Duncan v. Asset Recovery Specialists, Inc.

393 Wis.2d 814

948 N.W.2d 419

2020 WI App 54

Danelle DUNCAN, Plaintiff-Appellant,

v.ASSET RECOVERY SPECIALISTS, INC., Wells Fargo Bank, N.A. and Greg Strandlie, Defendants-Respondents.^†

Appeal No. 2019AP1365

Court of Appeals of Wisconsin.

Oral Argument: June 22, 2020

Opinion Filed: July 30, 2020

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of and oral argument by Briane F. Pagel of Lawton & Cates, S.C., Madison.

On behalf of the defendants-respondents, the cause was submitted on the brief of and oral argument by William W. Ehrke of Crivello Carlson, S.C., Milwaukee.

Before Blanchard, Graham, and Nashold, JJ.

GRAHAM, J.

¶1 Greg Strandlie, Asset Recovery Specialists, Inc., and Wells Fargo Bank, N.A. (collectively, the defendants) repossessed Danelle Duncan's vehicle while it was parked in the shared garage on the ground floor of her multi-unit apartment complex. It is undisputed that the defendants had a legal right to repossess the vehicle, but Duncan argues that the way they repossessed it violated WIS. STAT . § 425.206(2)(b) (2017-18).¹ She also contends that the defendants violated WIS. STAT. § 425.107(1), which prohibits unconscionable conduct directed against a customer. The circuit court determined that the defendants did not violate § 425.206(2)(b), and on that basis, it granted summary judgment on all claims in the defendants’ favor.

¶2 The central issue in this appeal is the proper interpretation of WIS. STAT . § 425.206(2), which prohibits a merchant from "enter[ing] a dwelling used by the customer as a residence" to repossess collateral. We conclude that the garage in Duncan's apartment building was part of a dwelling she used as a residence.

Therefore, the defendants violated § 425.206(2)(b) when they entered the garage, the circuit court erred by granting summary judgment in the defendants’ favor, and Duncan is entitled to summary judgment on that claim instead. We also reverse the court's grant of summary judgment on the WIS. STAT. § 425.107(1) claim because the court's stated reasons no longer apply, and the parties’ remaining arguments about unconscionable conduct are undeveloped. Accordingly, we reverse the order granting summary judgment to the defendants and remand for further proceedings consistent with this opinion.

BACKGROUND

¶3 Duncan purchased a vehicle from a dealership, and she financed the purchase with a loan. The loan contract was ultimately assigned to Wells Fargo Bank (the Bank), and the contract granted the Bank a security interest in the vehicle. Duncan failed to make payments that came due and eventually was in default.

¶4 The vehicle served as collateral for the loan, and Wisconsin law provided the Bank two options for recovering it. The Bank could go to court to obtain a replevin judgment under WIS. STAT . § 425.205. Alternatively, it could follow the procedures for a "nonjudicial" repossession under WIS. STAT . § 425.206(1)(d). The Bank chose the latter option, and it is undisputed that it met all statutory requirements to proceed with nonjudicial repossession.² Accordingly, the Bank retained Asset Recovery Specialists, a repossession company owned and operated by Greg Strandlie, to repossess Duncan's vehicle.

¶5 At the time, Duncan rented an apartment unit in a multi-story apartment building. The ground floor of the building consisted entirely of a private parking garage for tenants, and Duncan sometimes kept her vehicle in it.³

¶6 When Strandlie arrived to repossess the vehicle, the garage door had been left open and Duncan's vehicle was parked inside. At Strandlie's direction an ARS employee drove his tow truck into the garage, hooked up the vehicle, and drove away with it. Neither Strandlie nor the ARS employee had any interaction with Duncan at that time. Strandlie later averred that an apartment building maintenance employee was working in the garage during the repossession, and that he did not object to the repossession.

¶7 In this lawsuit,⁴ Duncan alleges various violations of the Wisconsin Consumer Act. Among other claims, she alleges that the defendants violated WIS. STAT . § 425.206(2)(b), which we refer to as her "illegal repossession" claim. She also alleges a violation of WIS. STAT . § 425.107(1), which we refer to as her "unconscionable conduct" claim. The parties filed cross-motions for summary judgment.

¶8 The circuit court determined that all of Duncan's claims depend on whether Strandlie's entry into the garage was lawful under WIS. STAT . § 452.206(2)(b). The court further determined that this issue turns on whether the garage was "primarily or intimately tied to the use of [Duncan's] apartment" and whether she had the "right to exclude others" from the garage. After determining that the garage did not meet these criteria, the court granted summary judgment in the defendants’ favor on all claims.

DISCUSSION

¶9 Duncan argues that the circuit court erroneously granted summary judgment to the defendants on her illegal repossession and unconscionable conduct claims. "We review de novo the grant of summary judgment, employing the same methodology as the circuit court." Palisades Collection LLC v. Kalal , 2010 WI App 38, ¶9, 324 Wis. 2d 180, 781 N.W.2d 503. Summary judgment is appropriate when "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." WIS. STAT . § 802.08.

¶10 Here, whether summary judgment should be granted to either party turns on the interpretation and application of statutes, which is also a question of law that we review de novo. Nowell v. City of Wausau , 2013 WI 88, ¶19, 351 Wis. 2d 1, 838 N.W.2d 852. When we interpret a statute, we begin with its plain language, and as part of our inquiry, we consider the statute's "scope, context, and purpose." State ex rel. Kalal v. Circuit Court for Dane Cty. , 2004 WI 58, ¶¶45, 48-49, 271 Wis. 2d 633, 681 N.W.2d 110.

¶11 We address Duncan's illegal repossession and unconscionable conduct claims in turn.

I. The Illegal Repossession Claim

¶12 The central dispute between the parties is whether the defendants violated WIS. STAT . § 425.206(2)(b) when they entered the garage shared by residents in Duncan's apartment building to repossess her vehicle. Section 425.206(2) provides in full:

In taking possession of collateral or leased goods, no merchant may do any of the following:

(a) Commit a breach of the peace.

(b) Enter a dwelling used by the customer as a residence except at the voluntary request of a customer.

Id.

¶13 Whether either party is entitled to summary judgment on this claim turns on the proper interpretation of the statutory phrase "dwelling used by the customer as a residence." The parties agree that the statute does not define this phrase and that no prior case law has interpreted it.⁵ Duncan contends that this phrase should be interpreted broadly to include the garage. The defendants disagree. Consistent with the circuit court's reasoning, they point out that Duncan did not live in the garage and did not have the right to exclude others from it. For these reasons, they argue, the garage cannot be considered a "dwelling used by the customer as a residence."

¶14 WISCONSIN STAT . § 425.206(2) is part of the Wisconsin Consumer Act, WIS. STAT . chs. 421-29, which we sometimes refer to as the WCA. We begin our analysis by briefly recounting the history and context of certain provisions in the WCA that are material to our analysis. We then turn our focus to the specific language of § 425.206(2). In the course of interpreting the phrase "dwelling used by the customer as a residence," we separately examine the meaning of the word "dwelling" and the phrase "used by the customer as a residence" that modifies it.

A. The Wisconsin Consumer Act

¶15 The Wisconsin Consumer Act was enacted in 1971 and went into effect two years later in 1973. See 1971 Wis. Act 239. Two of its stated purposes are "[t]o simplify, clarify and modernize the law governing consumer transactions" and "[t]o protect customers against unfair, deceptive, false, misleading and unconscionable practices by merchants."⁶ WIS. STAT . § 421.102(2)(a), (b).

¶16 There are actually two separate statutes in the WCA that limit merchants from entering dwellings to repossess collateral. One of the statutes is WIS. STAT . § 425.206(2), the repossession statute that Duncan claims the defendants violated in this case. The other is WIS. STAT . § 422.419(1)(a), which governs the contract terms that may be included in consumer credit transactions such as Duncan's loan. These two statutes were enacted by the legislature at the same time as part of the same act, and they use similar language to address separate but closely related contexts. We briefly summarize both statutes here because, for reasons we explain further below, an understanding of the parallels between them sheds light on the meaning of § 425.206(2).

¶17 The statute at issue in this case, WIS. STAT . § 425.206(2), is part of the subchapter of the WCA that addresses the rights that merchants have to enforce security interests that are granted by consumer credit transactions. See WIS. STAT . ch. 425, subch. II, §§ 425.201 - 425.210 (entitled "Enforcement of Security Interests in Collateral"). This subchapter regulates the collection actions that a merchant may take when a customer defaults on a loan.

¶18 WISCONSIN STAT . § 425.206, which is entitled "Nonjudicial enforcement limited," sets forth specific rules for repossessing collateral. For most items that serve as collateral, a merchant must first obtain a replevin judgment from a court before it can enforce its security interest in the item. See § 425.206(1)(b). There is a narrow exception for motor vehicles: under § 425.206(1)(d), a merchant may repossess a motor vehicle outside of the judicial process so long as the merchant fulfills certain notice requirements.⁷ Regardless of which process the merchant uses, § 425.206(2) specifies that a merchant may never "[...