Naomi Odell v. Wallingford Municipal Federal Credit Union: It's about to get expensive for a Wallingford credit union that took a woman's social security disability check to settle an old debt.
A state court judge has ruled that the taking of Middletown resident Naomi Odell's $13,800 social security disability check by Wallingford Municipal Federal Credit Union amounted to a theft and awarded the woman more than $200,000 in damages.
"The credit union knew those were disability funds," said one of the woman's lawyers, Joanne Faulkner, of New Haven. "No one other than Naomi was supposed to touch them," said Faulkner. "And they went ahead and illegally withdrew the money anyway."
The unusual set of circumstances began in 1999 when Odell became a member of Wallingford Municipal Federal Credit Union, which has been in business now about 19 years. Per the terms of the membership agreement, Odell had to open a "share account" that both parties can access. A balance of $5 remains in the account, which a customer must open with the credit union if they want to open their own checking or savings account, Faulkner explained.
By May 2005, Odell's husband Nicholas applied for a loan at the credit union, which she co-signed. Odell's husband was approved for the loan and later defaulted on it.
The credit union took legal action against the Odells in November 2007 for the remaining amount due on the loan. A judge awarded a judgment to the credit union for $18,443 plus $294 in court costs.
In May 2007, Naomi Odell applied to the Social Security Administration for social security disability benefits. She was diagnosed with multiple sclerosis, said Faulkner, and could no longer work. Interestingly, Odell had been working at the credit union as an account clerk.
As part of her application she had filled out a direct deposit form. In October 2007, Odell closed out her account with the credit union.
Faulkner said Odell's social security disability application took some time to get approved and by the time she received her first check it was June 2008. The check was sent to the credit union and it was in the amount of $13,801. The check included an amount for retroactive benefits.
Faulkner explained that the credit union placed the amount to the share account, since Odell's personal accounts had been closed, and applied the money to the outstanding judgment the credit union had received in 2007.
Odell, meanwhile, had opened a checking account at a bank and after realizing the direct deposit wouldn't show up in that account because it was opened after her social security disability benefits application had been submitted, she called the credit union about the check.
Faulkner said Odell was told that they would not be returning it to her because of the outstanding debt on the loan she co-signed. Odell told them they did not have the right to take her benefits check. Odell soon hired Faulkner.
"Our whole position in her case is social security disability benefits can't be taken under federal or state law," said Faulkner. "It's not subject to garnishment… It should've gone back to the Social Security Administration or [the credit union] should have called her and said 'We have this money. Do you want us to send you a check?'"
Faulkner filed a lawsuit in 2010 against the credit union on Odell's behalf alleging conversion, civil theft and a violation of the Connecticut Unfair Trade Practices Act.
The credit union filed a counterclaim against Odell for the judgment amount on the unpaid loan. The credit union was represented by Michael T. McCormack and Amy E. Markim of Hinckley Allen's Hartford office. McCormack was on vacation last week. Markim did not return repeated calls for this story.
In anticipation of a potential jury trial, Faulkner brought in experienced trial attorney Timothy P. Pothin, of Stratton Faxon in New Haven. The plaintiff's lawyers filed a motion for summary judgment, arguing that the credit union's conduct violated the federal Social Security Act, thus the defendant had unlawfully appropriated Odell's money.
McCormack and Markim, meanwhile, disputed the application of the federal law in this set of circumstances and argued that the credit union's conduct in this instance was lawful.
On Sept. 10, 2012, New Haven Superior Court Judge Robin Wilson sided with the plaintiffs on all three counts and granted the motion for summary judgment.
Faulkner wasn't all that surprised.
"It's pretty much against public policy to take social security disability funds," said Faulkner.
Pothin was a bit more frank.
"The conduct of the credit union management was morally and legally reprehensible and we think the trial court properly held them accountable for that," said Pothin in a prepared statement. "Taking advantage of someone because they are disabled is truly disgraceful and it's a shame that a court of law had to be brought into this matter at all."
A day-and-a-half hearing in damages took place before Judge Wilson in January 2013. Wilson issued a written ruling on the damages earlier this month. Wilson called out the defendant for keeping Odell's benefits check because of the outstanding debt despite knowing that social security disability is exempt from such an action.
"This court finds perplexing that on the one hand the defendant claims detailed knowledge of federal law as a basis to seize the funds, yet on the other hand, it claims lack of knowledge of the exempt status of the funds by claiming ignorance of federal law to excuse its conduct," wrote Wilson.
Wilson, in her 73-page ruling, awarded Odell $41,403 in damages, another $41,403 in punitive damages, $21,443 in trebled interest, roughly $83,400 in attorney fees and costs for Faulkner, and $12,866 in attorney fees for Pothin.
The total award comes to $200,505. Post-judgment interest shall accrue at 10 percent per year.
The post-judgment interest could come into play because Faulkner does not expect her client to receive her award any time soon.
"[Odell's] pretty much convinced she's going to have to wait for the money," said Faulkner. "They already appealed once and they will probably appeal again."•