ATLANTA (March 21, 2000) – Six former Presidents of local banks acquired by Regions Financial Corporation prevailed in their consolidated lawsuits against Regions. The federal district court in Atlanta, Georgia, following a five-day trial, entered a 28-page Order holding that Regions breached their Change of Control Agreements with the plaintiffs. The damages to the six exceeded $1.4 million, including interest and approximately $400,000 in attorneys' fees. Regions paid the judgment on March 14, 2000.
The trial provided an insight into the acquisition of "community banks" by a large bank holding company, and the changes required by the centralization process in an effort to control expenses. The federal court agreed with plaintiffs that, after the acquisition, "plaintiffs went from engaging in all of the duties and responsibilities of running their own banks . . . to being, in essence, bank managers with no legal title, no legal board, and with much of their previous duties and responsibilities now handled at the corporate offices after the merger."
The lawsuits arose out of Regions' April 1996 acquisition of First National Bancorp (FNB), a Georgia multi-bank holding company. Shortly before the acquisition, the Presidents of the local banks owned by FNB, along with other top officers, had entered into Change of Control Agreements. Separation benefits under the Agreements would be triggered by a change of control of FNB and any subsequent change in duties or positions of the officers.
Following its acquisition of FNB, Regions surrendered the charters of the local banks, thereby dissolving the banks as separate legal entities and dissolving the boards of directors. Regions also instituted numerous other policy changes as part of its centralization process, which plaintiffs claimed constituted "changes in duties" within the meaning of the Agreements. Plaintiffs subsequently resigned. Regions refused to honor the Agreements, claiming that, while there was a change in control, there was no "change in duties."
The court rejected Regions' arguments, holding that there were "significant changes" in the scope of the local presidents' responsibilities following the merger. The court further held there was an "adverse effect" on the ability of plaintiffs to carry out their jobs as a result of the changes. The court concluded that Regions "breached the terms of the Agreements by failing to pay the benefits due to plaintiffs."
The plaintiffs were as follows (listed along with the Regions bank which they formerly headed and the bank's location): Dennis W. Burnette, Pickens County Bank, Jasper, Georgia; Edward B. Hall, Granite City Bank, Elberton, Georgia; John Stafford, The Commercial Bank of Douglasville, Douglasville, Georgia; William F. DeVane, Bank of Clayton, Clayton, Georgia; David C. King, Barrow Bank and Trust Company, Winder, Georgia; and Tim Warren, Community Bank of Carrollton, Carrollton, Georgia.
The trial was held before the federal judge in October 1999, who rendered his initial judgment on February 8, 2000. The trial court left attorneys' fees and the value of benefits to be negotiated, and final terms were agreed to and the judgment satisfied by Regions on March 14, 2000. A copy of the Order and Final Judgment is available from plaintiffs' counsel upon request.
Dennis W. Burnette, Edward B. Hall, and John Stafford v. Regions Financial Corporation, United States District Court for the Northern District of Georgia, Civil Action File No. 1:96-cv-2431-CAM.
William F. DeVane and David C. King v. Regions Financial Corporation, United States District Court for the Northern District of Georgia, Civil Action File No. 1:97-cv-951-CAM.
Timothy I. Warren v. Regions Financial Corporation, United States District Court for the Northern District of Georgia, Civil Action File No. 1:98-cv-1507-CAM.
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For further information, contact Richard L. Robbins, Esq.