Chapter 425

425.208 History History: 1971 c. 239; 1979 c. 10, 89; 1983 a. 389; 1991 a. 316; 1997 a. 302; 1999 a. 85; 2001 a. 10.

425.209 425.209 Restrictions on deficiency judgments.

425.209(1) (1) This section applies to a deficiency on a consumer credit sale of goods or services and on a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408); a customer is not liable for a deficiency unless the merchant has disposed of the goods in good faith and in a commercially reasonable manner.

425.209(2) (2) If the merchant repossesses or accepts voluntary surrender of goods which were the subject of the sale and in which the merchant has a security interest, the customer is not personally liable to the merchant for the unpaid balance of the debt arising from the sale of a commercial unit of the goods of which the amount owing at the time of default was $1,000 or less, and the merchant is not obligated to resell the collateral unless the customer has paid 60 percent or more of the cash price and has not signed after default a statement renouncing the customer’s rights in the collateral.

425.209(3) (3) If the merchant repossesses or accepts voluntary surrender of goods which were not the subject of the sale but in which the merchant has a security interest to secure a debt arising from a sale of goods or services or a combined sale of goods and services and the amount owing at the time of default was $1,000 or less, the customer is not personally liable to the merchant for the unpaid balance of the debt arising from the sale, and the merchant’s duty to dispose of the collateral is governed by the provisions on disposition of collateral under chs. 401 to 411.

425.209(4) (4) If the lender takes possession or accepts voluntary surrender of goods in which the lender has a security interest to secure a debt arising from a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408) and the amount owing at the time of default of the loan paid to or for the benefit of the customer were $1,000 or less, the customer is not personally liable to the lender for the unpaid balance of the debt arising from the loan and the lender’s duty to dispose of the collateral is governed by the provisions on disposition of collateral under chs. 401 to 411.

425.209(5) (5) The customer may be liable in damages to the merchant if the customer has wrongfully damaged the collateral or if, after judgment for the creditor has been entered in a proceeding for recovery of collateral under s. 425.205, the customer has wrongfully failed to make the collateral available to the merchant.

425.209(6) (6) If the merchant elects to bring an action against the customer for a debt arising from a consumer credit sale of goods or services or from a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408), when under this section the merchant would not be entitled to a deficiency judgment if the merchant took possession of the collateral, and obtains judgment:

425.209(6)(a) (a) The merchant may not take possession of the collateral; and

425.209(6)(b) (b) The collateral is not subject to levy or sale on execution or similar proceedings pursuant to the judgment.

425.209 History History: 1971 c. 239; 1973 c. 2, 3; 1991 a. 148, 304, 315, 316.

425.209 Cross-reference Cross-reference: See also ss. DFI-WCA 1.70 and 1.71, Wis. adm. code.

425.209 Annotation Proof of disposal of goods in accordance with sub. (1) must be made by a merchant to obtain a deficiency judgment. Failure to do so need not be asserted as an affirmative defense. Shoeder’s Auto Center, Inc. v. Teschner, 166 Wis. 2d 198, 479 N.W.2d 203 (Ct. App. 1991).

425.209 Annotation Consistent with Shoeder’s Auto Center, 166 Wis. 2d 198 (Ct. App. 1991), in order to make a prima facie case for summary judgment for a deficiency judgment, the merchant is required to present evidence demonstrating that the collateral was disposed of in a commercially reasonable manner. Gemini Capital Group, LLC v. Jones, 2017 WI App 77, 378 Wis. 2d 614, 904 N.W.2d 131, 16-2123.

425.210 425.210 Computation of deficiency. If the creditor is entitled to a deficiency judgment pursuant to s. 425.209 (1), the creditor shall be entitled to recover from the customer the deficiency, if any, remaining after deducting the fair market value of the collateral from the unpaid balance.

425.210 History History: 1971 c. 239.

subch. III of ch. 425 SUBCHAPTER III

CUSTOMER’S REMEDIES

425.301 425.301 Remedies to be liberally administered.

425.301(1) (1) The remedies provided by this subchapter shall be liberally administered to the end that the customer as the aggrieved party shall be put in at least as good a position as if the creditor had fully complied with chs. 421 to 427. Recoveries under chs. 421 to 427 shall not in themselves preclude the award of punitive damages in appropriate cases.

425.301(2) (2) Any right or obligation declared by chs. 421 to 427 is enforceable by action unless the provision declaring it specifies a different and limited effect.

425.301(3) (3) Notwithstanding any other section of chs. 421 to 427, a customer shall not be entitled to recover specific penalties provided in s. 425.302 (1) (a), 425.303 (1), 425.304 (1) or 425.305 (1) if the person violating chs. 421 to 427 shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

425.301(4) (4) The liability of a merchant under chs. 421 to 427 is in lieu of and not in addition to any liability under the federal consumer credit protection act and ss. 138.09, 138.14, or 218.0101 to 218.0163. An action by a person alleging a violation under chs. 421 to 427 may not be maintained if a final judgment has been rendered for or against that person with respect to the same violation under the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163. If a final judgment is entered against any merchant under chs. 421 to 427 and the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163 for the same violation, the merchant has a cause of action for appropriate relief to the extent necessary to avoid double liability.

425.301(5) (5) If there are multiple obligors in the same consumer credit transaction or consumer lease, there may be no more than one recovery of civil penalties for each violation of chs. 421 to 427.

425.301 History History: 1971 c. 239; 1975 c. 407; 1979 c. 89; 1985 a. 256; 1999 a. 31; 2009 a. 405.

425.301 Annotation An error of law is not a bona fide error under sub. (3). First Wisconsin National Bank v. Nicolaou, 113 Wis. 2d 524, 335 N.W.2d 390 (1983).

425.301 Annotation Sub. (2)’s right to enforcement “by action” does not specify any right to trial. In this case, the arbitration agreement merely shifted the proceedings to a less formal, less expensive, and more expedient form. Therefore, the borrower’s general attack on agreements to arbitrate, rather than litigate, failed. Cottonwood Financial, LTD v. Estes, 2012 WI App 12, 339 Wis. 2d 472, 810 N.W.2d 852, 09-0760.

425.302 425.302 Remedy and penalty for certain violations.

425.302(1) (1) A person who commits a violation to which this section applies is liable to the customer in an amount equal to:

425.302(1)(a) (a) Twenty-five dollars; and

425.302(1)(b) (b) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.302(2) (2) This section also applies to all violations for which no other remedy is specifically provided.

425.302 History History: 1971 c. 239.

425.303 425.303 Remedy and penalty for certain violations. A person who commits a violation to which this section applies is liable to the customer in an amount equal to:

425.303(1) (1) One hundred dollars; and

425.303(2) (2) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.303 History History: 1971 c. 239.

425.304 425.304 Remedy and penalty for certain violations. A person who commits a violation to which this section applies is liable to the customer in an amount equal to the greater of:

425.304(1) (1) Twice the amount of the finance charge in connection with the transaction, except that the liability under this subsection shall not be less than $100 nor greater than $1,000; or

425.304(2) (2) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.304 History History: 1971 c. 239.

425.304 Annotation The word “or” in this section makes it clear that the recovering party is not entitled to both statutory and actual damages. Kirk v. Credit Acceptance Corp., 2013 WI App 32, 346 Wis. 2d 635, 829 N.W.2d 522, 10-2573.

425.305 425.305 Transactions which are void.

425.305(1) (1) In a transaction to which this section applies, the customer shall be entitled to retain the goods, services or money received pursuant to the transaction without obligation to pay any amount.

425.305(2) (2) In addition, the customer shall be entitled to recover any sums paid to the merchant pursuant to the transaction.

425.305 History History: 1971 c. 239; 1973 c. 2.

425.306 425.306 Unenforceable obligations.

425.306(1) (1) Any charge, practice, term, clause, provision, security interest or other action or conduct in violation of chs. 421 to 427, to the extent that the same is in violation of chs. 421 to 427, shall confer no rights or obligations enforceable by action.

425.306(2) (2) This section shall not affect the enforcement of any provision that is not prohibited by chs. 421 to 427.

425.306 History History: 1971 c. 239; 1979 c. 89.

425.307 425.307 Limitation of action.

425.307(1) (1) Any action brought by a customer to enforce rights pursuant to chs. 421 to 427 shall be commenced within one year after the date of the last violation of chs. 421 to 427, 2 years after consummation of the agreement or one year after last payment, whichever is later, except with respect to transactions pursuant to open-end credit plans which shall be commenced within 2 years after the date of the last violation; but no action may be commenced more than 6 years after the date of the last violation.

425.307(2) (2) Rights under chs. 421 to 427 may be asserted as a defense, setoff or counterclaim to an action against the customer without regard to this time limitation.

425.307 History History: 1971 c. 239; 1979 c. 89.

425.307 Annotation Regardless of the reason the six-year limitations period was included, the language of the statute makes it clear that the six-year deadline is not a way for a plaintiff to avoid the deadlines in the first part of the statute. That part of the statute says that a lawsuit “shall be commenced” within one or two years of certain events. In other words, if the plaintiff is a customer and he cannot meet the limitations periods in the first part of the statute, the plaintiff cannot rely on the last part of the statute to extend his limitations period. McDonough v. WESTconsin Credit Union, 97 F. Supp. 3d 1040 (2015).

425.308 425.308 Reasonable attorney fees.

425.308(1) (1) If the customer prevails in an action arising from a consumer transaction, the customer shall recover the aggregate amount of costs and expenses determined by the court to have been reasonably incurred on the customer’s behalf in connection with the prosecution or defense of such action, together with a reasonable amount for attorney fees.

425.308(2) (2) The award of attorney fees shall be in an amount sufficient to compensate attorneys representing customers in actions arising from consumer transactions. In determining the amount of the fee, the court may consider:

425.308(2)(a) (a) The time and labor required, the novelty and difficulty of the questions involved and the skill requisite properly to conduct the cause;

425.308(2)(b) (b) The customary charges of the bar for similar services;

425.308(2)(c) (c) The amount involved in the controversy and the benefits resulting to the client or clients from the services;

425.308(2)(d) (d) The contingency or the certainty of the compensation;

425.308(2)(e) (e) The character of the employment, whether casual or for an established and constant client; and

425.308(2)(f) (f) The amount of the costs and expenses reasonably advanced by the attorney in the prosecution or defense of the action.

425.308 History History: 1971 c. 239; 1991 a. 316; 1993 a. 490.

425.308 Annotation Attorney fees awarded under this section often far exceed the amount of recovery. First Wisconsin National Bank v. Nicolaou, 113 Wis. 2d 524, 335 N.W.2d 390 (1983).

425.308 Annotation Awards of attorney fees and costs are limited to instances in which a customer has shown that a creditor has not “fully complied with chs. 421 to 427.” Suburban State Bank v. Squires, 145 Wis. 2d 445, 427 N.W.2d 393 (Ct. App. 1988).

425.308 Annotation A prevailing party is one who succeeds on any significant issue and is entitled to recover fees relating to successfully litigated issues. Footville State Bank v. Harvell, 146 Wis. 2d 524, 432 N.W.2d 122 (Ct. App. 1988).

425.308 Annotation Although voluntarily dismissed, prosecution of improperly venued actions violated the consumer act, and the defendants were prevailing parties under this section entitled to attorney fees. Community Credit Plan, Inc. v. Johnson, 228 Wis. 2d 30, 596 N.W.2d 799 (1999), 97-0574.

425.308 Annotation A party moving for attorney’s fees and costs under the Wisconsin Consumer Act (WCA) must show both a significant benefit in litigation and a violation of the WCA on the part of the non-moving party. When a claim for deficiency judgment was dismissed without costs and without prejudice, no violation of the WCA was shown. Credit Acceptance Corp. v. Woodard, 2012 WI App 43, 340 Wis. 2d 548, 812 N.W.2d 525, 11-0135.

425.309 425.309 Class actions. Class actions are governed by s. 426.110.

425.309 History History: 1971 c. 239.

425.310 425.310 Liability of corporate officers. Damages or penalties awarded to a customer or the administrator for a violation of chs. 421 to 427 which cannot be collected from a corporation by reason of its insolvency or dissolution shall be recoverable against the principal agents of the corporation including, but not limited to, officers, managers and assistant managers who knew of, should have known of or willfully participated in such a violation, if a meaningful part of the corporation’s activities were in violation of chs. 421 to 427.

425.310 History History: 1971 c. 239; 1979 c. 89.

425.311 425.311 Evidence of violation. Sections 402.202 and 411.202 and any other statute restricting admissibility of parol evidence shall be inoperative to exclude or limit the admissibility of evidence of an act or practice in violation of chs. 421 to 427.

425.311 History History: 1971 c. 239; 1979 c. 89; 1991 a. 148.

subch. IV of ch. 425 SUBCHAPTER IV

CRIMINAL PENALTIES

425.401 425.401 Willful violations: misdemeanor.

425.401(1) (1) Except as provided in sub. (2), a person who willfully and knowingly engages in any conduct or practice in violation of chs. 421 to 427 may be fined not more than $2,000.

425.401(2) (2) A person who intentionally violates s. 425.2065 (2) may be fined not more than $500.

425.401 History History: 1971 c. 239; 1979 c. 89; 2005 a. 255.