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Legal Notes Blog > May 2010

OFFICE OF THE CLERK, WISCONSIN COURT OF APPEALS

Creditor Counsel:  Kohn Law Firm S.C.

Debtor Counsel:  Gary Thompson, Thompson Law Offices, S.C.

You are hereby notified that the Court has entered the following opinion and order:

2009AP1337

2009AP1338

Capital One Bank, USA NA v. Eugene Summers (L.C. # 2008CV242)

Capital One Bank, USA NA v. Eugene Summers (L.C. # 2008SC440)

Before Neubauer, P.l, Anderson and Snyder, JJ.

In these consolidated appeals, Eugene Summers appeals from circuit court judgments awarding Capital One Bank, USA NA, his credit card issuer, $3154.86 (the small claims judgment) and $7754.62 (the large claims judgment). Based upon our review of the briefs and record, we conclude at conference that this case is appropriate for summary disposition. WIS.

STAT. RULE 809.21 (2007-08)1 We affirm the judgments.

In the small claims case, appeal no. 2009AP1338 (Green Lake County circuit court case no. 2008SC440), Capital One sued Summers for amounts due on his credit card account after he defaulted on the account by failing to pay amounts due. Appended to the complaint were documents, including statements, substantiating the unpaid charges and other amounts due on the account. In the large claims case, appeal no. 2009AP1337 (Green Lake County circuit court case no. 2008CV242), Capital One sued Summers for amounts due on another credit card account after Summers defaulted by failing to pay amounts due. Appended to that complaint were documents, including statements, substantiating the unpaid charges and other amounts due on the account.  Capital One sought summary judgment in both cases. At the summary judgment hearing in the large claims case,2 Capital One argued that it had proved the debt by submitting account statements via affidavits from a Capital One employee. The statements showed the status of the account from a zero balance to the amount in litigation. Relying upon his interpretation of WIS. STAT. § 425.109(2), Summers argued that Capital One also had to submit the credit card agreement and other information regarding the account's terms. The circuit court concluded that WIS. STAT. § 425.109(2) only required Capital One to prove the debt via account statements covering the period during which the balance due accrued.  Summers offered no evidence to support his argument that Capital One's claims fell outside the terms of the credit card agreement, and there was no evidence that Sununers had disputed any of the charges or statements. The court granted summary judgment to Capital One.

2 In the small claims case, the circuit court heard Capital One's summary judgment motion.  Summers did not file any pleadings in opposition to Capital One's summary judgment motion. At the conclusion of the hearing, the conrt adjonrned the summary judgment proceeding to another date to permit Summers to further prepare to counter the motion. Summers did not appear at the adjourned hearing, and the circuit court entered summary judgment for Capital One. Summers raised the same issues in both cases.

We review decisions on summary judgment by applying the same methodology as the circuit court. M & I First Nat'l Bank v. Episcopal Homes, Mgmt. Inc., 195 Wis. 2d 485, 496,536 N.W.2d 175 (Ct. App. 1995). That methodology has been recited often and we need not repeat it here except to observe that summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter oflaw. Id. at 496-97.

On appeal, Summers argues that WIS. STAT. § 425.109(2) required Capital One to produce more than monthly statements to support its claim. Section 4:25.109(2) provides:

Upon the written request of the customer, the creditor shall submit accurate copies to the court and the customer of writings evidencing any transaction pursuant to an open-end credit plan upon which the creditor's claim is made and judgment may not be entered for the creditor unless the creditor does so.

There is no dispute that WIS. STAT. § 425.109(2) applies to this case. It is inescapable from a reading of Newgard v. Bank of America, 2007 WI App 161, 303 Wis.2d 466, 735 N. W.2d 578, that account statements constitute "writings evidencing" the transactions shown in them within the meaning of § 425.109(2).3 id., ~~3-4, 15. While the Newgard court disallowed all claims based on transactions not shown in the statements submitted by the creditors, the court allowed claims based on the transactions shown in the account statements. See id., ~15.

Similarly, the account statements incorporated in Capital One's affidavits constituted writings evidencing the transactions on Summers' accounts, and these statements established Capital One's compliance with § 425.109(2). Summers' attempt to expand the definition of "writings"

3 In Newgard v. Bank of America, 2007 WI App 161, 303 Wis. 2d 466, 735 N.W.2d 578, no party disputed that the creditors' account statements constituted writings evidencing a transaction within the meaning of WIS. STAT. § 425.109(2). Therefore, the court did not directly address the issue. See Newgard, 303 Wis. 2d 466, ~~3-4. We likewise conclude that no basis exists to dispute the conclusion that account statements are writings evidencing a transaction within the meaning of § 425.\09(2).    in § 425.109(2) to include all documents relating to the creation of the account, including its terms and conditions, is inconsistent with Newgard.

In addition, the statements submitted by Capital One fulfilled the goal of WIS. STAT. § 425.109(2): to provide the debtor with all the information necessary to determine how the creditor computed the amowlt due. Household Finance Corp. v. Kohl, 173 Wis. 2d 798, 801. 496 N.W.2d 708 eCt. App. 1993). Summers did not dispute that these were his credit card accounts or that he made the purchases and transactions detailed on the statements.

Summers offered no evidence in opposition to summary judgment. Merely alleging a factual dispute will not defeat an otherwise properly supported motion for summary judgment.  Helland v. Kurtis A. Froedtert Memorial Lutheran Hosp., 229 Wis. 2d 751, 756, 601 N.W.2d 318 (Ct. App. 1999). The opposing party must set forth specific evidentiary facts showing that a genuine issue exists for trial. See id. SWllmers did not counter Capital One's summary judgment motion with evidentiary facts. Capital One met its burden to present a prima facie case warranting summary judgment.

Upon the foregoing reasons,

IT IS ORDERED that the judgments of the circuit court are affirmed.

David R. Schanker, Clerk of Court of Appeals

Posted: 5/27/2010 2:38:44 PM by Global Administrator | with 0 comments


As you might expect, day in and day out, those in the debt collection profession see debtors that have put themselves in untenable situations.  While there are many reasons this occurs, many times it is obvious that their lack of financial sophistication was a significant contributing factor. In some cases, they simply never received an adequate practical finances education. In others, that education apparently didn’t make enough of an impression. I know schools do a great job trying to impart such things to their students, but sometimes they really need to hear it from those "in the trenches."  With that in mind, the National Association of Retail Collection Attorneys (NARCA) has developed a program intended for presentation at high schools, colleges and other appropriate venues throughout the country. Following is a "cut and paste" of NARCA’s explanation of the presentation:

 

In the last decade, young adults (18-24) saw credit card debt increase 104% and people under age 25 are the fastest growing group of bankruptcy filers. With the use of credit among young adults on the rise, many are finding themselves deep in debt without understanding how they got there or how to get out of financial trouble.

The Debt Trap is a presentation specifically tailored to this younger audience and designed to teach the importance of proper credit habits. The Debt Trap explores key concepts in budgeting, credit, math, consumer finance, and debt management, including:

Beginners budgeting techniques and tips

An explanation of how credit works and commonly found terminology

The true cost of credit in everyday purchases

The benefits of good credit and the burdens of bad credit

What to do to protect your credit and how to come out of debt successfully

Kohn Law Firm has staff available to make this presentation to local schools or community organizations.  Contact Attorney Robert E. Potrzebowski, Jr. with your interest.

Posted: 5/27/2010 1:34:00 AM by Global Administrator | with 0 comments


By:  Attorney Robert E. Potrzebowski, Jr., President, Kohn Law Firm S.C.

In 2006, a Wisconsin Court of Appeals in Rsidue, L.L.C. v. Michaud, 295 Wis. 2d 585, 721 N.W.2d. 718, ruled that lawsuits seeking to enforce purchased debt are not covered by the pleading requirements set forth in the Wisconsin Consumer Act (the “WCA”).  Last year state legislators, upon the urging of consumer rights attorneys, introduced a bill that would’ve brought such lawsuits under those same requirements.  That bill was identified as AB 131.

 Debt purchasers seeking to legally enforce their debt in Wisconsin and the attorneys who assist them in doing so immediately took note.  Neither group was opposed to the intent of the bill in theory, but both were concerned about its application in practice, particularly in credit card cases.  Of most concern was the WCA’s requirement that the lawsuit’s complaint include the “figures necessary for computation of the amount” due.  In previous such cases brought by creditors already subject to the WCA requirement (i.e. original credit grantors, as opposed to assignees), this somewhat ambiguous language has allowed debtors’ attorneys to argue that the complaint must include a complete history of all charges and payments to the credit card account since its original “zero balance” (i.e. copies of all account statements for the entire life of the account).  And based upon a related decision in Household Fin. Corp. v. Kohl, 173 Wis. 2d 798, 496 N.W.2d. 708 (Ct. App. 1993) some trial courts have agreed.

 However, the Household case is not on point, as it involved a delinquent loan (a “closed-end credit plan”), not a credit card account (an “open-end credit plan”).  A legal analysis confirms that difference is critical – that for credit card cases, the “figures necessary” requirement cannot mean a complete set of statements must be attached to the initial complaint, because in open-end credit cases the WCA requires that such “writings evidencing” the transactions be provided only upon written request of the debtor, per Wis. Stat. Section 425.109(2) and Newgard v. Bank of America, 303 Wis. 2d 466; 735 N.W.2d 578 (Ct. App. 2007).  And a practical analysis confirms that the “figures necessary” requirement should not mean a complete set of statements, as if it did, it would make every purchase ever made with that credit card a matter of public record, even for those very many debtors that do not dispute their liability.  Such an interpretation would directly undermine the many recent legislative efforts to ensure privacy.

With those concerns in mind, an informal coalition of debt purchasers and creditors’ attorneys -- including the Kohn Law Firm -- was formed.  That coalition met with legislators and testified at committee hearings regarding AB 131.  We first made clear that we were not opposing the effort to bring debt purchasers under the WCA’s pleading requirements.  Instead, we explained that if the legislature was going to amend that section of the WCA to bring a new and large group of lawsuits under its purview, it should simultaneously act to clear up the “figures necessary” ambiguity for credit card cases, as it is resulting in unnecessary burdens for the courts, the creditors and the debtors. We proposed additional legislation that would allow the plaintiff/creditor to satisfy the “figures necessary” requirement by providing the amount due on a date certain after default as reflected on any monthly or periodic statement that was sent to the defendant/debtor, as well as an accounting of any payments or charges made after such date.  In effect, the creditor would be reconciling the complaint balance with a post-default balance that had previously been explained to the debtor by way of their monthly statements.

The consumer bar was unreceptive to those additional changes, but would not propose an alternative definition of the “figures necessary” requirement for credit card cases.  As a result, legislators on both sides of the issue were unable to reach a consensus and AB 131 – which had been passed in the Assembly before the changes had been proposed – was not brought to the Senate floor for a vote prior to the end of its 2010 session.  Which means purchased debt lawsuits remain exempt from the pleading requirements of the WCA and the “figures necessary” requirement in cases brought by credit card issuers remains ambiguous.  Because both of these issues still need to be addressed, it is hoped and expected that the parties involved – the consumer bar, the creditors and their attorneys and the state legislature – will continue to discuss the necessary changes and follow-up legislation will be proposed in 2011.

Posted: 5/24/2010 5:53:00 AM by Global Administrator | with 0 comments