Board of Trustees, Sheet Metal Workers' Local 9 Pension Trust et al v. Certified Balancing and Commissioning LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 24-cv-00909-PAB
BOARD OF TRUSTEES, SHEET METAL WORKERS’ LOCAL 9 PENSION TRUST,
BOARD OF TRUSTEES, COLORADO SHEET METAL WORKERS’ LOCAL 9 HEALTH
FUND,
JOINT APPRENTICESHIP AND TRAINING COMMITTEE, COLORADO SHEET
METAL WORKERS TRAINING FUND,
SHEET METAL WORKERS' LOCAL 9 VACATION FUND,
COLORADO SHEET METAL INDUSTRY FUND, and
SMACNA COLORADO DRUG TESTING FUND,
Plaintiffs,
v.
CERTIFIED BALANCING AND COMMISSIONING LLC,
Defendant.
ORDER
This matter comes before the Court on Plaintiffs’ Motion for Default Judgment
[Docket No. 16]. On May 20, 2024, the Clerk of Court entered default against defendant
Certified Balancing and Commissioning LLC (“Certified Balancing”). Docket No. 12.
I. 	FACTS 1
The International Association of Sheet Metal, Air, Rail, and Transportation
Workers’ Local (“Local 9”) is a collective bargaining agent for a unit of Certified
1 Because of the Clerk of Court’s entry of default against the defendant, see
Docket No. 12, the well-pled allegations in plaintiffs’ complaint, Docket No. 1, are
deemed admitted. See Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003).
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Balancing’s sheet metal employees. Docket No. 1 at 4, ¶ 13. Local 9 and Certified
Balancing are parties to a collective bargaining agreement (“CBA”). Id. at 5, ¶ 14.
Pursuant to the CBA, Certified Balancing is required to contribute to the following
funds on a monthly basis: the Board of Trustees of the Sheet Metal Workers’ Local 9
Pension Trust (the “Pension Fund”), the Board of Trustees of the Colorado Sheet Metal
Workers’ Local Health Fund (the “Health Fund”), the Training Committee of the
Colorado Sheet Metal Workers (the “Training Fund”), Colorado Sheet Metal Industry
Fund (the “Industry Fund”), the Sheet Metal Workers’ Local 9 Vacation Fund (the
“Vacation Fund”), and the SMACNA Colorado Drug Testing Fund (the “Drug Testing
Fund”) (collectively, “the CBA Funds”). Id., ¶ 16. The Pension Fund, Local Health
Fund, and Training Fund are each a “multiemployer plan” under ERISA, 29 U.S.C.
§ 1002(3), and have been maintained pursuant to the Labor Management Relations Act
(“LMRA”) 29 U.S.C. § 186(c)(5). Id. at 3-4, ¶ 7. The Vacation Fund, Industry Fund, and
Drug Testing Fund are not governed by ERISA. Id. at 4, ¶ 9. The Boards of Trustees
for the Pension Fund, Health Fund, and Training Fund (collectively, the “Employee
Retirement Income Security Act Funds (‘ERISA’) funds”) are fiduciaries (collectively, the
“Boards of Trustees”) within the meaning of the ERISA, 29 U.S.C. § 1002. Id. at 3, ¶ 6.
The CBA requires that, no later than the twentieth day of each month, Certified
Balancing must transmit remittance reports to the CBA Funds that report the number of
hours worked by each covered employee, which is necessary to calculate the amount of
contributions that Certified Balancing owes. Id. at 5, ¶ 17. No later than the twentieth
day of each month, Certified Balancing must pay its contributions and, if payments are
not received by the fifth day of the following month, it is delinquent on its payments. Id.
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at 5, 7, ¶¶ 17, 25. In the event that Certified Balancing is delinquent on its obligations,
Certified Balancing is liable for the costs and penalties provided for in the CBA, which
include interest, liquidated damages, and all costs of collection including reasonable
attorney’s fees and accounting fees. Id. at 6, ¶ 20. Specifically, Certified Balancing is
liable for interest at the rate of 10% annum and liquidated damages at the rate of 20%
on its delinquent contributions pursuant to the collection policy of each ERISA fund,
which “provides terms of the CBA.” Id. at 7, ¶¶ 25-26.
The CBA states that Certified Balancing is bound to the provisions of the
Agreement and Declaration of Trust of each of the CBA Funds (the “Trust Agreements”)
and all regulations and rules adopted by the CBA Funds’ respective Board of Trustees.
Id. at 5, ¶ 18. Certified Balancing is required to retain payroll records of and permit
auditors, as authorized by the Boards of Trustees to inspect Certified Balancing’s
payroll records to ensure compliance with Certified Balancing’s obligations under the
CBA. Id. at 5-6, ¶ 19. Pursuant to the Trust Agreements, the Boards of Trustees have
the “authority at any time to have an audit made by independent certified public
accounts retained by the Board of Trustees to perform payroll audits of the Employers
to determine whether or not to correct amount of Contributions were made.” Id. at 6,
¶ 21. Furthermore, the Trust Agreements require Certified Balancing to “make available
its records” that are connected to a “request for an audit or examination of records.” Id.,
¶ 22. If Certified Balancing refuses to provide such records, the Boards of Trustees are
authorized to “institute suit to compel a payroll audit and the Employer will be liable for
the costs of the suit, including attorney’s fees.” Id., ¶ 23. If an “audit discloses
unreported contributions in excess of ten percent (10%) of those contributions
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previously reported during the period of time being audited, the Employer shall be liable
for and shall pay to the Fund the reasonable cost of such examination or audit.” Id.,
¶ 24.
The Boards of Trustees selected Certified Balancing for an audit of its payroll
records for the period of January 1, 2019 to December 31, 2021 (the “Audit Period”). Id.
at 8, ¶ 31. Through a sample audit, a prior payroll auditor determined that Certified
Balancing failed to make contributions to the CBA Funds in the total amount of
$22,075.63. Id., ¶ 32. Based on the sample audit, plaintiffs conducted a “full scope
Payroll Audit” for the Audit Period. Id., ¶ 33. Certified Balancing has failed to comply
with the payroll audit. Id. at 9, ¶¶ 34-35. On December 22, 2023, plaintiffs sent a
demand letter ordering Certified Balancing to comply with the payroll audit and provide
written confirmation of its intention to comply by January 4, 2024. Id., ¶ 35. The
demand letter was sent by certified mail; however, it was returned to plaintiffs because
Certified Balancing did not claim the letter. Id., ¶ 36. Plaintiffs did receive a read
receipt indicating that an email sent to defendant, with the letter attached, was read by
defendant on January 3, 2024. Id.; Docket No. 16-3 at 3, ¶ 7 (citing Docket No. 16-3 at
13). Certified Balancing did not confirm in writing by January 4, 2024 that it would
comply with the payroll audit. Docket No. 1 at 9, ¶ 37. In addition to the delinquent
contributions identified by the payroll audit, Certified Balancing has “at times, otherwise
been delinquent in reporting the work performed by its covered employees and/or in
paying the corresponding contributions to the Funds.” Id., ¶ 38.
On April 4, 2024, plaintiffs filed this case, bringing claims under ERISA, 29
U.S.C. § 1132, and the LMRA, 29 U.S.C. § 185. Id. at 10-13, ¶¶ 40-65. The Boards of
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Trustees for the ERISA Funds bring two claims under ERISA, while all plaintiffs bring
claims under the LMRA, 29 U.S.C. § 195, for breach of labor contract, and under the
LMRA, 29 U.S.C. § 185, to compel the payroll audit. Id. The Boards of Trustees for the
ERISA Funds bring a claim under ERISA, 29 U.S.C. § 1132(g)(2), to recover Certified
Balancing’s delinquent contributions to the Pension Fund, Health Fund, and Training
Fund. Id. at 11-13, ¶¶ 53-62. The Boards of Trustees for the ERISA Funds bring a
claim under ERISA, 29 U.S.C. § 1132(a)(3)(B), to compel the payroll audit. Id. at 10,
¶¶ 40-47.
On April 24, 2024, plaintiffs’ process server served Certified Balancing’s
registered agent, Daniel B. Kelley Attorney at Law LLC, at 822 7th Street, Suite 530,
Greeley, Colorado 80631 through Hannah Miller, Mr. Kelley’s legal assistant, who
plaintiffs claim is “authorized to accept service on behalf of Daniel B. Kelley Attorney at
Law, LLC.” Docket No. 5. On May 20, 2024, the Clerk of Court entered default against
Certified Balancing. Docket No. 12. On July 8, 2024, plaintiffs filed the instant motion
for default judgment. Docket No. 16. Certified Balancing has not entered an
appearance in this case.
II. 	LEGAL STANDARD
In order to obtain a judgment by default, a party must follow the two-step process
described in Fed. R. Civ. P. 55. First, the party must seek an entry of default from the
Clerk of the Court under Rule 55(a). Second, after default has been entered by the
Clerk, the party must seek judgment under the strictures of Rule 55(b). See Williams v.
Smithson, 57 F.3d 1081, 1995 WL 365988, at *1 (10th Cir. June 20, 1995) (unpublished
table decision) (citing Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981)).
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The decision to enter default judgment is “committed to the district court’s sound
discretion.” Olcott, 327 F.3d at 1124 (citation omitted). In exercising that discretion, the
Court considers that “[s]trong policies favor resolution of disputes on their merits.”
Ruplinger v. Rains, 946 F.2d 731, 732 (10th Cir. 1991) (quotation and citations omitted).
“The default judgment must normally be viewed as available only when the adversary
process has been halted because of an essentially unresponsive party.” Id. It serves to
protect a plaintiff against “interminable delay and continued uncertainty as to his rights.”
Id. at 733. When “ruling on a motion for default judgment, the court may rely on detailed
affidavits or documentary evidence to determine the appropriate sum for the default
judgment.” Seme v. E&H Prof’l Sec. Co., Inc., No. 08-cv-01569-RPM-KMT, 2010 WL
1553786, at *11 (D. Colo. Mar. 19, 2010).
A party may not simply sit out the litigation without consequence. See Cessna
Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444-45 (10th Cir.
1983) (“[A] workable system of justice requires that litigants not be free to appear at
their pleasure. We therefore must hold parties and their attorneys to a reasonably high
standard of diligence in observing the courts’ rules of procedure. The threat of
judgment by default serves as an incentive to meet this standard.”). One such
consequence is that, upon the entry of default against a defendant, the well-pleaded
allegations in the complaint are deemed admitted. See 10A Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 2688.1 (4th ed., 2022 rev.). “Even after
default, however, it remains for the court to consider whether the unchallenged facts
constitute a legitimate cause of action, since a party in default does not admit
conclusions of law.” Id. A court need not accept conclusory allegations. Moffett v.
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Halliburton Energy Servs., Inc., 291 F.3d 1227, 1232 (10th Cir. 2002). Although
“[s]pecific facts are not necessary” in order to state a claim, Erickson v. Pardus, 551
U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)), the well-pleaded facts must “permit the court to infer more than the mere
possibility of misconduct.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quotations and
alterations omitted). Thus, even though modern rules of pleading are somewhat
forgiving, “a complaint still must contain either direct or inferential allegations respecting
all the material elements necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (quotation and
citation omitted).
To obtain a default judgment for a sum certain, the plaintiff must show the
following by affidavit. First, that the party in default is (1) not a minor or an incompetent
person, (2) is not in military service, and (3) has not made an appearance.
D.C.COLO.LCivR 55.1(a)(1). Second, that the sum is certain or the sum can be made
certain by computation. D.C.COLO.LCivR 55.1(a)(2). Additionally, the plaintiff must
submit a proposed form of judgment that shows (1) the party in favor of whom judgment
shall be entered, (2) the party against whom judgment shall be entered, (3) the sum
certain amount consisting of the principal amount, prejudgment interest, and the rate of
post judgment interest, and (4) the sum certain of attorney fees. D.C.COLO.LCivR
55.1(b).
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III. 	ANALYSIS
A. Jurisdiction
Before entering default judgment, the Court must determine whether it has
subject matter jurisdiction over the case and personal jurisdiction over the defendant.
See Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 772 (10th
Cir. 1997) (holding that “a district court must determine whether it has jurisdiction over
the defendant before entering judgment by default against a party who has not
appeared in the case”).
1. 	Subject Matter Jurisdiction
Plaintiffs state that the Court has subject matter jurisdiction over this action under
28 U.S.C. § 1331. Docket No. 1 at 3, ¶ 2. Pursuant to 28 U.S.C. § 1331, the “district
courts shall have original jurisdiction of all civil actions arising under the Constitution,
laws, or treaties of the United States.” The Court has subject matter jurisdiction over
plaintiffs’ ERISA and LMRA claims because they arise under federal law. See 29
U.S.C. § 1132; 29 U.S.C. § 185.
2. 	Personal Jurisdiction
Plaintiffs bears the burden of establishing personal jurisdiction. Rambo v. Am. S.
Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1988). Plaintiffs can satisfy their burden by
making a prima facie showing. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d
1063, 1070 (10th Cir. 2008). The Court will accept the well-pled allegations of the
complaint as true in determining whether plaintiff has made a prima facie showing that
personal jurisdiction exists. AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054,
1057 (10th Cir. 2008). If the presence or absence of personal jurisdiction can be
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established by reference to the complaint, the Court need not look further. Id. The
plaintiffs, however, may also make this prima facie showing by putting forth evidence
that, if proven to be true, would support jurisdiction over the defendant. Id.
Furthermore, proper service is a jurisdictional prerequisite to litigation. Jenkins v.
City of Topeka, 136 F.3d 1274, 1275 (10th Cir. 1998) (“Effectuation of service is a
precondition to suit.”). Without proper service, the Court lacks personal jurisdiction over
a defendant. Okla. Radio Assocs. v. Fed. Deposit Ins. Corp., 969 F.2d 940, 943 (10th
Cir. 1992).
a. 	Service of Process
Federal Rule of Civil Procedure 4(h) governs the service of corporations,
partnerships, and associations. Rule 4(h)(1)(B) provides that a plaintiff may serve
process on these entities “by delivering a copy of the summons and of the complaint to
an officer, a managing or general agent, or any other agent authorized by appointment
or by law to receive service of process.” Fed. R. Civ. P. 4(h)(1)(B); see also Howarth v.
TCER, LLC, 20-cv-03230-PAB-KMT, 2021 WL 4775270, at *3 (D. Colo. Oct. 13, 2021),
at *3. In the alternative, a plaintiff may serve an entity “in the manner prescribed by
Rule 4(e)(1) for serving an individual.” Fed. R. Civ. P. 4(h)(1)(A). Rule 4(e)(1) allows
service to be made “following state law” for either the state where the district court is
located or where service is made. Under Colorado law, a plaintiff can effectuate service
on limited liability company by delivering a copy to “the registered agent for service as
set forth in the most recently filed document in the records of the secretary of state of
[Colorado] or of any other jurisdiction, or that agent’s secretary or assistant.” Colo. R.
Civ. P. 4(e)(4). “The Colorado Supreme Court has held that a registered agent may be
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served in the same manner as a natural person, namely, at the person’s usual
workplace, with the person’s secretary, administrative assistant, bookkeeper, or
managing agent.” Howarth, 2021 WL 4775270, at *4 (internal quotations and citation
omitted). Service must be made upon an “employee whose position presumptively
includes delivery of papers to the relevant party.” Goodman Assocs., LLC v. WP
Mountain Properties, LLC, 222 P.3d 310, 317 (Colo. 2010).
Here, plaintiffs’ proof of service states that they served “Hannah Miller, Legal
Assistant, authorized to accept service on behalf of Daniel B. Kelley Attorney at Law,
LLC.” Docket No. 5 at 1. For Ms. Miller to be able to accept service on behalf of Daniel
B. Kelley Attorney at Law, LLC, plaintiffs must “identify” Ms. Miller “as being the
administrative assistant of [Certified Balancing’s] registered agent or the administrative
assistant of any other individual listed in Colo. R. Civ. P. 4(e)(4).” Howarth, 2021 WL
4775270, at *4. Alternatively, plaintiffs must identify Ms. Miller as a secretary,
bookkeeper, or managing agent of Daniel B. Kelley Attorney at Law, LLC. Goodman
Assocs., LLC, 222 P.3d at 317. In sum, plaintiffs do not indicate whether Ms. Miller, as
a legal assistant, holds a position that “presumptively includes delivery of papers to the
relevant party.” 2 Goodman Assocs., LLC, 222 P.3d at 317. “[T]he plaintiff bears the
burden of proving personal jurisdiction before a default judgment may be entered.”
2 Black’s Law Dictionary defines “legal assistant” as a “legal secretary,” but does
not define a “legal secretary.” LEGAL ASSISTANT, Black's Law Dictionary (12th ed.
2024). However, the entry for “legal assistant” cross-references to the definition for
“paralegal,” which is defined as “[s]omeone who has some education in law and assists
a lawyer in duties related to the practice of law but who is not a licensed attorney.”
PARALEGAL, Black's Law Dictionary (12th ed. 2024).
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Millman v. State Farm Fire & Cas. Co., No. 21-cv-00036-CMA-NYW, 2021 WL
3206308, at *2 (D. Colo. July 29, 2021).
Plaintiffs represent that Ms. Miller is authorized to accept service on behalf of
Daniel B. Kelley Attorney at Law, LLC. This is insufficient. “[N]either C.R.C.P. 4(e)(1)
nor 4(e)(4) indicate that service could be accomplished by serving someone ‘authorized
to receive service’ where that person merely represents the same, nor does the
Colorado Supreme Court’s ruling in Goodman Associates permit such a broad
interpretation of the rules.” Shields v. Duncan, No. 14-cv-02231-RM-MEH, 2015 WL
3947221, at *3 (D. Colo. June 26, 2015); see Howarth, 2021 WL 4775270, at *5 (finding
that service was not proper where the proof of service was left with an individual
identified as an “admin asst.” and the process server “checked the box indicating that
[the administrative assistant] is designated by law to accept service on behalf of [the
defendant]” because plaintiff failed to identify the administrative assistant as being the
administrative assistant of defendant’s registered agent or another authorized individual
under Colo. R. Civ. P. 4(e)(4)) (internal quotation omitted).
Plaintiffs have not perfected service against Certified Balancing, and the Court
therefore lacks personal jurisdiction over Certified Balancing. Because service on
Certified Balancing is “insufficient but curable,” plaintiffs will be allowed an opportunity to
properly serve Certified Balancing with process. See AMG Nat’l Corp. v. Wright, No.
20-cv-02857-PAB-KLM, 2021 WL 4170459, at *4 (D. Colo. Sept. 14, 2021) (denying
motion for default judgment based on improper service and providing time for plaintiff to
attempt proper service). Therefore, within 60 days of the entry of this order, plaintiffs
may attempt to serve Certified Balancing pursuant to Fed. R. Civ. P. 4.
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IV. 	CONCLUSION
Therefore, it is
ORDERED that Plaintiffs’ Motion for Default Judgment [Docket No. 16] is
DENIED without prejudice. It is further
ORDERED that, within 60 days of entry of this order, plaintiffs may serve
Certified Balancing and Commissioning LLC pursuant to Fed. R. Civ. P. 4.
DATED March 7, 2025.
BY THE COURT:
___________________________
PHILIP A. BRIMMER
Chief United States District Judge
______________	__	_ ___________
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