 and $56, 298.94 respectively. In neither case has the defendants entered a satisfaction of judgment. In fact, it appears from the Court records that neither consent judgment has been paid. See 4:06-CV-1251 at Doc. 16; 4:07-CV-1976 at Doc. 13. In addition to ERISA cases filed in this Court, Mr. Wilkerson's company Master Craftsmen Construction Services, Inc. was also sued for ERISA violations in the United States District Court for the Southern District of Indiana, Mark McCleskey v. Master Craftsmen Construction Services, Inc., No. 1:08-CV-40 LJM-JMS (S.D. Ind. filed Jan. 10, 2008).

More recently, CD Corp. and CD Construction were defendants in a separate ERISA action brought in this Court by the Carpenters' District Council of Greater St. Louis and Vicinity, Carpenters' District Council of Greater St. Louis and Vicinity v. Commercial Drywall Construction, No. 4:12-CV-805 CEJ (E.D. Mo. filed May 4, 2012). As a registered agent of both companies, Mr. Wilkerson was served with process, but never entered an appearance or answered the complaint. In that case, Judge Carol E. Jackson entered an order stating that during the course of an investigation, plaintiffs learned that one of the principals of CD Construction, namely Thomas Wilkerson, created ...


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