By Attorney Jonathan Cattey
In March 2012, I posted a blog in this space discussing the impact of the United States Supreme Court’s 5-4 decision in AT&T v. Concepcion.[1] The Court’s decision reinforced the notion that the purpose of the Federal Arbitration Act (FAA) is to enforce arbitration agreements on their terms, even when the parties to the agreement are not similarly situated.[2] Specifically, the Court held that the FAA preempted state laws that invalidated class action waivers in arbitration agreements. Concepcion’s ruling is forcing state courts around the country to reconsider state consumer acts and their precedent; Wisconsin is no different.
Earlier this year, the Wisconsin Court of Appeals issued certification in the case of Jones v. Wisconsin Auto Title Loans Inc.[3] By issuing certification, the appeals court is foregoing ruling on the case and, instead, asking the Wisconsin Supreme Court to decide the case. As of the date of this blog, the state’s highest Court has not yet granted certification.
Jones has a long procedural history dating back to 2002, but the issues on appeal are quite straightforward. The plaintiffs borrowed money against their car titles from Wisconsin Auto. Included in the loans was an arbitration agreement that contained a class-action waiver, much like Concepcion, and a provision concerning the allocation of attorney’s fees.[4] Wisconsin Auto filed a Motion to Compel Arbitration with the circuit court, which was denied due to the alleged unconscionability of the arbitration agreement.[5] That ruling leads to two questions on appeal: (1) is the denial of the Motion to Compel Arbitration immediately appealable under Wis. Stat. § 808.03 as a final “order,” and (2) is the denial of the motion contrary to the Supreme Court’s holding in Concepcion?[6]
As to the first question, Wisconsin Auto argues that the trial court’s denial pertains to a “special proceeding” as contemplated by Wis. Stat. § 808(1). In support of its position, Wisconsin Auto likens motions to compel arbitration to contempt motions and motions to intervene, which have previously been held to be immediately appealable as “special proceedings.” Not surprisingly, the consumers claim that the motion is not a “special proceeding” because it is intertwined with the case and is not independent to the underlying claim.[7] The question is novel in Wisconsin, and the Court’s decision would inevitably impact the appealability of future motions to compel arbitration.
The second question on appeal will require the Court to determine the effect of Concepcion on Wisconsin’s consumer laws. According to Wisconsin Auto, a substantial portion of the trial court’s holding that the arbitration agreement is unconscionable was based upon the finding that the loan was basically a contract of adhesion.[8] The consumers argue that the arbitration agreement is unconscionable under Wisconsin’s common law understanding of unconscionability. The state’s high Court will be required to address the tension between Concepcion and Wisconsin common law. If the Court holds that Concepcion alters the impact of common law unconscionability and arbitration precedent, it would significantly impact Wisconsin’s consumer laws.
It seems likely that the Court will grant certification in Jones. However, even if certification is denied, the appeals court will still decide the two questions posed above. It will be interesting to watch the developments in the case over the next year. No matter which court rules on the issues, the ruling will inevitably impact the scope of arbitration agreements in Wisconsin.
[1] AT&T Mobility LLC v. Concepcion, 563 U.S. ___, 131 S. Ct. 1740 (2011).
[3] Jones v. Wisconsin Auto Title Loans Inc., 2011AP2482.
By: Meghan P. MacKelly, Post-Judgment Litigation Supervisor
Judgment liens are an important device in the collection process because they encumber what may be the debtor’s most valuable asset. But, what are judgment liens and how do they work?
After a creditor enters and properly dockets a judgment against a debtor, a lien is placed against the debtor’s real property located in the county where the judgment is docketed.[i] If the debtor owns property in more than one county, then the judgment may be transcribed and docketed into all counties where the debtor owns real property. The judgment lien is attached to all nonexempt real property the debtor (1) owns at the time the judgment is docketed and (2) acquires after the judgment is docketed.
Judgment liens are an effective collection tool. First, they attach for a period of ten years from the date the judgment is docketed.[ii] The lien may be renewed for another ten years upon the court’s permission.[iii] Second, the creditor has the ability to file a judgment lien foreclosure. However, the amount recoverable in a judgment lien foreclosure depends on many factors, including, but not limited to, the property’s fair market value, the priority of mortgages and other liens that may precede the creditor’s, and whether the homestead exemption is applicable. Third, the judgment lien stays with the property regardless of whether the subsequent owner is connected to the debt. Therefore, title companies often require the lien to be released, whether in full or in part, prior to closing on the sale of the property.
The Homestead Exemption. A debtor may protect its homestead property from the judgment lien up to $75,000 (or if married, each spouse may claim $75,000) of the proceeds when sold.[iv] Generally, the homestead includes the debtor’s dwelling and the surrounding land that is reasonably necessary for using the dwelling as a home. This may include property such as houses, condominiums, mobile homes, house trailers, and the like.
To qualify for this exemption, the debtor must (1) be a resident of Wisconsin; (2) own the property; and (3) occupy the property at the time of or subsequent to the judgment. If the debtor sells the homestead, the exemption also applies to the sale proceeds for up to two years, if the debtor holds the proceeds with the intent to purchase another homestead.
When the debtor’s equity in the homestead property is greater than the exempted amount, the judgment lien attaches to the difference.[v] In this situation, if the debtor sells the homestead without a lien release, the buyer will not have clear title. In other words, a properly docketed judgment lien interest in nonexempt property is superior to the interest of the buyer to whom the debtor sold the homestead.
Lien Releases. A judgment creditor may release a judgment lien in full or in part. A full release will be issued when the judgment is paid, whether voluntarily or involuntarily. A partial lien release removes the lien’s encumbrance on a particular piece of the debtor’s property. However, the lien still remains in effect for all other real property the debtor now owns or may later acquire. Most commonly, a partial release is issued when a debtor is selling a piece of property that is exempt from execution. For example, if a debtor’s homestead is exempt from execution and the debtor is selling the property, the title will be clouded and impede the sale. Therefore, the debtor or someone on behalf of the debtor (such as a realtor or lender) will request a partial release in order to clear the title. Since the exempt property is not executable, the partial lien release may be issued, but the lien still applies to the remainder of the debtor’s property.
Thus, judgment liens carry significant leverage for collecting on a judgment. This is why judgment liens are one of the most effective tools for post-judgment enforcement.
[iv] Pursuant to Wis. Stat. § 815.20(1).
[v] Rumage v. Gullberg, 235 Wis. 2d 279, ¶¶ 29, 29-41 (2000).
During regular conference calls with many of our clients, a particular theme comes up for discussion: “What do you do, or how do you achieve better results than others in your area or state?”
Professional + Ethical + Respectful = Successful
When this website went through a redesign, including additional security features, it was intended to be consumer friendly versus business developing or marketing skewed. One assumes law firms to be professional, but we also work in a debt collection tainted industry. It was important for us to stress the professionalism of all of our staff members that interact daily with consumers as well as courts. We do what is right in a fair and ethical manner. We can help a consumer more by offering alternatives to the legal process. We do not stand in judgment of why someone has an unpaid debt. We respect them first, and then seek a resolution that also serves the best interest of our clients as directed. Those combinations add to success not only for KLF, but for those we are adverse to in our daily course of business.
Accounts are audited internally and externally on a daily basis. Recorded calls are reviewed for professional, ethical and respectful resolutions that exceed not only the legal requirements our industry must comply with, but our clients and our firm standards as well. Camera surveillance is monitored and reviewed for positive interactions with those who prefer in person contact. Accounting records are audited by clients, and by outside CPA firms, and are then on file with the Office of Lawyer Regulation annually. All data meets PCI compliance standards. KLF was one of the first firms in our industry to create a Compliance Department. That’s how important our professional, ethical and respectful tagline is to our culture.
Many years ago, our retired firm founder, Bob Kohn, preached that it was “better to communicate than to litigate.” We continue to espouse that at KLF through voluntary opportunities to resolve debt before litigation.
Brenda A. Majewski
Director of Operations
By David A. Ambrosh
A statute of limitation is a legal time period within which a lawsuit must be filed. With few exceptions, a cause of action is considered forever barred if not filed within the applicable statute of limitations period. Statutes of limitation vary from state to state, and they also vary depending upon the type of claim involved. For example, under Wisconsin law a cause of action for personal injury must be brought within 3 years of the date of injury. A claim for property damage must be brought within 6 years of the date of damage. The statute of limitations for claims of libel, slander or defamation is 2 years. For purposes of this discussion, we will be focusing on the statute of limitations for contract claims and, more specifically, claims to collect deficient credit card balances.
Pursuant to Wisconsin law, an action upon any contract -- -- written or oral -- -- must be commenced within 6 years after the cause of action accrues. A cause of action begins to “accrue” at the time of the breach. On a credit card account, the date on which a breach occurred will ultimately depend upon the language of the credit card contract. Under most credit card agreements, a breach is considered to have occurred once the consumer has failed to make the requisite minimum payment on one or more occasions within a specified period of time.
Wisconsin does have a borrowing statute which applies to actions brought in Wisconsin that relate to foreign causes of action. A cause of action is “foreign” if the final significant event giving rise to the claim -- -- the breach -- -- occurred outside of the state of Wisconsin. In such a case, the shorter statute of limitations period applies. If either the foreign state’s or Wisconsin’s statute of limitations period has expired, the claim is time-barred.
In causes of action based upon contract, a partial payment made before the expiration of the statute of limitations tolls the statute and sets it running from the date of the payment. While statutes of limitation generally exist to promote prompt litigation of claims, a partial payment on a contract claim extends the statute to encourage settlement agreements without litigation.
Wisconsin courts have further concluded that a payment by check is made when the check is accepted and negotiated. See id. In the case of Liberty Credit Services, Inc. v. Quinn, the consumer called the debt collector to make a payment by phone. The consumer subsequently put a stop payment on the check, and the check was returned marked “ACCOUNT CLOSED”. The issue on appeal was whether the phone payment, which was subsequently canceled, constituted a partial payment for purposes of extending the statute of limitations. The court concluded that the phone payment was tendered and negotiated in good faith, and the subsequent cancelation of payment did not detract from the fact that, for purposes of extending the statute of limitations, the payment occurred at the time it was verbally authorized by the consumer. For purposes of extending the statute of limitations, it was not necessary for the funds to have actually transferred from the consumer’s account to the debt collector’s account.
The St. Mary’s Hospital case, previously cited herein, addressed the additional issue of whether a partial payment made by one obligor extends the statute of limitations as to all co-obligors. The answer is generally yes, however Wisconsin courts have held that co-obligors must be shown to have consented to, or acquiesced to, the making of the payment. The St. Mary’s Hospital case involved an unpaid medical debt. The hospital sued the patient for the unpaid balance. The patient argued that the claim was time-barred. The hospital argued that the patient’s insurance company had made a partial payment prior to the expiration of the statute of limitations, and that payment extended the statute as to the patient. The insurer’s payment was found to have extended the statute of limitations period as to the patient because the court concluded that consent and/or acquiescence is inherently present in the case of an insured-insurer relationship, as the insured relies on the insurer to make payments on his or her behalf.
In the case of a deficient credit card balance, the relationship(s) between co-obligors may not be as clear cut as the insured/insurer relationship. One could argue, however, that by virtue of the fact that both obligors signed the credit application, those obligors necessarily consented to, or acquiesced to, the making of payments by their fellow obligors. Ultimately the issue of consent or acquiescence may be an issue of fact left for a court or jury to decide. The important thing to remember, though, is that so long as consent or acquiescence is found to exist, a partial payment made by one obligor prior to the expiration of the statute of limitations will extend the statute of limitations as to all obligors.
By: Brenda A. Majewski, Director of Operations
Kohn Law Firm has completed its annual charity drives for the Hunger Task Force and for the American Heart Association, with all funds raised by staff matched by the firm. $3500 was sent to the Hunger Task Force of Milwaukee in December alone in time for holiday meals. The firm also allows employees four paid hours per year to work in their community during a regular business day.
As we look to 2013 and the firm’s charity and community events, we surveyed our staff on the activities they participate in besides the firm sponsored events. We were pleasantly surprised at the number of volunteer hours served as well as the diversity of events supported both in a monetary form, as well as through non-cash donations.
Many churches and schools and alma maters were supported through monetary contributions and volunteer hours. In addition to other charitable contributions, KLF’s President and Majority Shareholder, Robert E. Potrzebowski, Jr., annually funds two scholarships that help students with financial need attend Waukesha Catholic Memorial High School.
Our staff provided many hours of community service to local church and schools, as well as other events and organizations. Those volunteer hours beyond churches and schools were spent serving:
* American Auto Immune Related Diseases Association
* American Right to Life
* Association of Women Lawyers Community Outreach
* American Heart Association
* Blood Center of Wisconsin
* Camp Helen Brachman
* COA Youth and Family Center
* Feeding America
* Girl Scouts of Wisconsin
* Hunger Task Force
* Juvenile Diabetes Research Foundation
* MACC (Midwest Athletes Against Childhood Cancer) Fund
* Make a Wish Foundation
* The Rescue Mission
* Ronald McDonald House
* Safe Harbor Humane Society & Pit Crew
* Salvation Army Christmas Dinner program
*Toys for Tots
* Veterans Administration Affairs
* USBC Youth Bowling.
When it came to monetary contributions, the organizations served, again beyond churches and schools, reflect the great diversity of our staff, and their interests. Many thousands of dollars were donated to:
* American Auto Immune Related Diseases Association
* American Cancer Society
* American Heart Association
* American Right to Life
* American Society for the Prevention of Cruelty to Animals
* Badgerland Striders Running Club
* Channel 10/36 PBS
* Children’s Hospital of Wisconsin
* DAR Library Foundation
* Feeding America
* For Cats Sake
* Goodwill Industries
* Hartford Pregnancy Center
* Hunger Task Force
* Hurricane Sandy Relief
* Juvenile Diabetes
* Make a Wish Foundation
* MACC Fund
* March of Dimes
* National Kidney Foundation
* Purple Heart Veterans
* The Rescue Mission
* Ronald McDonald House
* Safe Harbor Humane Society and Pit Crew
* Saint Jude’s Cancer Research
* Salvation Army
* Second Hand Purrs
* Susan G Komen Race for the Cure-Breast Cancer Awareness
* The Center - San Diego LGBT Community
* Tri County YMCA
* UNICEF
* United States Olympic Teams
* United Way
* USBC Youth Bowling
* U S Humane Society
* USO
* Wisconsin Humane Society
* Wounded Warrier
* WMSE 91.7 Frontier Radio
* World Wild Life Fund
* Yellow Ribbon Suicide Prevention Program
And finally, beyond hours and monetary contributions, our staff supported donations of blood, clothing, shoes, books, puzzles, household items, baby formula and clothes, toys, hygiene supplies, underwear, hats, booties, blankets, car seat covers, scarves, and rummage sale items to a number of charities including:
* Blood Center of Wisconsin
* Goodwill
* Hunger Task Force
* Menomonee Falls Food Pantry
* Milwaukee Women’s Center
* Milwaukee Women’s Veterans Affairs Center
* St. Vincent DePaul
* Toys for Tots
* Northwest Trading Post
* Vietnam Veterans
The firm also contracts with Goodwill Industries to use its shredding services, helping with job opportunities in our Milwaukee area, as we help them with their mission statement:
"Goodwill works to enhance the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work."
We are very proud of our 140 staff members who give back to the community they live and work in.