Claim of right to ‘sou sou’ funds defeated by statute of frauds

February 4, 2014 By Charisma L. Miller, Esq. Brooklyn Daily Eagle

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Where the terms of a cultural savings groups are not detailed in writing, the return of a participant’s contribution is not guaranteed, a Brooklyn judge ruled.

In April 2013, Angie Duncan joined a sou sou — an informal savings club utilized by immigrants allowing them to avoid bank fees and other forms of infrastructural red tape — whereby she contributed $400 a week for a periodic payout of $4,500 cash. Each member received the same payout amount on a rotating basis with members able to receive the full amount of his or her financial contribution at the end of their savings club membership. Duncan’s membership in the sou sou is slated to end on Dec. 27, 2014.

Sometime in August 2013, Duncan failed to submit her weekly contribution. Duncan asserted that she contacted the sou sou’s organizer, Lorain Campbell, and offered to send her payment via Western Union — an offer that Campbell refused to accept. Despite not making her required contribution, Duncan demanded $4,500 when her payout turn came around.

Campbell refused to provide Duncan with her payout and announced to the entire sou sou group that Duncan had been removed. Upon announcement of her removal from the savings group, Duncan, who had been contributing $400 weekly for 18 weeks, filed a civil suit against Campbell, requesting the instant return of the $7,200 she contributed to the group.

According to Duncan, written agreements between members and the sou sou state that for members late with making their mandated weekly pool payments will incur a $25 penalty and required to schedule a new date for their mandated pool contribution. Duncan, however, did not have a written agreement and relied on the presumption that the terms of others agreements would apply to her, a fellow member. It was this fact that caused Duncan to lose her case on a legal technicality.

The Statute of Frauds requires that when the performance of a contract cannot be completed within a year such contract must be made in writing. In Duncan’s case, the ultimate performance was the release of the final $7,200, to be released in December 2014, more than a year from the start of the Duncan’s participation in the sou sou.

“[T]he statute of frauds bars plaintiff’s recovery,” Brooklyn Supreme Court Justice Lisa Ottley said in her ruling in the case. Even if Duncan had a sou sou agreement in writing, her claim for an immediate recovery of $7,200 would still be defeated, Ottley further noted.

The oral agreement between Duncan and Campbell was that in exchange for participation in the sou sou, Duncan had to submit a weekly contribution of $400. By not making her contribution, Duncan breached her verbal agreement with Campbell.

“[A]ssuming arguendo that a contract did exist between the parties, [Duncan]’s failure to make the weekly payment of $400.00 to the savings club … constitutes a material breach of that contract precluding plaintiff’s right to enforce its terms,” Ottley ruled. Dismissing Duncan’s case in its entirety, Ottley prevented Duncan from receiving the $7,200 that she contributed to the sou sou savings club.

Correction Notice:

In a story titled ‘Claim of Right to Sou Sou Funds Defeated by Statute of Frauds,’ which appeared in the February 5, 2014 edition of the Brooklyn Daily Eagle incorrectly identified the presiding judge. Honorable Lisa Ottley is the Supervising Judge for Kings County Civil Court and an Acting Supreme Court Justice.

Further, the plaintiff in the case was offered the return of her investment in the sou sou in a lump sum at the end of the sou sou membership or in periodic installments. The plaintiff rejected these offers. Hon. Ottley’s full decision can be found at www.brooklyneagle.com