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Trustees of Iowa Iron Workers Heavy Highway Defined Benefit Pension Fund v. Calacci Construction Co., Inc.

United States District Court, N.D. Iowa, Cedar Rapids Division

October 10, 2019

TRUSTEES OF THE IOWA IRON WORKERS HEAVY HIGHWAY DEFINED BENEFIT PENSION FUND, TRUSTEES OF THE IRON WORKERS HEAVY HIGHWAY DEFINED CONTRIBUTION PLAN, and TRUSTEES OF THE NORTHEAST IOWA IRON WORKERS LOCAL 89 JOINT APPRENTICESHIP TRAINING COMMITTEE TRUST, Plaintiffs,
v.
CALACCI CONSTRUCTION CO. INC., and MPCC, LLC d/b/a INTERSTATE REINFORCING STEEL, Defendants.

          ORDER

          MARK A. ROBERTS, UNITED STATES MAGISTRATE JUDGE

         The matter before the Court is the Motion to Set Aside Default Entry filed by Defendants Calacci Construction Co., Inc. (“Calacci”) and MPCC, LLC filed September 23, 2019. (Doc. 11.) Plaintiffs Trustees of the Iowa Iron Workers Heavy Highway Defined Benefit Pension Fund, Trustees of the Iron Workers Heavy Highway Defined Contribution Plan, and Trustees of the Northeast Iowa Ironworkers Local 89 Joint Apprenticeship Training Committee Trust (“Plaintiffs”) filed their resistance on September 27, 2019. (Doc. 13.)

         I. FACTS

         Plaintiffs filed their Complaint on June 20, 2019. (Doc. 1.) Plaintiffs allege Defendants breached terms of a collective bargaining agreement that required them to make contributions to the Plaintiff entities. Personal service of the Summons and Complaint was made on June 27, 2019 by service upon John Calacci, the owner, operator and president of Calacci Construction Co., Inc. and MPCC, LLC d/b/a Interstate Reinforcing Steel (“IRS”). (Doc. 11-2 at 2 ¶ 1.) Defendants were required to move or plead on or before July 18, 2019, but failed to do so. On August 12, 2019 Plaintiffs applied for entry of a default against Defendants pursuant to Federal Rule of Civil Procedure 55(a). (Doc. 7.) On August 13, 2019, the Clerk of Court entered such a default against Defendants. (Doc. 8.) On September 9, 2019 Plaintiffs filed a Motion for Default Judgment. (Doc. 9.) Approximately two weeks later (and more than a month after a default had been entered), Defendants filed the instant motion to set the default aside.

         II. DISCUSSION

         A. The Parties' Positions

         Defendants seek to set aside the default, arguing that, pursuant to Federal Rule of Civil Procedure 60(b), there is good cause to do so. Defendants argue that because a default judgment has not yet been entered a more lenient standard for good cause applies. Here, Defendants argue they are not blameworthy or culpable but are, at worst, ignorant of the legal process. Mr. Calacci, states that he believed his partial payment and efforts to resolve pending issues with Plaintiffs put the lawsuit “on hold.” (Doc. 11-2 ¶ 4.) Mr. Calacci states he did not forward the Complaint to his lawyers because he believed he was resolving the problem by himself in communication with Plaintiffs' attorney. (Id. ¶¶ 3-5.) Defendants contend they have a meritorious defense, which they do not describe other than to indicate that they “disagree with Plaintiffs regarding the amounts Plaintiffs allege Defendants owe the various funds.” (Doc. 11-1 at 3.) Defendants further contend Plaintiffs will not be prejudiced if the Court allows the suit to proceed on its merits. (Id. at 4.)

         Plaintiffs contend the excuses Defendants have offered for failing to timely file an Answer are implausible. First, Plaintiffs point out that Mr. Calacci is no neophyte with respect to litigation. Plaintiffs offer a list of cases where Mr. Calacci or his businesses had been sued in state and federal courts since August 8, 2018, including instances where he or his business had been defaulted. (Doc. 13-1.) There are nine pending cases and eight closed cases during this time. (Id.) Plaintiffs also point to several lawsuits, including ongoing lawsuits, where Mr. Calacci's businesses are represented by various lawyers. (Doc. 13 at 2.)

         The affidavit of Plaintiffs' counsel, Jennifer Germaine, paints a different picture of what actions Mr. Calacci took after having been served with the Complaint. Her affidavit reflects on his veracity, as well as on the reasonableness of Mr. Calacci's belief the lawsuit “was on hold.” (Doc. 13-2.) Ms. Germaine reports she has not had any contact with Mr. Calacci. Rather, more than a month after Mr. Calacci was served with the Complaint, Ms. Germaine was contacted by Miron, a contractor who wanted to employ IRS on a project and who wanted to verify whether IRS was current on their payments to Plaintiffs. (Id. at 2 ¶ 3.) In the subsequent email exchange involving the contractor's representative, the business manager for the Ironworkers Local 89 Union, and Ms. Germaine, a joint check agreement was established that permitted Miron to use IRS and its union ironworkers for the project. (Id. ¶ 4.) Mr. Calacci was not involved in communications with Ms. Germaine in connection with this joint check agreement. (Id. ¶ 5.) Ultimately, IRS was able to complete the work for Miron, but the instant litigation was not discussed. (Id. ¶6.)

         Plaintiffs contend Defendants have not shown good cause for setting aside the default. First, they contend that because Mr. Calacci has experience with litigation and is represented by multiple attorneys, he had no reasonable basis to believe the case would be delayed because of his partial payment. Plaintiffs further contend there is no meritorious defense because the damages sought are based on hours worked and reported to the Plaintiffs by the Defendants, themselves, at the contribution rates set forth in the collective bargaining agreement. Finally, Plaintiffs contend they will be prejudiced if the default is set aside because of the numerous cases pending against Defendants, presumably as shown in Exhibit 1. Plaintiffs desire to proceed with collection before Defendants are insolvent.

         B. Applicable standards

         Defendants do not argue that the default was improperly entered or that it had not, in fact, defaulted because of its failure to timely move or plead. Therefore, the principal question is whether there is “good cause” to set aside the default entered against Defendants. The Court may “set aside an entry of default for good cause.” Fed.R.Civ.P. 55(c).; see also Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998). The showing necessary to set aside a default entry is not as stringent as that necessary to vacate a default judgment. Id. at 784. The Eighth Circuit Court of Appeals has explained

[t]here is a “judicial preference for adjudication on the merits, ” Oberstar v. F.D.I.C., 987 F.2d 494, 504 (8th Cir. 1993), and it is likely that a party who promptly attacks an entry of default, rather than waiting for grant of a default judgment, was guilty of an oversight and wishes to defend the case on the merits.

Id. To determine whether good cause exists, the 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.” Id. (citation omitted); see also Stephenson v. El-Batrawi,524 F.3d 907, 911-12 (8th Cir. 2008). The Court focuses heavily on the blameworthiness of the defaulting party and seeks to “distinguish between contumacious or intentional delay or disregard for deadlines and procedural rules, and a ‘marginal failure' to meet pleading or other deadlines.” Dayton Elec., 140 F.3d at 784. The Eighth Circuit notes it has ...


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