Lawsuits and loose cannons?

Among the rules that doctors impose on themselves is this: First, do no harm.

That rule, as you might imagine, goes right out the door (so to speak) when a doctor is confronted with a babbling visitor who has dropped down from the ceiling into his house in the middle of the night.

That's what happened to Dr. Michael Raineiro, M.D. About 11:30 one night, Dr. Rainero awoke to hear his dog barking. When the doctor turned on the hallway light, he saw his dog barking at Kurt Prochaska -- someone the doctor didn't know.

Prochaska said to the doctor "I just need to use your bathroom." Then he began doing just that. While Prochaska -- who'd broken in through a roof vent -- used the bathroom, Dr. Rainiero had his wife call 911, and while she did that, Doc grabbed a pistol.

Prochaska then came out of the bathroom, but didn't respond to the doctor's calls of "Hey, buddy," so, just before Prochaska could disappear around the bend, Doctor Rainiero shot him.

End of story, right?

No, of course not. This is America. No story ends like that; they all end up in Court. Prochaska -- the man who'd dropped into Dr. Rainiero's life, literally, after climbing onto his roof in the middle of the night -- sued Dr. Rainiero, for negligence and intentional battery.

Yep. Prochaska -- who got two lawyers to represent him on this at one time or another -- claimed that Dr. Rainiero was negligent in shooting Prochaska, and/or that Dr. Rainiero should pay Prochaska some money because Prochaska had been hurt when Dr. Rainiero shot him.

Prochaska's novel claims -- remember, two lawyers at one point or another decided this was worth pursuing -- were that Dr. Rainiero acted negligently by shooting in his general direction, or that Dr. Rainiero hadn't been acting in self-defense because Prochaska might have been leaving the doctor's house.

In short, Prochaska, and his lawyers, felt that Dr. Rainiero had acted unreasonably in shooting the guy who'd broken into his house in the middle of the night.

Now, I am not a gun nut -- and I include in the words "gun nut" anyone who has a gun. If it were up to me, people wouldn't have guns in their house and Dr. Rainiero would've had to do what the rest of us do when we think someone's broken into our house at night: grab a golf club and go downstairs in our pajamas to see what's going on.

But Dr. Rainiero apparently legally possessed this gun, and we all have the legal right to defend our property, our family, and ourselves -- and especially to defend those things against drunken idiots who crash through the ceiling, use our bathroom, and then go wandering off to maybe exit.

Prochaska didn't win; his case was dismissed by a judge without a trial, after which Prochaska (identified in the caption by his name and inmate number, too, and with a return address of a correctional institution) filed an appeal on his own, prolonging the doctor's expense and troubles a little longer until the Wisconsin Court of Appeals could dismiss the appeal, too.

In all, though, it took just over two years from the date Prochaska first filed this ridiculous lawsuit until the Wisconsin Court of Appeals hopefully ended it (Prochaska could still appeal to the Supreme Court of Wisconsin, but it's unlikely they'll take the case.)

I'm often asked by people: Can I get sued for such-and-such, and I like to keep cases like the Prochaska v. Rainiero case handy to show them that the answer is yes, you can get sued. My usual response is "Anyone can sue anyone for anything; the question is whether they can win." And that's true: there's no prohibition on filing a lawsuit, at all. I could sue you, right now -- all I need is your name, your address, and $256, and you'll be sued.

If I did that kind of thing -- picked you out at random and sued you frivolously, I may not win, but that's sometimes not the point of some lawsuits.

Some lawsuits are filed just to impose burdens on people, or because the person filing them has nothing better to do with his time. Like Prochaska, here. He is or was doing time when the suit was filed, and had nothing better to do with all those hours in the day.

Other people file lawsuits to try to force settlements, or to harass neighbors or former co-workers. Some people file lawsuits or fight legal cases because they have emotional or mental problems.

These problems are easily dealt with. Wisconsin has rules that apply to certain inmate suits, requiring that at least some of them be pre-approved before they can be commenced -- so that if you've got an inmate coming after you for something or other, you might have some protections from the lawsuit even being started.

There are other rules that apply, though. Wisconsin recognizes the claim of "abuse of process." An "abuse of process" occurs when someone uses a legal process for something other than what that legal process was intended to achieve -- like someone suing in small claims, over and over again, when their intent is to harass their ex-girlfriend or wife. In such a case, a litigant could countersue the person suing them for "abuse of process."

"Malicious prosecution" is a related claim that could be made when one gets sued-- although "malicious prosecution" can be hard to prove.

Wisconsin, and federal courts, also have a rule that allows someone sued frivolously to move the Court for an award of costs and fees, if the person can be proven to have filed the case without any reasonable basis for doing so.

All of those countersuits are difficult to prove -- and they should be, because they represent a check on the ability of someone to get their day in Court. Wisconsin, and most states, favor allowing people their day in Court. So it's not surprising to me that Prochaska filed his suit, or that he got a hearing and could appeal it. What is surprising is that Prochaska found not one, but two lawyers to represent him at one point or another.

That's the real shame here.

Monday News Update for the week of 5/25/09.

A Weekly Roundup of News Stories That Are Important To Anyone Who Has A Family Or Spends Money...

Divorce & Family: Leilani Neumann, the Wisconsin woman charged with murdering her daughter when she and her family prayed for a cure rather than get insulin and water, was convicted of second-degree reckless homicide last week.

Click here to read More Family Law Issues.

Banking/Mortgage: What does the BankUnited failure mean for you, personally? Not much, other than higher taxes in the long run. BankUnited, which specialized in risky housing loans (do you have one from them? If so, you just found out what kind of risk you are) was bought by a private equity firm, which will likely keep many, if not all, of the loans BankUnited made.

Click here to read more Banking Issues.

Click here to read more Mortgage Issues.

Landlord-Tenant/Consumer: One of the lesser known features of the "Helping Families Save Their Homes Act" that President Obama just signed is that renters get more protection... maybe. The Act requires banks that foreclose to honor existing leases, and, if you're a month-to-month tenant, you'll get at least 90 days notice before you have to move. Wisconsin recently moved to protect renters in foreclosure situations, too. So if you're renting and find out your landlord isn't paying the mortgage, consult a lawyer.

Click here to read more Landlord-Tenant Issues.

Tip of the Week: Get a phone call from someone, only to be greeted with silence on the other end of the line for several seconds or more? If you owe money to someone, you've probably been hit by a predictive dialer, a system that calls many telephone numbers at once and then connects only those calls that are answered to a live person -- probably someone who doesn't yet know who they're talking to.

Click here to read more debt collection issues.

Interesting Judicial Comments, 4:

"A great deal of this criticism stems from the concern that the study of language is at best an inexact science, and words are often subject to multiple interpretations...In truth, perhaps Lewis Carroll best captured the essence of this debate:

“When I use a word,” Humpty Dumpty said in a rather scornful tone, “it means just what I choose it to mean-neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many things.”

“The question is,” said Humpty Dumpty, “which is to be master-that's all.”

-- Judge Utschig, In re Ehlen, 202 B.R. 742 (W.D. WI 1996), discussing the interpretation of an amendment to the Bankruptcy Code.

It isn't everyday that you see Lewis Carroll quotes in a judicial opinion. Although maybe it should be more common.

If it looks like a duck and quacks like a duck but believes it's a water buffalo...

It has been said (probably by me, since I don't recall who I might have heard this from, so I'll take credit) that Americans would rather believe something than know something.

If you're a debt collector, that's certainly true: It's better to believe something than to know the truth -- if what you believe is that you're not a debt collector.

There's a law called the "Fair Debt Collection Practices Act." (I'll call it the FDCPA.) It governs, like the title says, "Debt Collection Practices." The devil is in the details, and here, the details are who, exactly, is a "debt collector." That matters a lot, because only "debt collectors" are covered by the FDCPA; if a "debt collector" does something that law prohibits, he or she could get sued; but if the person isn't a "debt collector," then the FDCPA doesn't apply.

In broad terms, a "debt collector" can be said, under the FDCPA, to be someone who collects debts that are owed to someone else. If you owe me money, and I hire that guy to collect it, that guy is (usually) a debt collector.

Confusion is injected lots of places in that law, but as it matters here, confusion arises over what should happen when "that guy" isn't hired to collect the debt, but instead is simply assigned, or buys the debt -- so instead of that guy collecting money from you to pay me, that guy is collecting money from you to pay himself.

The FDCPA says what happens in that case -- but that's where it gets complicated, again. In broad terms, when that guy buys a debt from me to collect from you, that guy is not a debt collector if the debt wasn't in default when he bought it.

So if you owe me money, but you don't have to pay me until the end of the month, and I sell the debt to that guy before the end of the month, then he's not a debt collector. (Usually.) If I sell the debt to that guy after the end of the month, he is a debt collector.

Usually.

Things get more confusing, still, because it turns out that whether that guy is a debt collector depends not on what actually happened with the debt, but on what me and that guy think happened with the debt. In other words, that guy is a debt collector if (and only if?) me and that guy think he's a debt collector.

That's the result of the case titled Schlosser v. Fairbanks Capital Corporation, a Seventh Circuit Court of Appeals case. What happened is this: Fairbanks bought a bunch of mortgages from a company called "ContiMortgage." ContiMortgage told Fairbanks the mortgages it was buying were in default -- that they were past due. Fairbanks believed ContiMortgage, and assumed that it was a debt collector.

Fairbanks then sent the Schlossers a letter demanding that they pay up, in full -- and refused to accept the monthly mortgage payment from the Schlossers. The trouble was, the Schlossers weren't in default. They were current on their mortgage, but couldn't get Fairbanks to accept their regular payment because Fairbanks thought the Schlossers were in default. While the Schlossers were trying to pay their mortgage, Fairbanks filed a foreclosure action against them.

The Schlossers then sued Fairbanks, saying that Fairbanks had violated the FDCPA-- not by foreclosing on their home, as you might guess, but by failing to include some required information in the demand letters they'd been receiving.

The FDCPA places a great many restrictions and impositions on debt collectors, and the failure to follow those rules could result in the debt collector paying damages and attorney's fees to the debtor, and the Schlossers, or their lawyer at least, knew that, and so they sued Fairbanks for not including information on how to "verify" the debt -- an FDCPA requirement.

Fairbanks -- which had in its letters said "This letter is from a debt collector" -- then took the novel stance that it wasn't, after all, a "debt collector" because the Schlossers weren't, after all, in default when Fairbanks got the mortgage.

Got all that? The parties had essentially reversed their positions: Fairbanks, which had been saying you're in default and we're a debt collector, when sued, said You're not in default, and we're not debt collectors. Fairbanks took that position because, it said, upon actually looking at its records (something they seem not to have done until after threatening to sue and foreclosing on the Schlossers house), upon actually looking at the records it had, hey, it turned out the Schlossers weren't actually in default.

The Seventh Circuit Court of Appeals considered the issue and decided that Fairbanks was a "debt collector." It came to that ruling this way:

1. The FDCPA says a company is a debt collector if the debt was in default when they acquired it.
2. This debt, the Schlossers mortgage, was not in default when Fairbanks acquired it.
3. But Fairbanks believed the debt was in default, so
4. To heck with what the law says, Fairbanks is a debt collector.

You might be thinking, well, sure, the law may say Fairbanks isn't a debt collector, but didn't the Court do the right thing in holding the company's toes to the fire and also aren't you, as a lawyer, in favor of being able to sue more people under the FDCPA?

To which I say: No, and no. Laws are written because they mean something, and if Courts can just ignore the plain meaning of a law and say well, we're going to go with what you all THOUGHT you were doing rather than what the law says, then the laws don't mean anything. How am I, or you, or that guy supposed to know what Fairbanks and ContiMortgage were thinking when they transferred "12,800 allegedly delinquent high-interest mortgages?" The meaning of a law can't be dependent on what some people were thinking back then.

And, also, consider this: If Fairbanks was a debt collector because it believed it was a debt collector, then wouldn't the opposite hold true? Isn't it just possible that if someone says I believe I'm not a debt collector, that the FDCPA wouldn't apply?

Crazy, you say? Crazy like a Seventh Circuit Court of Appeals. Consider this footnote the Court slipped in:

If the mistake in this case went the other way and Fairbanks purchased the loan for the purpose of servicing and treated it as such... it would be classified as a creditor and therefore outside the scope of the [FDCPA].

That is: If Fairbanks thought and acted like it wasn't a debt collector, then it wouldn't have been.

So all ContiMortgage and Fairbanks had to do was say These loans aren't in default. We're going to transfer them because they're not in default. Then Fairbanks could do whatever it wanted, so long as it didn't think it was a debt collector.

And it doesn't matter what you think about it.

George Costanza: Consumer Protection Pioneer?

The automobile-repair industry is "a trade replete with frequent instances of unscrupulous conduct" in which, absent consumer protection laws, the status quo is "consumer exploitation."

Or so says Washington State, and now the Wisconsin Court of Appeals. The problems of mechanics ripping off customers is so widespread that "across the nation" states have passed laws requiring that consumers give "informed consent" to repair shops, says the Wisconsin Court of Appeals, in the recently-decided case of Kaskin v. John Lynch Chevrolet-Pontiac Sales, Inc.

In Kaskin, a customer sued the dealership repair shop for fixing his truck. He sued, even though the truck was fixed, because (he said) he never authorized the shop to repair the truck.

Kaskin had bought a truck and then, within 3300 miles of purchasing it, the engine began to knock. So he took it to the dealer, who did what Wisconsin law requires, and gave Kaskin a written estimate of the cost of repairs. That estimate was one cent; the dealer assumed the repairs would be covered by the warranty.

The dealership then discovered that the problem was that bad fuel had wrecked the engine injectors, and repaired those-- and charged Kaskin $5,000 for the service, which was not covered by the warranty.

Outraged that his repairs were $4,999.99 over the estimate, Kaskin did what all good American do: He paid and then sued... and lost, initially.

Kaskin had sued under a Wisconsin law that says consumers like him can sue dealers like John Lynch if the dealers have violated the law. In this case, the law that Kaskin said was violated was a law prohibiting a shop from repairing a car without authorization. Kaskin said that he hadn't authorized the shop to repair anything.

The shop said, though, that it didn't matter -- they'd fixed the problem and done a good job and were owed $5,000.

The trial court ruled against Kaskin, initially, and said that the dealer hadn't done anything, really, wrong. The damage to the truck wasn't caused by the dealer. But Kaskin appealed, and won -- kind of -- because the Wisconsin Court of Appeals said that the real issue is whether the dealership could charge Kaskin for repairs (allegedly) done without authorization. And the answer, the Court of Appeals said, is no, in Wisconsin, mechanics can't charge you for repairing your car unless you authorized the repairs.

The Court of Appeals then said that a trial needed to be held to determine whether Kaskin had authorized the repairs at all, and sent the whole thing back.

It's an important thing to consider, because that law is there to protect you, and me, and everyone else, from being taken advantage of by mechanics, who know a lot more than we do and who have both that knowledge and some critical other powers on their side.

Power number one, in Wisconsin, is that mechanics have a "mechanics lien" for repairs. If you take your car into a shop and they fix it up, they have a lien on your car until you pay... and because of that, they don't have to give you your car until you pay. So Kaskin couldn't, legally, get his car until he paid the $5,000. I don't know about you, but that would concern me -- being forced to cough up $5,000 I didn't know was coming.

Power number two is that nobody really understands cars. Take the sage wisdom of George Costanza, who opined about mechanics:

Oh, of course their tryin' to screw ya. No one know what they're talkin' about! It's like, "Oh, seems you need a new johnson rod." Oh! Yeah! Johnson rod! Well, get me one of those!

Or another wise mind, Dane Cook:

With any auto mechanic you’ve ever dealt with, as he's telling you what's supposedly wrong with your car, in your head, you're like... "this guys **** me big time."

Whatever they say, you just keep nodding. [The mechanics say] “Uh by the way, we had to replace the roof of your car, it was just peeling away in resentment of the rest of the car. And also we found a tiny unicorn in your exhaust and he was jumping and poking random holes in the exhaust, and he was *** in your filters as well, so we had to replace the entire unit. ” And you’re like “oh, ok, thank you very much. I didn’t know the roof was so angry at the rest of the vehicle and um… good god I’m glad you found that tiny mythological creature jumping around in there, 'cause I can't have holes being poked, not with a road trip coming up. So how much is that gonna cost? $7000 dollars? Yea that’s what I was gonna suggest. No really, I love to be in debt to the point of suicide."

The point being that it's sunk into pop culture now that we, as consumers, are getting ripped off when we go to the mechanic's. So laws like Wisconsin has, requiring that a customer be charged only for those repairs that he or she actually authorized, are important -- they're a protection against having your Johnson Rods replaced, or paying a charge to remove the tiny unicorn in your exhaust.

Wisconsin's law has some teeth, too -- if you sue your mechanic, and you win, you not only get the money back, but the loser will have to pay your attorney's fees, too.

Weird Laws You Didn't Know You Needed.

Lawyers maybe have a different sense of what's fun or funny or interesting, so bear with me. One of the things I enjoy about my job (aside from helping people right wrongs and get money for doing so) is coming across comments I think are funny from judges (like the Interesting Judicial Comments you'll find on here from time to time), and also weird laws, laws that make me think Now, what's that all about?

Take the prohibition, in Wisconsin, on chauffers getting bribes. In Wisconsin, it is illegal for your chauffeur to take payola related to the car they drive -- and for anyone to offer such a bribe. In other words, in Wisconsin, chauffeurs can't get a little under the table in exchange for having The Boss' car get its muffler at a specific shop.

That's a law that's been on the books only since 1993 -- so presumably it was anything goes for chauffeurs up until the early 90s, when Wisconsin (thankfully?) cracked down on what had to be a horrible problem. And I do mean cracked down -- the fine for breaking that law? $25.

Here's the actual law:

134.06 Bonus to chauffeurs for purchases, forbidden. It shall be unlawful for any chauffeur, driver or other person having the care of a motor vehicle for the owner to receive or take directly or indirectly without the written consent of such owner any bonus, discount or other consideration for supplies, or parts furnished or purchased for such motor vehicle or upon any work or labor done thereon by others or on the purchase of any motor vehicle for the chauffeur's, driver's or other person's employer and no person furnishing such supplies or parts, work or labor or selling any motor vehicle shall give or offer any such chauffeur or other person having the care of a motor vehicle for the owner thereof, directly or indirectly without such owner's written consent, any bonus, discount or other consideration thereon. Any person violating this section shall be guilty of a misdemeanor and punished by a fine not exceeding $25.

If a law is broken in the forest, and nobody is there to enforce it, is it still a law?

Last time, en route to pointing out how a typo might result in a free house (sorta), I also raised the question about whether laws do what people who write the laws think they will do.

Today is a different look at the same kind of idea. Today, I'll look at the existential question of whether a law is really a law if nobody follows it and nobody can be forced to follow it.

Take the speed limit. That's a law. But nobody follows it, really. I know that I've always believed that the "actual" speed limit is about 5-7 miles over the posted speed limit. If you're in a 55 zone, you can, I've always figured, go about 60-62 without getting pulled over.

Then again, that didn't work when I got two tickets in two weeks back last fall.

The speed limit, while it may not be followed much (or ever) is at least enforceable, as I found out twice in two weeks last fall. Nobody follows the speed limit, but if you do break that law, and you get caught, you'll pay a fine and your wife will tell you that your insurance is going to go up, and will continue to say, months later "What was the deal with that?"

Other laws are not so lucky as to be either followed or enforced. Take Wisconsin Statute section 425.109. You've probably never heard of Wisconsin Statute Section 425.109, but that's okay. You're not a consumer lawyer, or a creditor, or a debt collector, or a judge, and Wisconsin Statute section 425.109 (which I'll just start calling "425.109" now) applies mainly to lawyers and debt collectors and, because they have to apply the law, judges.

425.109 is a rule of law that is part of a larger set of laws which are collectively known as the "Wisconsin Consumer Act." The "Wisconsin Consumer Act" is known (among lawyers like me at least) as a far-reaching law that provides, or is supposed to provide, some of the best protections to consumers -- that's you -- in the United States.

That's the idea, anyway. The Wisconsin Consumer Act has a lot of facets to it; it tries to protect you and regulate creditors in a number of ways. 425.109 is one of those ways.

425.109 is a "rule of pleading." It sets out what a creditor needs to do when that creditor sues you. It says that "a complaint by a creditor" must include various required pieces of information.

That seems straightforward enough, right? A creditor who sues you files a complaint, and that complaint must include the information required by law. Easy to read, easy to follow.

Except...

Except that debt collectors and creditors don't like to follow this law, and here's why: the list of things that a creditor has to include is pretty long. I won't repeat it all for you here, but a creditor who sues you has to do things like identify what they're suing you for, say what you did that entitles them to sue you, say how much they claim to be owed and show the figures necessary to prove that amount, and include a copy of anything in writing that shows you owe the money.

Why wouldn't creditors want to do that? Why shouldn't they want to do that? Shouldn't they know those things before they sue you? It'd seem to be easy enough for someone who's suing you to say "Here's why I'm suing you, here's how much I think you owe me and the math that shows why I think that, and here's something you signed saying you'll pay me back."

But creditors don't want to comply with that law, so they keep attacking it. The first thing the "creditors" did was find a truck-sized loophole in who has to comply with the law.

See, the law says creditors have to do those things. And the Wisconsin Consumer Act says who are considered to be "creditors." Because this is a complicated law, figuring out who is a "creditor" is also complicated, but I'll boil it down: The Wisconsin Consumer Act says a "creditor" is a "merchant." And it says a "merchant" is someone who sells things to consumers, and that a "merchant" includes an "assignee" of a creditor.

That sounds technical, too, so I'll break that down: An "assignee" is someone who gets assigned the right to do something. So if you owe me money, but I tell my friend Ben that he can collect the money instead, then Ben is my assignee, which the Wisconsin Consumer Act says makes him a "creditor."

Or so you'd think, because the Wisconsin Court of Appeals said that, the law be damned, an assignee is not a creditor. In the case of Rsidue LLC v. Michaud, the Wisconsin Court of Appeals said that someone who is assigned the right to collect a credit account isn't a "creditor," even though the law, if you read it, seems to say the exact opposite.

The Rsidue case got started because creditors routinely assign the right to collect their debts to "debt buyers," people who pay pennies on the dollar to buy old credit-card debts from credit card companies, and who then take over (as the "assignee") collecting the money. Once a debt buyer buys your account, you no longer owe Capital One, or American Express, or whoever -- you owe the debt buyer.

Rsidue LLC is a company that buys debts, and because it buys debts, it sues a lot of people over those debts. (It's been involved in about 190 lawsuits in 9 years.) But Rsidue LLC doesn't have to comply with 425.109 anymore, thanks to the Wisconsin Court of Appeals.

The bottom line there? If you owed money to Capital One, and Capital One sued you, the law (and the Wisconsin Court of Appeal) think that Capital One should tell you why they're suing you, how much you owe, and why you owe it. But if you owed money to Capital One, and Capital One sold your debt to Rsidue LLC, and Rsidue LLC sues you, you have no right to that information, at least not upfront.

But at least the people who are still considered "creditors" have to comply with 425.109, right?

Wrong.

Even if you are a "creditor," even if you admit you're a creditor, you may not have to comply with 425.109 at all.

Consider the case of Mercado v. GE Money Bank. This is an unpublished decision, which means that while it exists, you can't ever mention it in court. But I can mention it on a blog.

In Mercado, a couple of borrowers were sued by GE Money Bank, which had lent them money. GE Money Bank wasn't an "assignee." They were the original lender. The borrowers didn't "answer" the complaint -- they never appeared in court or otherwise tried to fight, and so default judgments were entered.

Later on, the borrowers got themselves a lawyer and sued GE Money Bank for violating the Wisconsin Consumer Act. The borrowers lost, and rightly so, but the case itself shows the problem with laws that nobody follows.

The borrowers lost, and rightly so, because they sued too late and in the wrong court. When you're sued -- I can't emphasize this enough -- you've got to do something. You've got to call a lawyer, or go to court, or file an answer. It's not even tough; the papers you're given when you're sued tell you exactly what to do.

The Mercado borrowers, though, didn't do anything when they were sued. They were sued in 2006, and didn't appear in court and got judgments entered against them in the fall fo 2006. It was over a year later, in December 2007, when the borrowers finally got around to suing GE Money Bank.

The borrowers said, in that second lawsuit, that GE Money Bank (and its lawyers, the Kohn Law Firm) had violated the Wisconsin Consumer Act, and specifically, that GE Money Bank had violated 425.109.

They lost -- and lost, rightly -- even though GE Money Bank might have actually violated 425.109.

The borrowers said that GE Money Bank didn't include all the information required by 425.109, and they wanted to sue GE Money Bank for that problem. The Courts said -- and they were right -- that the borrowers were going about it all the wrong way. The borrowers should have (but didn't) answered the original complaint, or at least asked the court to "reopen" those cases.

Case over: The borrowers lose.

That's simple enough, too, but what's more fascinating is that it appears that GE Money Bank did get a judgment against the borrowers in the original action, and that the GE Money Bank complaint may not have complied with 425.109.

That's interesting because 425.109 doesn't just list what's got to be in a Complaint; it also says this:

A judgment may not be entered upon a complaint which fails to comply with this section.

Now, that is a straightforward rule, right? If the complaint doesn't comply with 425.109, the creditor doesn't get a judgment.

But... GE Money Bank's complaint, which (allegedly) didn't comply with 425.109, still allowed them to get a judgment. So, what's up?

And why would GE Money Bank file a complaint that doesn't comply with 425.109?

I don't know why GE Money Bank did that, but I can guess. I can guess that there are at least two reasons why GE Money Bank wouldn't want to comply with 425.109.

The first is money: It costs money to comply. A creditor has to supply that information, and paperwork, to the lawyer, who has to read it, and then that information has to be put into a complaint and/or attached and copies made and filed. It might only take 5 extra minutes per case to comply, but that 5 extra minutes adds up. Lawyers charge from $150-$300 per hour. Let's say a lawyer's time is worth $200 per hour. 5 minutes = $16.

GE Money Bank filed more than 300 lawsuits in Milwaukee County, Wisconsin, alone, since 2003. 300 x $16 = $4,800. By saving 5 minutes per complaint -- if that's what they were doing, and I don't know for sure, I'm only guessing in a completely nondefamatory way -- GE Money Bank saved $4800 on its Milwaukee County litigation over 6 years. They filed more than 100 cases in Dane County, Wisconsin since 2005 for savings of an estimated $1600 more in the last few years.

The flip side of saving money by not complying with extra requirements is this: There's no apparent cost to failing to follow the law. Most people (like Mercado) don't even answer, so nobody ever points out the issues. And when they do answer, courts have become reluctant to enforce the law and penalize them. The Wisconsin Consumer Act has a provision that allows debtors to sue creditors for violating the law, and it allows for the creditors to pay the debtors' attorneys' fees.

But the courts are skeptical of that, and have hinted around that failing to follow the law -- failing, for example, to follow 425.109 -- isn't really that big of a deal, that if a creditor makes a decision not to comply with the law, and you catch them at it and sue, well, no harm, no foul, right?

Many of the people who could have been covered by 425.109 are exempted by the Courts, and the remaining few who are still affected by it have not only a business reason for not following the law, but no fear of penalties if they break it.

The end result: a law nobody need follow.

Interesting Judicial Comments, 2

“If the beans that the young naive Jack purchased from the crafty old man in the fairy tale 'Jack and the Bean Stalk' had been worthless rather than magical, it would have been only fair to allow Jack to disaffirm the bargain and reclaim his cow.”

Wisconsin Supreme Court Justice Wilkie, on the law’s presumption that a minor can void a contract not made for necessities. Kiefer v. Fred Howe Motors, Inc., 39 Wis.2d 20, 158 N.W.2d 288 (1968)

Did you know minors might not be held to the deals they make?