Clark v. Stanley Furniture Co.

• Decision Date: 14 October 2021
• Docket Number: Civil Action No. 4:20-cv-00063
• Parties: Melvin CLARK, et al., Plaintiffs, v. STANLEY FURNITURE COMPANY, LLC, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

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Melvin CLARK, et al., Plaintiffs,
v.
STANLEY FURNITURE COMPANY, LLC, et al., Defendants.

Civil Action No. 4:20-cv-00063

United States District Court, W.D. Virginia, Danville Division.

Signed October 14, 2021

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Carrol Mullen Ching, Daniel Jacob Martin, John Palmer Fishwick, Jr., Fishwick & Associates, PLC, Roanoke, VA, for Plaintiffs Melvin Clark, Jay N. Busey, Kelly S. Cain, Jesse V. Cannaday, Charles William Cubberley, Jr., Calvert Fulcher, Jr., John W. Johnson, Dave P. Maddox, Douglas I. Payne, William G. Perdue, William A. Sibbick, Jr., Robert J. Smith, Alexander Teglas, Jr., Robert Anthony Vanore, Larry E. Webb, Jr., John Hart Matthews, Phyllis Haley.

Amanda M. Morgan, Glenn Walthall Pulley, Gentry Locke Rakes & Moore, LLP, Lynchburg, VA, for Defendants Stanley Furniture Company LLC, Stanley Interiors Corporation Deferred Compensation Capital Enhancement Plan.

J. David Folds, John G. McJunkin, Baker, Donelson, Bearman, Caldwell & Berkowitz PC, Washington, DC, Richard Andrew Hutchinson, Baker Donelson, Johnson City, TN, for Defendants Stone & Leigh, LLC, Supplemental Retirement Plan of Stanley Furniture Company, Inc.

MEMORANDUM OPINION

THOMAS T. CULLEN, UNITED STATES DISTRICT JUDGE

Several decades ago, Stanley Furniture Company, LLC ("SFC") allowed executives to defer compensation until their later working years, or even retirement. The deferrals were a good deal, accruing high interest on beneficial tax terms.

But the furniture business has fallen on hard times in recent years (at least in the United States), and the COVID-19 pandemic only compounded these economic woes. Even before the pandemic started, SFC had missed some of their scheduled deferred compensation payments. And once COVID-19 lockdowns began, Stone & Leigh, LLC ("S&L"), which owns an interest in SFC and is responsible for some of these deferred compensation payments, began missing payments too. Plaintiffs, all retired SFC executives, understandably asked the companies to resume payments. When these efforts proved futile, Plaintiffs brought this suit under the Employee Retirement Income Security Act of 1974 ("ERISA"), formally demanding their missed benefits payments, declaratory judgments ensuring their future payments, prejudgment interest, and attorneys’ fees.

This matter is now before the court on Plaintiffs’ motion for summary judgment. For the reasons below, the court will grant that motion.

I. BACKGROUND

Plaintiffs are all retired SFC business executives.¹ During their years working at SFC, each individual Plaintiff deferred some compensation in exchange for cash benefit payments which would be paid years, or even decades, later. In 2018, S&L purchased several assets from SFC and, as part of this deal, accepted some of SFC's deferred compensation obligations.

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Since then, SFC and S&L have administered the contested deferred compensation plans. SFC administers the Stanley Interiors Corporation Deferred Capital Enhancement Plan ("DCP") (together, the "Stanley Defendants"), and S&L administers the Supplemental Retirement Plan of Stanley Furniture Company, Inc. ("SERP") (together, the "S&L Defendants").²

The parties stipulate to several key facts. First, there is no dispute that each Plaintiff is entitled to deferred compensation under the DCP and/or the SERP. Second, at the time Plaintiffs moved for summary judgment, the parties agreed on how much each plan owed its respective beneficiaries. SFC began to miss deferred compensation payments in 2019, paid each of the Stanley Plaintiffs only $500 in 2020, and has yet to make a payment in 2021. (Mem. in Supp. of Mot. for Summ. J. ("SJ Mem.") at 3 [ECF No. 108].) The parties agree that the amounts owed to each plaintiff by the DCP and the SERP are:

Plaintiff Name	Undisputed Annual DCP Payment	Undisputed DCP Payments Owed to Date
Jay N. Busey	$10,000.00	$23,250.00
Kelly S. Cain	$10,000.00	$23,250.00
Jeese V. Cannaday	$17,000.00	$39,875.00
Melvin Clark	$19,200.00	$45,100.00
Charles William Cubberley, Jr.	$14,833.33	$34,727.92
Calvert Fulcher, Jr.	$17,400.00	$40,825.00
Herman Ellsworth Haley, Jr.	$19,475.00	$43,675.00
John W. Johnson	$25,833.33	$59,903.59
Dave P. Maddox	$14,000.00	$32,750.00
John Hart Matthews	$17,500.00	$6,062.50
Douglas I. Payne	$12,000.00	$28,000.00
William G. Perdue	$11,520.83	$26,861.97
William A. Sibbick, Jr.	$10,000.00	$23,250.00
Robert J. Smith	$10,000.00	$23,250.00
Alexander Teglas, Jr.	$17,583.00	$41,259.63
Robert Anthony Vanore	$22,000.00	$29,750.00
Larry E. Webb, Jr.	$34,800.00	$82,150.00
TOTAL	$283,145.49	$603,940.61

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Plaintiff Name	Undisputed Monthly SERP Payment	Undisputed SERP Payments Owed to Date
Jay N. Busey	$102.42	$1,382.67
Kelly S. Cain	$174.69	$2,358.32
Jeese V. Cannaday	$702.08	$9,478.08
Melvin Clark	$215.93	$2,915.06
Charles William Cubberley, Jr.	$683.48	$9,226.98
Calvert Fulcher, Jr.	$713.19	$9,628.07
Herman Ellsworth Haley, Jr.	$753.42	$7,157.49
John W. Johnson	$760.48	$10,266.48
Dave P. Maddox	$162.30	$2,191.05
Douglas I. Payne	$256.34	$3,460.59
William G. Perdue	$114.36	$1,543.86
Robert J. Smith	$265.06	$3,578.31
Alexander Teglas, Jr.	$144.26	$1,947.51
Larry E. Webb, Jr.	$1,315.63	$17,761.01
TOTAL	$6,363.64	$82,895.48

Setting these stipulated facts aside, two issues remain. First, the Stanley Defendants argue that the plain language of their plan empowers them to curb benefits during financially stressful times; in sum, they contend the plans themselves contemplate the nonpayment. Second, all Defendants argue that the COVID-19 pandemic has made it impossible for them to perform their contractual obligations under the plans. As a result, they maintain that their performance can be excused. Plaintiffs contest both positions and seek damages equal to what they are owed, plus prejudgment interest and attorneys’ fees, as well as declaratory judgments establishing their entitlement to future benefits.

II. STANDARD OF REVIEW

Under Rule 56(a), the court must "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Glynn v. EDO Corp. , 710 F.3d 209, 213 (4th Cir. 2013). When making this determination, the court should consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with ... [any] affidavits" filed by the parties. Celotex , 477 U.S. at 322, 106 S.Ct. 2548. Whether a fact is material depends on the relevant substantive law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. (citation omitted). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets that burden, the nonmoving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

In determining whether a genuine issue of material fact exists, the court views the facts and draws all reasonable inferences in the light most favorable to the nonmoving party. Glynn , 710 F.3d at 213 (citing Bonds v. Leavitt , 629 F.3d 369, 380 (4th Cir. 2011) ). Indeed, "[i]t is an ‘axiom that in ruling on a motion for summary judgment, the evidence of the nonmovant

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is to be believed, and all justifiable inferences are to be drawn in his favor.’ " McAirlaids, Inc. v. Kimberly-Clark Corp. , 756 F.3d 307, 310 (4th Cir. 2014) (internal alteration omitted) (quoting Tolan v. Cotton , 572 U.S. 650, 651, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014) (per curiam)). Moreover, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Anderson , 477 U.S. at 255, 106 S.Ct. 2505. The nonmoving party must, however, "set forth specific facts that go beyond the ‘mere existence of a scintilla of evidence.’ " Glynn , 710 F.3d at 213 (quoting Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ). The nonmoving party must show that "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson , 477 U.S. at 249, 106 S.Ct. 2505. "In other words, to grant summary judgment the [c]ourt must determine that no reasonable jury could find for the nonmoving party on the evidence before it." Perini Corp. v. Perini Constr., Inc. , 915 F.2d 121, 124 (4th Cir. 1990) (citing Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ). Even when facts are not in dispute, the court cannot grant summary judgment unless there is "no genuine issue as to the inferences to be drawn from" those facts. World-Wide Rights Ltd. P'ship v. Combe, Inc. , 955 F.2d 242, 244 (4th Cir. 1992).

III. ANALYSIS

A. The Benefits Plans

The parties agree that ERISA covers the DCP and the SERP. Courts construe ERISA plans "according to the ordinary principles of contract law." M & G Polymers USA, LLC v. Tackett , 574 U.S. 427, 435, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015). The court must first look to the contract's language; if the language is "clear and unambiguous, [the contract's] meaning is to be ascertained in accordance with its plainly expressed intent." Id. (quotation omitted). If an ERISA plan is ambiguous, courts construe the plan against the drafter and in line with the insured's reasonable expectations. Jenkins v. Montgomery Indus., Inc. , 77 F.3d 740, 743 (4th Cir. 1996).

The DCP explains how future employee benefits are calculated (see DCP at 3–14 [ECF. No. 24-1]) and includes a plan summary (see id. at 15–27). The Stanley Defendants cite three different sentences from the plan and its...