SCIENT FEDERAL CREDIT UNION v. JOYCE VARGAS Settlement

You or someone in your family may have had a consumer loan agreement directly with or that was assigned to Credit Union for a loan used to purchase property repossessed and sold by Credit Union.

You were sent a short form notice by regular mail on January 8, 2025 because you should know about a proposed settlement of a class action lawsuit in which you may be a class member, and about all your options, before the Court decides whether to approve the settlement. If the Court approves it, and after objections and appeals are resolved (if any), Credit Union will write-off any remaining alleged debts and request removal of the negative “tradeline” from your consumer credit reports, meaning your default, repossession, and unpaid deficiency balance should no longer show up on your consumer credit reports. Class members will also receive payments, as described more fully in this package.

The notice explains in greater detail about the lawsuit, the settlement, your legal rights, what benefits are available, who is eligible for them, and how to get them. The Court in charge is Waterbury Superior Court, Connecticut, and the case is Scient Federal Credit Union v. Joyce Vargas, Cause No. UWY-CV18-6081068-S.

The lawsuit claimed Credit Union sold your vehicle after repossession without providing a proper post-repossession notice as required by Connecticut Law. You can read the claims in more detail in Defendant/Counterclaimant Joyce Vargas’s Second Revised Amended Counterclaim in the Important Court Documents section.

In a class action, a Class Representative (Joyce Vargas here) sues on behalf of people with similar claims. All these people with similar claims are a “Class” or “Class Members.” One court and one lawsuit will resolve the issues for all Class Members, except for those who exclude themselves from the Class. The Honorable W Glen Pierson in Waterbury Superior Court oversees this class action.

The parties disagree over who would have won and what Vargas or the potential Class would’ve recovered if they had won. Vargas believed she could have recovered the statutory amount provided in (Connecticut Statute), which is 10% of the principal amount of her loan and the “finance charge” stated on her loan. Vargas also believes she could have obtained other relief, such as having her deficiency eliminated and derogatory information removed from her consumer credit reports. Credit Union believed the Class were entitled to nothing, and Credit Union had the right to try to collect debt from class members or file a lawsuit against them in court to recover the alleged deficiency. To resolve the dispute, and because both parties are unsure of what would’ve happened in a trial, they agreed to a settlement. That way, they avoid the cost of a trial and the people affected will get money and other benefits much sooner. The Class Representative and the attorneys believe the settlement is fair and equitable for all Class Members.

Judge W. Glen Pierson decided everyone who fits this description is a Class Member:

All individuals who have or had a loan or finance agreement held by Credit Union under which personal property was pledged as collateral, who had their personal property repossessed by Credit Union or its agents, and who, in the Class Period of May 29, 2013 to July 19, 2018 were mailed a post-repossession, pre-sale notice.

If you contracted with Credit Union, that alone doesn’t make you a Class Member. You are a Class Member only if you fit the description above.

If you are still not sure whether you are included, you can ask for free help. You can call (833) 404-4962 or visit Important Court Documents for more information.

Credit Union has agreed to provide the Class with settlement benefits, which includes:

MONEY
Credit Union has agreed to create a $700,000.00 fund to pay: (a) Class Members; (b) the attorneys’ fees and expenses for representing the Class; and (c) Joyce Vargas for her services as Class Representative. This amount is called the “Cash Fund.”

DEFICIENCY BALANCE WRITE-OFF
Credit Union will no longer seek to collect any money it claimed you still owed after it repossessed and sold your property. These outstanding amounts are called “Deficiency Balances,” and Credit Union has agreed to request removal of the corresponding negative “tradeline” from your consumer credit reports. The Parties estimate the value of this benefit to the Class and the Deficiency Balances during the class period being eliminated, at this time, is approximately $2,925,595.82. You can choose not to receive the Deficiency Balance Write-Off by submitting a Refusal of Deficiency Balance Write-Off in the manner explained in question 10 below. However, if you choose to refuse the Deficiency Write-Off, your balance on the loan will not be reduced and Credit Union may attempt to collect on that balance.

CREDIT BUREAU REPORTING
After the Effective Date, Credit Union will request removal of your credit tradeline reported to any of the following nationwide consumer reporting companies if Credit Union has reported any information to them about your loan subject to this settlement: Equifax, Experian, Innovis, and TransUnion. Class Counsel estimates the minimum value of this benefit to the Class to be at least $10,000 per class member for a total of at least $3,080,000.($10,000 times 308 Class Members)

QUANTIFIABLE SETTLEMENT BENEFITS
The “quantifiable settlement benefits” are estimated to be at least $6,705,595.82 and includes (1) the $700,000.00 paid to the Cash Fund, (2) the value of the deficiency write-off, which the Parties currently estimate to be approximately $2,925,595.82, and (3) the value from the removal of Class Members’ credit tradeline estimated to be at least $3,080,000.

TAX IMPLICATIONS
The cash payment may have tax implications for you. The Settlement Administrator will issue IRS 1099-series forms for cash payments over $600.00.

The deficiency write-off may have tax implications for you. The Deficiency Balance Write-off constitutes the settlement of a disputed debt or contested liability. Class Representative contends any Deficiency Balances never arose due to Credit Union’s alleged failure to comply with Connecticut law. Credit Union takes no position regarding Class Representative’s contention. If your Deficiency Balance is cancelled as part of this Settlement, the IRS may consider this income to you. A Form 1099-C will be issued to each Class Member who does not opt out or elect not to receive the Deficiency Write-off.

Credit Union’s issuance of a Form 1099-C related to a deficiency balance write-off may require you to declare income in that amount and potentially be obligated to pay tax on some or all of the claimed Deficiency Balance. Neither Credit Union nor Class Counsel can make any representations as to whether this benefit is or will be income, for which tax may be due. Therefore, you are urged to contact a tax professional regarding the tax implications of this Settlement for your particular circumstances.

If the IRS makes an inquiry, audit, or challenge regarding a Deficiency Balance Write-Off for a particular Class Member, Credit Union will use good faith, commercially reasonable efforts to respond to any request from a Class Member for documents or information reasonably necessary to respond to the IRS inquiry, audit, or challenge within 20 business days after receipt of the request on behalf of the specific Class Member.

Every Class Member will get the benefits that come from the settlement. The amount of the Settlement Check which shall be issued to Class Members shall be determined by multiplying the Net Settlement Fund by the Class Member’s Prorated Percentage. The Class Member’s Prorated Percentage is equal to a numerator consisting of 10% of the Original Principal Amount on the Class Member’s loan plus the Finance Charge on the Class Member’s loan and a denominator consisting of 10% of the aggregate Original Principal Amount for the Class plus the aggregate Finance Charge for the Class.

You do not need to do anything further to remain in the Class and receive the settlement benefits. Any outstanding debt related to the financing of your repossessed vehicle will automatically be eliminated unless you submit a Refusal of Deficiency Balance Write-Off.
If you do not want your alleged outstanding debt to be waived, you must send a letter by mail to Refuse the Deficiency Balance Write-Off.  This letter must: (a) identify the case name; (b) identify the name and address of the person requesting refusal; (c) be personally signed by the person requesting refusal; and (d) contain a statement that indicates a desire to be included in the Class, but to refuse the Deficiency Balance Write-Off, such as “I hereby request that I be included in the proposed Class in the Action, but I do not want Credit Union to write-off any Deficiency Balance on my Account.”  

This information must be mailed and postmarked no later than February 7, 2025, and mailed to the following address:

Scient v Vargas Settlement Administrator
P.O Box 23698
Jacksonville, FL  32241

Note: if you are a co-borrower on a loan, all co-borrowers must elect not to receive a Deficiency Balance Write-Off for the Refusal of Deficiency Balance Write-Off to be effective for that loan.

The Court will hold a final fairness hearing at 10:10 a.m. EST, on February 7, 2025, to decide whether to approve the settlement. Even if Judge Pierson approves the settlement, there may be appeals. It’s always uncertain how an appeal will be resolved and how long it will take. Some appeals take more than a year. Please be patient. You’ll receive your payment if the settlement is approved and after that approval becomes a “final judgment” (i.e. after any appeals are resolved or the time for appealing has passed).

Unless you exclude yourself by following the procedure below, you are a part of the Class, and that means you can’t sue, continue to sue, or be part of any other lawsuit against Credit Union about the legal issues in this case.  For example, you won’t be able to make any independent claim against Credit Union arising from the written notices (presale and post-sale notices) this lawsuit is about. Staying in the Class also means all the Court’s orders in this lawsuit will apply to you and legally bind you. To see exactly the legal claims and defenses you give up if you get settlement benefits, please view the Settlement Agreement in the Important Court Documents section.

To exclude yourself from the settlement, you must send a letter by mail saying you want to be excluded from Scient Federal Credit Union v. Joyce Vargas, Cause No. UWY-CV18-6081068-S. Include your name, address, telephone number, last four digits of your Social Security Number, and the name of any other person on your agreement with Credit Union, along with your signature. The exclusion request must be signed by you and by any co-borrower on your agreement, unless the co-borrower is deceased, in which case you must include a death certificate with your request. You cannot exclude yourself by having an actual or purported agent or attorney acting for you or a group of Class Members sign the letter. You must mail your exclusion request postmarked no later than 30 days after the mailing of class notice, to:

Scient v Vargas Settlement Administrator
P.O Box 23698
Jacksonville, FL  32241

If you ask to be excluded, you’ll get no settlement benefits, and you cannot object to the settlement. You won’t be legally bound by anything that happens. You may sue (or continue to sue) Credit Union about the claims asserted.

No. Unless you exclude yourself, you give up any right to sue Credit Union for the claims this settlement resolves. If you have a pending lawsuit, speak to your lawyer in that case immediately. You must exclude yourself from this Class to continue your own lawsuit. Remember, the exclusion deadline is February 7, 2025. Exclusion requests postmarked later than this date will not be honored.

No. But you may sue, continue to sue, or be part of a different lawsuit against Credit Union about the same types of claims that were made in this case.

The Court appointed Garrett Denniston and his law firm of Lynch, Traub, Keefe & Errante, P.C., to represent you and other Class Members. These attorneys are called Class Counsel. They are experienced in handling similar class action cases against consumer lenders. More information about these lawyers and their firm is available at www.ltke.com. You need not hire your own lawyer because Class Counsel is working for you. If you want to be represented by your own lawyer, you may hire one at your own expense.

Class Counsel has prosecuted this litigation on a contingent basis and has incurred or advanced all costs, expenses, and attorneys’ fees associated with the lawsuit. Class Counsel hasn’t been paid for their work or received reimbursement for the expenses they have incurred or advanced for the Class Representative and Class Members. Class Counsel intend to ask the Court to approve fees of approximately 35% of the total class benefits in attorneys’ fees. Class Counsel will also ask to recover costs and expenses in an amount not to exceed $30,000. Class Counsel will also petition the Court to award Joyce Vargas $10,000 for her services as Class Representative. Any fees and expenses awarded by the Court to Class Counsel is supposed to compensate and reimburse Class Counsel for investigating the facts, litigating the case, negotiating the settlement, and paying the costs to administer the settlement.

If you’re a Class Member, you can object to the settlement if you don’t like it. You can explain why you think the Court shouldn’t approve it. The Court will consider your views. To object, you must send a letter saying you object to Scient Federal Credit Union v. Joyce Vargas, Cause No. UWY-CV18-6081068-S. Your letter must include your name, address, telephone number, facsimile number (if available), email address (if available), last four digits of your Social Security Number, a statement of your objections, and the reasons and facts you contend support your objections. Your objection must include any documents (including loan documents) you rely upon to support your objection and identify any witnesses you plan to use at the Fairness Hearing (described below). If there is other evidence (e.g., documents) that you rely upon for your objection, you must attach copies to your objection. If you plan to use expert witnesses about your objection, you must provide—with your objection—an expert report for each expert outlining the expert’s opinions and the facts and reasons for the expert’s opinions. You must also state whether you intend to appear at the Fairness Hearing and provide copies of any evidence you intend to use at the hearing. Finally, you must sign and date the objection and include a statement substantially in this form: “I declare (or certify, verify, or state) under penalty of perjury that all of the information in the objection is true and correct. Executed on (date). (Signature).”
 
Mail the objection to the Court, to Class Counsel, and to Credit Union’s Counsel at the separate addresses below. Your objection must be postmarked no later than February 7, 2025:

If an attorney is submitting the objection for you, besides information and materials discussed above, the objection must also include the name, address, telephone number, facsimile number (if available), and email address (if available) of your attorney and a detailed description of the legal authorities supporting each objection.

If you file an objection, Class Counsel or Credit Union’s Counsel may notice and take your deposition, consistent with the Connecticut Rules, at an agreed-upon location before the Fairness Hearing and seek any documentary evidence or other tangible things relevant to the objection. Failure by an objector to comply with discovery requests may cause the Court to strike the objection and otherwise deny that person the opportunity to be heard further. The Court reserves the right to tax the costs of any such discovery to the objector or objector’s counsel should the Court determine the objection is frivolous or is made for an improper purpose.

Objecting is telling the Court you don’t like something about the settlement. You can object only if you stay in the Class. Excluding yourself is telling the Court you don’t want to be part of the Class. If you exclude yourself, you have no basis to object because the case no longer affects you.

The Court will hold a Fairness Hearing at 10:00 a.m. EST, on February 7, 2025, at the Waterbury Superior Court, located at 400 Grand Street, Waterbury, CT 06702, Courtroom 3B. At this hearing, the Court will consider whether the settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. Judge Pierson will listen to people who have asked to speak at the hearing. The Court may also decide how much to pay to Class Counsel and the Class Representative. After the hearing, the Court will decide whether to approve the settlement. We don’t know how long these decisions will take.

No. Class Counsel will answer questions that Judge Pierson may have. But you are welcome to come at your own expense. If you send an objection, you don’t have to come to Court to talk about it. If you mailed your written objection on time with all the required information, the Court will consider it. You may also pay your own lawyer to attend, but that is unnecessary.

You may ask the Court for permission to speak at the Fairness Hearing. You may speak either for or against the settlement. To speak for the settlement, you must send a letter saying it is your “Notice of Intention to Appear in Scient Federal Credit Union v. Joyce Vargas, Cause No. UWY-CV18-6081068-S.” Include your name, address, telephone number, last four digits of your Social Security Number, and your signature. Your “Notice of Intention to Appear” must be postmarked no later than 10 days prior to the Fairness Hearing, be sent to the Superior Court Clerk’s Office, Class Counsel, and Credit Union’s Counsel, at the addresses provided in question 18.

If you plan to speak at the Fairness Hearing to tell the Court you don’t like something about the settlement, you must submit an objection as detailed in question 18 and include with that objection a statement you intend to appear at the Fairness Hearing. The identity of any witnesses or experts you plan to present at the Fairness Hearing, with evidence you intend to present at the Fairness hearing, must also be included with your objection.

You cannot speak at the hearing if you excluded yourself or if you don’t send in a request with the required information and documents.

This notice summarizes the proposed settlement. More details are in the Settlement Agreement. You can get a copy of the Settlement Agreement by writing to American Legal Claim Services, LLC, P.O. Box 23698, Jacksonville, FL  32241, or by visiting the Important Court Documents.

You can call (833) 404-4962 toll free, write to Scient v Vargas Settlement Administrator, P.O Box 23698, Jacksonville, FL 32241; or visit the website www.ScientFCURepoSettlement.com, where you will find information to help you determine whether you are a Class Member.