U.S. District Judge James P. Jones imposed Rule 11 sanctions against John S. Stacy II, Charles A. Stacy and their law firm in the wake of a court battle over the $350,000 retirement account of a man who died two years ago.
Gary Childress had set up the IRA on his own, unconnected with any employer. He had not designated a beneficiary. Nevertheless, his ex-wife, represented by the Stacys, filed suit claiming she was entitled to the money after Childress’ death.
The lawyers based part of their argument on pre-emption of a Virginia statute under the federal ERISA law governing employee retirement accounts.
Jones found the Stacys persisted in their contention far past the point they should have realized the ERISA pre-emption could not apply because the IRA was not created by an employer.
“At least by the time discovery was completed in this case, counsel should have been aware that this was not an ERISA plan and that the claim in this lawsuit was without merit,” Jones wrote.
The lawyers never conceded, continued to advocate their position through oral argument, and never offered any real excuse for their conduct, Jones said.
Jones’ Oct. 28 opinion and order states the Stacys and their firm “are formally reprimanded,” imposes a penalty of $750, and directs the clerk to send a copy of the order to the Virginia State Bar.
Because he imposed the sanctions on his own motion, Jones said he was not able to order payment of the opposing party’s attorneys’ fees.