Española widow Stella Vigil went to her local credit union in the winter of 2012 to withdraw from her life savings, left to her by her husband, to pay for propane to heat her double-wide mobile home.
Minutes later, Vigil, now 65, left in a daze and empty-handed after being told without explanation that her account, of about $100,000, was frozen and cleaned out, with just $25 left for her, say her attorneys. In December, they won a jury trial verdict on Vigil’s behalf awarding her more than a half-million dollars. The lawyers now want a judge to triple that amount.
Santa Fe attorneys Ben Allison and Justin Miller of the Bardacke Allison law firm prevailed in a five-year fight when a jury returned a verdict in Vigil’s favor on all nine counts of a lawsuit filed against Zia Credit Union, which operates in Santa Fe, Rio Arriba, Los Alamos and Taos counties. Those counts included unjust enrichment, conversion, intentional infliction of emotional distress and violation of the Unfair Practices Act.
Allison characterized what happened to Vigil, who had a joint account with her debt-ridden daughter at the credit union. “They (Zia) say, ‘I’m sorry your account has been frozen, we can’t tell you anything more,’ and she stumbled out in the cold,” Allison said.
“I have never seen such cold-hearted stuff,” he said.
Zia President and CEO David Woodruff disagreed in a brief telephone interview. “We were operating following the terms of our membership agreement and state law,” said Woodruff. “We are looking out for our membership as a whole and individually.”
At issue in the case was whether Zia could go after the money in the joint mother-daughter account to cover debts incurred by the daughter. The daughter worked for Zia Credit Union and was heavily in debt to Zia with a mortgage and other loans when she was dismissed from her job, court documents state.
Allison says financial problems had forced Vigil’s daughter to file for bankruptcy, but the daughter never deposited or withdrew any funds in the joint account and that her name was on the account solely in case Vigil died. The funds were from two certificates of deposit of $30,000 and $79,000 she inherited when her husband died in 2009.
According to the lawsuit, Zia said in a letter that it had “no option” other than to seize Vigil’s money to secure her daughter’s debts and “professed to recognize that the loss of her savings ‘is a difficult set of circumstances for Ms. Vigil’ … and stated that it ‘regrets having to enforce the provisions of this agreement.’ ”
Allison maintains, “The bank can only take what the debtor contributed to a joint account. In this case, it was all Stella’s money. The daughter never put a penny in.”
But the credit union has argued post-verdict that it had done nothing abnormal.
“It was undisputed at trial that it is entirely normal for a mother and daughter to be in a joint account relationship” and “Zia was not taking some novel position on the law or a novel interpretation of its account agreements,” says a filing by the credit union.
Zia’s Woodruff said appeal options were being considered. “We were disappointed in the jury decision on this,” he said. “It’s unfortunate that the outcome was as it was.”
Asked in a subsequent email query to refute specifics assertions by Vigil’s attorneys, Woodruff declined.
Vigil was awarded a judgment of $580,000 in punitive and compensatory damages. But because the jury found “a willful violation of the New Mexico Fair Practices Act,” said Allison, the judge will be asked to put aside the $150,000 punitive part of that award and triple the $430,000 compensatory amount.
“The judge has the power under the statute to take the compensatory damage verdict and multiply it by three,” attorney Miller said.
A motion filed last month by Zia’s attorneys argues against the triple damages and asserts that the law doesn’t even allow the increased award.
Zia also again defended its actions in emptying the joint account. “The account agreement which Plaintiff (Vigil) acknowledges applies to the CDs at issue expressly states that no notice was required before exercising a setoff,” a Zia motion says. A setoff is a reduction of a debt.
Zia “was acting under the advice of legal counsel to observe legal obligations to Plaintiff (Vigil) and to exercise the remedies it reasonably believed were legally available to it,” Zia argued.
Vigil’s suit said she was unaware of her daughter’s $142,000 debt to Zia when she got the CDs.
In court documents, a financial services expert supporting her suit said Zia had “failed to inform Stella Vigil of the risks she assumed when she opened her accounts or when events occurred that further jeopardized her accounts.”
The suit maintains that Zia also did not inform Vigil about, or explain the terms and conditions of, “the boilerplate membership account agreement” governing her CDs.
The suit alleged that the contract Vigil “signed in order to open her account does not comply with the requirements for such contracts of deposit, in that it does not contain the statutorily required language stating that ‘Parties own account in proportion to net contributions, unless there is clear and convincing evidence of a different intent.'”
Vigil, through her attorneys, declined to be interviewed for this article, but attorney Miller characterized her as being “devastated” when her account was frozen.
Vigil suffered when she could not access her funds, said Allison. “She turns the thermostat from 57 to 55 degrees. She can’t make ends meet on $8.50 an hour (as a health care worker) and goes to predatory lenders,” Allison said.