Are you prohibited from agreeing to pay as much interest as you can in order to get someone to lend you money? (Payday Loans & Unconscionability, 1)

I thought I would take a stab at a post-header that summarized the usual payday loan argument in a slightly-different, slightly-less consumer (un?)friendly way; whenever payday loans come up the focus is invariably on how terrible payday lenders are for doing what they do, kind of the same way that whenever football players hold out on their contracts the focus is entirely on how terrible the football players are to do what they do.

But football players can be cut at any time, and not get paid for the remainder of their contract (absent guarantees, of course.) So if owners don't have to honor the contracts, why do players, I sometimes ask people.

Now take that to payday lenders: Banks will not make micro-loans, especially not to people with marginal or bad credit, even if those people are employed. I've never run into a bank or credit union that would spot me $200 for a week or two, no matter how much interest I promised to pay them.

Payday lenders will, though -- they'll lend me $200 for a week or two, or longer, depending on the laws, and they'll charge a lot of interest to do that... relatively speaking.

Because a lot of interest needs to be quantified and considered rationally. Is it a lot when considered solely as a percentage of the loan? Or as a hypothetical figure that might never be paid? Or is it actually a lot?

Here's what I mean: If you consider only percentages, everything can look big. A 1,000% increase sounds huge -- but if you go from 1 to 10, that's 1,000%; so if I lend you a buck and you give me back eleven, I charged you 1,000% interest. But I only made ten bucks.

Is that a lot? Depends, right?

What about as a percentage? If I lend you ten bucks, and make you pay me back $15, I charged you fifty percent interest -- more than any credit card. But most people, I think, would say "Well, jeez, you only charged $5."

What about that hypothetical figure? Ever look at the amount of interest you'll pay on a mortgage loan? You should. If you take out a mortgage loan at 5% annually, on, say, $200,000, you'll pay, over the life of the loan, $186,511.57 in interest alone. You'll pay back $386,511.57, total, almost half of which is interest.

But everyone agrees that 5% is a reasonable rate, right? Suppose, instead of saying you'll pay 5% interest annually, the bank was required to tell you on your mortgage that forty-eight percent of what you'll pay is interest? That doesn't sound like such a good deal, now, does it?

I bring this up because it made big news that the Wisconsin Supreme Court is going to consider whether the interest rates charged by payday lenders can be deemed by a court to be unconscionable.

Details of the case are hard to come by. Here's what I found:

The court will consider whether state statutes block judges from determining if a particular interest rate is unconscionable and, if they don't, what evidence would prove rates are too high.

The case stems from loans Jesica Mount of Onalaska secured from Payday Loan Stores of Wisconsin Inc. in 2008. According to court documents, annual interest rates on the loans varied from 446 percent to 1,338 percent.

The loan company filed a lawsuit against Mount after she failed to make her payments. Mount filed a counterclaim alleging the loans violated the Wisconsin Consumer Act because the rates were unconscionable.

(source.) None of the stories I read told how much the loan was, or how long the woman had the loan out, or whether she made interest payments or provided any other detail. That would matter if you want to know not just what the annual interest rate might be, but also how to compare it to anything else to determine whether you think the rate is fair.

None of the stories, either, mentioned what I presume is the statute under which this case is currently being considered: Section 425.107, Wis. Stats., which reads:

425.107  Unconscionability.

(1) With respect to a consumer credit transaction, if the court as a matter of law finds that any aspect of the transaction, any conduct directed against the customer by a party to the transaction, or any result of the transaction is unconscionable, the court shall, in addition to the remedy and penalty authorized in sub. (5), either refuse to enforce the transaction against the customer, or so limit the application of any unconscionable aspect or conduct to avoid any unconscionable result.

(2) Specific practices forbidden by the administrator in rules promulgated pursuant to s. 426.108 shall be presumed to be unconscionable.

(3) Without limiting the scope of sub. (1), the court may consider, among other things, the following as pertinent to the issue of unconscionability:

(a) That the practice unfairly takes advantage of the lack of knowledge, ability, experience or capacity of customers;

(b) That those engaging in the practice know of the inability of customers to receive benefits properly anticipated from the goods or services involved;

(c) That there exists a gross disparity between the price of goods or services and their value as measured by the price at which similar goods or services are readily obtainable by other customers, or by other tests of true value;

(d) That the practice may enable merchants to take advantage of the inability of customers reasonably to protect their interests by reason of physical or mental infirmities, illiteracy or inability to understand the language of the agreement, ignorance or lack of education or similar factors;

(e) That the terms of the transaction require customers to waive legal rights;

(f) That the terms of the transaction require customers to unreasonably jeopardize money or property beyond the money or property immediately at issue in the transaction;

(g) That the natural effect of the practice would reasonably cause or aid in causing customers to misunderstand the true nature of the transaction or their rights and duties thereunder;

(h) That the writing purporting to evidence the obligation of the customer in the transaction contains terms or provisions or authorizes practices prohibited by law; and

(i) Definitions of unconscionability in statutes, regulations, rulings and decisions of legislative, administrative or judicial bodies.

(4) Any charge or practice expressly permitted by chs. 421 to 427 and 429 is not in itself unconscionable but even though a practice or charge is authorized by chs. 421 to 427 and 429, the totality of a creditor's conduct may show that such practice or charge is part of an unconscionable course of conduct.

(5) In addition to the protections afforded in sub. (1), the customer shall be entitled upon a finding of unconscionability to recover from the creditor or the person responsible for the unconscionable conduct a remedy and penalty in accordance with s. 425.303.

That's a mouthful; but the statute expressly allows a court to find "any aspect of the transaction" to be unconscionable, which makes the way the media are reporting this case to be somewhat suspect -- and worrisome, for consumer advocates:

The state Supreme Court has agreed to decide whether Wisconsin law permits judges to determine when payday loan interest rates are too high.

(Source.) That may just be reporters interpreting the case without bothering to check with lawyers. But maybe not. According to the case history at the appellate level, the panel certification that sent this to the Supreme Court of Wisconsin phrased the question as:

Whether the Wisconsin Consumer Act precludes a court from determining that an annual interest rate on a short-term loan of over a thousand percent is unconscionable should be decided by the Wisconsin Supreme Court. If the WCA does not preclude a court determining that interest rates are per se unconscionable, this case presents the question of what legal standard to apply in determining unconscionability and what evidence is necessary.

That's not the official text of any order; that's just what's publicly available online at the WCCA Appellate level records. But the order is troubling: Whether the Act precludes a court from doing that? How you phrase a question matters, and the Court of Appeals appears to be taking the stance that there's something in the Act that would bar the circuit court from doing what it did; the statute, though, speaks in terms of a court's broad powers, not in terms of proscriptions of the court's broad powers.

Also not noted in the stories, but I think relevant: The payday lender is the appellant, which means a circuit court already held that the rates were unconscionable -- presumably. I haven't seen the opinions. (I emailed two lawyers involved to ask them to share information with me, as it's cumbersome and expensive to get those records myself.) So getting the Court of Appeals to agree to phrase the question in a lender-friendly way may help even the field for a lender who (apparently?) lost round one; the question the Court of Appeals used reads almost exactly as I would have written that question if I were briefing this for the payday lender.

Also not noted in the stories: Justices Bradley and Prosser did not participate in at least some aspects of accepting this case for certification, again according to the records available online. That seems significant to me, but I can't say exactly why.

That's what I know about this case so far -- which is more than any other story on it has reported. I also know a lot about the law of unconscionability, both within the Wisconsin Consumer Act and without.

And while I'm already in the midst of a series of posts about parenting and emotional distress, who says I can't do two series of posts, right? So here's what I'm going to do: I'll wait and see what materials those lawyers provide me, but in the meantime, I'm going to do a series of posts on unconscionability as it affects payday lenders in other states, and as it has been used under the Wisconsin Consumer Act here in Wisconsin.

So check back and see what you learn about this issue -- and also consider this overriding question, which I'll phrase as a story problem:

Assume that courts can, as the law seems to say, determine that an interest rate is too high, as a matter of law. That determination is going to be made only after a consumer takes out a loan, and then decides to not pay that loan back -- either because he can't, or he won't. Once the decision to not pay the loan back is made, then either the lender or the consumer will go to court to get a ruling regarding that interest rate, resulting in the lender expending attorney's fees (which it cannot get back) and the consumer expending attorney's fees (which he can get back.) Ultimately, the Courts will make a determination on the interest rate -- upholding it, striking it entirely, or, the third-rail option, limiting the interest rates to the extent required to make the loan conscionable. (Go back and read that statute to see where the legislature gave the courts the power to do that.)

This, then, is the question: Is all of that good for consumers?

With follow up questions:

Do we want courts determining, after the fact, on a county-by-county basis, what interest rate is okay? Do we want the appellate courts to set a maximum interest rate across the State? Should the interest rate that is allowed be determined on a customer-by-customer basis? Should I, as a consumer protection lawyer, be allowed to agree to pay a higher interest rate than a high-school dropout who barely reads English?

Bonus question for you consumer advocates out there: Was this the best possible time to bring the Wisconsin Consumer Act to the attention of this Supreme Court and this legislature?

Emotional Distress and Parenting, Part 3: Once upon a time, dads had to fight to have a relationship with their kids...

... but not the good kind of dads.

It's interesting to look back at cases from not all that long ago and wonder if the people who fought so hard to establish this or that right are now sympathetic to others who today are fighting to establish that or the other right. Like in the case of Slawek v. Stroh, 62 Wis.2d 295, a 1974 case which must be taken with a grain of salt because most of it reads like law that almost certainly has been abolished... only maybe it hasn't.

Here's the background: Perhaps the least-sympathetic "putatative dad" ever commenced an action for declaratory relief seeking to have himself adjudicated the father of a girl he claimed was his. The mom -- not Dad's wife -- opposed this, and the primary issue to be dealt with up front was whether Dad could maintain the action at all.

This being 1974, after all, there weren't all these fancy-shmancy custody rules and procedures; back then, paternity actions in Wisconsin were brought by a district attorney... or not at all. So Dad, who lived out of state, had asked the DA to bring such an action, but the DA refused. Dad then sued for declaratory relief, and the Court, over Mom's strong opposition, said "Well, okay, we'll let you do that," primarily because Dad, they felt, had a constitutional right to prove his parental relationship under Stanley v. Illinois, and the State therefore was obligated to provide a way to do that.

So declaratory judgment it was -- although the Court, too, seemed squeamish about this, and why not? Here's why Mom (and probably the DA) opposed Dad's request, period:

The allegations of the defendant-mother's first counterclaim are in substance as follows:

During the first three months of their association plaintiff-appellant told her he was not married, loved her, wanted to marry her and wanted to visit her parents in Marinette, Wisconsin, to discuss marriage.

She believed his statements and because of this had sexual relations with him. By accident she found out he was married, living with his wife and had three children. The plaintiff then told her he was not in love with his wife, that they had separated and divorce was being instituted, and that as soon as he was divorced he would marry her. All of these statements were false and made for the purpose of inducing her to have sexual relations with him.

As a result of these relations a son was born in 1969 and has been adopted by third persons. She again became pregnant in 1970, and in August of 1970 suffered a miscarriage 'by reason of manipulations and injections given to this defendant by the plaintiff upon false representations that they would not harm the unborn baby when, in fact and truth, they were the direct cause of and induced said miscarriage and abortion.'

The minor child in this action was born because of the false representations which led to the relationship between them. She also alleges that all the plaintiff's representations to her were false and fraudulent and that he has not and never intended to separate [62 Wis.2d 310] from his wife, and that these representations were made for the purpose of seducing her.

She has had two illegitimate children and a miscarriage and abortion, and suffered an assault and battery solely because of his false representations, and suffered pain, both mental and physical, and has been held up to public ridicule and shame.

So you can see where her opposition came from.

The Court having held that Dad could use the declaratory judgment statutes for custody purposes (something that probably wouldn't be allowed today, although I haven't researched it; I did some quick updating of this case but haven't made sure every single point in it is good law, yet) then had to decide whether Mom could keep her counterclaims in there -- counterclaims for assault and battery (the miscarriages), seduction, breach of promise to marry, and, for our purposes, intentional infliction of emotional distress:

The second counterclaim of the defendant-mother alleges in substance that the plaintiff-appellant, by his intentional physical acts in repeatedly telephoning her and her family at all hours of the day and night, interrupting their sleep and other activities, that by wild and false ruses, stories and use of false names, he has repeatedly tried to see her and associate with her despite her repeated refusal to talk with him or see him, that by these actions he invaded her privacy in her home and in public and private and before her parents and friends, and that these acts caused her great mental anguish, suffering and humiliation and that she has been held up to ridicule, shame, contempt and embarrassment in public and private and before other persons.

That, the Court held, stated a claim for intentional infliction of emotional distress -- not quite what I've been looking at here, vis a vis parents and kids, but still, an interesting type of claim: by pursuing her, he subjected her to emotional distress; how many women have been stalked or harassed and who didn't then sue their ex-boyfriends or husbands?

(This case appears, in fact, to be the case that established the tort of emotional distress in Wisconsin.)

The Court also held that the woman had stated a claim for seduction, altering the common law that only allowed the master of a seduced servant to sue; here in Wisconsin, at least, in 1974, the seduced woman could sue for damages. (I'm pretty sure even without researching it that a claim for seduction is gone. But not 100% sure. I've never had to research that.)

Also interestingly for these purposes is the baby's claim, which the Court termed as a wrongful birth claim:

The infant minor, by her guardian ad litem, by way of counterclaim, has alleged a cause of action which can be referred to as 'wrongful birth' or 'wrongful life' for lack of a better description.

He alleges, in the minor's behalf, that the plaintiff-appellant is her father and induced her mother to have sexual relations upon the fraudulent promise that he would marry her, knowing this promise was false because he was already married and was married at the time of her birth, that the plaintiff-appellant knew or should have known that his acts would cause the birth of a child and cause such child mental pain and anguish, and that because she was born an adulterine bastard she does suffer mental pain and anguish and is subject to public humiliation and embarrassment.

That type of wrongful birth isn't a birth-defect type of claim; the allegation was that by being born out of wedlock the baby had suffered ("an adulterine bastard"), but the Court, after deciding it could allow such a claim, had better not, because of the policy ramifications of doing so.

(Ah! Remember when courts considered the policy ramifications of declaring everything a constitutional or litigational right?)

All told, the Court held that the Circuit Court could grant judgment on the pleadings, finding Bad Dad a real dad, and then hold a non-jury trial on the custody and placement issues, while allowing then for a bifurcated, jury trial on the issues raised by Mom in defense.

So you can maintain, at least if Slawek is still good law (and it likely is in this context, but it's late and I'm not going to research it today), a claim for emotional distress for someone too vigorously trying to establish a relationship with you -- even if that someone is the parent of your children. But kids: You can't sue your parents merely for having given birth to you.

Welcome To... CELL PHONE COURT!

This is a Sponsored post written by me on behalf of Straight Talk for SocialSpark. All opinions are 100% mine.

Ahem! The court will come to order. We now call the case of “You versus your stupid cell phone plan.” Let’s see, let me read the indictment here… says that you’ve been charged with overpaying for your cell phone plan. Well, that’s serious. Very serious indeed.

What do you mean, you plead ignorance? I’ll say it’s ignorant, to be paying as much as you pay for a cell phone plan. Are these numbers right? $80 or more for a monthly service plan? And you’re locked into that plan for two years? I ought to throw the book at you right now.

What book? The book of “Stupid Things People Do.” Bailiff! Play that video!

There, did you see THAT? Do you understand NOW just what you’ve done?

That’s right. You’ve been paying $80, $100, even $150 for a cell phone plan and you could have been paying as low as $45 a month, and STILL GETTING Everything you need! Straight Talk, the cell phone provider that gets you a cell phone for less, will give you an unlimited talk/text/data plan for as low as $45 a month – or $499 for the whole year!

Order! Order! Stop crying. I know you didn’t know, but that’s still no excuse.

Now, then, Count TWO of the Complaint says that you also paid nearly $200 for that phone. Let me see that. Mark it as an exhibit. What is this, a Kyocera? Oh, an LG? And you paid that much for it?

Why do I ask? Only because, young man, Straight Talk will sell you a smart phone with touch screen and qwerty keyboard and all your videos and apps and whatnot for under $60. You can even get Android on Straight Talk.

Yes, I said $60. If you don’t believe me, the reporter can read it back. Or listen to this customer:

:

Thank you for that helpful testimony. You know what bothers me the most? Not just that you’ve now fallen Hook, line and sinker for the Straight Talk plan but that it was staring you in the face all along! No contracts, no credit checks, no activation or termination fees, and you can change your plan each month if you want.

Plus, free 411 calls! Look at this bill here, Exhibit 3. You spent nearly $15 on those calls last month alone! Imagine what you could have done with that money! Why, you could’ve gone to LAW SCHOOL, and then you wouldn’t be standing here before me, in this predicament.

What am I going to do with you? I’ll tell you. First, watch this:

Now, Call a friend, and tell him that he has to take you immediately to get a Straight Talk phone.

Then, with all that extra money you’ll have, go do something nice for your family. Take them out to dinner - -heck, take them out to dinner TWICE A MONTH, every month. You’ll have enough left over.

That’s all. Court will be in recess.

Autism Works: A (Phone) Call To Action

Autism Works is a post I put on all my blogs, updating you on the latest information affecting people who are autistic or who know someone who is.


I would like you to make a phone call, and to keep making that phone call until you get through. But the phone call is not for me, it's for Mr F and Mr Bunches.

If you follow me on Twitter, you've already heard the gist of this, but it bears examination and repeating. At the bottom of this post, you'll find contact information to email Eric Cantor or call him, so if you know you already want to do this, go there and get that info. If you don't know why you should want to make a simple phone call, read on:

Here is my son, Mr. F. He was four years old when this video was shot:





Mr. F currently gets therapy 20-25 hours a week, in our house. So does his brother, Mr Bunches. They each have teachers and therapists come in every morning at 8:00, and stay until 11:20, when the boys each get on separate busses to go to their 4K classes for three hours. Two days a week, Tuesdays and Thursdays, the therapists come back from 3:00-5:30 p.m. There are two to four extra people in our house for 25 hours a week. At school, each of the boys has an aide that helps him in school. Mr Bunches' is part-time. Mr F's is full-time, by his side every second he's at school. They also have speech and occupational therapy, and used to get out-of-home occupational therapy until our insurance benefits ran out for the year.

The cost of just the in-home therapy per year is $50,000 per child. That doesn't count the school support services or the busses that take the boys to school or the ankle bracelet Mr F wears in case he wanders away or the sheriff's deputy who comes to our house once a month to check that the bracelet works.

All that effort is helping the boys learn to do things like talk. Many autistic people are nonverbal.

Mr F, for example, will say maybe 10 or 15 words. He understands what you say, but has trouble talking. When he wants something, he will use sign language and gestures, tapping his chest to say "I want" and taking your hand and pointing it to where he wants things. He, this summer, began being able to say I want but he can't pronounce the words yet. He says "Bo bo," which we know means I want.

He said a sentence the other day: He said "Bo bo GO." Which meant he wanted to go for a ride. It was the first sentence he'd ever said to me... after nearly 2,000 hours of intensive therapy and work. (It's not just teachers. We do it all the time, too. As I was typing this, Mr F wanted his breakfast, which is usually cheese puffs. Autistic kids are even pickier than other kids, in part because they are so sensitive to sensory issues we barely register, so they have to work at expanding their food groups. Before Mr F was allowed his cheese puffs, as part of his education, I had to make him choose between two alternatives [forcing him to communicate], then make him get the bowl out, and then tell me "I want cheese puffs," which he said as "bo bo" and pointing. To ensure that Mr F can someday take part in society, I have to make him work for his cheese puffs.)

Now on to what you can do:

Back in 2006, Congress passed the "Combating Autism Act." That bill -- passed by a pre-Tea Party Republican Congress and signed into law by the Republican Worst President ever -- set aside $924 million over 5 years to develop a strategic plan to expand and better coordinate the nation’s support for persons with autism and their families. It led to important research being started and promising new interventions.

Autism, as you may know, affects 1 in 70 boys, and the costs of supporting autistic individuals in society are $35,000,000,000 ($35 BILLION) per year. Interventions and cures allow autistic individuals to live fuller lives, with less costly supports (if any at all.)

The Combating Autism Act was the most comprehensive health measure ever passed. And it will now expire at the end of September, 2011, unless reauthorized.

That reauthorization is pending in the "Combating Autism Reauthorization Act," or CARA. CARA is almost halfway to becoming law: The Senate committee considering it just passed it unanimously and sent it to the full Senate.

But it has not yet been put up for a House vote, because of Eric Cantor.

Eric Cantor, the House Majority Leader, co-sponsored the bill in 2006. He is one of 113 House members of the Coalition for Autism Research and Education. He has taken part in "Walk Now for Autism Speaks" events.

But he won't even let this bill go to the floor for a vote.

Eric Cantor won't let America decide if autistic children should have a shot at a fuller life.

You can email Eric Cantor very easily by going to this site and filling out the form. It's a pre-written email that takes about a minute to fill out and send, and you won't get junked or spammed.

Or you can call Eric Cantor at 202-225-4000. I've got that number programmed into my cell phone, and called it 20+ times yesterday. It was busy during working hours, and after hours I was told I could not leave a message.

But I'm going to keep trying. Because if Mr F can work his way through counting to ten, I can certainly make a phone call, and so can you.

Call or email Eric Cantor and tell him to let the Combating Autism Reauthorization Act go to the House Floor for a vote!

Emotional Distress and Parenting, Part 2: Here's a mile-wide door I intend to drive my truck right through...

... if that is not an entirely improper metaphor to use in legal argument.

So two weeks ago, more or less, I talked about those kids that sued their mom for emotional distress because she didn't pick out just the right Hallmark card for them, and then raised the question: When does family conduct rise to the level of emotional distress?

This is not just an empty question for me, of course: I've got two pending cases right now in which I intend to make intentional infliction of emotional distress claims in a family context, so as usual I'm writing about what I'm thinking about working on. But it's also an important question, as the rules for "what is a family" and "what can be done to enforce not-so-ordinary family relations" become more labyrinthine.

When most of our family law rules were concocted, your prototypical family was a man, a woman, and some kids. When no-fault divorces became common, that was the American Gothic standard by which legislators began crafting divorce and placement rules.

Over time, those rules have morphed into ever-more-complicated schemes -- now, there are presumptions of maximization of time and multiple factors to consider and rules on when parents can move where and we have three levels of involvement with kids (custody, placement, and visitation) -- while our families have become ever more complicated, too: Stepparents and gay marriage and open adoptions and grandparents raising their grandkids... and so on.

The law cannot keep up with society, of course -- but lawyers have to try, and so into the cracks created by society comes the common law, famously creating "equitable parents" in Wisconsin or doing sub rosa gay adoptions or, in the cases I'll examine, using tort claims to pursue family rights.

And an examination of interfamily suing begins, appropriately, with someone losing such a case:
Gleiss v. Newman, 415 N.W.2d 845 (Wis. Ct. App. 1987).

Gleiss was the first-ever case to consider what rights a non-custodial parent might have to sue the custodial parent -- and the answer was "None, really." Beverly Gleiss, the mom, had visitation with her kids, but not any custody rights; the opinion, rather frustratingly, doesn't say why that was, and I think it matters, because, as you'll see, Beverly's rights to sue for tort damages were restricted by her rights to use family court procedures -- but those family court procedures presumably had been the ones that ended up with her losing custody in the first place.¹

Anyway, Beverly Gleiss in our case sued her ex, Newman, and apparently his new girlfriend (I'm assuming) for denying her visitation, framing the suit as a tort claim for intentional infliction of emotional distress.

The Court of Appeals for Wisconsin first began by noting that some courts allowed just this type of claim:

Few jurisdictions have addressed this issue. The Vermont Supreme Court has recognized a cause of action for denying a parent "personal contact or other communication." Sheltra v. Smith, 136 Vt. 472, 392 A.2d 431, 433 (1978).

But others had rejected it:

Also, a federal district court has concluded that Missouri would recognize a damage suit for the interference with visitation rights and assess damages to the noncustodial parent for the deprivation of those rights. Ruffalo v. United States, 590 F.Supp. 706, 713 (W.D.Mo.1984).

However, Missouri has since rejected Ruffalo in Politte v. Politte, 727 S.W.2d 198, 200 (Mo.Ct.App.1987), and the balance of the jurisdictions considering this issue have refused to recognize the existence of such a tort. 1 These courts based their conclusions upon reasons of public policy and fear that if such a tort is recognized, a host of actions would follow. See id. at 201. They noted that individuals whose visitation rights are improperly denied have other adequate remedies to enforce their visitation rights. See Owens v. Owens, 471 So.2d 920, 922 (La.Ct.App.1985); Hixon v. Buchberger, 306 Md. 72, 507 A.2d 607, 613 (1986).

Why are the courts rejecting those claims? Because doing so would confuse juries and clog up the courts:

We agree that allowing this type of tort could encourage claims for petty infractions. State courts are already plagued by trifling departures from court visitation orders. Additional damage suits would only further burden the already strained court dockets.

Now, I want to examine that logic. First of all, the Court assumes that the courts are "plagued" by "trifling" departures from court visitation orders.

Where's the citation for that? If I put that in a brief, every judge in the world would say "I need proof."

Secondly, family courts have resources to deal with "trifling" departures, including the ability to award fees for overtrial or based on need, and punishment for overlitigation, and also the use of family court commissioners, parent coordinators, and guardians ad litem -- systems set up to handle the many claims that may be made.

Thirdly, what the Court of Appeals assumes is that parents would litigate in family court, and in civil court -- bringing a "trifling" claim to family court and either then going to sue in tort, or suing at the same time. Which means the Court of Appeals is not familiar with "claim preclusion" and "issue preclusion." Litigants in a civil suit have the option of moving to dismiss under section 802.06 if another case is pending before another court involving the same parties, and a litigant who loses on a claim in one court has no right to bring that same claim in a different court.

Fourthly, the Court equates Gleiss' claim with a "trifling" visitation departure, which, again, makes it frustrating that the Court didn't tell us what her claim was. Was Gleiss suing because the husband had missed a single Tuesday night? Or had it been three years since Gleiss had seen her kids?

Wouldn't you like to know?

The Court had other weird reasons for declining to allow this suit:

Further, noncustodial parents claiming intentional interference with their visitation rights have viable and effective remedies for enforcement in Wisconsin. The noncustodial parent may institute proceedings to enforce visitation rights and obtain attorney fees for the pursuit of these actions. Sections 767.245, 767.262, Stats. In addition, they may institute not only contempt proceedings, but also proceedings to obtain custody of the child. Sections 785.02, 785.03, 785.04; 767.245, Stats.

That's suspect reasoning, right there. The Court did not say in its opinion whether Beverly had tried to use family court or not. Litigants sometimes must "exhaust administrative remedies" before pursuing tort claims of some sorts; it would have been possible to say "Beverly didn't even try to sue in family court" and rule based on that -- but if Beverly had been trying and trying to get justice in family court and got nowhere, you've just said she has an "effective" remedy that doesn't seem so "effective."

But also this: Just because I have one remedy, I should not have another? Lawyers' clients can sue in tort for malpractice, can sue in contract for breach of contract, can ask for fee arbitration in the State Bar, and can file Office of Lawyer Regulation complaints if they're unhappy with their lawyer. Presumably, the Gleiss court feels clients need only one of those -- so if you're a lawyer who gets sued, raise Gleiss as a defense and say "Litigants already have an effective remedy; they can complain to the OLR."

The Court then says, without developing this reasoning, that:

Finally, the recognition of such a claim would not be in the child's best interests. A claim for compensatory and punitive damages would alter the focus from determining visitation consistent with the child's best interests to parental compensation.

Which is, one, why you need a tort suit. Family courts are there to balance the best interests of the children in a visitation schedule; tort suits are there to remedy civil wrongs. There's nothing inconsistent with allowing tort suits to overlap family cases. (Battered wives can get divorced and sue their ex-husbands for damages, for example.)²

Also: Family courts can award "compensatory and punitive damages," using their contempt powers. So if you are a dad or mom who's being sued for contempt, tell the Court:

A claim for compensatory and punitive damages would alter the focus from determining visitation consistent with the child's best interests to parental compensation.

And demand the contempt action be dismissed.

Having decided that there was no such right of action, the Wisconsin Court of Appeals went on to decide that there just might be such a right of action, anyway:

Therefore, we hold that Wisconsin does not recognize a cause of action in tort to recover damages against a custodial parent for allegedly interfering with the judicially-fixed visitation.

...

We need not address the question of whether the same action brought by a custodial parent is a recognized right. Nor do we reach a decision regarding the recognition of a claim by a noncustodial parent granted visitation rights when the court lacks the power or ability to remedy the alleged interference with its powers of contempt, such as when the custodial parent takes the child to another state in order to deprive the noncustodial parent of visitation rights. See sec. 946.71, Stats.

That is to say: First, if you're a parent with custodial rights, you can maybe sue.

Second, if family court isn't an appropriate remedy, you can maybe sue. Which, again, brings up that the Court didn't bother telling us what Beverly had done in family court. If you're going to say "No, you can't sue because family court is a good remedy, but if you don't have a good family court remedy, you can sue," you should explain why Beverly's (theoretical) family court rights bar her.

Third, though, is that last paragraph: "when the court lacks the power... to remedy the alleged interference with its powers of contempt" a claim might be viable.

Well, now. There is a visitation statute that allows equitable parents, stepparents, and grandparents, to have visitation; and that visitation can only partially be enforced by contempt powers -- the Court cannot use its most powerful contempt sanction, jail.

And there are thousands of nonbiological same-sex parents who have no custodial rights and barely-enforceable visitation rights. And thousands of stepparents who have visitation rights that cannot be enforced. And thousands of grandparents who have the same.

Did the Gleiss court really mean to open the doors to litigation between stepparents and exes?

We'll see -- because I'm going to be filing those claims in the near future. And I'll continue examining them here on this blog.

**********************************************************

1. In case you're wondering: Family courts do not always get it right. In one remarkable case from about 1999, a husband was awarded primary placement of the family's two girls by the divorce court; the mother then took off with the kids, and was arrested on felony charges. Her defense, and presumably a claim she'd raised in divorce court, was that dad was sexually assaulting the girls. Dad eventually was convicted of doing just that, but meanwhile, the kids were placed with dad's parents. See, e.g., Paige K.B. v. Steven G.B., 594 N.W.2d 370 (Wi. S. Ct. 1999).

2. And, of course, children who have been sexually assaulted can sue their grandparents for intentional infliction of emotional distress, as the Paige K.B. kids did.

In Nevada, prostitution and gambling are illegal... and they have the moral high ground on Bank of America and Iowa. (Mortgage Foreclosure Issues.)

Hey, remember the other day when I complained that judges seem to not understand why banks and mortgage brokers would dupe homeowners into loans they couldn't afford? (Sure, you do.) It seems, at times, that judges assume that banks can't do wrong, while homeowners must be to blame for borrowing money they can't pay back, right?

Wrong -- but that's according to Nevada, not judges around here. Nevada just expanded its lawsuit against Bank of America, proving that while the Still Grudgingly President Obama's administration doesn't want to get tough with banks, some people are still willing to stick up for homeowners.

According to the Denver Post:

Nevada's attorney general charges that BofA and the now-defunct mortgage giant Countrywide, acquired by the bank in 2008, deceived borrowers and investors at almost every stage of the process. According to the suit, borrowers were duped into unaffordable loans and then victimized again through a misleading mortgage-modification program that homeowners tried to use to avoid foreclosure. Finally, the suit alleges, the bank filed fraudulent documents to move forward with the foreclosures. "Taken together and separately, (BofA's) deceptive practices have resulted in an explosion of delinquencies and unauthorized and unnecessary foreclosures in the state of Nevada," the suit alleges.

What must it be like to have an attorney general who thinks consumer protection is more than just counting McNuggets, (as Wisconsin's AG, J.B. "Van" Hollen says it is?)

And look at that large print -- where have I heard that before? Oh, yeah -- here, where I was trying to explain to Judge Vandehey in Grant Count, Wisconsin, that that's exactly what happened.

Bank of America, for its part, continues to work to get releases not just from foreclosure-related practices, but from any future legal claims against it, so if you're wondering what side to back here, I'll spell it out for you:

A.) The winning side: is the side that Iowa AG and the coalition of AGs, backed by Giving-Up-On-You Pres. Obama, are on: they favor settling before completing the investigation, and giving wide-ranging releases from all liability.

B.) The losing side: Nevada, New York, Massachusetts, and Delaware, who favor actually pursuing litigation intended to prove wrongdoing. (Also on the losing side: Homeowners.)

A man can dream. And a man can write that dream online and win $10,000.

This is a Sponsored post written by me on behalf of UPromise for SocialSpark. All opinions are 100% mine.

Have you gone over to the UPromise Dream wall to submit your dream, and vote for other’s, like I asked… no, TOLD, you to do not so long ago?

That was an ORDER, soldier!  And anyway, even if it WASN’T an order, and even if you WEREN’T about to be court-martialed for lacking in esprit de blog (literally: blog-sprites, a tiny creature that inhabits laptops and makes the “k” key become loose over time.)(They live under the key).

Whew! It’s still early today and I’m not full of coffee yet.  But I am full of dreams, which is where we started: The UPromise Dream Wall.

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UPromise is letting you enter your dream on their Dream Wall. at www.upromisetodream.com, and each week they’ll pick a dream and give that person $1,000.  In addition, everyone gets to vote on which Dream they like the best – and the top vote getter by September 29 gets $10,000!

I’ve entered my dream there: I want Mr Bunches and Mr F to go to college and learn how to cure autism, or how to work with people struggling with autism and make their lives better.  (I’d also like them to play for the Buffalo Bills and be movie stars, but that’s besides the point.)

You can go to the Dream Wall and find them and vote for my guys – and enter your OWN dream, whether you’re a college-age kid (or soon to be one) or have kids of your own, or someday will.

Start dreaming.  And let’s forget about all that Blog-Sprite stuff, okay? If you go around telling people I said something like that, my sprite’ll get mad and wreck my J button, too.

(Click here for the dream wall official rules.)

Why WOULD a company make a loan that's doomed to fail? (My Actual Case Results)

I don't often report My Actual Case Results if the outcome is unsatisfying -- i.e., a loss -- but I'll make an exception in this situation, because I'm right.

So here's the set-up: we represent a homeowner in a case pending in Grant County. This particular homeowner, a few years back, had a first mortgage on her house in favor of JPMorgan Chase Bank (then just "Chase," which is what I'll call them in this post.) She also had a second lien on the house in favor of SWCAP, a lien that had been put in to help with home repairs. That second lien was a no-payment lien with a due-on-sale provision.

The homeowner needed to do some sewerage hookup and had no money to pay for it, so she did what any reasonable homeowner does -- called a lender, in this case, her lender, Chase, and asked if she could borrow the money.

Chase reviewed her situation and advised her -- advised her, this homeowner who is not extremely sophisticated in terms of borrowing -- the take out a whole new refinance, including cashing out to pay for the repairs, and including advising her to pay off the SCWCAP lien.

Advising her. That's not even disputed: Our homeowner has an affidavit in the record swearing that's what Chase did. Chase has no counteraffidavit.

Chase then prepared a loan application, falsifying the homeowner's income -- overstating it, because the amount of income needed to pay the new payment was more than what the homeowner actually made.

And then Chase made the loan.

Our client, the homeowner, paid the loan for as long as she could, with help from her ex-husband, but ultimately she couldn't keep up and went into default.

That's when she applied for Still Grudgingly President Obama's horrible HAMP program, and was told to make trial payments while the application was pending.

Many months later, Chase foreclosed.

Without acting on the HAMP application.

So when we got involved, we opposed the foreclosure and said it was inequitable for the lender to foreclose under those circumstances -- that our client had a right under the Massachusetts case of In re Bank of America to enforce the HAMP contract, and that Chase's actions in overstating her income and advising her on the worst possible course of action constituted "unclean hands" barring foreclosure in part because this was a loan "doomed to fail."

(I have, in two other cases, convinced courts that "doomed to fail" loans are actionable, including being awarded $11,000 in damages in one case for a doomed to fail loan.)

Judge Vandehey, in Grant County -- who I've always been impressed by, other than this case -- asked me in the hearing: Why would Chase make a loan that is doomed to fail?

So I told him: They made the loan because investors were buying loans; I said it was a game of "hot potato" (yes, I said that on the record) in which lenders simply made loans, sold them for a premium, and didn't care if the loans could be paid, because they got their money and someone else would be left holding the bag.

Judge Vandehey didn't buy it; he ruled that any problems in the inception of the loan didn't amount to unclean hands and granted a judgment of foreclosure.

That was yesterday, September 1, 2011.

Today, September 2, 2011, I woke to find this the main story on Huffington Post:

U.S. Set To File Suits Against Big Banks Over Mortgages

The story that accompanied that, in part, said this:

The agency that oversees mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble... The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, ...among other banks. ... The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers' incomes were falsified or inflated.

Judge Vandehey is a very good judge.

But judges just don't get it yet.

The rules on foreclosures have changed. Just five years ago, there really wasn't much to litigate in most foreclosures. But the subprime mortgage market created a system in which large-scale and small-scale fraud took advantage of unsophisticated borrowers who were told they could afford loans, and subsequently took them out, trusting these professionals, who were engaged in nothing more than a game of hot potato.

Lenders created a system where loan originators got paid only for new loans, not modifications. Lenders created a system where originators and brokers got paid based on how large the new loan was. Both of those gave incentives to loan originators and brokers to create larger and larger loans, regardless of ability to pay, because the loans were almost always sold on the secondary market, so the originators would pass them on to the big banks who would pass them on to Fannie Mae and Freddie Mac and investors in trusts.

Those investors will be paid -- by Bank of America, Chase, and the others. The government will be paid by our taxes. The loan originators and mortgage brokers have long been paid.

And homeowners will continue to lose houses because judges think this is business as usual, and will continue to ask why would they make a loan that's doomed to fail?

We'll be filing a motion to reconsider, and likely an appeal. Maybe this homeowner will get her house back instead of being yet another victim of a system that made rich banks richer while the government did nothing to help her avoid the effects of a system it created. Or maybe not. But until judges get it, I'm like a guy trying to hold back the tide using a kid's pail -- and the judges keep taking my pail away.

(And now you understand the photo, right?)