CHAD AND ROSE LOPER v. CREATIVE FINANCE, INC.

The waiver of deficiency balances of the respective Class Members involves disputed debts which the Representative Plaintiffs contend are discharged by operation of law and which CFI contends are enforceable.

CFI may issue a Form 1099-C tax report which will report as income to you any deficiency balance waived as a result of the settlement. For general information concerning the taxation of cancelled debt, please review https://www.irs.gov/taxtopics/tc431.

As a result of the above, you may want to seek the advice of a tax professional if you have any questions concerning the taxation of settlement benefits and whether you should remove yourself from the Proposed Settlement pursuant to Question 12 below. Even if you remove yourself from the Proposed Settlement, CFI may nonetheless issue a Form 1099-C tax report which will report as income to you any deficiency balance that CFI may decide to waive.

A court authorized the notice because you have a right to know about a Proposed Settlement of this proposed class action lawsuit brought against Creative Finance, Inc. (“CFI”) and about your options before the Court decides whether to give “final approval” to the Proposed Settlement. The notice explains the lawsuit, the Proposed Settlement, your legal rights, what benefits will be provided, and who will receive them.

The case is currently pending in the Circuit Court for Sauk County, Wisconsin and is known as Chad and Rose Loper v. Creative Finance No.: 2021CV000427.

The lawsuit is about whether repossession notices and/or post-sale notices of CFI contained all of the information and disclosures required by Wisconsin law. Specifically, the lawsuit seeks damages for (i) violations of Wisc. Stat. §§ 409.610, 409.611, 409.613, 409.614, 409.616, and 409.625 of the Uniform Commercial Code; and the Wisconsin Consumer Act; and (ii) declaratory and injunctive relief.

CFI denies that its post-repossession notices are in violation of Wisconsin law and maintains that it did not act wrongfully or unlawfully. CFI contends that the claims of Chad and Rose Loper (hereinafter “Representative Plaintiffs”) have no merit and that, if the lawsuit proceeded, CFI would prevail at trial. In addition, CFI contends that certain members of the Class owe CFI money for balances still allegedly due on their accounts following the sale of their vehicle(s) at auction.

The parties have agreed, and the Court has ordered that, for settlement purposes only, this lawsuit may be maintained as a class action under Wisc. Stat. $803.08, subject to final approval at the conclusion of the settlement process. If the Proposed Settlement is not finally approved, or if any party withdraws from the Proposed Settlement, the lawsuit will return to the same status as before the Settlement Agreement was signed, and the Court will later determine if the case may proceed as a class action. CFI has challenged whether this case should proceed as a class action but has agreed not to oppose certification of a class for settlement purposes only.

The Proposed Settlement includes all persons who meet each and every one of the following criteria, namely persons who from December 2, 2018 to October 21, 2022  (a) have or had a finance agreement (“Loan Agreement”) held by CFI subject to the Wisconsin Consumer Act (Wis. Stat. §421.101 et seq.); and (b) had their motor vehicle repossessed in Wisconsin by CFI or its agents; and (c) who have not obtained a discharge in bankruptcy applicable to any such Loan Agreement; and (d) against whom CFI has not previously obtained a deficiency judgment arising from or related to a Loan Agreement; and (e) to whom CFI sent a Notice of Sale which Class Counsel has alleged violates the Uniform Commercial Code as set forth in the Plaintiff’s Complaint

You are receiving Notice because it is believed that you meet the above criteria and that you are a member of the Class.

There are approximately 835 accounts contained in the Class.

The parties arrived at the Proposed Settlement as a result of arms-length negotiations, including a day-long mediation conducted before the Honorable David E. Jones (Ret.). The parties reached the Proposed Settlement before the Court determined whether class certification was appropriate. The Proposed Settlement is a compromise of disputed claims and does not mean that any law was violated or that CFI did anything wrong.

The Proposed Settlement provides both equitable and monetary benefits (“Settlement Benefits”): 

• CFI will waive all outstanding balances and/or deficiency balances allegedly owed in connection with the Loan Agreement of the Class Members whose personal property was sold by CFI following repossession. The aggregate of the outstanding balances and/or deficiency balances is estimated to total $4,226,232.72 exclusive of interest. The waiver of such balances may have tax consequences to Class Members as discussed in Question 10 below. 
• CFI shall cease reporting any further adverse credit information on the consumer report of Class Members with respect to any Loan Agreement subject to the instant settlement and will undertake its best efforts to request the deletion of CFI’s tradeline from the Class Members’ credit reports for that Loan Agreement.       
• CFI shall make a payment of $475,000.00 towards the establishment of a fund (“Settlement Fund”) for the payment of Settlement Benefits. From the Settlement Fund, the Class Administrator shall pay to each Class Member a check (“Settlement Check”) as and for statutory damages, fines or any other liability pursuant to Wis. Stat. §409.625, less a proportionate share for settlement administration expense, incentive award, and attorneys’ fees and costs (see Question 14).  The Settlement Check will be sent to the address of the Class Member who is the primary obligor on the Loan Agreement.   

Any payment due to you under the Settlement Agreement will be adjusted on a pro-rata basis to pay for court-approved attorneys’ fees and expenses of litigation (see Question 14).

Not less than fifty percent (50%) of any monies from the Settlement Fund that remain unclaimed or undistributed after 90 days from the date of distribution of Settlement Checks shall be distributed to the Wisconsin Trust Account Foundation, Inc. to support direct delivery of legal services to persons of limited means in non-criminal matters.  The remainder of the monies from the Settlement Fund that remain unclaim or undistributed after 90 days from the date of distribution of the Settlement Checks shall be paid over to the Wisconsin Trust Account Foundations, Inc. to provide legal assistance to financially distressed individuals and families, subject to Court approval.

More details are in a document called the Class Action Settlement Agreement, which is available for your inspection at the Office of the Clerk of Circuit Court, Sauk County Court House, 510 Broadway, Baraboo, Wisconsin 53913, during normal business hours.

The Court will hold a final approval hearing on February 27, 2023, at 9:00 a.m. to decide whether to approve the Proposed Settlement (see Question 17) including the request for attorneys’ fees and litigation expenses (see Question 14).  Even if the Court approves the Proposed Settlement, there could be appeals. The time for an appeal varies.

The Proposed Settlement becomes final and binding on the “Effective Date.” If no appeals are taken, the Effective Date is the date on which the Court approves the Proposed Settlement as final, subject to certain conditions. If an appeal is taken, the Effective Date is the date when all appeals are complete, and the Proposed Settlement becomes final.

The Proposed Settlement will go into effect on the Effective Date.

If the Proposed Settlement is finally approved, the Court will enter an order dismissing all claims against CFI with prejudice.  Under the terms of the Proposed Settlement, you will release CFI with respect to the claims that were raised or could have been raised in the case. This means you cannot seek equitable relief or any type of monetary relief against CFI based on any claims related to or arising out of the repossession and sale of your personal property, the notices related to the same, and your Loan Agreement involved in this case. You will be giving up all such claims, whether or not you know about them.  Notwithstanding the foregoing, under no circumstances will this release extend to or include claims under the Servicemembers Civil Relief Act. 

Your interests as a member of the Class will be represented by the Representative Plaintiff and Class Counsel. You will not be billed for their services. Class Counsel will receive a fee only if the Court approves the Proposed Settlement, and the fee award will be set by the Court and paid from the Settlement Fund (see Question 14).

The Court’s order will apply to you even if you objected or have any other claim, lawsuit, or proceeding pending against CFI.  If you have any questions about the release, you should consult with a lawyer.

If you do nothing, you will be part of the Class. That means you cannot sue CFI over the claims settled in this case. It also means that all of the Court’s orders, including the release of claims and dismissal of the lawsuit with prejudice (see Question 8), will apply to you and legally bind you.

You do not have to do anything to obtain a Settlement Check. If the Court grants final approval of the settlement, a Settlement Check will be distributed from the Settlement Fund to all participating Class Members by mail. The amount of each Settlement Check will be reduced on a pro rata basis by the amount the Court determines that Class Counsel shall receive as compensation for the prosecution of the instant action, the incentive award to the Representative Plaintiffs, and certain expenses related to administering the Settlement (see Question 14 below).

Robert W. Murphy, Esq.
Law Office of Robert W. Murphy
440 Premier Circle, Suite 240
Charlottesville, Virginia 22901

Matthew C. Lein, Esq.
Lein Law Offices
5692 Hwy 63 North
PO Box 761
Hayward, Wisconsin 54843

Yes.  The Court has appointed Robert W. Murphy and Matthew C. Lein to represent you and the other Class Members in this case. Mr. Murphy and Mr. Lein are together called Class Counsel.

You will not be charged for representation by Class Counsel. Class Counsel’s compensation will be paid from the Settlement Fund. If you want to be represented by another lawyer, you may hire one at your own expense.

Class Counsel will ask the Court to approve attorneys’ fees and litigation expenses to be paid from the Settlement Fund. Class Counsel will ask the Court to award attorneys’ fees not to exceed $300,000 (“Attorney Fees”) and litigation expense not to exceed $15,000 (“Attorney Costs”). Class Counsel contends that the total benefit of the settlement to the Class includes approximately $4,226,232.72 in waived deficiencies exclusive of interest, the $475,000.00 payment to the Settlement Fund, and the economic benefits attributable to the deletion of adverse information from the Class Members’ credit reports.

Class Counsel will also ask the Court to approve an incentive award of $10,000 (“Incentive Award”) to be paid from the Settlement Fund to the Representative Plaintiffs for the time and resources they have spent helping Class Counsel on behalf of the whole Class, to be paid to the Representative Plaintiffs in addition to the Settlement Check. The Court may award less than the requested amount. 

The cost of administering the Settlement (“Settlement Administration Expense”), including the expense of sending the Notice and any settlement checks, will be paid directly out of the Settlement Fund. The estimated cost of the Settlement Administration Expense is $16,000.

No Class Member will owe or pay anything directly for the Attorney Fee Award, Attorney Costs and Incentive Award which will be paid from the Settlement Fund. 

The Court must approve both the Attorney Fees and Attorney Costs for Class Counsel and the Incentive Award for the Representative Plaintiffs. The Court will conduct a hearing on attorney’s fees and litigation expenses at the same time of the final approval hearing.

The Attorney Fees, Attorney Costs, Incentive Award and Settlement Administration Expense (“Litigation Payments”) will be deducted from the Settlement Fund before the pro rata distribution of Settlement Checks. Based on the anticipated Litigation Payments, each Class Member who does not exclude themselves from the Settlement (“Participating Class Member”) should receive a Settlement Check for approximately $160. Settlement Checks will be mailed to Participating Class Members shortly after the Effective Date (see Question 7 above).  

You may object to any part of the Proposed Settlement.  To do so, you must file a written objection in the case of Loper v. Creative Finance, Inc., Case No.: 2021CV000427.  Any objection must set forth your full name, current mailing address and telephone number and must include: (a) a written statement explaining the reasons for your objection; (b) copies of any papers, briefs, or other documents you want to bring to the Court’s attention; (c) any evidence you wish to introduce in support of your objection; and (d) a statement of whether you or your lawyer will ask to appear at the final approval hearing to talk about your objections.

Your objection must be mailed or otherwise delivered to each of the following addresses so that it is received by January 27, 2023:

If you or your lawyer asks to appear at the final approval hearing, in addition to providing the above information, you must include in your objection letter: (a) the points you wish to speak about at the hearing; (b) copies of documents you intend to rely upon at the hearing; (c) the amount of time you request for speaking at the hearing; and (d) whether you intend to have a lawyer speak on your behalf.

If you intend to have a lawyer present, your lawyer must file a written notice of appearance of counsel with the Court no later than January 27, 2023.

Objecting is simply telling the Court that you do not like something about the Proposed Settlement. You can object only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class. If you exclude yourself from the Class, you have no basis to object because the case no longer affects you.

The Court will hold a final approval hearing to decide whether the Proposed Settlement is fair, reasonable, and adequate and should be granted final approval.  The Court will also consider whether to award attorneys’ fees and other expenses to Class Counsel, whether to provide an incentive award to the Representative Plaintiff, and whether to enter a final judgment and dismiss the lawsuit.  If there are objections, the Court will consider them. You may attend and you may ask to speak.

The final approval hearing will be on February 27, 2023, at 9:00 a.m., before the Honorable Judge Wendy J.N. Klicko, Sauk County Courthouse, 510 Broadway, Room 3, Baraboo, WI 53913. The hearing may be rescheduled or continued without notice by the Court.

As a result of the effect of COVID-19 on court operations, the final approval hearing may occur telephonically or by Zoom.  If you or your attorney plan to attend the hearing, please contact Class Counsel (see Question 20) prior to the hearing to obtain updated information, including a tollfree call-in number in the event of a telephonic hearing or log-in information in the event of a Zoom hearing.   

The Proposed Settlement may be approved by the Court with modifications, and without further notice, if consented to by the Representative Plaintiff and CFI and their respective attorneys in accordance with the terms of the Settlement Agreement. 

No. Class Counsel will answer any questions the Court may have. If you send a written objection, you do not have to come to the final approval hearing to talk about it. As long as you mailed your written objection on time and according to the Court’s rules, the Court will consider it. You may also pay your own lawyer to attend the final approval hearing, but it is not necessary.

You have the right to do nothing.  If you do nothing, you will remain part of the Class and you will not be able to start a lawsuit, continue with a lawsuit, or be part of any other lawsuit against CFI about the claims in this case, ever again. You will receive all the Settlement Benefits described in Question 6 above.  Further, the tax consequences of the Settlement described in Question 10 above will apply.

If you have any questions concerning the matters dealt with in the notice, please direct your inquiries to the following Class Counsel:

Robert W. Murphy, Esquire
440 Premier Circle Suite 240
Charlottesville, Virginia 22901
Email: [email protected]
Telephone: (954)763-8660

Matthew C. Lein, Esq.
P.O. Box 761
Hayward, Wisconsin 54843
Email: [email protected]
Telephone: (715) 634-4273

The pleadings and other records in this litigation are available and may be examined and copied during regular office hours at the Clerk of the Circuit Court, Sauk County Courthouse, 510 Broadway, Room 2,  Baraboo, Wisconsin 53913.

PLEASE DO NOT TELEPHONE THE CLERK’S OFFICE OR THE JUDGE’S CHAMBERS CONCERNING THIS NOTICE OR THIS CASE.

IMPORTANT DEADLINES:

            1.   Submitting a Request for Exclusion Form: If you want to exclude yourself from the Class, you must complete, sign and mail your Request for Exclusion Form to the Settlement Administrator. The Request for Exclusion Form must be postmarked by January 27, 2023.

            2.   Objections to Settlement: If you want to be object to the settlement (and you have not requested to be excluded), you must file your written objection with the Clerk of Court with a postmark date before January 27, 2023.