Retired Stanley Furniture Co. executives won their lawsuit seeking nearly $700,000 in unpaid deferred compensation, after a federal judge in Virginia ruled that financial hardships exacerbated by the Covid-19 pandemic were no excuse for the company to stop these payments.
Stanley argued its obligation to make deferred compensation payments to the 17 former executives was suspended by the business struggles the company faced both before and during the Covid-19 pandemic. The company cited language in the benefit plan providing that, in the event of a bankruptcy, benefit payments would be made only if the company could pay its secured creditors.
Judge Thomas T. Cullen of the U.S. District Court for the Western District of Virginia disagreed in an opinion issued Thursday.
This plan language “does not mean that an economic downturn suspends the Stanley Defendants’ deferred compensation obligations,” Cullen said. “It simply provides that the plan beneficiaries are unsecured creditors of the company, and it describes their attendant priority in bankruptcy proceedings.”
Stanley also argued that it didn’t have to make the payments because Virginia’s Covid-19 shutdown orders made it “impossible” to do so. Cullen wasn’t persuaded.
“Rather than commandeering Defendants’ inventory or outlawing furniture sales altogether, Virginia’s orders only made performance more difficult,” he said. This isn’t enough to excuse the payments under the legal doctrine of impossibility, he said.
Cullen awarded the executives summary judgment and ordered the defendants to pay them nearly $700,000 in past-due benefits, along with 6% interest. He declined to award them attorneys’ fees.
Fishwick & Associates PLC represents the executives. The defendants are variously represented by Gentry Locke and Baker, Donelson, Bearman, Caldwell & Berkowitz PC.
The case is Clark v. Stanley Furniture Co., LLC, 2021 BL 395507, W.D. Va., No. 4:20-cv-00063, 10/14/21.