Please ensure Javascript is enabled for purposes of website accessibility
Home / Verdicts & Settlements / VA attorney helps plaintiff earn landmark settlement — $360,000 settlement

VA attorney helps plaintiff earn landmark settlement — $360,000 settlement

Type of action: Consumer class action; Uniform Commercial Code violation for post repossession notice of sale

Injuries alleged: Statutory damages and being subjected to a deficiency balance claim; credit damage

Name of case: Jackson v. Merrick Bank (case filed and settled in Utah state court and settled as a nationwide class action)

Tried before: Mediation

Name of judge or mediator: Karen Hobbs

Verdict or settlement: Settlement

Amount: $360,000

Attorneys for plaintiff (and city): Thomas R. Breeden, Manassas; Brian Bromberg, New York, New York; Eric Stephenson, Salt Lake City, Utah

Breenen

Description of case: This is believed to be the first successful nationwide UCC Article 9 class action settlement. Merrick Bank financed consumer purchases of RVs, boats and trailers. If the consumers defaulted on the loan, Merrick Bank would exercise their rights under the UCC to repossess the collateral. After the repossession, Merrick Bank was required to send a notice to the consumer telling them when and where a post repossession sale would occur. This requirement is identical among all the states’ UCC provisions. The notice which Merrick Bank sent out did not include any identification of where the sale would occur. The notice thus violated the UCC requirements of all 50 states.

There was some disparity among the 50 states of what the ramifications were for failing to provide proper notice. There are two basic categories of ramifications. First, in 44 states, there is a provision for the consumer to receive statutory damages in the amount of 10% of the amount financed plus all finance charges. Second, in 48 states, there is also some form of a prohibition against seeking a deficiency balance (whether that is an absolute bar or a presumption against a deficiency balance).

Merrick Bank had sent the defective notice to about 1,100 consumers. Almost all these consumers had mandatory arbitration provisions in their contracts (and a prohibition against class claims in arbitration); however, the arbitration provisions had a carve out for repossession activities. Plaintiffs argued that this carve out would exclude all aspects of repossession activities, including the post repossession notices. The case was settled prior to this argument being decided by the court but was a significant factor in the case being settled on a class basis. Merrick Bank also argued that the disparity in the various state laws made a class action untenable. Plaintiffs were able to show that the disparity was minimal, and all substantive provisions were materially identical.

The class action settlement, approved by the court, included a common fund of $360,000. From this, the class representative received a $20,000 incentive award, costs and fees were deducted, and the remaining balance was divided between all members in the statutory damages states who submitted a claim. This resulted in an award of approximately $1,100 per claimant. In addition, all class members in the deficiency balance states (states which had some version of a prohibition on claiming a deficiency balance if the notices were not proper) received a credit of $599 against the balance, and an agreement from Merrick Bank not to sue or seek arbitration on the remaining balance; Merrick Bank had further assured that, while this left the option for them to send out letters or make phone calls on these accounts, they have not routinely done so in the past and had no present intent to change that policy. Finally, Merrick Bank agreed to remove the entire trade line from the consumer’s credit profile, thus removing a derogatory credit reporting from these consumers’ credit. This was a result which could not have been achieved in court without the settlement.

Plaintiff’s attorney Thomas Breeden provided case information. [022-T-154]