Schmidt v. Reiff, Appeal Nos. 2019AP1919

CourtCourt of Appeals of Wisconsin
Writing for the CourtPER CURIAM.
Citation2022 WI App 7,970 N.W.2d 567 (Table)
Parties Scott R. SCHMIDT, Plaintiff-Appellant, v. Sheila REIFF, Clerk of Circuit Court, Kimberly S. Bushey, Richard G. Chandler, Secretary, Steven Gorton, Chief, Walworth County and Department of Revenue, Defendants-Respondents.
Docket Number2019AP2215,Appeal Nos. 2019AP1919
Decision Date14 July 2021

970 N.W.2d 567 (Table)
2022 WI App 7

Scott R. SCHMIDT, Plaintiff-Appellant,
Sheila REIFF, Clerk of Circuit Court, Kimberly S. Bushey, Richard G. Chandler, Secretary, Steven Gorton, Chief, Walworth County and Department of Revenue, Defendants-Respondents.

Appeal Nos. 2019AP1919

Court of Appeals of Wisconsin.

July 14, 2021


¶1 In these consolidated appeals, Scott Schmidt appeals pro se from orders dismissing his complaint for failure to state a claim. We agree that Schmidt's complaint does not state a claim, and we affirm.

¶2 In 1990, as a result of convictions for multiple felonies, the circuit court imposed court costs on Schmidt, which he never paid.1 Pursuant to WIS. STAT. § 973.05(4) (2013-14), on August 28, 2014, the circuit court entered a $2725.20 civil judgment for those costs against Schmidt. Schmidt did not appeal from the August 2014 judgment. In October 2014, the Walworth County Clerk of Circuit Court (the clerk) notified Schmidt of the clerk's intent to certify the debt to the Wisconsin Department of Revenue (DOR) to offset a tax refund.

¶3 In 2016, the clerk entered into a State Debt Collection Agreement (the agreement) with the DOR pursuant to WIS. STAT. § 71.93(8)(b)5. (2015-16). In 2017, the clerk sent two notices to Schmidt that his debt was being sent to the DOR for collection pursuant to WIS. STAT. § 71.935 (2015-16). On October 2, 2017, the DOR levied Schmidt's bank account and recovered $351.49 on his 2014 judgment debt (the levy).

¶4 In October 2018, Schmidt commenced the case before us, suing the clerk, the DOR, and various individuals2 and challenging the levy on a number of grounds. After concluding that Schmidt owed the debt and that "there was a mechanism for collecting on that debt," the circuit court concluded that Schmidt's complaint failed to state a claim. Schmidt appeals from the dismissal of his complaint.

¶5 As a threshold matter, we must clarify the scope of this appeal. The 2014 judgment is outside the scope of this appeal because the time for appealing that judgment has long since expired. See WIS. STAT. RULE 809.10(1)(e) and WIS. STAT. § 808.04(1) (2019-20). Furthermore, Schmidt's complaint in this case constitutes an impermissible collateral attack on the 2014 judgment. Mercado v. GE Money Bank , 2009 WI App 73, ¶16, 318 Wis. 2d 216, 768 N.W.2d 53. We do not consider any issue premised on a challenge to the 2014 judgment or the existence of the judgment debt.

¶6 "A motion to dismiss for failure to state a claim tests whether the complaint is legally sufficient to state a cause of action for which relief may be granted." Tietsworth v. Harley-Davidson, Inc. , 2004 WI 32, ¶11, 270 Wis. 2d 146, 677 N.W.2d 233. "We review a dismissal for failure to state a claim de novo, accepting the facts alleged in the complaint ... as true ...." Id. "[T]he sufficiency of a complaint depends on substantive law that underlies the claim ...." Data Key Partners v. Permira Advisers LLC , 2014 WI 86, ¶31, 356 Wis. 2d 665, 849 N.W. 2d 693.

¶7 On appeal, Schmidt argues that his complaint states claims upon which relief could be granted. Of the claims properly before this court, Schmidt challenges the process by which the clerk sent the debt to the DOR for collection and the process by which the DOR collected the debt.

¶8 Schmidt's complaint alleges that in levying against his bank account to collect upon a judgment debt, the DOR acted outside of its authority under WIS. STAT. ch. 71 (2015-16) to collect tax due. As the DOR and the clerk correctly argue, Schmidt does not state a claim upon which relief can be granted. In paragraph fifty of his complaint, Schmidt acknowledges that the county can enter into collection agreements with the DOR to collect funds due the county. WIS. STAT. § 71.93(8)(b)1. and (b)5. (2015-16). In this case, the DOR was not collecting a tax due; the DOR was collecting an outstanding judgment debt due to the county pursuant to the agreement. Schmidt's complaint does not state a claim that the DOR should have complied with statutes governing the collection of taxes.

¶9 Schmidt alleges that by levying against his accounts, the DOR was not acting under WIS. STAT. § 71.935(3)(a) (2015-16), which authorizes the DOR to set off debts against a tax refund. Schmidt does not state a claim. The agreement authorizes the DOR to act pursuant to WIS. STAT. § 71.93(8)(b)5. (2015-16). The DOR may collect debts by collecting against any property of the debtor. WIS. STAT. §§ 71.93(8)(b)5. and 71.91(6)(b) (2015-16).

¶10 Schmidt claims due process violations because he did not receive notice of collection activities before they started in October 2014 and the 2017 levy occurred without notice to him.3 Schmidt's 2018 complaint alleges that he is subject to a WIS. STAT. ch. 980 (2019-20) commitment and has been residing at Sand Ridge Secure Treatment Center since September 2010. The clerk sent the August 2014 judgment to Schmidt at Sand Ridge. The clerk complied with WIS. STAT. § 973.05(4)(a) (2013-14) (the clerk shall "send to the defendant at his or her last-known address written notification that a civil judgment has been issued"). The clerk also sent the October 2014 Notice of Certification to Schmidt at Sand Ridge. In 2017, the clerk twice sent notices of intent to collect to Schmidt. These notices appear in the docket entries for the 1990 felony case in which the financial obligation was first imposed.

¶11 Schmidt is charged with knowledge of debt collection laws affecting his property. See Ritter v. Ross , 207 Wis. 2d 476, 493, 558 N.W.2d 909 (Ct. App. 1996). We conclude that as with "proceedings for the levy and collection of taxes, due process ‘does not imply or require the right to such notice and hearing as are deemed essential to the validity of the proceedings and judgments of judicial...

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