In May, 2006, Timothy Ross bought a motorcycle from Terrance Larson for $9,000, with Ross apparently (or allegedly) agreeing to give Larson a lien on the bike to secure the purchase.
By June, 2008, Ross had (allegedly) stopped paying, and Larson then filed a small claims action for repossession of the motorcycle. (Ross claimed, according to court records, that he had paid for the bike and that it might not have been worth $9,000.)
Larson represented himself at the small claims level -- and lost. The Court took evidence and decided that Larson had not created an enforceable security interest in the motorcycle, and because of that, he couldn't repossess it. (Larson's security interest seems to have never been properly created because, according to Larson, Ross never filed the papers to do that.)
Larson then went and got himself a lawyer, and sued again, this time in regular civil court. Larson's theory in civil court was that Ross had breached the contract for sale of the motorcycle and he was therefore entitled to damages. (For some reason, Larson sued in this action the Wisconsin Department of Children & Families. I wasn't able to figure out why that was, but that's not a pro se litigant's fault; that's the lawyer's doing, since Larson was represented in the second action.)
Larson lost the second action on claim preclusion grounds, with the Court ruling that the underlying facts of each suit, the small claims pro se case and the later civil action for breach of cotnract, were the same.
Claim preclusion applies when there have been two different legal actions, and (1) the parties are the same in each (or are deemed to be the same), (2) there was a final judgment in the first action, and (3) there is "an identity of claims" in the two suits.
Larson-- via his lawyer, in the second action -- tried to get around claim preclusion by arguing a couple of theories.
First, he said that there was no "identity of claims." His first suit, he said, was for repossession; the second suit was for breach of contract. No go, said the Court of Appeals (using fancier language, of course):
"We use the transactional approach to determine whether there is an identity of claims... [we look at] a claim in factual terms... regardless of the claimant's substantive theories or forms or relief, regardless of the primary rights invaded, and regardless of the evidence needed to support the theories or rights. Under the transactional approach, the legal theories, remedies sought, and evidence used may be different between the first and second actions."
Which is all a lengthy way of saying what the Court then said to sum up:
"We therefore look not only to claims actually brought, but to claims that could have been brought in the first action."
Larson said neither the second nor third element of claim preclusion was met, but he was obviously wrong -- the underlying facts were a sale of the motorcycle to Ross, and Ross' alleged breach of contract. Even though Larson said he didn't know about the failure to properly note the lien on the motorcycle title, there was nothing different about the facts in each suit. (The Court of Appeals noted that by saying "the underlying factual grouping in each case remained identical.")
Larson then attacked the validity of the judgment on competency grounds, which is curious.
Competency is what Wisconsin courts use to make a distinction between jurisdiction, and an inability to hear an action. In the past, people used to argue that courts in Wisconsin had no jurisdiction to hear a case -- mea
ning generally that the court lacked "subject matter" jurisdiction. But all Wisconsin circuit courts have subject matter jurisdiction over all cases -- that is, there is no legal issue a Wisconsin circuit court is prohibited from hearing. (The issue of circuit court's jurisdiction apparently goes back to when there were county courts and courts of equity and all the other courts people used to have. Nowadays, we just have circuit courts and small claims' courts and circuit courts, at least, have subject matter jurisdiction over any kind of action.)Competency is a different matter: A circuit court may lose competency to deal with a matter, even though it has subject matter jurisdiction, if statutory procedures leading up to the filing aren't complied with, or under other limited circumstances.
A small claims court may lack competency to deal with sums over the jurisdictional limits -- according to Mueller v. Brunn, 105 Wis.2d 171 (1982). But that doesn't mean that a plaintiff is forbidden to file in small claims; instead, if a small claims court is the forum selected for a civil action in which the damages might exceed that sum, one of a couple things might happen. A court might allow the case to be dismissed with prejudice and refiled as a civil action, or may award damages up to the jurisdictional limits (as happened in the unpublished case Knoll v. Mashak, 166 Wis.2d 4 (1991).)
Or the court could do what it did here, and simply decide that by filing in small claims, the plaintiff has implicitly represented that the value of the claim is less than $5,000.
In that way, the small claims court becomes competent to proceed on the case -- and can award damages up to the limit.
(Inquiring legal minds may now wonder what, if any, is the difference between small claims and regular civil actions. Small claims courts now have lawyers appearing for parties, and parties make more and more liberal use of formal discovery, virtually extinguishing the difference between the two fora. An enterprising legislator, or Court, may want to revisit this to make small claims court truly a small claims court again -- by, say, prohibiting formal discovery. Or, just go the other route and get rid of small claims court altogether.)
(Then again, there are certain benefits and procedures in small claims that are not available in civil actions -- like the fact that virtually no rules of evidence of apply in small claims, and the fact that corporations don't need to appear via a lawyer in small claims court -- they can have an employee represent them, instead. (Sec. 799.06(2) -- but sorry, assignees, that rule doesn't apply to you.)
Larson probably meant to argue jurisdiction, not competency, since Larson was arguing that the Court couldn't actually hear his action, as the value of the motorcycle (in Larson's argument) was greater than $5,000. Larson pointed out (in his second suit) that replevin actions can only be brought in small claims for property worth less than $5,000. (Sec. 799.01(1)(c).) That's where the Court of Appeals said Larson implicitly represented the cycle to be worth less than $5,000, a ruling the Court of Appeals pretty much had to make, since section 799.01(1)(c) might just be jurisdictional; in another case, the Court of Appeals appeared to rule that section 799.01(1)(c) is jurisidictional, but that there are exceptions.
That case was Clearpointe Capital, Inc. v. Townsend, 275 Wis.2d 878, an unpublished 2004 case in which Townsend appealed a replevin judgment by attacking subject matter jurisdiction; Townsend claimed that the collateral was more than $5,000 -- and the Court of Appeals agreed that the collateral was worth more than $5,000, but found a loophole in that the Wisconsin Consumer Act created an exception to the small claims jurisdictional limits for "consumer credit transactions." (In Townsend, the Court of Appeals still spoke of competence, not jurisdiction.)
Anyway, Larson made his argument on competence, not jurisdictional, grounds, and he lost on those grounds because he'd implicitly represented that the cycle was worth less than $5,000 (leaving open the question what if he'd expressly plead that it was worth more?)
That left Larson with claim preclusion again. Because the court was competent to hear the case, the judgment was valid and the facts underlying the first and second claims were identical.
The Court of Appeals briefly -- very briefly -- considered the narrowly drawn exceptions to claim preclusion, and found that neither exception applied. The exceptions had to do with the validity of the judgment -- which was already decided -- and an exception that applies when the prior case "fails to yield a coherent disposition" of the controversy.
(When would that ever apply, I wonder?)
Larson was left with no motorcycle and no judgment -- and a lesson in when to hire a lawyer (every time, right?) Had Larson hired his pretty-creative lawyer for the first case, that lawyer could have brought all the claims together in one action and ensured that the circuit court, if it didn't grant repossession, at least granted a judgment for breach of contract (if that case was proven.)
But Larson didn't hire a lawyer, and didn't argue in the first case that the contract had been breached, and didn't get his money or his motorcycle.
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