Payday Loan Resolution, LLC, William Karger and Lauren Petruzzelli, Petitioners-Appellants,
Wisconsin Department of Financial Institutions, Respondent-Respondent.
from an order of the circuit court for Dane County: No.
2017CV2617 STEPHEN E. EHLKE, Judge.
Lundsten, P.J., Kloppenburg and Fitzpatrick, JJ.
Payday Loan Resolution, LLC, William Karger, and Lauren
Petruzzelli (collectively, Payday) appeal a circuit court
order that affirmed an Order of the Administrator of the
Wisconsin Department of Financial Institutions, Division of
Banking (the Division). The Order requires that Payday, a
non-Wisconsin business, cease certain business activities in
Wisconsin, pay a forfeiture, and issue refunds for all fees
paid by Wisconsin clients to Payday, because Payday "was
conducting unlicensed adjustment service company
business" in violation of Wisconsin statutes and had not
complied with an earlier order issued by the Division.
The parties do not dispute that the Division was exercising
Wisconsin's "police power" in issuing the Order
against Payday, and Payday does not dispute that it "was
conducting unlicensed adjustment service company
business" as stated in the Order. However, Payday argues
that the Division's exercise of Wisconsin's police
power over Payday violates due process. Payday asserts that
this is so because due process limitations on Wisconsin's
exercise of its police power require greater contacts between
Payday and Wisconsin than are necessary to establish
"personal jurisdiction for judicial process," and
because the requirements for "personal
jurisdiction" are not present, it necessarily follows
that due process bars the exercise of Wisconsin's police
power against Payday. We reject Payday's argument as
contrary to the test set forth by our supreme court for the
proper exercise of Wisconsin's police power over
out-of-state entities. Applying that test here, we conclude
that the Division's issuance of the Order falls well
within due process limits. Accordingly, we affirm.
Payday is a limited liability company located in and
organized under the laws of Florida, and is engaged in the
"debt settlement" business. In 2017, the Division
received a consumer complaint against Payday from a Wisconsin
resident. We will discuss the details of
Payday's contacts with the Wisconsin resident in the
discussion section that follows. It suffices to state here
that the resident entered into a contract with Payday, which
provided that Payday would negotiate to reach settlements or
payment plans with the resident's debtors in return for a
"consulting fee" to be paid by the resident.
On June 9, 2017, the Division sent a letter to Payday
informing it that: (1) the Division "administers the
adjustment service company law in Wisconsin"; (2) the
Division determined that Payday was operating as an
unlicensed adjustment service company in Wisconsin contrary
to that law; (3) Payday must cease conducting "all such
activity involving Wisconsin residents until the company is
properly licensed"; and (4) Payday was "prohibited
from collecting or receiving fees or other forms of
compensation from Wisconsin consumers because it is not
licensed." Pursuant to its statutory investigative
powers, the Division requested that Payday provide
information as to all Wisconsin residents who had contracted
with the company. The Division also requested that Payday
respond to the complaint that the Division had received and
advise the Division of the actions that Payday was taking to
avoid future violations.
Payday sent the Division a letter in response describing its
activities as a "debt settlement company" and
stating that it is a Florida company "required to abide
by" Florida law only.
On June 27, 2017, the Division issued an Order to Payday,
finding that Payday refused to refund the fees that it had
collected from the Wisconsin complainant and that Payday was
"conducting adjustment service company business with
Wisconsin residents without first obtaining a license."
The Division ordered that Payday cease conducting
"adjustment service company business with a Wisconsin
resident without first obtaining a license," provide a
list of its Wisconsin clients, and refund to any Wisconsin
clients all money paid by those clients to Payday that was
not paid to the clients' creditors. The Order required
that Payday issue the refunds to any Wisconsin clients by
July 28, 2017.
Payday did not respond to the June Order. On August 9, 2017,
the Division served on Payday a Notice of Hearing. The Notice
directed Payday to respond in writing to the Notice by August
31, 2017, and to appear at an administrative hearing on
September 7, 2017. The Notice asserted that Payday violated
the June Order and informed Payday of the potential penalties
that the Division might impose upon Payday for failing to
appear or upon finding that Payday violated any Wisconsin
banking laws or Division rules or orders.
Payday failed to answer the Notice or appear at the hearing.
On September 8, 2017, the Division issued an Order finding
Payday in default and, therefore, to have "admitted to
the matters asserted and the violations set forth in the
Notice." The Division ordered that Payday cease its
adjustment service company business activities in Wisconsin,
pay a forfeiture, and issue refunds for all fees paid by
Wisconsin clients to Payday.
Payday timely petitioned the Division for a rehearing,
asserting that it is not subject to the licensing
requirements in Wisconsin law because the Division lacks
"personal jurisdiction" over it. Specifically,
Payday asserted that because it is a Florida company and its
contacts with Wisconsin residents are de minimis,
attenuated, and initiated by the customer, the Division lacks
"personal jurisdiction" to require Payday to obtain
a license or to enforce orders against Payday. The Division
denied the petition.
Payday petitioned for judicial review of the September Order.
The circuit court affirmed the September Order, and Payday
Payday challenges none of the factual findings or legal
conclusions in the Division's September 2017 Order, which
is the subject of this appeal. Rather, Payday's sole
argument is that the Order violates Payday's due process
rights because the connection between Payday and Wisconsin ...