Rumpf v. Quorum Fed. Credit Union & Case Law Firm

TIMOTHY R. RUMPF, Plaintiff, v. QUORUM FEDERAL CREDIT UNION and CASE LAW FIRM, S.C., Defendants.

17-cv-290-wmc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

November 30, 2018

OPINION AND ORDER

Plaintiff Timothy R. Rumpf asserts claims against defendants Quorum Federal Credit Union and its law firm Case Law Firm, S.C., for violations of the Wisconsin Consumer Act, Wis. Stat. § 427.104, and civil theft under Wis. Stat. § 895.446, and against defendant Case for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 ("FDCPA"), all based on defendants' actions in a state court debt collection and garnishment action against Rumpf. Before the court is defendant Quorum's motion to dismiss, asserting several bases including jurisdictional challenges (dkt. #36), and defendant Case's motion for summary judgment (dkt. #20), largely asserting the same bases for judgment in its favor and relying on the same state court records as Quorum's motion to dismiss. The court will take up these two motions together, cognizant of the different standards applied to each. For the reasons that follow, the court will deny both motions, albeit noting some limitations to plaintiffs' claims going forward.¹

FACTS²

Plaintiff Rumpf applied for and received a credit card from Quorum, which not only required that he repay in full all credit extended eventually, but also required him by contract to make minimum, monthly installment payments toward any amounts charged and required him to pay a finance charge on the outstanding balance. Rumpf alleges in his complaint, and avers in a declaration submitted in opposition to defendant Cases' motion for summary judgment, that he "used the money obtained from Quorum [under this contract] for his own personal and household purposes."³ (Compl. (dkt. #1) ¶ 2; see also Rumpf. Aff. (dkt. #44) ¶ 3.)

In March 2012, Quorum determined that Rumpf was in default under the terms of their contract. On March 27, 2012, therefore, Quorum served a notice of default, providing Rumpf 12 days to make the payments due. Rumpf did not comply.

On December 3, 2012, Quorum filed a lawsuit against Rumpf in Dane County, Wisconsin, claiming it was then owed $20,954.89. Quorum Fed. Credit Union v. Rumpf, No. 12CV004714 (Wis. Cir. Ct. Dane Cnty. Dec. 3, 2012). Quorum alleged that Rumpf had defaulted on this line of credit and could no longer cure that default. Rumpf answered the complaint. Among other things, he asserted as a defense that Quorum failed to provide alegally-sufficient notice of right to cure default. Specifically, Rumpf argued the "notice of default" that Quorum served on Rumpf provided less than 15 days to cure, rendering it deficient under the Wisconsin Consumer Act. Rumpf's argument failed in Dane County Circuit Court, resulting in the entry of judgment in favor of Quorum. Rumpf then filed a notice of appeal on January 23, 2015.

While this appeal was pending, Quorum filed garnishment notices on Rumpf on February 2, 2015, and December 16, 2015. Unsuccessful in opposing garnishment, Quorum successfully garnished approximately $6,000 from Rumpf's earnings as a result. On May 24, 2016, however, the Wisconsin Court of Appeals issued an opinion reversing the circuit court's grant of judgment in Quorum's favor and remanding for further proceedings. See Quorum Fed. Credit Union v. Rumpf, No. 2015AP201, 2016 WL 8606258 (Wis. Ct. App. May 24, 2016) (unpublished). In its decision, the court of appeals agreed that Quorum's first notice was deficient because it did not provide at least 15 days to cure the default, and that a second notice was ineffective because it was not provided before Quorum filed suit. Id. at *2. On remand from that decision, Quorum requested that the Dane County Circuit Court dismiss its action against Rumpf.

Rumpf filed his complaint in this court on April 18, 2017, alleging that "Quorum and its counsel have received and refused to return the sum of $8,928.37 in funds garnished from Mr. Rumpf's paycheck." (Compl. (dkt. #1) ¶ 20.) During oral argument in Dane County Circuit Court on Quorum's motion to dismiss held on the same day that Rumpf filed his federal action, however, that court ordered return of the garnished funds to Rumpf and awarded him attorney's fees and costs. Consistent with that oral ruling, thestate court entered a written order on May 9, 2017, requiring Quorum to return the garnished funds in the amount of $6,931.03 to Rumpf, awarding him attorney's fees in the total amount of $15,500.00, and closing that case. (See Decl. of Lisa M. Lawless, Ex. 1 (dkt. #46-1).)

Plaintiff has since conceded in his opposition brief to Quorum's motion to dismiss this case, and again in responding to Case's proposed findings of facts in support of its motion for summary judgment, that defendants paid both amounts on June 6, 2017. Still, plaintiff points out that this was almost two months after the state court had orally ordered Quorum to return the garnished funds, and about a year after Quorum sought dismissal of its underlying state lawsuit in response to the Wisconsin Court of Appeals decision reversing entry of judgment in defendants' favor. (Pl.'s Opp'n to Quorum's Mot. (dkt. #39) 20.)

OPINION

I. Motion to Dismiss and Motion for Summary Judgment

In this lawsuit, plaintiff asserts claims against both defendants for two violations of the Wisconsin Consumer Act. First, plaintiff alleges that defendants' disclosure in a brief filed in the Wisconsin Court of Appeals that

a review of the billing statements submitted with the plaintiff's brief . . . shows that the vast majority of the charges were for gambling," violated Wis. Stat. § 427.104(1)(e), which prohibits "[d]isclos[ing] or threaten[ing] to disclose to a person other than the customer or the customer's spouse information affecting the customer's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for theinformation.

(Compl. (dkt. #1) ¶ 31a.) Second, plaintiff alleges that defendant violated Wis. Stat. § 427.104(1)(j), which prohibits "[c]laim[ing], or attempt[ing] or threaten[ing] to enforce a right with knowledge or reason to know that the right does not exist," by "filing their legal action, seeking a judgment, filing two garnishments, defending those garnishments, garnishing Rumpf's paychecks, and then refusing to return the garnished funds." (Id. at ¶ 31b.) Rumpf also alleges a civil theft claimed pursuant to Wis. Stat. § 895.446, on the basis that "[b]oth defendants . . . intentionally retained possession of the garnished funds without Rumpf's consent." (Id. at ¶ 34.) Finally, as to defendant Case, Rumpf alleges FDCPA claims based on the same factual allegations underlying his state law claims. (Id. at ¶¶ 25-28.) Defendant Quorum moves to dismiss and defendant Case seeks summary judgment on all of the claims asserted against them, for largely duplicative reasons. The court addresses each argument below.

A. Jurisdictional Challenges

Quorum's first argument warrants little discussion. Indeed, Quorum appears to concede as much in its reply brief. Quorum originally contended that the court lacks jurisdiction over any state law claims because plaintiff failed to plead sufficient facts to find the amount in controversy exceeded $75,000. Certainly, this argument would warrant scrutiny if the state law claims were the only ones asserted in this case. However, plaintiff asserts a federal claim against defendant Case premised on the same allegations that underlay the state law claims, providing federal question jurisdiction under which the court has ample supplemental jurisdiction to consider the state law claims. See 28 U.S.C. §1367(a) (providing that district could "shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they face the same case or controversy under Article III).⁴

Both defendants also argue that the court is barred from exercising jurisdiction over plaintiff's state law claims by the Rooker-Feldman doctrine.⁵ This doctrine generally applies to "cases brought by state-court losers complaining of injuries caused by state court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments," Exxon Mobile Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005), in recognition that "no matter how erroneous or unconstitutional the state court judgment may be, only the Supreme Court of the United States has jurisdiction to review it." Brown v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012).

Defendants focus on the fact that this case involves actions taken in a state court proceeding, but fail to appreciate why the doctrine is not applicable in this case: plaintiff is not seeking relief inconsistent with a state court judgment. On the contrary, there is no adverse state court judgment at all, having already been vacated by the Wisconsin Court of Appeals. Indeed, Rumpf did exactly what the Rooker-Feldman doctrine requires if a state court enters a judgment against him; he appealed that decision through the state system,rather than filing a federal lawsuit challenging that judgment. Accordingly, the Rooker-Feldman doctrine has no application in this case.

B. Preclusion

Defendant Quorum next argues -- as does defendant Case in its reply brief -- that even if the claims are not barred by Rooker-Feldman, the court should find claim or issue preclusion. Under the Wisconsin common law doctrine of claim preclusion, "a final judgment is conclusive in all subsequent actions between the same parties as to all matters which were litigated or which might have been litigated in the former proceedings." Menard, Inc. v. Liteway Lighting Prods., 2005 WI 98, ¶ 26, 282 Wis. 2d 582, 698 N.W.2d 738 (emphasis added). Wisconsin law requires the following essential elements for claim...