Shepherd v. Community First Bank et al

Filing 154

OPINION AND ORDER staying 139 Motion for Attorney Fees pending appeal; denying 148 Motion to Stay. Signed by Honorable Donald C Coggins, Jr on 6/25/2019.(abuc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
Frederick D. Shepherd, Jr.,

)
)
Plaintiff,
)
)
v.
)
)
Community First Bank, Community
)
First Bank SERP Plan, Richard D.
)
Burleson, Gary V. Thrift, Dr. Larry S.
)
Bowman, William M. Brown, John R.
)
Hamrick, James E. Turner, Charles L. )
Winchester, and Robert H. Edwards,
)
)
Defendant. )
________________________________ )

C/A No. 8:15-cv-04337-DCC

OPINION AND ORDER

Pending before this Court are the Plaintiff's Motion for Attorneys' Fees and Costs
and Defendants' Motion to Stay Execution Pending Appeal Without Supersedeas Bond.
ECF Nos. 139, 148. The Motions have been fully briefed and the issues are ripe for
review. See ECF Nos. 147, 149, 151, 152.
I.

Motion for Attorneys' Fees and Costs
In his Motion for Attorneys' Fees and Costs, Plaintiff seeks $561,575 in attorneys'

fees and $2,044.63 in costs. ECF No. 139 at 14. In response, Defendants contend that
Plaintiff should receive no more than $121,740 in attorneys' fees and costs, and,
alternatively, request that the Court defer deciding the issue until the Fourth Circuit
resolves Defendants' appeal of the underlying Order. ECF No. 147 at 1–2. In light of the
pending appeal, the Court exercises its discretion and defers ruling on the pending Motion
for Attorneys' Fees and Costs until resolution of the underlying appeal. The parties are
directed to file a joint status report within 14 days of the Fourth Circuit's mandate.

Additionally, if Plaintiff prevails on appeal, he may file a supplemental fee petition if
necessary. Accordingly, [139] Plaintiff's Motion for Attorneys' Fees and Costs is STAYED
PENDING APPEAL.
II.

Motion to Stay Execution Pending Appeal Without Supersedeas Bond
In their Motion to Stay Execution Pending Appeal, Defendants ask this Court to

stay execution of the judgment without requiring Defendants to post any bond or other
security. The essence of their argument is that they are fully solvent and can "easily meet
the judgment" if the Fourth Circuit affirms the underlying Order. ECF No. 147 at 3. In
support of this position, Defendants submitted a Declaration of Jennifer M. Champagne,
the Executive Vice President and Chief Financial Officer for Defendant Community First
Bank ("Community First"), which states that Community First holds $38.648 million in
cash deposits and $39.634 million in unpledged, available-for-sale securities. ECF No.
148-1.
Federal Rule of Civil Procedure 62 permits a party to "obtain a stay by providing a
bond or other security." Various courts have held that district courts have the inherent
authority to grant an unsecured stay. See Se. Booksellers Ass'n v. McMaster, 233 F.R.D.
456, 457–58 (D.S.C. 2006) (collecting cases). "The Fourth Circuit apparently has not
adopted any particular standard to guide the district court's exercise of discretion in
granting unsecured stays." Id. at 458. However, the District of South Carolina Local Civil
Rule 62.01 prescribes the following procedure:
The appellant shall not be entitled to a stay of execution of the judgment
pending appeal unless the appellant executes a bond with good and
sufficient sureties, approved by the Clerk of Court, payable to the Clerk of
Court with condition, failing the appeal, to satisfy such judgment as the
appellate court may render, when the judgment is:

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(A)

(B)

For the payment of money only, in an amount equal to 150% of
the amount of the judgment if the judgment does not exceed ten
thousand dollars ($10,000) or 125% if the judgment exceeds ten
thousand dollars ($10,000);
For the payment of money and also for the performance of some
other act or duty, or for the recovery or sale of property or the
possession thereof, in such sum, in addition to the sum required
for money judgments only in (A) above, as the trial court may in
writing prescribe; or if appellant wishes to supersede the
judgment as to the payment of money only, the requirements of
(A) above shall apply;
....

Local Civil Rule 62.01 (D.S.C.).
While district courts possess the inherent authority to stay a civil judgment without
posting a bond, the Court is guided by the Local Rules and finds that a bond should be
required in this case. The question then becomes, what amount should be required?
Here, the parties differ greatly in their interpretation of the Local Rule and the effect of the
judgment in this case. Plaintiff contends that the total amount of supersedeas bond
required for an automatic stay under Rule 62 is $4,022,548.21. ECF No. 151 at 5–6.
Plaintiff arrives at this number by calculating 125% of the back benefits owed
($1,198,648.90) and 125% of the present value of the future benefits owed
($2,823,899.31).1 Plaintiff attached an affidavit of a forensic economist—Dr. Charles
Alford—which outlines, in detail, how these numbers are calculated.2

1

Plaintiff's computation of the amount required for an automatic stay does not include
post-judgment interest or attorneys' fees and costs.

2

The Court notes that Dr. Alford attached a case list to his report, which contains a
number of cases that the undersigned was involved in prior to his appointment to the
federal bench. Indeed, the undersigned and his former law firm have used Dr. Alford on
a number of occasions, as have many lawyers in the South Carolina community. This
has no bearing on the Court's holding in this case, and the Court notes it only out of full
candor to the parties.
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Defendants disagree with these numbers and focus a large portion of their
argument on Dr. Alford's use of the South Carolina prejudgment interest rate and inclusion
of the present value of future benefits payments. As to the first issue, Defendants state
that "the overwhelming majority of courts which have examined the issue have applied
prejudgment interest at the federal rate, not the state rate. ECF No. 152 at 3 (citing
cases). Defendants claim that Plaintiff relies on two district court cases in support of his
use of the South Carolina prejudgment interest rate. This is a misstatement of Plaintiff's
argument and a misstatement of the law of this Circuit. Indeed, Plaintiff does cite to one
District of South Carolina case in support of his argument; however, the other case cited
by the Plaintiff is an en banc decision of the Fourth Circuit that applied Virginia's
prejudgment interest rate in the context of an ERISA case. See ECF No. 151 at 4–5
(citing Quisenberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1030–31 (4th Cir. 1993) (en
banc); Harrison-Belk v. Rockhaven Comm. Care Home, Inc., 2008 WL 2952440 (D.S.C.
2008)).
While district courts do have discretion as to the prejudgment interest rate to apply
in a given case, the Court is guided by the Fourth Circuit's approval of a state prejudgment
interest rate in an ERISA case.

Moreover, the Court cautions Defendants against

misrepresenting Plaintiff's arguments and misstating the applicable law. Both parties in
this case have made accusations of unprofessional conduct against each other, and the
state court in a related action issued a considerable sanctions award against Defendants
for unprofessional conduct. The Court expects candor from all counsel in this case and
will not countenance misrepresentation of the facts or law in future filings. Accordingly,
given the state of the law in this Circuit, the Court accepts Plaintiff's use of South

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Carolina's prejudgment interest rate in determining the back benefits owed.
As to Defendants' second argument about future payments, the Court finds that it
would be inappropriate in light of the terms of the plan document to require Defendants
to post a bond that includes all future payments given natural uncertainty about Plaintiff's
life expectancy and the plan's requirement for payment of the Accrual Balance amount if
Plaintiff were to die before the conclusion of the future payments.
Taking all of these facts into consideration, Defendants' [148] Motion to Stay
Execution Pending Appeal Without Supersedeas Bond is DENIED. Defendants have two
options: (1) they can pay the past due amount of $1,198,648.90 plus applicable postjudgment interest and pay future monthly benefits; or (2) they can post a supersedeas
bond in the amount of $2,000,000. This bond is necessary to protect Plaintiff's judgment
if it is affirmed on appeal by the Fourth Circuit, and is appropriate in light of Defendants'
prior financial problems, prior FDIC involvement, and the lack of significant earnings. The
Court arrives at this bond amount by evaluating the past due benefits, potential attorneys'
fees, post-judgment interest, and the amount of future benefits reasonably likely to be
due during the pendency of the appeal. Given the uncertainty about the length of the
appeal and the amount of attorneys' fees and costs due at this time, the Court has erred
on the side of a smaller bond so as not to be punitive and to comport with the requirements
of Federal Rule of Civil Procedure 62.
CONCLUSION
For the reasons detailed above, Plaintiff's [139] Motion for Attorneys' Fees and
Costs is STAYED PENDING APPEAL, and Defendants' [148] Motion to Stay Execution
Pending Appeal Without Supersedeas Bond is DENIED.

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IT IS SO ORDERED.
s/Donald C. Coggins, Jr.
United States District Judge
June 24, 2019
Spartanburg, South Carolina

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