926 N.W.2d 167
Wis.2019Background
- Security Finance loaned Kirsch $1,000; Kirsch defaulted and Security sued in small claims court.
- Kirsch alleged Security sued without first giving the statutorily required notice of default and right to cure under Wis. Stat. ch. 425, and counterclaimed under Wis. Stat. § 427.104 seeking damages.
- Security voluntarily dismissed its complaint; Kirsch opposed dismissal and maintained his ch. 427 counterclaims.
- The circuit court dismissed Kirsch's ch. 427 counterclaims; the court of appeals affirmed.
- The Wisconsin Supreme Court reviewed whether failing to give the ch. 425 notice can, by itself, support a ch. 427 prohibited-practice claim and attendant ch. 427 remedies.
- The Supreme Court held the ch. 425 procedural violation (failure to give notice) does not by itself constitute a § 427.104 violation that entitles the debtor to ch. 427 damages; dismissal of the improperly filed action is the appropriate remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing suit without first providing the ch. 425 notice of default and right to cure constitutes a violation of Wis. Stat. § 427.104(1) (prohibited debt collection practices) | Kirsch: failure to give the required notice means the creditor lacked the right to sue; that attempt to enforce a nonexistent right violates § 427.104(1)(j) (and § 427.104(1)(g)) and entitles him to § 427.105 remedies | Security: the notice requirement in ch. 425 is a procedural prerequisite; its noncompliance warrants dismissal of the suit but does not transform into a ch. 427 prohibited-practices claim | Held: A ch. 425 notice defect is a procedural failure; it does not, standing alone, satisfy the conduct prohibited by § 427.104 (no ch. 427 damages). Dismissal without prejudice is the remedy. |
Key Cases Cited
- Kett v. Community Credit Plan, Inc., 228 Wis. 2d 1, 596 N.W.2d 786 (Wis. 1999) (holding creditor violated § 427.104 when it enforced a right it had reason to know did not exist in that venue/ factual context)
- Beal v. Wyndham Vacation Resorts, 956 F. Supp. 2d 962 (W.D. Wis. 2013) (creditor's failure to send required notice was a procedural defect; appropriate remedy was dismissal of creditor's action, not § 427.104 damages)
- Credit Acceptance Corp. v. Kong, 344 Wis. 2d 259, 822 N.W.2d 506 (Ct. App. 2012) (premature or invalid notice led to remedies under ch. 425 but did not independently support liability under ch. 427)