NEWS: The Wisconsin Supreme Court has issued an opinion that restricts lenders and towing companies from repossessing vehicles from apartment parking garages.
In a December 2020 Compliance Courier, we warned credit unions about a 2020 Wisconsin Court of Appeals decision in Duncan v. Asset Recovery Specialists, Inc. That case involved a towing company hired by Wells Fargo Bank to recover a vehicle in a so-called “self-help repossession.” (The League’s ii Release No. B066 explains that if certain conditions are met, then Wisconsin law lets lenders repossess motor vehicles from consumers who are in default, without having to get a judgment first.)
Wisconsin’s Consumer Act says that self-help repos can be done only if (among other limitations) the person taking the vehicle does not “enter a dwelling used by the customer as a residence except at the voluntary request of a customer.”
In the Duncan case, the tow truck driver took the car from the open parking garage on the ground floor of the car owner’s multi-unit apartment building. The owner sued both the towing company and creditor Wells Fargo. The trial court decided that entry into the garage was lawful. The appeals court reversed that decision, writing that the garage was part of the car owner’s dwelling and that the towing company violated state law by entering that location without the owner’s consent. The case was then appealed to the Wisconsin Supreme Court.
The League filed a “friend of the court” brief with the high court, backing Wells Fargo’s position that the repossession from the parking garage was lawful. The Supreme Court has now ruled against that position. It affirmed the appeals court’s decision, holding that a “dwelling used by the customer as a residence” in the Consumer Act includes a garage attached to the residential building in which the customer lives. The high court concluded that the word “dwelling” means “at a minimum, a building in which at least one person lives. Based on that definition, Duncan’s ‘dwelling’ includes the parking garage, because it is located in the building in which she lives.”
In her complaint, Duncan also alleged that Defendants’ conduct during and after the repossession was unconscionable, in violation of another provision in the Wisconsin Consumer Act. The Supreme Court disagreed on that point, writing:
We hold that claims of unconscionability … are available only in “actions or other proceedings brought by a creditor to enforce rights arising from consumer credit transactions,” … and that a non-judicial repossession [i.e., self-help repossession] … like the one Defendants performed in this case, is not such an action or other proceeding. As a result, Duncan’s unconscionability claim must be dismissed. We therefore affirm the decision of the court of appeals, as modified by our conclusion on unconscionability, and remand to the circuit court for further proceedings.”
In light of this Supreme Court opinion, Wisconsin credit unions should work with their repossession agents and avoid taking vehicles from apartment garages or similar structure that may be considered a “dwelling” used as someone’s “residence” without the owner’s consent.