The Wisconsin Court of Appeals has affirmed the dismissal of a couple’s Wisconsin Consumer Act lawsuit that accused an auto finance company of illegally continuing to collect on a debt after a court order halted collection.
The background: The plaintiffs had filed for a voluntary, court-supervised plan to repay their debts over time, including a balance they owed to the defendant, an auto lender.
- At the time the couple entered the repayment plan, one spouse’s wages were already being garnished to satisfy the debt owed to the defendant.
- The court overseeing the plan issued an order barring creditors from garnishing the couple’s wages and from contacting them about collection except through their attorney.
- Even after that order, $117 was garnished from two of the spouse’s paychecks, and the defendant sent the couple a letter. The letter stated in bold at the top: “This letter is for informational purposes only and is not a demand for payment.” It explained that the defendant had stopped automatic withdrawals because its records mistakenly showed the couple had filed for bankruptcy, when in fact they had filed the repayment petition, and it described how to restart the withdrawals voluntarily.
- The plaintiffs sued, alleging the defendant had threatened or harassed them, had tried to enforce a right it knew it did not have, and had committed civil theft by garnishing wages.
The ruling: The Appeals Court affirmed, addressing whether an informational letter and the continued acceptance of garnished wages could amount to illegal collection, and concluding that neither did.
- The court found the letter was not an attempt to collect a debt at all, because it demanded no payment and threatened no consequences. Since the statute reaches only conduct in attempting to collect a debt, the letter could not violate it.
- On the wages, the court leaned on federal decisions holding that when a garnishee wrongfully withholds a worker’s pay, the worker’s remedy is against the garnishee, not the creditor that accepts the money.
- A key wrinkle: it was the spouse’s employer, not the defendant, that actually garnished and withheld the wages.
- The plaintiffs lost much of the appeal not on the merits but because their arguments were undeveloped or raised for the first time in their reply brief, and the court noted it would not build arguments on a party’s behalf.
- On the civil theft claim, the court found the couple never showed how the defendant’s conduct met the elements of embezzlement. The trial judge had earlier described that theory as “trying to put a square peg in a round hole.”
- The couple’s request for punitive damages did not rescue the case, since punitive damages are a remedy rather than a standalone claim.
