The Wisconsin Court of Appeals not so long ago made it easier to sue debtors; now, the Court has balanced the scales by making it harder to win those cases.
The Court made it easier to sue debtors in the wrongly-decided-but-its-the-law-for-now case Rsidue LLC v. Michaud. That case (which I discussed at length here) exempted assignees of debts from complying with a rule of pleading under the Wisconsin Consumer Act. The rule of pleading requires that creditors supply certain information, right in the complaint. After Rsidue, assignees of creditors did not have to do that, making it easier for assignees to file suits against debtors than it was for the original creditors to do so. (I predicted, off the record, that Rsidue would mean that Wisconsin would likely see an explosion in the number of assignees bringing claims, instead of creditors. I don't have any hard facts or figures to back that up, but from personal experience I can tell you that virtually every complaint I see for a credit card or consumer debt is, now, brought by an assignee rather than a creditor.)
That anti-debtor, anti-actually-enforcing-the-law-as-it's-written, tide is turning, maybe, based another Wisconsin Court of Appeals case, one that's been brought up by numerous readers -- TrueQ was first to point it out to me, but others did, too -- the case of Palisades Collection LLC v. Kalal. This not-yet-published case constituted a major victory for debtors and a serious blow to the let's-just-assign-the-debt school of thought.
In Kalal, Palisades Collection LLC sued the Kalals, alleging that the Kalals had defaulted on a credit card account and owed $27,343.47. Palisades moved for summary judgment, and in support of that submitted some account statements attached to an affidavit made by a Palisades employee.
But, the Kalals noted, that affidavit didn't pass muster. Summary judgment materials must be admissible in evidence -- a statutory rule that is rarely followed -- and Palisades' affidavit, the Kalals said, wasn't, because the Palisades employee wasn't qualified to say that the credit card statements were business records.Business records can be admissible into evidence if a custodian, "or other qualified witness" says that they're business records, and that the records were made at or near the time in question by a person with knowledge of the records (I'm simplifying),and that the records were maintained or created in the ordinary course of regular activity. (Wis. Stats. Sec. 908.03(6).) The Palisades' witness didn't meet that criteria -- she didn't know anything about how the records in question were created.
Palisades tried to argue that the witness was a custodian, bu the Court of Appeals shot that down, ruling that it's not enough to be a custodian -- one must be a qualified custodian.
The end result in the Kalal case was a reversal of summary judgment and remand. The case hasn't gone back to the Circuit Court yet, so it's not clear what'll happen from here on out. Palisades may be able to get another qualified witness to testify about the records -- or prove the amount owed through other means.
But the ripples from this case are just beginning. Here in my office, alone, I have at least four files I can think of off the top of my head where the records were submitted by someone other than a qualified custodian; courts in the past have tended to shrug off those objections and overlook them, for a variety of reasons. If Palisades gets published, and becomes law people have to follow (as opposed to unpublished "law that exists for no good reason"), then the practice of assigning debts -- debts ranging from credit cards to mortgages -- will have to be modified.
Especially mortgages, where I see this having the biggest impact. Mortgages are initiated by lenders and rights to the proceeds, and servicing rights, are all-too-frequently assigned over, sometimes many many times over -- sometimes surreptitiously by companies like MERS. Now, with the strength of a hopefully-to-be-published Kalal decision, homeowners can force the original lenders, and everyone down the line, to verify the accounts and business records.
The message to creditors and debt collectors? You'll find it easy to move the ball -- but harder to punch it into the end zone.
Note: I will compare anything to football, given the chance.
2 comments: