Kett v. Community Credit Plan, Inc.

• Citation: 228 Wis.2d 1,596 N.W.2d 786
• Decision Date: 09 July 1999
• Docket Number: No. 97-3626, No. 97-3620, No. 98-0092.
• Parties: Frank M. KETT, Plaintiff-Appellant, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner. Kenneth P. MADER, Plaintiff-Appellant, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner. Marcia K. JOHNSON and Hulda M. Johnson, Plaintiffs-Appellants, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

228 Wis.2d 1

596 N.W.2d 786

Frank M. KETT, Plaintiff-Appellant, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner.

Kenneth P. MADER, Plaintiff-Appellant, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner.

Marcia K. JOHNSON and Hulda M. Johnson, Plaintiffs-Appellants, v. COMMUNITY CREDIT PLAN, INC., Defendant-Respondent-Petitioner.

Nos. 97-3620, 97-3626, 98-0092.

Supreme Court of Wisconsin.

Oral argument June 2, 1999.

Decided July 9, 1999.

For the defendant-respondent-petitioner there were briefs by Arthur M. Moglowsky, Penny G. Gentges and Bass & Moglowsky, S.C., Milwaukee and oral argument by Arthur M. Moglowsky.

For all the plaintiffs-appellants there was a brief by Gerald R. Harmon and Harmon Law Office, Milwaukee and oral argument by Gerald R. Harmon.

Amicus curiae was filed by Stephen E. Meili and Consumer Law Litigation Clinic, Madison for Center for Public Representation, Inc.

Amicus curiae was filed by Edward J. Heiser, Jr., and Whyte Hirschboeck Dudek, S.C., Milwaukee for the Wisconsin Financial Services Association.

¶ 1. SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE.

This is a review of a published decision of the court of appeals, Kett v. Community Credit Plan, Inc., 222 Wis. 2d 117, 586 N.W.2d 68 (Ct. App. 1998), which reversed two orders, one of the Circuit Court for Waukesha County, Kathryn W. Foster, Judge, and one of the Circuit Court for Walworth County, James L. Carlson, Judge.

¶ 2. This review involves three actions against Community Credit Plan, Inc., for damages for alleged violations of the Wisconsin Consumer Act, Wis. Stat. chs. 421-427 (1995-96).¹ Marcia and Hulda Johnson filed an action in Walworth County; Frank M. Kett and Kenneth P. Mader each filed an action in Waukesha County. These three actions were consolidated at the court of appeals. We refer to the four plaintiffs collectively as "the customers."

¶ 3. The review at bar arises from earlier replevin actions that Community Credit brought in Milwaukee County Circuit Court against these customers to recover their vehicles that were collateral for loans. Community Credit obtained default replevin judgments in these actions, but the Milwaukee County Circuit Court later vacated the judgments because the actions were commenced in Milwaukee County Circuit Court in violation of the venue provision of the Wisconsin Consumer Act; the actions were dismissed. After the Milwaukee County Circuit Court entered the default replevin judgments but before it vacated the judgments, Community Credit took possession of the customers' vehicles by nonjudicial recovery.

¶ 4. In the actions presently before this court the customers are seeking damages from Community Credit for wrongfully taking possession of the vehicles and for other practices prohibited by the Wisconsin Consumer Act. The customers moved for summary judgment in the circuit court on the liability issues.² ¶ 5. Three issues are presented in this review. Each involves interpretation of the Wisconsin Consumer Act and application of the Act to undisputed facts. The three issues of law are as follows:

¶ 6. (I) Does Community Credit's taking possession of the vehicles by nonjudicial recovery pursuant to the default replevin judgments entered by the Milwaukee County Circuit Court violate the venue provision of the Wisconsin Consumer Act violate Wis. Stat. § 425.206? If so, the customers are entitled to damages under Wis. Stat. § 425.305.

¶ 7. (II) Did Community Credit engage in prohibited practices in violation of Wis. Stat. § 427.104(1)(h) and (j)? In other words, did Community Credit engage in conduct that could reasonably be expected to threaten or harass the customers or persons related to the customers or claim, or attempt or threaten to enforce a right with knowledge or reason to know that the right did not exist? If Community Credit engaged in either of these prohibited practices, the customers are entitled to damages under Wis. Stat. §§ 425.304 and 427.105.

¶ 8. (III) Are the customers entitled to reasonable attorney fees under Wis. Stat. § 425.308?

¶ 9. The Circuit Court for Waukesha County granted summary judgment to Community Credit and dismissed all the customers' claims, reasoning that the customers waived their claims by not objecting to the default judgments before Community Credit repossessed the vehicles.³

¶ 10. The Circuit Court for Walworth County granted summary judgment in favor of Community Credit on the customers' wrongful repossession claims.⁴ It refused to grant summary judgment on the prohibited practice claims because it concluded that genuine issues of material fact exist with regard to the elements of knowledge.

¶ 11. The court of appeals concluded that summary judgment should be entered in favor of the customers on all claims and remanded the causes for determination of damages.⁵ We agree with the court of appeals and affirm the decision of the court of appeals. The language, the legislative history, and the interplay of the statutes, as well as the legislative policies expressed in the Wisconsin Consumer Act, support our conclusion that the default replevin judgments on which Community Credit relied for possession of the collateral by nonjudicial recovery were invalid at the time of entry for purposes of Wis. Stat. § 425.206(1)(b) because Community Credit had not commenced the replevin actions in a county of proper venue. Accordingly, we conclude that Community Credit engaged in wrongful repossession in violation of Wis. Stat. § 425.206 and engaged in prohibited practices in violation of Wis. Stat. § 427.104(1)(h) & (j).

I

¶ 12. The first issue is whether Community Credit's taking possession of the vehicles by nonjudicial recovery pursuant to the invalid Milwaukee County Circuit Court default replevin judgments violates Wis. Stat. § 425.206. At the time of Community Credit's taking of the vehicles, the customers had not surrendered, nor agreed to surrender, possession to Community Credit. Community Credit could have relied on execution to take possession of the collateral, but it chose instead to undertake nonjudicial recovery of the collateral after entry of the Milwaukee County Circuit Court default replevin judgments.⁶

¶ 13. The parties agree that the default replevin judgments of the Milwaukee County Circuit Court were invalid because venue was not in Milwaukee County.⁷ The question is whether Community Credit's nonjudicial recovery of collateral pursuant to the judgments conformed to the requirements of Wis. Stat. § 425.206. Section 425.206 provides in pertinent part as follows:

425.206 Nonjudicial enforcement limited. (1) Notwithstanding any other provision of law, no merchant may take possession of collateral or goods subject to a consumer lease in this state by means other than legal process in accordance with this subchapter except when:

....

(b) Judgment for the merchant has been entered in a proceeding for recovery of collateral or leased goods under s. 425.205, or for possession of the collateral or leased goods under s. 425.203(2);

....

(3) a violation of this section is subject to s. 425.305.⁸ [Emphasis added.]

¶ 14. We must determine under Wis. Stat. § 425.206(1)(b) whether Community Credit proceeded to take possession of collateral by nonjudicial recovery with judgments entered in proceedings for recovery of collateral under Wis. Stat. § 425.205.

¶ 15. As we have said, Community Credit and the customers agree that the default replevin judgments were invalid because the replevin actions against the customers were commenced in Milwaukee County Circuit Court in violation of the venue statute, Wis. Stat. § 421.401.⁹ Indeed this court has held these default replevin judgments invalid in a decision released this same date. See note 7 above. Thus the invalidity of the default replevin judgments is a settled matter.

¶ 16. The question then is whether these default replevin judgments, which were vacated because of a defect of venue after recovery of collateral, can be deemed to be valid judgments under Wis. Stat. § 425.206(1)(b) and as such protect Community Credit, which used nonjudicial recovery, from the charges of wrongfully taking possession of collateral.

¶ 17. Community Credit rests its argument that it had valid judgments when the collateral was recovered for purposes of Wis. Stat. § 425.206(1)(b) on the general venue statute, Wis. Stat. § 801.50(1), which provides that "[a] defect in venue shall not affect the validity of any order or judgment."¹⁰ Noting that § 801.50(5)(m) refers to § 421.401, which contains the venue provisions applicable to actions arising from consumer credit transactions, Community Credit contends that § 801.50(1) is applicable to the Milwaukee County Circuit Court replevin actions. Community Credit further notes the Wis. Stat. § 425.205(1) statement that "replevin actions shall be conducted in accordance with ch. 799 [the Small Claims Act]," and the Wis. Stat. § 799.04 provision that except as otherwise provided in chapter 799, the general rules of practice and procedure in chapter 801 apply. Community Credit argues that these various provisions demonstrate that § 801.50(1) governs the venue of actions arising from consumer credit transactions and that the default replevin judgments in this review were, on recovery of the vehicles, valid under § 801.50(1).

¶ 18. Thus Community Credit argues that the circuit court should have held that the default replevin judgments in this case were, when the vehicles were taken by nonjudicial recovery, voidable under Wis. Stat. § 801.50(1), but not void. Community Credit argues that whereas a void judgment is a nullity and proceedings founded upon it are worthless, proceedings founded on a voidable judgment are generally valid until the judgment is set aside.¹¹

¶ 19. Our reading of the venue provisions does not lead to Community Credit's conclusion that Wis. Stat. § 801.50(1) is applicable to the Milwaukee County Circuit Court...