Gemini Capital Grp., LLC v. Jones

• Decision Date: 17 October 2017
• Docket Number: Appeal No. 2016AP2123
• Citation: Gemini Capital Grp., LLC v. Jones, 378 Wis.2d 614, 904 N.W.2d 131, 2017 WI App 77 (Wis. App. 2017)
• Parties: GEMINI CAPITAL GROUP, LLC, Plaintiff-Respondent, v. Leroy JONES and Roger Jones, Defendants-Appellants.
• Court: Wisconsin Court of Appeals

378 Wis.2d 614

904 N.W.2d 131

2017 WI App 77

GEMINI CAPITAL GROUP, LLC, Plaintiff-Respondent,

v.Leroy JONES and Roger Jones, Defendants-Appellants.

Appeal No. 2016AP2123

Court of Appeals of Wisconsin.

Submitted on Briefs September 5, 2017

Filed October 17, 2017

On behalf of the defendants-appellants, the cause was submitted on the briefs of Matthew C. Lein of Lein Law Offices, Hayward.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Bryan K. Nowicki, Joshua D. Taggatz and Monica A. Mark of Reinhart Boerner Van Deuren s.c., Madison, and Kersten Holzhueter of Spencer Fane LLP, Kansas City, Missouri.

Before Stark, P.J., Hruz and Seidl, JJ.

STARK, P.J.

¶1 Leroy and Roger Jones(collectively, Jones) appeal an order granting summary judgment to Gemini Capital Group, LLC.Gemini filed the instant lawsuit in attempt to recover a deficiency judgment against Jones.Jones argues the circuit court improperly granted summary judgment in Gemini's favor because: (1) Gemini failed to establish its ownership of the debt; (2) Gemini failed to prove the collateral at issue was sold in a commercially reasonable manner, as required by WIS. STAT. § 425.209(1)(2015-16);¹ and (3) a material issue of fact exists as to whether Gemini's complaint was timely filed, pursuant to the applicable statute of limitations.

¶2We conclude Gemini failed to make a prima facie case for summary judgment with respect to the first two issues raised by Jones, and a genuine issue of material fact exists regarding the third issue.We therefore reverse the order granting summary judgment to Gemini and remand for further proceedings.

BACKGROUND

¶3 In July 2007, Jones purchased a 2004Ford Ranger from Timber Ford Mercury of Hayward, Inc.To finance the purchase, Jones entered into a "Motor Vehicle Consumer Simple Interest Installment Sale and Security Agreement" with Timber Ford Mercury.It is undisputed that Jones made some of the payments due under this agreement, but he eventually stopped making payments.In March 2009, HSBC Auto Finance, Inc., filed a small claims lawsuit against Jones in Sawyer County, seeking to repossess the vehicle.That lawsuit resulted in a default judgment against Jones, and the vehicle was subsequently repossessed and sold.

¶4 On March 23, 2015, Gemini filed the present lawsuit in attempt to recover a deficiency judgment against Jones.In its complaint, Gemini alleged it had "purchased the deficiency amount owed on the [Motor Vehicle Consumer Simple Interest Installment Sale and Security Agreement]" and was "the successor-in-interest for the HSBC Serv Auto Loan."

¶5 Gemini ultimately moved for summary judgment.As relevant to this appeal, Gemini relied on an affidavit of Roger Neustadt to establish its ownership of Jones' debt.In his affidavit, Neustadt averred:

I am a custodian of records for [Gemini] and the facts recited herein are based upon my personal knowledge of the electronic business records of the account in question, which are part of [Gemini's] regular business records.These records are kept by [Gemini] in the regular course of business, and it was the regular course of business of [Gemini] or its predecessor in interest for an employee or representative of [Gemini] or its predecessor in interest, with knowledge of the act or event recorded, to make the record or to transmit information thereof to be included in such record, and the record was made at or near the time or reasonably soon thereafter.

¶6 Neustadt averred that Jones entered into a Motor Vehicle Consumer Simple Interest Installment Sale and Security Agreement with Timber Ford Mercury on or around July 12, 2007, and, "[a]s indicated on the contract," Timber Ford Mercury assigned Jones' debt to "HSBC."Neustadt further averred that, on or about November 9, 2009, HSBC "transferred the contract and the rights therein to Santander Consumer USA Inc."Neustadt next averred that, on or about September 7, 2012, Santander "sold the contract and the rights therein to Main Street Acquisition Corp."Finally, Neustadt averred that, on or about July 16, 2014, Main Street "sold the contract and the rights therein" to Gemini.Neustadt averred Gemini is "the current holder and owner of [Jones'] contract and the rights therein."Various documents were attached to Neustadt's affidavit in support of these averments.

¶7 Jones filed a brief and affidavits in opposition to Gemini's summary judgment motion, but he did not submit any evidence disputing Gemini's claim that it was the current owner of Jones' debt.Instead, Jones argued the evidence Gemini submitted was insufficient to make a prima facie showing regarding Gemini's ownership.

¶8The circuit court granted summary judgment in Gemini's favor.Addressing Jones' argument that Gemini had failed to establish its ownership of the debt, the court stated Gemini had presented a "logical ... step by step ... from the point the vehicle was purchased, was financed by HSBC all the way up to Gemini."The court observed that, while Jones was critical of Neustadt's affidavit, he had "not necessarily challenged the affidavit with any counter affidavits."

¶9The circuit court also rejected Jones' argument that Gemini was not entitled to summary judgment because it had failed to show that the vehicle was disposed of in a commercially reasonable manner, as required by WIS. STAT. § 425.209(1).The court reasoned further proceedings were not necessary on that issue because Jones had never alleged or presented any evidence to indicate that the sale of the vehicle was not commercially reasonable.Stated differently, the court concluded Jones had failed to show the existence of a genuine issue of material fact regarding the reasonableness of the sale.

¶10 Finally, the circuit court concluded there was no "issue" regarding the statute of limitations.The court explained, "[T]he deficiency became due in mid 2009 and [Gemini] began this action in early 2015 under the six-year statute of limitations, so that does not forego or prohibit the action."

¶11 Jones now appeals, arguing the circuit court erred by granting Gemini summary judgment.

STANDARD OF REVIEW

¶12We independently review a grant of summary judgment, using the same methodology as the circuit court.Hardy v. Hoefferle, 2007 WI App 264, ¶ 6, 306 Wis.2d 513, 743 N.W.2d 843."Under that methodology, the court, trial or appellate, first examines the pleadings to determine whether claims have been stated and a material factual issue is presented."Preloznik v. City of Madison, 113 Wis.2d 112, 116, 334 N.W.2d 580(Ct. App.1983).If so, we then examine the moving party's submissions to determine whether they establish a prima facie case for summary judgment.Id.If the moving party has made a prima facie showing, we examine the opposing party's affidavits to determine whether a genuine issue exists as to any material fact.Id.¶13 In this case, it is undisputed that Gemini's complaint stated a claim for a deficiency judgment, and that Jones' answer raised several material factual issues.The parties' arguments instead pertain to whether Gemini made a prima facie case for summary judgment and, if so, whether Jones established the existence of a genuine issue of material fact.Seeid.

DISCUSSION

I.Ownership of the debt

¶14 Jones first argues the circuit court erred by granting Gemini summary judgment because Gemini failed to make a prima facie showing that "it is the real party in interest[,] as it lacks standing to seek a deficiency judgment against [Jones]."The parties appear to agree that, under either a standing analysis or a real-party-in-interest analysis, the critical question is whether Gemini presented sufficient evidence to make a prima facie showing that it owns Jones' debt.²

¶15 Gemini argues the documents attached to Neustadt's affidavit establish its ownership of the debt.³Gemini contends these documents show the "step-by-step process" by which the debt was transferred from Timber Ford Mercury to HSBC, from HSBC to Santander, from Santander to Main Street, and, finally, from Main Street to Gemini.We conclude, however, that the documents attached to Neustadt's affidavit are insufficient to establish Gemini's ownership.With the exception of the initial assignment from Timber Ford Mercury to HSBC,⁴ none of the documents attached to Neustadt's affidavit specifically reference Jones' debt.

¶16 As the basis for his averment that ownership of Jones' debt was transferred from HSBC to Santander on or about November 9, 2009, Neustadt referenced a November 2, 2010 document entitled "Santander Consumer USA Inc. Secretary's Certificate," which was attached to his affidavit.In that document, Santander's "chief legal officer and secretary" certified that, pursuant to an "Asset Purchase Agreement" and "Servicing Agreement" dated November 9, 2009, Santander was "the assignee/servicer of [HSBC's] auto loan portfolio."However, nothing in the November 2, 2010 certificate specifically indicates that Jones' loan was part of that portfolio.Neither the "Asset Purchase Agreement" nor the "Servicing Agreement" referred to in the certificate was attached to Neustadt's affidavit.

¶17 Neustadt also averred that, on or about September 7, 2012, Santander "sold the contract and the rights therein to Main Street Acquisition Corp."In support of that averment, Neustadt cited an attached document entitled "Bill of Sale and Assignment," which stated that, pursuant to the terms and conditions of a "Purchase & Sale Agreement" dated September 7, 2012, Santander assigned to Main Street "all rights, title and interest ... in and to those certain receivables, judgments or evidences of debt described in the ‘Purchase and Sale Agreement’ and ‘Data File’ attached hereto and made part hereof for all purposes."⁵The "Bill of Sale and Assignment" indicated Santander had assigned 153,062 "accounts" to Main Street, but it did not specifically reference any individual accounts or debts.Neither the "Purchase and...