United States District Court, E.D. Wisconsin
ORDER GRANTING PARTIAL JUDGMENT ON THE
William C. Griesbach, Chief Judge.
Dennis and Maureen Lehman and Lords N' Ladies Salon
N' Spa filed suit against Denmark Bancshares Inc.
(“Denmark Bank”) for claims arising from a loan
Denmark Bank provided the Lehmans for the salon. Before the
court now is Denmark Bank's motion for partial judgment
on the pleadings pursuant to Federal Rule of Civil Procedure
12(c). ECF No. 13. This motion was filed on October 5, 2017.
Plaintiffs had until October 26, 2017 to respond.
See Civil Local Rule 7(b). They did not file a
response. Failure to file a memorandum in opposition to a
motion is sufficient cause for the Court to grant the motion.
Civil Local Rule 7(d). For the reasons explained below,
Defendants' motion is granted and Plaintiffs' fraud
and civil theft claims are dismissed.
and Maureen Lehman own Lords N' Ladies Salon N' Spa
in Manitowoc, Wisconsin. Denmark Bank provided the Lehmans
with a number of services over twenty-five years, including a
loan for the salon. In 2008, the Lehmans declared bankruptcy.
In 2009, the Lehmans approached Denmark Bank about lowering
their interest rates and a possible loan to keep the salon
open. In January 2015, the Lehmans began approaching other
lending institutions about refinancing their home, business,
and salon loans. In April 2015, the Lehmans were informed of
credit errors on their credit report, which caused them to
have their loans denied. The Lehmans allege that one of these
errors was the listing of the salon loan as debt after the
loan was “charged off” by Denmark Bank. The
Lehmans allege that they contacted Denmark Bank about this
mistake (and others), but that the salon loan was never
removed from their credit report. The Lehmans also allege
that they continued making payments on the salon loan,
despite it being “charged off.”
April 21, 2017, the Lehmans brought an action in Manitowoc
County state court against Denmark Bank for two violations of
the Fair Credit Reporting Act, fraud, and civil theft. ECF
No. 1 at 1. Denmark Bank was served on April 28, 2017.
Id. at 1-2. On May 26, 2017, Denmark Bank removed
the case to federal court. Id. at 3. On July 10,
2017, the Lehmans filed an amended complaint. ECF No. 9. On
July 18, 2017, Denmark Bank filed its answer to the
Lehmans' amended complaint. ECF No. 11.
October 5, 2017, Denmark Bank filed a motion for partial
judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c). Denmark Bank alleges that the Lehmans had
failed to plead their fraud claim with particularity. ECF No.
14 at 5-6. Denmark Bank also alleges that the Lehmans'
claims for fraud and civil theft fail as a matter of law
because a “charged off” debt is an accounting
term, not a legal discharge of debt. Id. at 7-8. The
Lehmans had twenty-one days to respond to Denmark Bank's
motion for judgment on the pleadings. See Local
Civil Rule 7(b). They did not respond. Even without examining
the merits of Defendant's motion, failure to respond in
opposition is sufficient cause for the court to grant the
motion. See Local Civil Rule 7(d).
motion to dismiss under Federal Rule of Civil Procedure 12(c)
challenges the sufficiency of the pleadings in the complaint.
Rule 12(c) permits a party to move for judgment after the
parties have filed the complaint and answer. N. Ind. Gun
& Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d
449, 452 (7th Cir. 1998); see Fed. R. Civ. P. 12(c).
A motion for judgment on the pleadings is analyzed like a
motion to dismiss for failure to state a claim under Rule
12(b)(6). Thomason v. Nachtrieb, 888 F.2d 1202, 1204
(7th Cir. 1989). The court must accept all well-pled
allegations as true and draw all reasonable inferences in
favor of the plaintiff. Dismissal is appropriate when the
plaintiff has not pled a valid claim even assuming the truth
of the allegations of the complaint. Johnson v. Revenue
Mgmt. Corp., 169 F.3d 1057, 1059 (7th Cir. 1999).
allege that Denmark Bank “charged off” the salon
loan in 2012, but continued to list it on their credit report
and allowed them to continue making payments on this debt.
Therefore, Plaintiffs allege that Denmark Bank committed
fraud by representing to them that the loan required payment.
Plaintiffs allege that Denmark Bank committed civil theft by
accepting their payments on the loan despite it being
fraud and civil theft claims fail as a matter of law and must
be dismissed. A “charge off” is an
accounting term that is means to “treat (an account
receivable) as a loss or expense because payment is unlikely;
to treat as a bad debt.” Black's Law Dictionary
(10th ed. 2014). However, “charging off a debt does not
diminish the legal right of the original creditor to collect
the full amount of the debt.” Hinkle v. Midland
Credit Mgmt., Inc., 827 F.3d 1295, 1297 (11th Cir.
2016). See also LeBlanc v. Unifund CCR Partners, 601
F.3d 1185, 1188 n.5 (11th Cir. 2010); Caplinger v. Ocwen
Loan Servicing, LLC, No. 8:14-cv-3214-T-35-MAP, 2015 WL
12938920, at *1 (M.D. Flo. Dec. 29, 2015); Talaie v.
Wells Fargo Bank, N.A., No. CV 12-04959 DMG, 2013 WL
3316157, at *5 (C.D. Cal. June 27, 2013); Hanks v. Talbot
Classics Nat. Bank, No. C 12-2612 SI, 2012 WL 3236323,
at *1 n.2 (N.D. Cal. Aug. 6, 2012); Plaza Bank v. Alan
Green Family Trust, No. 2:11-cv-130-RCJ-RJJ, 2011 WL
6102883, at *5 (D. Nev. Dec. 7, 2011). Therefore, Denmark
Bank's “charge off” of the Lehmans' salon
loan did not legally discharge or forgive their debt. The
Lehmans have alleged only that the debt was “charged
off”; the Lehmans have not allege any facts that the
loan was legally discharged or forgiven. Therefore, even
accepting the Lehmans' allegation that the debt was
“charged off” as true, there can be no civil
theft or fraud by Denmark Bank for their representations that
the Lehmans still owed payment on their salon loan or for
accepting payments by the Lehmans during this time because
the Lehmans still legally owed this debt.
IS THEREFORE ORDERED that Defendant's motion for
partial judgment on the pleadings (ECF No. 13) is
IS FURTHER ORDERED that Plaintiff's claims for
Fraud and Civil Theft (claims three and four of the ...