Your best bet, if you ever plan on selling your house, is to just stop taking care of it right now. Or, better yet, NEVER SELL YOUR HOUSE.

You can lie to someone without ever saying anything, the Wisconsin Court of Appeals ruled today. And in doing so, the Court clarified -- and mooted entirely -- two earlier rulings.

In the almost-hot-off-the-presses case of Novell v. Miglicaccio, decided April 27, 2010, the Court of Appeals determined that painting a basement wall could be a misrepresentation, leading to liability under section 100.18 -- and that was the second opinion the Court of Appeals issued in this case, and the third appellate opinion overall regarding this home purchase-gone-bad.

Here's what happened, in a nutshell: the home buyer -- Novell-- bought a house that he thought had good basement walls, only to discover that they leaked.

As is the American way, Novell sued.

The initial Novell opinion by the Court of Appeals was delivered way back in 2006, and it offered a tantalizing glimpse into the future of section 100.18 jurisprudence and a glimpse of the facts behind this case. There, the Court of Appeals elucidated a little on the factual background of the case: Novell was told of the possible sale of the Migliaccios' home by his cleaning lady. After informally offering to purchase it a few times, he finally toured the house, submitted an offer to purchase, closed, and moved in -- only to discover water leaking in the basement. So he sued, in 2004, alleging a violation of section 100.18, plus some other common-law fraud and breach of contract claims.

The circuit court dismissed the entire case on summary judgment, and the Court of Appeals upheld that decision as to all but one count: It found that there were material issues of fact about the section 100.18 claim.

In particular, the Court of Appeals focused in on this statement in its opinion:

Novell hired a home inspector to inspect the home before closing. During the inspection, the inspector noticed step cracks and minor differential movement in the basement walls. The inspector asked Anthony if he had painted the basement walls or had had any water in the basement. Anthony responded negatively to both questions.

About that, the Court of Appeals said that Novell could not have demonstrated reliance -- a necessary element of most of his claims except section 100.18 -- because his home inspector suggested that Novell get an expert to look at the basement, and, in the Court of Appeals' opinion, Novell's "reliance on Anthony's statements, despite the home inspector's opinion/suggestion, is unreasonable as a matter of law."

That was a tantalizing glimpse into section 100.18 rulings because it appeared that Anthony's statements had come after the contract between the parties existed -- so it appeared that section 100.18, long closed off to people who are in a contractual relationship, had now sprung a loophole.

The Court of Appeals reversed as to section 100.18, then, and the case was appealed to the Supreme Court of Wisconsin -- which muddied the waters a little more. The Supreme Court agreed with the Court of Appeals, kind of, that "reliance" is not an element of a section 100.18 claim -- that is, you could sue under section 100.18 without proving that you relied on the false statements.

Or could you? The Supreme Court gives with one hand, and takes away with the other, because after ruling that "reasonable reliance is not an element of a statutory false representation claim," the Court, twenty-six paragraphs later, said this:

"the reasonableness of a plaintiff's reliance may be relevant in considering the third element of such a claim, that is whether a representation materially induced (caused) the plaintiff to sustain a pecuniary loss."

So reliance is not an element -- but it is relevant to considering an element?

The Supreme Court's Novell I opinion didn't do anything to clarify the (apparent) loophole that the Court of Appeals' opinion had opened -- the focus on the reliance, and the recitation of facts by both courts, suggested that the false claims were those made after the parties had agreed to a contract for sale. (I've mentioned before that Courts may want to focus a little more on which facts they're specific about and which they gloss over, and Novell proves that point again.)

The Supreme Court went more into details about what Novell knew or should have known, and focused on Novell's receipt of the Real Estate Condition report, the Home Inspection report Novell commissioned, and Migliaccio's "statements that the basement walls had not been painted," which the Court said "were made in direct response to the inspector's concerns," -- suggesting that Migliaccio had made those statements after the contract was entered into.

A-ha! said lawyers like me -- and I did say that, kind of -- and we began arguing that, based on Novell I, section 100.18 now could apply to false representations made after a contract was entered into by the parties. After all, if the Supreme Court of Wisconsin allowed a section 100.18 claim to go on because the seller had made comments after a contract was entered, that was a ruling (implicit) that the law applied post-contract.

The Supreme Court agreed with the Court of Appeals, and sent the case back for trial. The Court didn't address the other, dismissed common-law claims because Novell hadn't appealed those, so the only thing that went back to trial was the section 100.18 claim.

And this week, the decision appealing from that earlier set of facts was also released, and shed new light on the situation.

In Novell II, we breathless readers finally learn even more facts behind the case -- facts that weren't in any prior decision, for whatever reason. This time around, Novell was appealing, again, from losing, again, on summary judgment. The circuit court had dismissed the case, saying that no misrepresentations had occurred.

The Court of Appeals took up the issue and immediately -- as though they'd been reading my mind before I thought it -- clarified the issue of when section 100.18 applies:

"Section 100.18(1) only applies to statements or representations ... made before the seller's acceptance of the purchaser's offer."

The Court restricted its discussion to those things that occurred on or before June 30, 2003, when the Migliaccios accepted Novell's offer... which meant that virtually every single fact mentioned in the earlier appeal was now completely irrelevant.

It didn't matter, in the end, what Migliaccio said in direct response to the inspector's concerns, and didn't matter what the inspector had told Novell -- all of that so much water under the bridge. (Pun intended.)

Instead, we get more detail about Novell's actions before submitting an offer: he walked through the house, and told Migliaccio that the basement was important to him (Novell was going to use it as a recording studio). Novell "relied on the pristine appearance of the basement walls" and was told "on numerous occasions" by Migliaccio that "he had not painted the property's basement walls during his ownership."

Novell also said that he found some KILZ paint in the house, and Migliaccio couldn't quite explain what it was there for.

After all that talk and all those appeals, it came down to this: "the crux of this case is whether painting a basement all can be a representation" under section 100.18.

The Court of Appeals then, in a few short pages, noted that Wisconsin has held for a long time that "acts can be representations" and then noted that painting the walls was an act -- so a jury could conclude that Migliaccio's painting of the walls could have been a false representation, and could have violated section 100.18.

What's really interesting about this is that, since the Court of Appeals has now ruled that painting the walls could be a misrepresentation, shouldn't Novell be able to go back and re-assert his common-law claims? After all, the Court of Appeals had earlier ruled that Novell couldn't maintain those because:

Novell was negligent as a matter of law in relying on the representation. Novell relied on Anthony's statement despite the objective evidence presented by the home inspector and despite the home inspector's suggestion that a basement expert be utilized. Under these circumstances, Novell cannot succeed on a negligent misrepresentation claim as a matter of law. Accordingly, the trial court did not err in granting summary judgment on this cause of action.

But Novell's case here relied on the painting of the walls -- and after seeing the painted walls, Novell submitted an offer to purchase, which was accepted. So Novell's reliance, or lack thereof, should be considered at the time of making the offer -- a fraud-in-the-inducement type of exception to misrepresentation.

Only Novell didn't appeal that decision to the Supreme Court of Wisconsin, which then didn't rule on it, so Novell may be out of luck -- his other claims may be gone under law of the case.

Which may not matter that much, except that the remedies are different under section 100.18 and common-law misrepresentation and breach of warranty. Common law claims, for example, can result in punitive damages. And Novell had a statutory claim, too, that could have resulted in triple damages.

The case hasn't been ordered published yet -- but it's recommended for publication, and, based on the history of the Novell/Migliaccio home purchase, it's a safe bet to say we haven't heard the last of this, yet -- especially if Novell now goes back and tries to reinstate those earlier-dismissed claims.

Or they could, you know, settle.

My actual case results, Table of contents

A bank can make itself liable simply by suing you. (When does a breach of fiduciary duty cause of action accrue?)

I win a mortgage foreclosure summary judgment hearing in style... in front of the judge I once ran against.

Judges just don't get it: I explain why a "loan doomed to fail" would be made, and a day later the US government agrees with me.


Making something out of nothing: how to win at summary judgment without even trying.

"Stated income" loan results in $11,000 verdict for plaintiffs whose home was foreclosed on.

A lender forced to produce ACTUAL EVIDENCE, not just allegations.

A stunning blow against the forces of evil... don't claim frivolousness when it's not.

A chance to hear me argue about whether the federal government can foreclose on a farm.

Columbia County judge agrees I can depose an attorney who signed an assignment of mortgage.

Dane County Judge Denies Summary Judgment In Foreclosure Case.

The Supreme Court makes a mistake of law in ruling on the FDCPA's mistake of law defense!

While nobody's running through a lot of tissues crying over their plight, it did get a little more difficult to be a debt collector the other day, when the U.S. Supreme Court decided that debt collectors who misinterpret the Fair Debt Collection Practices Act can be sued for mistakes of law. (And in doing so, they made a mistake of law themselves -- which I'll get to eventually.)

In Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, the Court considered the case of a law firm which was sued for requiring that disputes to debts they wanted to collect be in writing.

The Carlisle firm filed a mortgage foreclosure suit against Jerman, and included in the legal pleadings an FDCPA a "Notice" intended to comply with FDCPA rules. The notice said that Jerman could dispute the debt, but required that his dispute be in writing.

Jerman did dispute the debt, and when Carlisle investigated the dispute, it learned that Jerman had already paid the debt in full -- so the foreclosure suit was withdrawn.

Jerman then filed suit under the FDCPA against the Carlisle firm. Jerman focused on the requirement that Carlisle imposed of putting the dispute of the debt in writing, claiming that the FDCPA doesn't allow that.

The District Court ruled that Carlisle had violated the FDCPA, but also ruled that Carlisle was relieved from liability by the bona fide error defense; the Sixth Circuit Court of Appeals upheld the ruling, noting that while the bona fide error defense usually applies to clerical mistakes, there was no reason that an error of law could not also be a bona fide error.

The Supreme Court reversed the Sixth Circuit and settled the dispute among the circuits by ruling that debt collectors have to know the law, or they can get sued. Like many of the best Court decisions, that one seems common sense -- after the fact -- and like many of the Court's decisions, it required some time to get there.

The Court began by noting what we all learn from an early age, usually when we're first pulled over for speeding and tell the officer we didn't know it was a 25 mph zone: Ignorance of the law is no excuse, Justice Sotomayor reminded everyone -- digressing into a fascinating footnote that set out the inception of that phrase in American jurisprudence: It turns out that we decided ignorance of the law is no excuse when a shipping clerk passed off as "refined sugars" some things that were not, it turned out, refined sugars.

The majority found, in examining the language of the FDCPA, that Congress had never intended to allow mistakes of law to be a defense to liability under the Act, and bolstered that by examining seemingly every single statute ever passed, before moving on to the dictionary definition of procedures, which it looked at because a bona fide error requires not only that the violation be unintentional but also that a violation happen despite the maintenance of procedures designed to avoid violating the FDCPA.

A procedure, the Court decided, is a series of orderly steps, here designed to avoid mistakes. (One example, the Court mused, might be the procedures that a debt collector uses "to ensure its employees do not communicate with consumers at the wrong time of day." But what procedures would a debt collector need to do that? They don't need procedures for that protection; they just need a clock.) And procedures implies a process... then, said Justice Sotomayor:

"But legal reasoning is not a mechanical or strictly linear process."

The Court seems to have missed the boat, there. Legal reasoning is not always a linear process; sometimes, lawyers make jumps of intuition. Sometimes they try to extend the law. Sometimes they make an allegation in a complaint, an allegation that is 100% allowable under, say, Long v Shorebank Development Corporation, but they don't need to put that citation into their complaint, and then, later on, because they didn't put that into their complaint, the Court thinks that they should not have made such an allegation -- even though the Court never gave the attorney a chance to litigate the question of whether Long made the allegation allowable...

... I'm just sayin'...

Anyway, legal reasoning doesn't always appear to be straightforward, but the procedures designed to make sure reasoning is as good as possible is. Consider two hypotheticals:

Debt Collector A, to make sure his legal reasoning is sound, does this: every day, he comes into his office and reads the updated case reports from his state and federal courts to see if any cases have come out interpreting the FDCPA or related laws. He attends monthly training sessions at his firm where the FDCPA and developments related to it are discussed. He attends 15 hours a year of continuing education, all of it related to the FDCPA.

Debt Collector B, meanwhile, doesn't pay much attention to the FDCPA at all; when he is assigned a file to collect on, he reviews the file and sends out a letter. When he gets a claim made that he's violated the FDCPA, he googles the statutory reference, reads two or three articles about the law, and sends a letter back to the debtor denying he's done anything wrong.

Assuming that both debt collectors make the same mistake of law, should both be equally penalized? Under Jerman, they will be - because no amount of learning about the law and keeping up with it will protect a debt collector from being held liable for making a mistake about the law.

Here's the real problem I have with that, though: As I hinted at in the foregoing, sometimes lawyers have to make judgment calls about the law. Sometimes lawyers have to look at a case that's on the margins of an area of law, a claim that isn't clearly allowed... but isn't clearly disallowed, either. In those cases, a lawyer runs the risk that the Court is going to rule against his position -- to say he was mistaken.

If a lawyer, in good faith, brings an argument that he believes is a good one -- but he's wrong, and wrong simply because a judge rules against him on a new area of law -- should that lawyer be held liable under the FDCPA? The Carlisle firm raised that as a prospect under the Court's ruling, a prospect the Court did not rule out, noting only that a lawyer can be shielded from liability for factual errors, not legal errors -- and ruling that lawyers shouldn't worry so much, because there may be no real damages for errors they might get sued for

That's not really a question the US Supreme Court should answer: that's a policy decision, one for Congress to make, about how much we want lawyers and debt collectors to push the envelope. What the Court did, in Jerman, is decide that Congress had made that policy decision. The Jerman decision says that Congress decided that mistakes of law aren't "bona fide" errors... and I'm not so sure that Jerman is right -- not based on Sotomayor's interpretation so far, because she compares apples to oranges: She looks at the procedures used to avoid calling someone at the wrong time, and finds them orderly, but then looks not at the procedures for legal research, but at the end result.

The Court fares a little better when bolstering its conclusion about mistakes of law by looking at the safe harbor provided by an FTC opinion: The FDCPA provides that a debt collector can't be sued if the debt collector was acting in good faith in conformity with an advisory opinion of the FTC, and that is a better basis for holding that a mistake of law isn't a bona fide error than anything else the Court came up with: The FDCPA provides an explicit mechanism for seeking guidance, and if you've sought that guidance, you'll have better protection from being sued.

Of course, the FTC language itself doesn't say anything about mistakes of law, and there's no reason the FTC safe harbor couldn't itself apply only to clerical-type errors. It's possible to read the entire FDCPA as providing protections for mistakes of law, or no protections for mistakes of law. A debt collector could just as easily seek FTC guidance on, say, the number of clocks it must have in-house to avoid liability for calling at the wrong time -- a Sotomayor-esque bona fide error -- as he or she could on whether the FDCPA allows a debt collector to require debt disputes to be in writing. So the fact that the FTC can advise a debt collector in and of itself doesn't really settle the question of whether Congress intended a mistake of law to be considered a bona fide error.

Nor does the final nail in the Court's structure help much, either: The Court looked at the bona fide error defense allowed under TILA, and noted that no court had ever held, under TILA, that a mistake of law was a bona fide error -- and, noting that, decided that Congress, in using the same language in the FDCPA, must have adopted the construction under TILA.

The problem with that is that Jerman cites to cases that actually go both ways under TILA -- and do not clearly settle the issue, especially when one considers that Congress later amended TILA to expressly exclude legal errors as bona fide errors: In 1980, Congress (knowing, as the Court assumed, of the prior TILA decisions saying a legal error was not a bona fide error under TILA) passed a law ... which said that legal errors were not bona fide errors under TILA. Sotomayor suggested that Congress was merely codifying the rulings at that time, but doesn't explain why Congress didn't do the same for the FDCPA.

Sotomayor then finds additional justification for the Court's ruling by Congress' habit, in the past, of expressly excluding legal errors from bona fide error defenses, which is a roundabout way to support this holding; if Congress knows how to write language expressly excluding legal errors from mistake defenses, why didn't they put that into the FDCPA? The Court doesn't explain that, either.

The Court then balances out the policy concerns by noting that the FDCPA is intended to curb abusive debt collection practices and that imposing a no mistake of law requirement will further that policy -- but, again, that premise is based on the idea that there are not procedures which will show that a mistake of law was a bona fide error; in the race to the bottom hypothesized by Jerman, no collector would ever try to comply with the law; but allowing a mistake of law to be a bona fide error wouldn't immunize debt collectors who hire a lawyer, and wouldn't immunize all lawyers, either: A court (and plaintiff) would still be free to investigate what procedures were actually in place to ensure that mistakes of law didn't happen, and, overall, lawyers would still have the same incentive to avoid mistakes of law -- namely, lawyers want to win cases and not get sued. A mistake of law, whether unintentional or not, causes a lawyer to lose a case, and get sued. (Ask a defendant in an FDCPA case whether it was worth it to win on a bona fide error defense, and you're likely to hear "It was better than losing, but not by much.") Defendants who make mistakes under the FDCPA face a lawsuit, and generally, at best, will incur substantial time-and-money costs; rarely does a defendant get awarded fees for improper FDCPA suits. So allowing a defendant to defend such a suit based on a mistake of law wouldn't necessarily cause lawyers everywhere to cry Damn the torpedos and begin filing suits.

(Justice Sotomayor fretted a little about the mechanism of allowing a mistake-of-law defense, noting that Courts would have to decide what procedures, exactly, are enough, and who must follow what procedures -- but that's not a reason, either, to rule that mistake-of-law isn't a defense, since that's exactly what Courts do now, with mistake of fact defenses.)

The US Supreme Court, it is often noted, is not last because it's infallible, but instead is infallible because it's last: its pronouncements of the law are right because nobody else can say they're wrong. (Except Congress, which is not likely to do anything about this anytime soon, I figure.) So the question "Did the Court get it right as to whether the FDCPA allows a mistake of law to be a bona fide error?" has to be answered Yes, because the Court has said that's the way to answer the question.

I'd have ruled the other way -- but I'm not on the Court, so my views on mistake of law don't carry the same weight as Justice Sotomayor's, which is too bad for her, it turns out -- because the Justice made her own mistake of law.

It's true: The US Supreme Court was wrong about the law, in the Jerman opinion. So the Court is not infallible, either: Despite being last, the Court can also be wrong, as Justice Sotomayor was in this opinion.

The Jerman majority opinion says this:

Several States have enacted debt collection statutes that contain neither an exemption for attorney debt collectors nor any bona fide error defense at all. See, e.g., ... Wis. Stat. §427.105 (2007–2008).

She's wrong: While section 427.105 doesn't include a bona fide error defense, the Wisconsin Consumer Act does -- it's at section 425.301(3), which says:
(3) Notwithstanding any other section of chs. 421 to 427, a customer shall not be entitled to recover specific penalties provided in s. 425.302 (1) (a), 425.303 (1), 425.304 (1) or 425.305 (1) if the person violating chs. 421 to 427 shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

Section 427.105, which Justice Sotomayor cited to, expressly allows remedies under section 425.304(1); but those remedies are not available if the defendant's violation was the result of a bona fide error; Justice Sotomayor's mistake of law about what Wisconsin does or does not do cannot take away a remedy that the Wisconsin legislature allowed to WCA defendants.

Weird Lawsuits: 2

Time for some more weekend fun: Weird lawsuits. Today's is Griffith v. Griffith -- as in Andy Griffith v. Andy Griffith:

This case began when a Wisconsin man, William Harold Fenrick, wanted to run for Sheriff of Grant County in Wisconsin... so he changed his name to Andrew Jackson Griffith, and ran for office under that name.

That prompted the "real" Andy Griffith -- or I should say the first Andy Griffith -- to file a lawsuit in federal court. (He filed it under the name Andy Griffith, even.) Among the things that had First Andy upset, besides the use of the name, was Fake Andy's references to Mayberry in his campaign -- claiming, for example, that Mayberry never had a speed trap.

(Also, Fake Andy used the slogan Andy Griffith For Sheriff on, among other election paraphernalia, condoms.)

While the fact of the lawsuit was widely reported, what got a lot less notice was the decision in favor of the defendant -- the fake Andy Griffith.

First Andy sued for violations of federal law, the Lanham Act, which protects people's trademarks from claims of confusion. (I'm roughing that out; I'm not a trademark lawyer.) The Court -- Judge Shabaz -- found "not a scintilla of evidence" to support that claim. Not only that, but the statute under which First Andy sued has an express safe harbor that allows people to use a trademark for noncommercial purposes: any speech that is not purely commercial is protected from a claim of infringement, according to Judge Shabaz's opinion -- and he cited to a case involving the AFLAC duck, so you know he was right.

Judge Shabaz then found that there was also no way that First Andy could have suffered $75,000 in damages -- necessary for a federal court to have jurisdiction over the rest of the case. First Andy earns about $5,600 per year, he noted, in appearance fees, and there was no evidence that memorabilia sales had suffered; plus, the fact that Fake Andy ran on a campaign touting First Andy's morals prevented any real harm to his reputation.

So, if you're planning on running for office, you might just feel free to use anyone's name as your own. I intend to seek a position on the school board next year -- just as soon as I change my name, legally, to Barack Santa Claus Ronald Superman Reagan Obama. I'm a shoo-in!

A Six Million Dollar FDCPA case? Not really. (What's My Case Worth?)

When is an FDCPA case not an FDCPA case?

When it's the Stark v. EMC Mortgage case -- a case that's widely reported on various bulletin boards and other sites as a Six million dollar FDCPA case.

Here, and here, are two examples of the misreporting of this case -- a case that's much more about arbitrator's powers than about the FDCPA, and a case that by no means is a Six Million Dollar FDCPA case. (The latter of those two examples is particularly egregious, in that it's apparently quoting a newspaper report which misunderstood the case.)

In Stark, two homeowners took out a $57,000 (or so) mortgage -- and then defaultede when their business went under. They filed bankruptcy, and their bankruptcy lawyer got in touch with EMC and said he represented them and "that his representation extended beyond the bankruptcy proceedings."

(Remember, not so long ago, when I posed the question about whether a lawyer's open-ended claim of representation would bar contact with his clients? I haven't come up with a definitive answer yet, but this case helps shed some light on the question, because here, the lawyer's apparently-broad claim protected his clients... although I don't know what, exactly, the lawyer said.)

EMC was considered a "debt collector" because it had been assigned the note just after the default -- so it wasn't supposed to contact the Starks after hearing from Mr. Bankruptcy Lawyer. But it did so anyway -- "several times," (as many as 10) according to the Eighth Circuit Court of Appeals.

EMC did more than that, as a matter of fact-- they tried to deal with the Starks, but they also broke into the Starks house and posted a sign in the front window of their house claiming the house had been secured and winterized and was not for sale or rent.

(It seems that one or both of the Starks no longer lived in the house at that time, because the Court notes the agent "then contacted Mrs. Stark at her apartment.")

And EMC did that -- broke into the house -- after the Starks had sued them. The Starks had sued after a few contacts with them instead of their attorney, and the case had been sent to arbitration by EMC. It was after the parties were already in litigation over the FDCPA violations that EMC broke into the house -- causing the Starks to amend their complaint to seek punitive damages for that intentional tort.

The FDCPA does not allow punitive damages - -the Starks never sought, and never could have sought punitive damages for FDCPA violations.

The arbitrator awarded the Starks, for the FDCPA violations, $1000 each in actual damages, $22,780 in attorneys fees, and $9300 for the cost of the arbitration.

The arbitrator then considered the forcible entry and found that worthy of punitive damages -- for the intentional tort, not the FDCPA violations -- and awarded $6,000,000.

The main focus of the arbitrator's attention was whether or not punitive damages could be awarded; EMC claimed they could not, but the arbitrator found otherwise because the agreement in several places preserved the Starks' rights to seek "all damages allowed by law," but then denied the right to punitive damages. The arbitrator found this made the contract ambiguous, and then construed the contract against its drafter, EMC.

The award was challenged by EMC, and the district court initially ruled in EMC's favor; the 8th circuit reversed in a relatively simply opinion that simply found the arbitrator had acted within the bounds of discretion allowed to arbitrators. The U.S. Supreme Court denied cert, and the case was over.

It's important to remember, this was not a typical FDCPA case. It really didn't matter, in the end, that EMC was a mortgage servicer or lender. While that lent context to the disagreement, it seems to me that anybody who broke into a house as a means to furthering litigation would end up on the wrong side of a large punitive damage award.

One thing I noted, too -- no award was made for "emotional distress" from the violations. It would violate the FDCPA to break into someone's house, and "actual damages" include emotional distress from the violation. It's not clear from the sources I read why the Starks didn't claim emotional distress (although if they didn't live in the house, that may be one reason.)

What the Stark case does, though, is highlight the importance of looking outside the FDCPA and related laws in these suits, if you're a plaintiff or plaintiff's lawyer -- had the Starks contented themselves with claiming the break-in was an FDCPA violation, they'd have walked away with $2,000 instead of $6,002,000.

(It also highlights the importance of not believing everything a blogger says about a case.)

(Excepting me, of course. You can believe everything I say about a case.)

A couple of Latin phrases, a conspiracy... and some vague attempts at applying this all to you.

What can you, the average, everyday friendly neighborhood consumer, do when a company's employee rips you off?

That all depends on just what it is the employee did to rip you off: In some cases, the employer may be responsible for the rip-off-age; in others, the employee is your only lawsuit target. It all depends on whether the loftily-named Doctrine of Respondeat Superior applies.

The Doctrine of Respondeat Superior is Latin for employees' actions can get an employer sued if the employee was acting within the scope of his employment. It's that last little bit there -- the scope of employment -- that's really the crux of the matter.

Consider James Cape & Sons Co. v. Streu Construction, a 2009 case decided in the Wisconsin Court of Appeals.

James Cape & Sons, a road construction company, employed a guy by the name of Beaudoin, whose job it was to submit bids for state contracts and manage work crews. In 1997, Beaudoin got himself involved in a little corporate espionage: he started providing Cape's information to a competitor, Streu. The scheme was designed to let the bids be adjusted to guarantee that certain companies got certain contracts.

Cape discovered the "scheme" and reported it to the FBI, resulting in federal charges for violating the Sherman Antitrust Act (an Act which turns out to be more than just "a really boring part of your high school US History class.) Cape then sued Beaudoin, Streu, and Streu's employee (a guy named Vinton), claiming that the fraud led to its bankruptcy.

Streu and Vinton, in a novel twist, claimed respondeat superior protected them -- saying that Beaudoin's part in the plan was intended to help Cape, at least a little, so that Beaudoin's actions were attributable to Cape. That, in turn, according to Streu, led to a second Latin phrase, in pari delicto -- Latin for you're both equally wrong, so shut up.

In short, Streu's defense was Cape, your guy was trying to help you, too, so we're all criminals here.

Wonder how that worked out for them? Not well. Streu premised its claim on Beaudoin's testimony that he, Beaudoin, was giving Streu information to help Cape by preventing Cape from being spread too thin; he just wanted to keep his company from having too much work, in other words.

Cape argued that it didn't get any benefit (because, it said, Beaudoin was lying), and that no benefits had been proven. Streu responded by saying that Cape had the ability to control Beaudoin and so must be responsible under respondeat superior.

The Court of Appeals narrowed things down to the proper scope: The focus is on the employee's intent. If the employee intended at least in part to help his employer, respondeat superior is supposed to apply. The parties all focused on whether Beaudoin intended to help out Cape, and if so, whether that meant that Streu wasn't liable to Cape.

So novel was that argument that the Court of Appeals had to go all tye way back to 1866-- which, it turns out, wasn't just the second most boring part of US History; it also was when a prior case, Zulkee v. Wing, was decided.

The ruling of Zulkee v. Wing, which, being decided in 1866 was probably briefed on the back of a shovel in charcoal, was that respondeat superior doesn't apply when it's the employer suing the employee -- a ruling the Court of Appeals then shoved into the 21st Century by noting that allowing the Beaudoins of the world to get away with this stuff would wreak havoc:

What a world it would be if employees were allowed, without recourse, to decide for themselves the means and methods an employer uses to earn the revenue projected in its plans.... Allowing anarchy to control employer-employee relationships is not a policy the courts have endorsed. And we do not do so now.

Having decided that anarchy isn't really a policy that Wisconsin courts can get behind, the Court of Appeals then decided that Streu couldn't "piggy back" their claims onto a defense that Beaudoin couldn't raise:

We are having none of it. If it does not work for the employee, it cannot work for the employee's co-conspirators, either.

The Court then went on to find that Streu and Vinton were, in essence, just as liable as Beaudoin -- rather than getting out of liability, they got themselves into liability via their collusion.

It's interesting to note that the Circuit Court -- Racine County -- originally sided with Streu & Vinton & Beaudoin; that decision was reversed by the Court of Appeals after Cape's appeal.

The lesson for you, consumer-- is to make sure that the employee doesn't make you a part of the scheme. If you're at Wal-Mart, or ordering aluminum siding, or otherwise involved in something that may end in a scam and a lawsuit, keep your own hands above the table and your nose to the grindstone, or something like that.

As long as you're not part of the conspiracy, you should be able to hold the employer responsible for the employee ripping you off -- provided that the employee had some intentions, at least, of helping out the employer.

I should say something legal-ish here. Like "res ipsa couponitur."

Is there still an economic crisis going on? I don't know -- I'm not a leading economist or some other person who makes his living spewing out predictions that we can't possibly have the knowledge to make.

What I do know is this: Economic crisis or not, coupons are always welcome: everyone wants to save money on the things they already are buying, and everyone wants to have an excuse to try something new, and coupons do both those things. Save 50 cents on the soda you were going to buy anyway... thanks to coupons. Try that new kind of yogurt, the kind that comes with nuts to mix in that you wouldn't ordinarily buy but now you can get a free sample... thanks to coupons.

And you can find those coupons you want, very easily, at the all-newly-updated Coupon Kim:

Coupon Kim's website lets you search for coupons, discounts, online savings, and even free stuff (like free goat cheese, which seems weird... but weirdly right) and use them right away. Printable coupons, online codes, you name it, they're right there on the site, waiting for you to save money. No more scissors-and-Sunday-paper routine. No more hunting for web deals. Just go to Coupon Kim's and use it (like I did to get free book offers the other day).

And you can even sign up to get email alerts when new coupons are offered. Let's see an economist do that for you.

2MP: The program you never heard of might just save your home.

In all likelihood, your servicer or lender continues to simply ignore the Making Homes Affordable program it signed up for or was forced to participate in... at least based on my experience so far.

But that hasn't stopped the Obama Administration from trying to get companies to actually comply with a federal law they opted into, and it hasn't stopped the government from expanding the program to try to help almost all homeowners.

The latest effort is an increased awareness of, and changes to, the HAMP "2nd Lien" program.

That's right: HAMP has a second lien facet to it. I'll bet you didn't know that. I'll be nobody knew that (except the servicers who receive the directives to implement it.)

HAMP's 2nd Lien program actually went into effect in August, 2009, and requires that a HAMP-enrolled servicer or lender of the 2nd mortgage on a house modify that loan whenever the first loan is modified under HAMP. Modifications can even include completely extinguishing the lien.

More information is available here if you'd like.

Okay, maybe MADNESS is a little over-the-top; but it's still not a very good case.

Today's case begins with the idea of reopening a case after judgment, and then descends into madness. Let's start with the easy issues, first:

If you were to guess at what the absolute last possible time the law would let you amend your complaint would be, what would you guess? Just at the end of trial? Just before the entry of judgment? Just before appealing?

Or, maybe, nine months after the case is over?

Patrick Sweeney thought nine months after the case was over was a fine time to amend his complaint for foreclosure; the Circuit Court (and the Court of Appeals) felt otherwise -- but not because it was way too late, as you might guess.

And along the way to that decision, the opinion, and the case, Sweeney v. Petska, becomes far more interesting than a simple foreclosure case ought to be. The Sweeney case is one of those cases where the appellate opinion makes me think There must be something more going on here, because I'm left with more questions about the facts than I have answers.

The facts we get begin with this: in January, 2003, the Petskas, William and Kimberly, gave Sweeney a mortgage to secure a debt of $174,459.96.

(That specificity in the appellate opinion is specificity without a purpose; in a circuit court record, it might be important to note that the debt is exactly $174,459.96. In an appellate opinion in which the exact amount of the debt is unimportant, why not just say "about $175,000?")

Kimberly Petska's mother, Ruth Baker, also signed on the mortgage and note as a partial guarantor -- guaranteeing up to $65,000 of the debt. As we'll see, there was other security given, it seems, but that doesn't get mentioned upfront in the opinion.

Instead, the appellate opinion then says that in December, 2006, Sweeney "commenced a foreclosure action against William, with no service of the summons and complaint upon Kimberly or her mother."

That's how they phrased it, which is a weird way to put it, because if Sweeney had foreclosed only against William, then he doesn't need to serve a copy of the summons and complaint on Kimberly or her mother; they're not parties to the action, and people who aren't parties to an action don't get served with pleadings.

But also weird is the fact that Sweeney foreclosed only William: why foreclose only against one party to a mortgage? The only reason you might want to do that is if the other parties to the mortgage have no interest in the property -- which is possible, if, say, the property was titled in William's name and was solely William's property and Kimberly had signed on the mortgage solely as a suspenders-and-belt kind of signature, making sure that her interest in the property would be alienated if necessary (but without really thinking she had any interests to give away.)

Kimberly might have an interest in the property even if her name isn't on the deed, depending on when she and William were married and how they paid for the property and whether or not they have a Pre-Divorce Agreement [a Pre-Divorce Agreement is what people who are less sophisticated than I am call a Marital Property Agreement.]. And under 706.02(1)(f), Stats., Kimberly would have to sign a mortgage in most cases or the mortgage wouldn't be valid. So maybe the parties thought Kimberly had an interest in the property originally.

But if Kimberly had an interest in the property, why not foreclose against her?

Trying to answer those questions, I went ahead and checked out the case record on CCAP, where I saw that Kimberly Petska wasn't identified as Kimberly Petska anymore; she's now Kimberly Oemig; it appears that Kimberly and William were divorced in 2004, which would be one reason why Sweeney didn't sue Kimberly Petska in the first place -- if Kimberly was not awarded the property in the divorce, then she might no longer have an interest.

Sweeney got a judgment of foreclosure about 5 months after suing (and four months after serving the complaint on a "Truck Stop Co-Op," another unexplained feature of this case.) Sweeney then, according to the Court of Appeals "made changes to the property and leased it to a third party."

The opinion never says what property, or type of property, was being foreclosed on, either. That may or may not be important; I just don't know. Wondering about that, I checked, again, on the court records, to find out when the sheriff's sale was held; since the case does say that Sweeney waived deficiency, I could have told whether this was homestead property or not by looking at the redemption period, but there's no judgment of foreclosure entered (only an order for judgment), and there's no notice of sheriff's sale, and no sheriff's report of sale, and no confirmation of the sheriff's sale, all (usually) required steps in a foreclosure case.

In fact, a footnote says that there hasn't been a sheriff's sale yet; the Court of Appeals suggests that Sweeney might be arguing that the lack of a sheriff's sale supports his motion to reopen (and then rules against that suggested potential argument.)

Back to the Court of Appeals' opinion:

"In January, 2008, Sweeney filed a motion to reopen and amend the judgment to remove the language waiving a deficiency judgment. Sweeney also moved to amend the complaint, seeking to add both Kimberly and her mother as defendants and seeking additional property used to secure the promissory note."

Wait, what?

The circuit court denied both motions -- refusing to reopen and refusing to amend the complaint. Sweeney then appealed, but appealed only the motion to amend his complaint.

Wait, what?

That should mean that his whole case was doomed. Sweeney had a judgment -- resolving the entire action. But he wanted to amend his complaint to add in new parties and new claims -- despite the fact that the judgment was there.

How was that supposed to work? And, more importantly, why was that supposed to work?

Let's assume, for the moment, that Sweeney could amend his complaint to add in Kimberly and Mom-In-Law, and sue them for foreclosure (which he wouldn't need to do because he's already got the property and is leasing it out) and then also sue them for breaching the note and seek deficiency judgments and ask to seize other property securing the note.

That might be possible, because in a regular civil case, it's possible to get judgment against one party while the case continues against the others; I have lots of cases where one party has defaulted or settled but the case goes on against the others. There's no automatic bar against that; Sweeney could have filed a suit against William, and then, say, a month later, added in Kimberly and her mother as parties, doing so without even needing permission from the Court to do so.

So the Court could have, without any real problems, amended the complaint, I suppose -- if it felt that it was fair to do so. The considerations for the Court were whether there would be any undue prejudice to the parties, and whether "justice" requires that the amendment be allowed.

The Circuit Court, in deciding against the amendment, apparently decided that the waiver of deficiency judgment (against William), and the difficulty in calculating what the deficiency would now be (since Sweeney had made changes to the property), were good enough reasons to refuse to let Sweeney sue Kimberly and her mother.

Wait, what?

Why should the remedies sought against one party affect the ability to go seek remedies against another party? Sweeney could have sued all three in the first place, and sought foreclosure (without deficiency) against William -- although doing so would have been a bad idea, because sometimes waiving a deficiency judgment can result in releasing the guarantor on a deal.

Which might explain why William now wanted to not waive deficiency, or rather, to go back and amend and unwaive it -- because waiving that deficiency might have released the guarantor.

But Kimberly wasn't a guarantor, she was a co-obligor, who should not have been released simply because Sweeney released William from the deficiency.

Or, if there was a reason for Kimberly to not be held liable -- say, something in the note or mortgage -- based on a waiver of deficiency, that reason doesn't appear in the opinion. (The overly-specific figure of $174,459.96 does appear in the opinion, but not the reason for releasing Kimberly, if Kimberly was released.)

About the waiver of deficiency -- if it happened. Remember that the records show no sheriff's sale (apparently) and the Court of Appeals in a footnote expressed the belief that no sheriff's sale had yet occurred. If that is the case, how did Sweeney get possession of the property to re-lease it? If the property was abandoned, Sweeney could get a 2-month redemption period (the shortest allowed by Wisconsin for mortgage foreclosures)... but that means he could sell it in two months, not just take possession.

Otherwise, to take possession, Sweeney ought to have had a court order, or a receiver appointed, or some other mechanism to let him walk in there, change the property, and lease it. No such order appears in the record, and apparently nobody involved ever said "Wait a minute, how does Sweeney even have the right to lease this property, whatever it is?" (And, in general, waiving deficiency does not let you get a receiver, since waiving deficiency means that you are agreeing to let the defendant remain in possession during the pendency of the action and keep all rents and profits.)

It's not clear, then, how Sweeney even got possession of this property prior to a sheriff's sale. But there's a bigger question: Why did Sweeney bother asking to amend the pleadings?

He'd never served Kimberly or her mother-in-law, as of January, 2008, when he sought to reopen and amend the complaint to sue them. They weren't parties to the original action. But they had signed a note and guarantee, in or after January, 2003 (according to the barely-there factual statement in the Court of Appeals' opinion.)

That means that as of January, 2008, the statute of limitations had not yet run on claims against Kimberly and her mother-in-law for breach of contract; Sweeney was free to simply file a lawsuit against Kimberly and her mother-in-law and claim they were in breach of the contract promising to pay him, and seeking a money judgment against them; he could seek to replevin the goods that he'd used to secure his loan, too...

... so far as I can tell. There's nothing in the opinion that says for sure that Sweeney couldn't sue Kimberly and her mother, and no court could have barred him from filing such a complaint.

The circuit court did suggest that such a claim might be barred; it's ruling (quoted in part) said that suing the defendants now would subject them to "loss of assets that are now theirs and right now free and clear because of the waiver of deficiency."

That appears to be wrong -- so wrong, in fact, that it's the exact opposite of the law: the actual law is that waiving a deficiency judgment against one piece of collateral releases the debtor from any deficiency judgment on the underlying debts, but doesn't release the collateral.

Or, as the Supreme Court of Wisconsin put it back in 1984:

Accordingly, we hold that a waiver of personal deficiency does not imply waiving the right to make further applications of the remaining security toward the debt. The Bank is entitled to foreclose on the remaining mortgages securing the debt, since the primary obligation for the debt still exists until all the security has been applied toward it.
That's from Glover v. Marine Bank of Beaver Dam, and it seems to me that the Glover quote says that the circuit court was wrong, and that the waiver of deficiency did not release the assets.

If Sweeney could have simply filed a separate suit, why did he (through a lawyer) go the motion-to-reopen route?

That's not clear, just like nothing in this case is clear. There's an "Answer And Counterclaim For Dismissal" filed on in April, 2008, but I don't have a copy of that (and there's no such thing, really, as a counterclaim for dismissal; it should have been a motion to dismiss). That was accompanied by a brief, but I haven't been able to review that, either.

Maybe in that brief there's a bunch of good reasons not only supporting the denial of the right to amend, but showing why a separate action against Kimberly and her mother would have failed, too. But that information isn't in the Court of Appeals' opinion, and wasn't quoted from the circuit court's decision, if it was in the record in the first place. So however good those reasons were, they were not the reasons the Court of Appeals opted to highlight in upholding the trial court's decision.

Instead, we get simply the unpublished opinion supporting a trial court's decision to deny the right to amend a complaint because of the remedies sought against another party. That's the gist of the circuit court's decision, as quoted in part by the Court of Appeals: because the deficiency was waived and it would be hard to calculate it now, you can't add in new parties.

That's a troubling decision, for me, because of what it suggests might happen. Suppose Sweeney had sued Kimberly and Mom from the outset, and had served them, so they were parties to action in the first instance. Suppose that William, who (apparently) had the property then defaulted, as he did, and Sweeney took over the property, as he did. In that scenario, the case would then be continuing against Kimberly and Mom-In-Law, with Sweeney having every right to proceed. Suppose Sweeney then came back, in January, 2008, with the case not being reopened, but simply continuing, and said "I'd like to amend my complaint to seek more money and property from Kimberly."

The circuit court's ruling, denying reopening-and-amending, would have equal force in that instance -- it would still be hard to calculate a deficiency. But that procedural stance would make more clear that it was the remedy against one defendant that was now barring the remedy against another defendant. And that is not the law, not always; sometimes a claim against one defendant releases another, but that doesn't always happen.

The fact that a judgment was entered against one defendant should have been almost completely irrelevant to the case. I say almost because it wasn't completely irrelevant; the judgment's entry was relevant to the issues but in a way that nobody else bothered to consider: If Kimberly and Ruth were sued by Sweeney, they might have had cross-claims against William, and many of William's issues had already been decided, which may have made it difficult -- and unduly prejudicial to Kimberly and Mom-in-Law -- to hear those issues.

The circuit court didn't say any of that, and the Court of Appeals didn't decide any of that, either. And that might not have been such a decisive factor, since defendants (junior lienholders) are added to foreclosure cases all the time after the judgment of foreclosure is entered.

And, as I started out with, nobody said "nine months after the case is over is just too long to amend a complaint and start over," a ruling that would have been on equally shaky legal ground but which would have made sense in the context of the case, at least; if you're going to just make up law, why not make up a bright-line rule that would rarely apply to any other case?

The Sweeney v. Petska case didn't answer any questions, in the end. There's an old saying that good cases make bad law, but bad cases make bad law, too, and this is one of those. Nothing in this case appears to have happened the way it should have, and it's hard to argue that the result is fair, to anyone, least of all to litigants trying to decipher what to do in the future.

Want to read something that's really fascinating?
Read
Lesbian Zombies Are Taking Over The World!:
in the future, everyone will do what their octopus tells them to do, and the fate of the 73 dimensions will rest on the slim, sexy shoulders of Rachel... Queen of the Lesbian Zombies.

It's a catchy phrase, if not exactly the most erudite way it could have been put. (Interesting Judicial Comments)

Time for a little weekend fun.

Back in 1978, in the case of State v. Waste Management of Wisconsin, Inc., the Supreme Court of Wisconsin was confronted with an appellant who had raised 29 separate challenges to a conviction. The Court, in an opinion authored by Justice Robert W. Hansen, grouped the challenges into five categories, decided those categories and said that anything they hadn't discussed "can be deemed to lack sufficient merit or importance to warrant individual attention."

The opinion explained that approach with its opening line, which was this:

An appellate court is not a performing bear, required to dance to each and every tune played on an appeal.

Since that time, the phrase has been cited in 128 subsequent opinions -- an average of 4 per year, making it (in my opinion) one of the most-cited phrases in Wisconsin legal history.

Are they already giving up on the modifications program?

Here's some news you maybe don't want to hear or use: Amidst reports that the "Making Homes Affordable" program is being underutilized, the Obama Administration last week announced a couple of reforms to that law.

Now, unemployed homeowners may qualify for modifications while they look for a job, with lower payments for up to 6 months while the homeowner looks for work.

And, servicers are required to consider principal write-downs. That's new, and that's a big deal, because they now have to consider not only whether your interest rate should be lowered but also whether you should have to pay back the total amount you borrowed.

And they've set up better timelines to make sure you're getting responses back in a timely manner.

And, as a last resort, if you don't qualify for Making Homes Affordable, and decide to do a short sale or deed in lieu of foreclosure, there may be cash payments available to help you move.

Hopefully you don't need that extra help. And hopefully your servicer will actually comply with the law, as so far most of them aren't.

Which keeps guys like me busy.

Read the whole fact sheet here.

You're about to get taken advantage of... for the second time.

Are class actions worth it for you?

Do they do anything... for you?

Are they even fair?

Those are the questions I ask myself a lot, and those are the questions I answer in the negative whenever clients or potential clients ask me about class action lawsuits.

"They do a lot for the lawyers," I tell them, "And, so far as I can see, very little for anyone else."

I say that because I'm not aware of anyone, ever, individually benefitting from a class action lawsuit -- and I was even a member of a class, once. I was a member of a class several times, actually, but I opted out all but one time. The time I didn't opt out, of the compact disc class action lawsuit, I never actually received my $13.86.

Now, a new class action lawsuit promises to make someone else a lot of money while (probably) not doing very much to help you. On Friday, a class-action lawsuit was filed against Associated Bank, alleging that the way the Bank handles overdraft fees is illegal.

The allegations -- which I haven't read yet, as I'm still trying to track down the actual complaint -- are apparently that the way the Banks "re-order" or organize transactions is designed to maximize overdraft charges.

The example given in one news story is this: Suppose a customer starts the day with $50 in her account. That customer then does this:

Withdraws $10 by ATM.
Spends $10 using the debit card at the store.
Withdraws $10 by ATM
Withdraws $10 by ATM.

Then, later that day, the customer deposits $100, and finishes the day by spending $100 using her debit card at the store.

If the customer did those things, in that order, there should be no charges -- there was always enough money in the account. But Associated Bank is accused of ordering those transactions differently: Deducting the $100 withdrawal, then the four $10 withdrawals and only then crediting the $100 deposit -- resulting in up to five overdraft charges.

(These are allegations only, remember, and I'm repeating what a news article repeated about the allegations. Nothing's been proven yet.)

Associated Bank isn't the only bank being sued; there are claims against Bank of America, Citibank, JPMorgan Chase, Union Bank, U.S. Bank, Wachovia and Wells Fargo, all of them consolidated to a federal court in Miami, apparently.

The lawsuits have already survived a motion to dismiss; further activity will be updated.

But what I'm concerned about, more, are a couple of things.

First, this: I'm not sure this is going to help you much. And by "you" I mean you, the individual reading this. If you've been the victim of illegal overdraft charges and bank transaction-ordering, you may have lost a lot of money. But class action suits rarely pay off in actual damages. Many times they resolve by offering discounts to you to buy new products from the company the class sued. Sometimes, they "resolve" by paying money to charity. None of that puts money back in your pocket, so you're out money from the bank's actions (if they acted illegally) and you're out of luck because your settlement just got shipped off to someone else.

Second, there's this: As a bank customer, you and I and the other guy are included, potentially, in a class-action suit heard in a Miami court. That's a suit you may not even know about (I read this type of news and I hadn't heard about this until today, when my wife told me about it).

What that means is that you might lose your individual right to sue your individual bank, because if you don't opt out of the class action suit, that suit is going to adjudicate your rights. It's going to be settled, with tons of money going to the lawyers and a relatively nominal sum (if any) going to the people actually affected... and you may, at best, get a modest settlement, but at worse, you'll be bound by a case you didn't bring, that you weren't a part of, and that you didn't even know about. (Class action suits are required to try to notify the class members, but there's no requirement that they actually notify every single person affected.)

That doesn't seem fair to me -- to have my rights as a bank customer/potential litigant affected by a lawsuit in Miami handled by lawyers I didn't choose in a jurisdiction I can't get to easily, and it really doesn't seem fair to me that after all that, I won't even get anything out of it.

My advice is to do what I do: If you get a class action notice, or hear about a class action notice, opt out. Always opt out. Then, call a lawyer who practices consumer law and ask why you got the class action notice, and ask if you can sue individually for the same thing. Many states have consumer-friendly laws that allow consumers to have their fees paid (under certain circumstances) by the other side if they win -- so you might get to opt out of the suit and still get a settlement, at no cost to you... but you'll also have a chance to actually get your compensation for whatever harm was caused.

Then again, legislators only work, like, 3 hours a year or something, so don't feel too bad for them.

If I were a legislator, I might sometimes wonder why I bothered coming in to work, given that courts seem to disregard the statutes the legislature works (?) so hard (?!) to come up with.

Among the more recent examples of such disregard comes a case that uses the idea of equity to ignore the plain dictates of the legislature. On March 3, 2009, the Court of Appeals issued an unpublished decision in Chase Home Finance LLC v. Pearson, 317 Wis.2d 733, 768 N.W.2d 64.

In Pearson, Chase had foreclosed on a property and a sheriff's sale was held. At the sale, Pearson outbid Chase, bidding $265,000 on the property. By law -- not equity, but law -- Pearson had ot put down $26,500 and then pay the remainder of the balance due not more than 10 days after the confirmation of the sale.

The sale was never confirmed, though: Pearson inspected the property and said it wasn't worth more than about $140,000, and citing various problems, asked the Court not to confirm the sale and to refund his deposit.

Chase, for some reason, didn't object to that; they agreed to a resale and the Court, after the resale, confirmed the new sale -- and then ordered that Chase should get to keep 10% of Pearson's down payment.

Chase appealed from that decision -- not Pearson, although you'd expect Pearson to have a problem with giving up $2,650 when the law says he shouldn't have to do so.

Chase's argument on appeal was that it should get the whole down payment, and the Court of Appeals quite properly dealt with those arguments by pointing out that Chase had agreed to a resale and couldn't be heard now to argue that it shouldn't have been required to sell the property.

But Chase also argued that the circuit court was wrong to award it only 10% of Pearson's down payment, an amount the circuit court ordered as compensation for Chase's costs of resale. Chase said it should get the whole amount, because the statute says that if the balance owed isn't paid, then the deposit is forfeited.

The Court of Appeals disagreed -- but for reasons that are unclear. The Court noted that the statute says that the statute in question, section 846.17, does say what Chase says it does, but also that the statute says that "if the sale is not confirmed, the deposit shall be returned to the purchaser."

And that's what the statute does say. But did the Court of Appeals correct the circuit court and remand for an order requiring that the deposit shall be returned to Pearson? It did not:

Here, even though the sale was not confirmed, the circuit court ordered ten percent of the deposit forfeited to Chase as a matter of equity.

That's what the Court said. But just to be clear, the Court of Appeals knew what the statutory requirements were, because it went on to add:

Chase's argument therefore fails because it already received more than it was entitled to under the statute.

It's unlucky for me, and my clients, that Pearson is unpublished, because I'd like to be able to wave it around in front of circuit courts and say "The Court of Appeals says that you, judge, can ignore a clear-cut unambiguous statute if you think it's fair to do so."

Pearson, being brief, doesn't say what other statutes a circuit court can ignore using equity as a guideline. Could a circuit court ignore, say, the statutory answer period, and the statutory requirement that excusable neglect be demonstrated for someone who has failed to file an answer in time, and simply hold that it's equitable to allow a defendant to file a late answer?

And if so, what about statutory time frames that can't be extended? Section 801.15 says that the 90-day period for serving a summons and complaint after filing "can't be extended." But could a circuit court, in a foreclosure action, allow a summons and complaint to be served on the 91st day, if it's a matter of equity?

After all, what's the difference between a legislative dictate that a time limit "not be extended" and a legislative dictate that a deposit be returned? Pearson doesn't say -- so at some point in the future, some clever litigant may just see what else is a matter of equity in foreclosure cases.

(Pearson also shows why unpublished decisions are a bad idea: In this case, the circuit courts and the Court of Appeals will never have to directly confront the rule they've created in that case, that a circuit court can ignore an unambiguous statute out of fairness -- in effect creating a private law that binds only Chase and Pearson. How is it fair that they're held to a standard that nobody else can be forced to abide by?)