United States District Court, W.D. Wisconsin
OPINION AND ORDER
D. PETERSON DISTRICT JUDGE
Traci Bahena is suing defendants Jefferson Capital Systems,
LLC and Messerli & Kramer, PA under the Wisconsin
Consumer Act (WCA) and the Fair Debt Collection Practices Act
(FDCPA). Bahena alleges that defendants brought a state-court
debt collection action against her when they did not have a
legal right to do so, because defendants did not provide the
required notice of the right to cure before filing the suit.
She also alleges that Messerli violated the FDCPA by falsely
implying that lawyers had independently reviewed her case.
Capital and Messerli have filed separate motions for summary
judgment on all of Bahena's claims. Dkt. 68 and Dkt. 77.
They assert essentially legal defenses, which the court
rejects for reasons explained in this opinion. On the
notice-of-right-to-cure claims, the material facts are
undisputed: Bahena did not receive the notice to which she
was entitled, and defendants had reason to know this. Based
on those facts, a reasonable jury would find that defendants
violated Bahena's rights. So the court will deny both
motions for summary judgment. Because it appears that a trial
is needed only on damages, the court is inclined to grant
summary judgment to Bahena on liability. But it will give the
parties an opportunity to explain why doing so would not be
remaining FDCPA claim concerns whether Messerli falsely
represented that a lawyer made a reasoned, professional
judgment that it had the right to sue Bahena. The parties
dispute how much time and attention Messerli attorneys
devoted to Bahena's case. A reasonable jury could credit
Bahena's version of the facts and find that
Messerli's attorneys were not meaningfully involved in
preparing the debt collection action. The court will deny
Messerli's motion for summary judgment on that claim.
following facts are undisputed except where noted.
2010, Bahena opened a consumer credit card account with
Fingerhut. In 2015, Bahena fell behind on payments. Her
January 2015 billing statement indicated that the account was
past due, that she had been charged a $26.00 late fee, and
that she needed to pay $148.88 by February 11, 2015 to
“keep [her] account in good standing.” Dkt. 98,
¶ 6. Fingerhut sent Bahena letters on January 15,
January 23, and January 30, 2015, alerting her that her
account was past due and requesting payment. Dkt. 71, at
February 2015, Bahena paid Fingerhut $148.88 which eliminated
her past-due minimum payment balance, although she still owed
almost $1400 on the account. She made additional payments in
April, May, and June, but she ceased making payments in July
because she had “[n]o funds, no money, no job.”
Dkt. 73 (Bahena Dep. 33:8). At that point, she stopped
reviewing her online account statements and began ignoring
mail and email communications about her account. Fingerhut
continued to send monthly email notifications advising that
her account was past due. It also sent letters on July 15,
August 4, August 14, and August 25, 2015, notifying Bahena
that the account was delinquent and urging her to make a
payment immediately. Dkt. 71, 12-15.
charged off the balance of Bahena's account in December
2015. By that time, she owed $1, 775.06. That same month,
Jefferson Capital Systems, a debt buyer and debt collector,
purchased the charged-off account. Dkt. 75-3, at 2. Jefferson
Capital received Bahena's last 11 account statements and
some basic information about Bahena and her Fingerhut debt,
including her name and location, how much she owed, the date
the account was opened and charged off, and the date of last
payment. Jefferson Capital then referred Bahena's account
to a series of agencies that attempted to recoup the debt
without success. Eventually, the account was placed with
Messerli & Kramer, a law firm that focuses on consumer
debt collection. Messerli received the same information that
Jefferson Capital received.
September 2016, Messerli sent Bahena a dunning letter
demanding payment on Jefferson Capital's behalf, which
Bahena ignored. In January 2017, Bahena received a summons
and small claims complaint notifying her that she was being
sued in Lafayette County Circuit Court by “Jefferson
Capital Systems, LLC . . . c/o Messerli & Kramer
PA” for $1, 870.72 in credit card debt. Dkt. 70-3, at
1. See Jefferson Capital Sys., LLC v. Bahena, No.
17-sc-11 (Lafayette Cty. Cir. Ct. filed Jan. 18, 2017). The
small claims complaint was signed by Jillian Walker, a
Messerli lawyer representing Jefferson Capital.
retained her own lawyer, Briane Pagel. On April 26, 2017,
Messerli mailed to the state court a proposed order
voluntarily dismissing the state-court collection action with
prejudice. Jefferson Capital says that it did so “due
to the heavy cost anticipated in litigating the small claims
case.” Dkt. 70, at 6. Pagel sent Messerli a notice of
counterclaim on April 30, but the state court dismissed the
case on May 3, apparently without docketing any counterclaim.
Bahena filed this federal lawsuit a few months later. Bahena
alleges that the stress and humiliation of being sued caused
her to lose sleep, drink alcohol excessively, and feel
suicidal, among other things.
court will provide additional material facts in the analysis
judgment is appropriate if the moving party “shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “Only disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). In reviewing defendants' motions for summary
judgment, the court construes all facts and draws all
reasonable inferences in Bahena's favor. Id. at
255. “To survive summary judgment, the nonmovant must
produce sufficient admissible evidence, taken in the light
most favorable to it, to return a jury verdict in its
favor.” Fleischman v. Cont'l Cas. Co., 698
F.3d 598, 603 (7th Cir. 2012). Under Rule 56(f), the court
can grant summary judgment for a nonmovant when appropriate,
so long as it provides the moving party notice and a
reasonable time to respond.
Overview of claims
asserts three causes of action, all of which arise out of the
debt collection action that defendants filed against Bahena
in Wisconsin state court. The first claim relies on 15 U.S.C.
§ 1692(e), which prohibits debt collectors from using
“any false, deceptive, or misleading representation or
means in connection with the collection of any debt.”
Bahena says that by filing a debt collection lawsuit, both
defendants represented that they had the right to sue her.
This was false, Bahena says, because a prerequisite to filing
a debt collection lawsuit in Wisconsin is complying with the
requirement in Wis.Stat. § 425.105 to provide the debtor
notice of her right to cure the default, something that
defendants did not do.
second claim relies on the same alleged conduct but arises
under Wis.Stat. § 427.104(1)(j), which prohibits debt
collectors from claiming, attempting, or threatening to
enforce a right with knowledge or reason to know that the
right does not exist. Bahena says that defendants knew or had
reason to know that they did not have the right to file the
debt collection lawsuit because Bahena had not received the
notice required under § 425.105.
third claim is against Messerli only and arises under 15
U.S.C. § 1692e(3), which prohibits “[t]he false
representation or implication that any individual is an
attorney or that any communication is from an
attorney.” Bahena says Messerli violated §
1692e(3) by filing the debt collection lawsuit without
“meaningful attorney involvement.” Dkt. 25,
seek summary judgment on each of these claims.
first two claims are predicated on her contention that she
was not provided a notice of right to cure that complied with
the requirements of the WCA. Under the WCA, debt collectors
must provide a consumer with notice of her right to cure her
default (i.e., pay the debt) before they can sue on the debt.
See Wis. Stat. § 425.105. The statute specifies
the information that the notice must contain. See
Wis. Stat. § 425.104. Bahena says she never received a
WCA-compliant notice, which means that defendants had no
right to file a debt collection action. So by filing that
action, Bahena says, defendants falsely implied that they had
the right to sue her (violating the FDCPA) and asserted a
right that they knew or had reason to know they didn't
have (violating the WCA).
response, defendants raise three main arguments. First, they
argue that Bahena was not entitled to notice under the WCA in
the first place. Second, they argue in the alternative that
Bahena did in fact receive notice that complied with the WCA.
Third, they argue that, even assuming notice was not
provided, Bahena has failed to adduce evidence that
defendants had knowledge or reason to know this under the
WCA, or that it constituted a materially false representation
under the FDCPA.
court will consider each of defendants' arguments in
Whether Bahena had a right to notice
assert five reasons why Bahena was not entitled to any
WCA-compliant notice of her right to cure: (1) Bahena did not
have a right to cure under the statute, so she was not
entitled to notice of that right; (2) Bahena could not have
cured her default by the time Jefferson Capital acquired her
debt, so defendants could not provide notice of that right;
(3) the WCA does not require a creditor to send a notice of
right to cure default prior to commencing a suit; (4) Bahena
had actual notice of her rights; and (5) compliance with
§ 425.104 would not have influenced Bahena's
behavior, so any error was immaterial.
Right to cure under the statute
Section 425.105 of the WCA states that “if the customer
has the right to cure under this section, ” a merchant
may commence an action only after that customer has been
provided with notice of her right to cure. Wis.Stat. §
425.105(1). A customer does not have a right to cure, or, by
extension, a right to notice of her right to cure, if the
following criteria are met:
A right to cure shall not exist if the following occurred
twice during the preceding 12 months:
(a) The customer was in default on the same transaction or
open-end credit plan;
(b) The creditor gave the customer notice of the right to
cure such previous default . . .; and
(c) The customer cured the previous default.
Wis. Stat. § 425.105(3).
say that Bahena met these statutory criteria at the time she
defaulted in July of 2015 because “she was in default
on the open-end credit plan twice during the preceding 12
months, . . . she was provided notice of the right to cure
such previous default, and . . . she did in fact cure the
previous default.” Dkt. 70, at 9. But § 425.105(3)
requires that all three criteria occur twice within the
preceding twelve months. It is undisputed that Bahena missed
at least two payments in 2015-one in January, which she
rectified on February 11, and again starting in July, when
she ceased making ...