Creditbox.com, LLC v. Antjuan Weathers

2023 WI App 37

COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION

Case No.: 2022AP746

Complete Title of Case:

CREDITBOX.COM, LLC,

PLAINTIFF-RESPONDENT,

V.

ANTJUAN WEATHERS,

DEFENDANT-APPELLANT.

Opinion Filed: June 22, 2023
Submitted on Briefs: August 25, 2022
Oral Argument: January 23, 2023

JUDGES: Blanchard, P.J., Kloppenburg, and Graham, JJ.
Concurred:
Dissented:

Appellant
ATTORNEYS: On behalf of the defendant-appellant, the cause was submitted on the
briefs of Briane F. Pagel of Lawton & Cates, S.C., Madison.

Respondent
ATTORNEYS: On behalf of the plaintiff-respondent, the cause was submitted on the
brief of David J. Turek and Kevin F. Geary of Gass Turek LLC,
Milwaukee.
2023 WI App 37

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
June 22, 2023
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2022AP746 Cir. Ct. No. 2021SC1581

STATE OF WISCONSIN IN COURT OF APPEALS

CREDITBOX.COM, LLC,

PLAINTIFF-RESPONDENT,

V.

ANTJUAN WEATHERS,

DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Dane County:
STEPHEN E. EHLKE, Judge. Affirmed in part; reversed in part and cause
remanded.

Before Blanchard, P.J., Kloppenburg, and Graham, JJ.

¶1 BLANCHARD, P.J. This appeal calls for the interpretation of two
provisions of the Wisconsin Consumer Act (“the Act”) to determine whether a
debtor has stated counterclaims against a creditor that survive a motion to dismiss.
No. 2022AP746

The two provisions are: WIS. STAT. § 421.108 (2021-22),1 which provides that
“[e]very agreement or duty within” the Act imposes on the parties “an obligation of
good faith in its performance or enforcement”; and WIS. STAT. § 425.102, which
limits the scope of some claims that may be brought under subchapter I of WIS.
STAT. ch. 425, such as those alleging unconscionability.

¶2 CreditBox.com LLC sued Antjuan Weathers, alleging that Weathers
defaulted on a loan agreement. Weathers responded by filing good faith and
unconscionability counterclaims under the Act. The circuit court granted
CreditBox’s motion for voluntary dismissal of its claim.2 The court also granted
CreditBox’s motion to dismiss both of Weathers’ counterclaims, which are the
rulings challenged by Weathers that we address.

¶3 The circuit court dismissed Weathers’ good faith counterclaim on the
ground that it is not supported by sufficient allegations of fact. We reverse that
ruling based on our conclusion that one set of allegations in the counterclaim is
sufficient to state a claim under WIS. STAT. § 421.108, although we separately
conclude that two other sets of allegations are not sufficient.

¶4 The circuit court dismissed the unconscionability counterclaim based
on its interpretation of the statutory scope rule, WIS. STAT. § 425.102, which states
that a consumer may bring such a claim “only in response to ‘actions or other

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
2
On appeal, Weathers challenges the circuit court ruling granting CreditBox’s motion for
voluntary dismissal of its claim, but only if we reject Weathers’ argument that the unconscionability
counterclaim should not be dismissed. For reasons we explain in the text below, we agree with
Weathers that the unconscionability counterclaim should not be dismissed based on the arguments
now advanced by CreditBox. Therefore we deem Weathers to have abandoned his challenge to
voluntary dismissal of the CreditBox action and accordingly we affirm on that issue.

2
No. 2022AP746

proceedings brought by a creditor to enforce rights arising from consumer credit
transactions.’” See Duncan v. Asset Recovery Specialists, Inc., 2022 WI 1, ¶¶27-
28, 400 Wis. 2d 1, 968 N.W.2d 661 (applying § 425.102 to determine that plaintiff
could not bring unconscionability claim under WIS. STAT. § 425.107 because
plaintiff brought it “‘via a separate civil lawsuit,’” and not “in response to ‘actions
or other proceedings brought by a creditor’” (quoted authority omitted)). The circuit
court here reasoned that Weathers cannot pursue this counterclaim against
CreditBox because the dismissal of CreditBox’s claim left no “actions or other
proceedings brought by a creditor” pending against Weathers. We reverse this
ruling. We conclude that § 425.102 does not require dismissal for the following
reasons: when CreditBox filed its lawsuit against Weathers to enforce the loan
agreement, this triggered the potential for an unconscionability counterclaim,
regardless of the fact that CreditBox moved for voluntary dismissal of its claim
against Weathers, and Duncan is distinguishable on these facts.

BACKGROUND

¶5 In June 2015, CreditBox and Weathers entered into an agreement for
a $500 loan. Weathers was to repay the principal and finance charges by making
52 weekly installments of $37.61 each, with the option to pay down the loan early.
According to the loan agreement, its annual percentage interest rate would be
399.0250%. As a result, if Weathers followed the payment plan and did not make
early payments he would end up paying a total of $1,955.72, including $1,455.72 in
finance charges.

¶6 CreditBox initiated a small claims action against Weathers, alleging
that Weathers failed to make some of the payments required under the loan
agreement. CreditBox sought a money judgment totaling $2,219.40, the alleged
outstanding principal, interest, and fees.

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No. 2022AP746

¶7 On May 11, 2021, Weathers, pro se, filed a preprinted small claims
answer in which he checked the boxes indicating that he did not contest CreditBox’s
claims and did not have a counterclaim. Accordingly, the clerk of court promptly
entered a judgment against Weathers that totaled $2,579.90.

¶8 Weathers then reversed course. Now represented by counsel, on
May 28, 2001, he moved to vacate the judgment and reopen the case. This motion
was accompanied by an affidavit. Weathers averred that he was “unsure whether I
ever defaulted on the loan in fact, because payments were to be deducted [by
CreditBox] from my bank account automatically, and to my knowledge they were
deducted.” On June 22, 2021, the court commissioner granted Weathers’ motion,
vacating the judgment and reopening the small claims proceeding.

¶9 On July 7, 2021, CreditBox moved the court commissioner for
voluntary dismissal of its action. CreditBox argued that it was entitled to dismissal
under WIS. STAT. § 805.04(1) because Weathers had not filed a responsive
pleading.3 In the alternative, CreditBox argued that it was entitled to a court-ordered
dismissal under § 805.04(2) because: no counterclaims by Weathers were pending
against it, the case was at an early stage, CreditBox had diligently pursued dismissal,
and dismissal posed no risk of duplicative litigation.4

¶10 On July 19, 2021, Weathers filed a brief opposing CreditBox’s motion
for voluntary dismissal. Weathers also filed an amended answer that included the

3
Under WIS. STAT. § 805.04(1), a plaintiff may dismiss its action without order of the
court by filing a notice of dismissal “before service by an adverse party of responsive pleading or
motion.”
4
Under WIS. STAT. § 805.04(2), “Except as provided in sub. (1), an action shall not be
dismissed at the plaintiff’s instance save upon order of court and upon such terms and conditions
as the court deems proper.”

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No. 2022AP746

two counterclaims against CreditBox based on provisions in the Act: a good faith
claim under WIS. STAT. § 421.108 and an unconscionability claim under WIS. STAT.
§ 425.107. On August 2, 2021, CreditBox filed a motion to dismiss Weathers’
counterclaims pursuant to WIS. STAT. § 802.06(2)(a)6., on the grounds that each
failed to state a claim upon which relief may be granted.

¶11 The circuit court, on de novo review of court commissioner rulings,
granted CreditBox’s motions for voluntary dismissal of its claim and for dismissal
of both of Weathers’ counterclaims.

DISCUSSION

¶12 Two primary questions are presented on appeal. First, did Weathers
adequately plead a good faith counterclaim under WIS. STAT. § 421.108? We
conclude that one set of allegations states a claim, but the other two sets do not.
Second, can Weathers pursue an unconscionability counterclaim against CreditBox
under WIS. STAT. § 425.107, consistent with Duncan, given the fact that CreditBox
moved for voluntary dismissal of its action before Weathers brought the
unconscionability counterclaim? We conclude that he can.

¶13 The following general legal standards apply across issues.

¶14 We review de novo a circuit court decision resolving a motion to
dismiss a complaint based on the argument that the complaint does not state a claim
upon which relief can be granted. Data Key Partners v. Permira Advisers LLC,
2014 WI 86, ¶17, 356 Wis. 2d 665, 849 N.W.2d 693. “When we review a motion
to dismiss, factual allegations in the complaint are accepted as true for purposes of
our review,” as well as all “reasonable inferences” that arise from the allegations.
Id., ¶¶18-19. “[A] court cannot add facts in the process of construing a complaint”

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No. 2022AP746

and “legal conclusions stated in the complaint are not accepted as true, and they are
insufficient to enable a complaint to withstand a motion to dismiss.” Id., ¶19. “In
order to satisfy WIS. STAT. § 802.02(1)(a), a complaint must plead facts, which if
true, would entitle the plaintiff to relief.” Data Key, 356 Wis. 2d 665, ¶21. Put
another way, plaintiffs must “allege facts that plausibly suggest they are entitled to
relief.” Id., ¶31.

¶15 “Interpretation and application of statutes and case law to a set of facts
are matters of law that we decide de novo.” Meyers v. Bayer AG, 2007 WI 99, ¶22,
303 Wis. 2d 295, 735 N.W.2d 448.

¶16 “[S]tatutory interpretation ‘begins with the language of the statute. If
the meaning of the statute is plain, we ordinarily stop the inquiry.’” State ex rel.
Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 681 N.W.2d
110 (quoted source omitted). We interpret statutory language “in the context in
which it is used; not in isolation but as part of a whole; in relation to the language
of surrounding or closely-related statutes.” Id., ¶46. “Statutory language is read
where possible to give reasonable effect to every word, in order to avoid
surplusage.” Id.

I. Weathers’ Good Faith Counterclaim Under WIS. STAT. § 421.108

¶17 To date, the Act’s good faith provision has not been interpreted in a
precedential opinion. We first explain basic features of the provision. Then we
provide additional background and present the parties’ arguments and explain our
conclusions.

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No. 2022AP746

A. WISCONSIN STAT. § 421.108

¶18 WISCONSIN STAT. § 421.108 provides:

Obligation of Good Faith. Every agreement or
duty within [WIS. STAT.] chs. 421 to 427 imposes an
obligation of good faith in its performance or enforcement.
“Good faith” means honesty in fact in the conduct or
transaction concerned and the observance of reasonable
commercial standards of fair dealing.

See WIS. STAT. § 421.101 (defining the Act as constituting chapters 421 to 427 of
the Wisconsin Statutes).5 The first sentence of § 421.108 addresses the proper
sources of the good faith obligation and the second sentence defines the nature of
the obligation. We address the two sentences in turn.6

¶19 As Weathers argues and CreditBox ultimately concedes, the only
reasonable interpretation of the first sentence of WIS. STAT. § 421.108 is that it
imposes its obligation of good faith on the parties for performance or enforcement

5
CreditBox does not dispute that provisions of the Act govern the transaction here because
it was a “consumer loan.” See WIS. STAT. § 421.301(12) (defining “consumer loan” transactions
subject to the Act). Nor does CreditBox dispute the general proposition that a consumer may state
a cause of action against a lender based on WIS. STAT. § 421.108. See WIS. STAT. § 425.301(2)
(“Any right or obligation declared” in the Act “is enforceable by action unless the provision
declaring it specifies a different and limited effect.”).
6
We observe that the Act provides definitions for two terms used in WIS. STAT.
§ 421.108—“agreement” and “transaction”—but those definitions have no bearing on the
arguments of the parties on appeal. See WIS. STAT. § 421.301(3) (“‘Agreement’ means the bargain
of the parties in fact as found in their language or by implication from other circumstances including
course of dealing or usage of trade or course of performance.”), § 421.301(44) (“‘Transaction’
means an agreement between 2 or more persons, whether or not the agreement is a contract
enforceable by action, and includes the making of and the performance pursuant to that
agreement.”).

7
No. 2022AP746

of both (1) agreements that are subject to the Act and (2) duties that are defined in
the Act. We now explain why we agree.7

¶20 The wording of the first sentence may be awkward in referring to
“[e]very agreement … within” the Act. But we see no other way to give reasonable
meaning to the more complete clause—“[e]very agreement … within [WIS. STAT.]
chs. 421 to 427 imposes an obligation of good faith in its performance or
enforcement”—than to interpret it to require good faith in the performance or
enforcement of agreements that are subject to the Act. In other words, “[e]very
agreement … within” the Act means every agreement that is subject to the Act.
Notably, WIS. STAT. § 421.108 draws a distinction between “agreement or duty,”
and we avoid statutory interpretations that treat statutory terms as surplusage. See
Kalal, 271 Wis. 2d 633, ¶46.

¶21 Our construction that WIS. STAT. § 421.108 involves both contract-
based and Act-based obligations also gives parallel meanings to parallel clauses.
We refer to the clause “[e]very … duty within [WIS. STAT.] chs. 421 to 427 imposes
an obligation of good faith in its performance or enforcement,” which means that
duties, as well as agreements, must be performed or enforced in good faith. Thus,
just as “[e]very agreement … within” the Act refers to every agreement that is

7
CreditBox’s position on this issue has shifted. In its briefing on appeal, CreditBox argues
that the only obligations WIS. STAT. § 421.108 creates are those defined in the Act, and not
obligations contained in agreements subject to the Act. Relying in part on statements in Parent v.
Home Depot U.S.A., Inc., No. 09-C-951, 2011 WL 2650725 (E.D. Wis. July 6, 2011), CreditBox
asserts that § 421.108 “acts as a rule of construction by merely codifying the general common law
duty of good faith and fair dealing for obligations imposed by the Wisconsin Consumer Act,” and
similarly asserts that the obligation of good faith “extends only to obligations found in the Act
itself.” In the same vein, CreditBox states that “the purpose of [§] 421.108” is “to merely
compl[e]ment other obligations in the Wisconsin Consumer Act by confirming that those
obligations must be performed in good faith.” But at oral argument CreditBox acknowledged that
obligations of good faith established under § 421.108 can also arise from provisions in agreements
subject to the Act. To the extent that some statements in Parent could be interpreted to support
CreditBox’s initial position we disagree for the reasons given in the text.

8
No. 2022AP746

subject to the Act, so too “[e]very … duty within” the Act refers to every
requirement of the Act.

¶22 Our interpretation of the first sentence of WIS. STAT. § 421.108 is also
consistent with the Act’s explicit “rules of construction,” which is a proper
interpretive aid. See, e.g., Roberts v. T.H.E. Ins. Co., 2016 WI 20, ¶28, 367 Wis. 2d
386, 879 N.W.2d 492; Kalal, 271 Wis. 2d 633, ¶49 (recognizing that legislative
statements of purpose or scope can inform a plain-meaning statutory interpretation).
The Act states that it “shall be liberally construed and applied to promote”
“underlying purposes and policies” that include “protect[ing] customers against
unfair, deceptive, false, misleading[,] and unconscionable practices by merchants”
and “permit[ting] and encourag[ing] the development of fair and economically
sound consumer practices in consumer transactions.” WIS. STAT. § 421.102(1),
(2)(b)-(c). Our construction identifies an expansive protection for consumers and
serves the legislature’s expressly stated purposes because it requires good faith in
the performance or execution of both agreement-created duties and Act-created
duties.

¶23 It is true that under Wisconsin common law “‘[e]very contract’”—not
only contracts that are subject to the Act—“‘implies good faith and fair dealing
between the parties to it.’” See Beidel v. Sideline Software, Inc., 2013 WI 56, ¶27,
348 Wis. 2d 360, 842 N.W.2d 240 (quoting Chayka v. Santini, 47 Wis. 2d 102, 107
n.7, 176 N.W.2d 561 (1970)). For this reason, one might wonder on first
encountering WIS. STAT. § 421.108 about the need for a seemingly redundant good
faith obligation that addresses only the subset of contracts that are subject to the Act.
But as we now explain, when we turn to the second sentence of § 421.108 defining
the nature of the obligation, the definition differs in some respects from the common

9
No. 2022AP746

law good faith obligation, although there is some overlap in meaning between the
two.8

¶24 The second sentence defines good faith to mean “honesty in fact in
the conduct or transaction concerned and the observance of reasonable commercial
standards of fair dealing.” This has two parts: “honesty in fact in the conduct or
transaction concerned” and “reasonable commercial standards of fair dealing.”
Applications of the two parts will no doubt overlap in some circumstances. For
example, as Weathers points out, reasonable commercial standards of fair dealing
will presumably often call for honesty in fact. For analytical clarity, however, we
address them separately, beginning with the honesty-in-fact requirement.

¶25 We conclude that it is appropriate to interpret the honesty-in-fact
requirement based on a formulation used in the context of the common law
obligation. In discussing the common law obligation, this court has quoted without
criticism the following definition contained in a prior version of WIS JI—
CIVIL 3044, and the definition appears to us to be a sound interpretation of the
statutory language:

8
Caution is required in borrowing or comparing forms of “good faith” referred to in
Wisconsin’s common law and statutes. A two-justice plurality of our supreme court, in making a
point not disputed by the three-justice concurrence, has observed that concepts of “good faith” and
“bad faith” can assume different meanings in different statutory and common law contexts. See
Koss Corp. v. Park Bank, 2019 WI 7, ¶32, 385 Wis. 2d 261, 922 N.W.2d 20 (lead opinion of
Roggensack, C.J.). The merits discussion in Koss is not on point here, because that case involved
interpretation of the Uniform Fiduciaries Act, in which the legislature has adopted a definition of
acts done “in good faith” in that distinct context. See WIS. STAT. § 112.01(1)(c) (“A thing is done
‘in good faith’ within the meaning of this section, when it is in fact done honestly, whether it be
done negligently or not.”). Bearing that caution in mind, we note in the text how some of the
language in WIS. STAT. § 421.108 mirrors the common law obligation while other aspects differ.

10
No. 2022AP746

[H]onesty in fact in the conduct or transaction concerned …
is … an honest intention to abstain from taking unfair
advantage of another, through technicalities of law, by
failure to provide information or to give notice, or by other
activities which render the transaction unfair.

Foseid v. State Bank of Cross Plains, 197 Wis. 2d 772, 793 n.14, 541 N.W.2d 203
(Ct. App. 1995).9 This “taking unfair advantage” definition gives meaning to the
statutory phrase “honesty in fact,” in that a plaintiff needs to show that the defendant
had an intention that was not honest and that this was aimed at gaining an unfair
advantage.10 We reject a contention that Weathers suggested at oral argument,
namely, that every failure by a creditor to fulfill an obligation created as part of a
consumer credit transaction is, by definition, a failure to act with “honesty in fact in
the conduct or transaction concerned.” We see no basis for such an interpretation
of WIS. STAT. § 421.108. This leaves the balance of the second sentence of
§ 421.108, to which we now turn.

¶26 “[T]he observance of reasonable commercial standards of fair
dealing,” which on its face refers to the violation of norms or standards of
commercial usage, may overlap to a degree with the common law obligation. But
it is clearly its own standard. As an example of a difference, this court has explained
that, under the common law obligation, “‘bad faith’” is conduct defined in the
following broad terms: it “‘violate[s] community standards of decency, fairness or

9
The court of appeals in Foseid v. State Bank of Cross Plains, 197 Wis. 2d 772, 541
N.W.2d 203 (Ct. App. 1995), did not cite which version of WIS JI—CIVIL 3044 it relied on.
10
We observe for context that the honesty-in-fact requirement in WIS. STAT. § 421.108
aligns with the general definition of “good faith” for purposes of the uniform commercial code as
a whole as adopted in Wisconsin, which limits the definition of “good faith” to this concept:
“‘Good faith’ means honesty in fact in the conduct or transaction concerned.” WIS. STAT.
§ 401.201(2)(k).

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No. 2022AP746

reasonableness.’” Foseid, 197 Wis. 2d at 796 (quoting RESTATEMENT (SECOND)
OF CONTRACTS § 205 cmt. a (Am. L. Inst. 1981));11 see also id. (enforcement of the

obligation “is intended as a guarantee against ‘arbitrary or unreasonable conduct’
by a party” to a contract (quoting WIS JI—CIVIL 3044)). The common law
obligation is broader than the fair-dealing requirement of WIS. STAT. § 421.108.
Under the statutory standard, parties must adhere to “reasonable commercial
standards of fair dealing,” which requires the application of an objective set of
standards that govern fair dealing in commercial practices.

¶27 It is self-evident that determining the substance of the statutory fair-
dealing requirement that applies in a given case will present an issue of fact. See
Schaller, 131 Wis. 2d at 402 (addressing the obligation of good faith in the uniform
commercial code, WIS. STAT. § 401.203, and observing that “[t]he issue of good
faith is generally for the jury but may in a proper case be decided as a matter of law”
in addressing appeal from grant of summary judgment). Therefore, allegations
intended to support a claim that the fair-dealing requirement was violated cannot
plausibly state a claim if the allegations do not, at a minimum, provide a basis to
infer the existence of some relevant reasonable commercial standard of fair dealing
that could be violated, whether that standard is stated in the Act or is instead found
to exist in a pertinent commercial setting. It may not be necessary for a complaint
alleging a violation of the fair-dealing requirement to explicitly refer to a relevant
objective standard to survive a motion to dismiss. But such a complaint that lacks

11
Wisconsin case law addressing the common law obligation of good faith ties it to the
RESTATEMENT (SECOND) OF CONTRACTS § 205 (Am. L. Inst. 1981), which states, “Every contract
imposes upon each party a duty of good faith and fair dealing in its performance and its
enforcement.” See Beidel v. Sideline Software, Inc., 2013 WI 56, ¶10 n.8, 348 Wis. 2d 360, 842
N.W.2d 240 (favorably citing reference to Restatement § 205 in the court of appeals opinion under
review); Wisconsin Natural Gas Co. v. Gabe’s Const. Co., 220 Wis. 2d 14, 21, 582 N.W.2d 118
(Ct. App. 1998) (citing RESTATEMENT (SECOND) OF CONTRACTS § 205); Foseid, 197 Wis. 2d at
796-97 (relying on two official comments to Restatement § 205).

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No. 2022AP746

reference to a relevant standard (not contained in the Act) risks dismissal because a
relevant standard cannot be inferred—that is, no relevant objective standard
suggests itself based on all reasonable inferences that arise from the allegations.

¶28 In sum regarding the content of the Act’s good faith provision, parties
are obligated to act in good faith in the performance or enforcement of an agreement
subject to the Act and to the performance or enforcement of a provision of the Act.
Further, the honesty-in-fact requirement is violated when a party lacks an honest
intention to abstain from taking unfair advantage of another by activities that render
the transaction unfair, and the fair-dealing requirement is violated when a party does
not observe reasonable commercial standards of fair dealing, which contemplates
the application of an objective set of standards.

¶29 Here, it is unclear what the content would be of the set of reasonable
commercial standards of fair dealing (not contained in the Act) that Weathers would
apply to CreditBox’s alleged conduct to establish one or more violations of the fair-
dealing requirement. That is, the counterclaim does not suggest a relevant objective
standard not set by the Act itself. Weathers acknowledges that at trial he would
“likely” have to elicit expert testimony to show that CreditBox’s conduct was “not
reasonable commercial behavior for a short-term consumer lender.” But, Weathers’
argument continues, for purposes of a motion to dismiss, the counterclaim contains
allegations “that are clearly potentially unreasonable within the field of short-term
consumer lending.” CreditBox takes the position that the counterclaim fails to state
facts from which it could be inferred that its conduct “was unreasonable or violated
any kind of standards, [including] commercial standards, or was dishonest in fact.”

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No. 2022AP746

B. Additional Background and Analysis

¶30 Weathers’ counterclaim alleges three sets of actions or omissions by
CreditBox that Weathers argues constituted violations of the obligation of good faith
under WIS. STAT. § 421.108: (1) an attempt by CreditBox to make an allegedly
unscheduled electronic funds transfer (EFT) withdrawal from Weathers’ bank
account because a prior withdrawal attempt by CreditBox had been unsuccessful
(“the EFT withdrawal allegations”); (2) “charging off” the debt 60 days after the
alleged first day of default, even though a federal guidance document (not
referenced in the counterclaim) suggests that charge offs are to occur 120 days after
a missed payment, and without providing Weathers with more notice (“the charge-
off allegations”); and (3) accelerating the debt and filing its action against Weathers
before providing him with notice and an opportunity to cure, in violation of the loan
agreement and WIS. STAT. § 425.105(1), which in some circumstances requires the
filing of the 15-day notice described in WIS. STAT. § 425.104 (“the notice of right
to cure allegations”). We agree with CreditBox that, even assuming as true the
factual allegations in the counterclaim and all reasonable inferences in Weathers’
favor, both the EFT withdrawal allegations and the charge-off allegations fail to
state a claim upon which relief may be granted. See Data Key Partners, 356 Wis. 2d
665, ¶31 (dismissal on a motion to dismiss is appropriate when the plaintiff fails to
“allege facts that plausibly suggest” entitlement to relief). In contrast, we agree with
Weathers that the set of allegations surrounding failure to provide notice of default
and a right to cure, including the alleged violation of § 425.105(1), survives the
motion to dismiss. We address each set of allegations in turn.

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No. 2022AP746

The EFT Withdrawal Allegations

¶31 The counterclaim includes the following pertinent allegations.
Weathers “originally arranged” through an “EFT authorization” agreement with
CreditBox to have payments withdrawn from his bank account “via electronic funds
transfer (EFT)” (sometimes referred to as an “EFT payment”). The weekly EFT
payments called for in the loan agreement and the EFT authorization “began and
were not canceled by Weathers.” “If payments commenced weekly on June 26,
2015 (a Sunday), then assuming that [each] payment was due on the first day of
each subsequent week … payments would have been due June 26, July 4, 11, 18,
and 25; August 1, 8, 15, 22, and 29; and September 5, 12, 19 and 26, for a total of
14 weekly payments due between June 26 and September 26, 2015.”12 CreditBox
“alleges [that] Weathers made four total payments, all apparently before August 7,
2015,” at which time “a payment was attempted to be withdrawn and was returned.”
“August 7 was not a date that had originally been scheduled for a payment at the
time of entering into the loan agreement.” On August 7, CreditBox attempted an
EFT payment that was “due prior to August 7, and [the August 7 attempt] was a
second or subsequent attempt. This second or subsequent attempt upon information
and belief caused Weathers to incur charges at his bank.” “[N]o agreement between
Weathers and [CreditBox] allowed [CreditBox] to make subsequent attempts to
withdraw by EFT a payment that had previously been declined.”

¶32 Weathers now argues that these allegations state a claim that
CreditBox violated WIS. STAT. § 421.108 by attempting to take an EFT payment
from his bank account on August 7, 2015, which CreditBox “was not scheduled” to

12
As we explain in the text below, these allegations misapply the terms of the EFT
authorization form to the 2015 calendar.

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No. 2022AP746

take, and that the August 7 activity therefore amounted to an “attempt[] [at] a second
withdrawal of a payment without a contractual right to do so.” CreditBox responds
in part that, under the terms of an EFT authorization form that Weathers signed at
the time he took out the loan, Weathers explicitly authorized CreditBox to take all
actions that Weathers alleges in the counterclaim. Therefore, the CreditBox
argument continues, based on the pleadings CreditBox’s actions could not violate
CreditBox’s obligation of good faith under § 421.108.

¶33 We assume without deciding that the EFT withdrawal allegations
could state a claim for a violation of WIS. STAT. § 421.108 if Weathers had not
signed the EFT authorization form. But dismissal is appropriate when the form is
taken into account.

¶34 CreditBox submitted to the court commissioner as an exhibit a two-
page EFT authorization form entitled “Optional, Revocable Electronic Fund
Transfer Authorization.” It purports to have been created by CreditBox and also
reflects execution by Weathers on the same day that Weathers executed the loan
agreement.13 By its terms, the EFT authorization form “allows a preauthorized
electronic fund transfer payment[,]” withdrawn by CreditBox from Weathers’ bank
account, starting on June 26, 2015, and “on [w]eekly intervals thereafter.” It further
states that “[i]f there are insufficient funds in [Weathers’] Account for any EFT
Payment to be made on any EFT Payment Date, [CreditBox] may present the debit
for such EFT Payment to [Weathers’] Account up to two times thereafter … to
process the scheduled payment.” In other words, the form authorized CreditBox to

13
For ease of reference, and following the arguments of the parties, we discuss the EFT
authorization form as it were an agreement separate from the loan agreement, but our analysis
would be the same if the EFT authorization form were considered to be a part of, or incorporated
into, the loan agreement.

16
No. 2022AP746

attempt an out-of-schedule EFT payment from Weathers’ bank account up to two
times after a scheduled attempt was stymied by insufficient funds.

¶35 The circuit court determined that it could rely on the EFT
authorization form to resolve the motion to dismiss in favor of CreditBox, even
though the form is not attached to Weathers’ counterclaim pleading. The court
based this reliance on Soderlund v. Zibolski, 2016 WI App 6, 366 Wis. 2d 579, 874
N.W.2d 561 (2015), which adopts the incorporation-by-reference doctrine. This
doctrine permits courts to consider a document attached to a motion to dismiss
without converting the motion to one for summary judgment, so long as the
document is referred to in the plaintiff’s complaint, it is central to the plaintiff’s
claim, and its authenticity has not been disputed. Id., ¶37. The purpose of the
doctrine is to “‘prevent[] a plaintiff from evad[ing] dismissal ... simply by failing to
attach to his complaint a document that prove[s] his claim has no merit.’” See id.,
¶38 (quoted source omitted).

¶36 Weathers fails to address the EFT authorization form in his opening
brief on appeal, even though it provided a basis for the circuit court ruling. Only in
his reply brief does he briefly offer limited arguments, which are submitted too late.
See A.O. Smith Corp. v. Allstate Ins. Cos., 222 Wis. 2d 475, 492, 588 N.W.2d 285
(Ct. App. 1998) (we need not address arguments raised for the first time in a reply
brief). We are not required to address otherwise undeveloped or abandoned
arguments simply because they were discussed at oral argument, see id. at 492-93,
but we now make additional observations based on references in Weathers’ reply
brief on appeal and discussion at oral argument.

¶37 Without referencing Soderlund in his briefing or during oral
argument, Weathers asserts that we cannot rely on the EFT authorization form

17
No. 2022AP746

because he did not refer to it in his counterclaim. This is not accurate. As
summarized above, the counterclaim alleges that Weathers “originally arranged”
with CreditBox “to have payments taken out of his [bank] account … via electronic
funds transfer (EFT),” referring to this “arrange[ment]” as an “EFT authorization.”

¶38 Weathers suggests that the circuit court “prevent[ed]” him from
addressing the EFT authorization form, but that suggestion is not supported by any
part of the record that he cites or that we independently identify. Further, the record
reflects that CreditBox submitted the form to the court commissioner, before the
circuit court’s de novo review, and therefore counsel for Weathers was presented
with this document even before the circuit court litigation.

¶39 Further, when the EFT authorization form is brought into the picture,
Weathers’ theory of liability for this set of allegations collapses, at least as best we
understand the theory. Weathers concedes, by failing to address it, the following
dispositive argument made by CreditBox, based on the 2015 calendar and the
unambiguous terms of the EFT authorization form. See United Coop. v. Frontier
FS Coop., 2007 WI App 197, ¶39, 304 Wis. 2d 750, 738 N.W.2d 578 (appellant’s
failure to respond in reply brief to an argument made in response brief may be taken
as a concession).

¶40 CreditBox points out that August 7, 2015, was six weeks to the day
after the June 26 start date provided in the EFT authorization form, and therefore
August 7 was a scheduled EFT payment date contemplated in the EFT authorization
form. These facts, incorporated by reference into the counterclaim, directly
undermine Weathers’ theory that CreditBox attempted to collect an EFT payment
on a date that was not scheduled for payment, and that the alleged August 7 attempt
to collect an EFT payment must have been a second or subsequent attempt that could

18
No. 2022AP746

have been justified only if CreditBox had made a prior attempt at an EFT payment
that was stymied by insufficient funds in Weathers’ bank account. Naturally, in
order to determine whether Weathers has stated “a plausible claim,” we must
construe the allegations consistently with the 2015 calendar. See Data Key
Partners, 356 Wis. 2d 665, ¶¶38, 39, 56 (plaintiff must state “plausible claim”).

¶41 As a rejoinder, Weathers notes that the counterclaim does not allege
that there were insufficient funds in the bank account on August 7. But that does
not matter, because the only basis for the good faith claim appears to be the
suggestion that an August 7 attempt to collect an EFT payment was improper, and
under the terms of the authorization form it would have been proper. Weathers
contends that the counterclaim describes an “illegal transaction,” but he fails to
support that position with allegations in the counterclaim or reasonable inferences
arising from those allegations.

¶42 In sum, the EFT withdrawal allegations are not sufficient to support a
plausible claim that CreditBox lacked an “honest intention to abstain from taking
unfair advantage” of Weathers, see Foseid, 197 Wis. 2d at 793 n.14, or that
CreditBox failed to observe a “reasonable commercial standard[] of fair dealing”
that could apply in this context.14

14
We emphasize that our rulings regarding the EFT withdrawal allegations, as well as the
charge-off allegations addressed in the following subsection of this opinion, are limited to
determinations that Weathers fails to state a claim under WIS. STAT. § 421.108 based on the sets of
allegations currently pleaded in the counterclaim. We express no opinion as to whether similar
allegations could state a claim in other cases, depending on the details, nor whether the circuit court
in this case following remand could or should permit amendment of Weathers’ counterclaim
regarding the EFT withdrawal or charge-off allegations. If the potential amendment topic is
litigated following remand, the circuit court is free to make its determinations based on the
applicable legal standards and any discretionary decisions properly available to the court. In a
similar vein, we express no view about rulings that the circuit court might be asked to make, if the
good faith claim survives to the trial stage, about potential motions in limine or evidentiary rulings.

19
No. 2022AP746

The Charge-off Allegations

¶43 Weathers’ charge-off allegations rest in part on allegations already
summarized above, namely, that Weathers made four total payments before
August 7, 2015. Weathers submits that one reasonable inference from these
allegations is that the last EFT payment occurred four weeks after the first payment
date of June 26, suggesting that the first default occurred one week after that, on
July 24—the first day on which a payment should have been made but allegedly
was not.15

¶44 Some or all of the following additional allegations in the counterclaim
may be pertinent to Weathers’ theory of the charge-off allegations. On
September 22, 2015, CreditBox “charged off” Weathers’ debt under the loan.16 This
represented a determination by CreditBox that it “was unlikely to be paid in full on
the debt, while [CreditBox was] still retaining the right to attempt to collect that
debt.” Before or at that time, CreditBox “‘accelerated’ the debt, which means that
[it] declared the entire amount due and owing in one lump sum, rather than payable
in installments over time.” “[T]he last contact [that CreditBox] attempted with
Weathers was a phone call and voicemail message left on September 14, 2017,” and
after the alleged charge off CreditBox “made little to no effort to notify Weathers
that it believed he was in default or that payment of any amounts were still required.”
“Between 2017” and the day CreditBox filed its claim against Weathers in March
2021, Weathers “received no communications from [CreditBox] or on [its] behalf

15
Putting aside Weathers’ misreading of the 2015 calendar, under his own theory, the date
of last payment would have been July 17, making July 24 the alleged date of first default.
16
See Charge Off, BLACK’S LAW DICTIONARY (11th ed. 2019) (“To treat (an account
receivable) as a loss or expense because payment is unlikely; to treat as a bad debt.”). Weathers’
theory of liability rests in part on the premise that his credit history must have been harmed by the
charge off.

20
No. 2022AP746

… which informed him that his debt was not paid in full or which informed him that
he had a debt that continued to accrue interest at 399.0250% per year.” As of
September 22, 2015, “only $24.44 of Weathers’ payments had been applied to the
principal of this debt. This means that Weathers still owed principal of $476 as of
September 22, 2015.” CreditBox’s claim against Weathers “was for $2,219.40,”
which “means that $1,743.40 of the debt was presumably interest that accrued over
the 2,029 days that the debt was allegedly owed.”

¶45 Although not referenced in the counterclaim, Weathers bases his
theory of this aspect of alleged good faith liability on what he characterizes as a
“recommended” time period for charge offs contained in a bulletin issued by the
federal Office of the Comptroller of the Currency. See OFFICE OF COMPTROLLER
OF THE CURRENCY, OCC BULL. NO. 2000-20, UNIFORM RETAIL CREDIT
CLASSIFICATION AND ACCOUNT MANAGEMENT POLICY: POLICY IMPLEMENTATION
(2000). The bulletin states that the office “generally requires that closed-end loans
be charged off when [they are] 120 days past due.”17 See id.

¶46 With that background, Weathers argues that, given the 120-day
federal guidance reference, CreditBox “acted outside of reasonable commercial
standards when it charged off the loan” at 60 days “past due,” and did not
sufficiently communicate with him regarding the charge off.18

17
The Law Dictionary, featuring Black’s Law Dictionary, 2d ed., defines a “closed-end
loan” in pertinent part as a “consumer installment loan” in which “the borrower cannot alter the
(1). number and amount of installments, (2). maturity date, and/or (3). credit terms.”
https://thelawdictionary.org/closed-end-loan/ (last visited July 28, 2023); see also WIS. STAT.
§ 421.301(27) (defining “open-end credit plan”). CreditBox does not dispute that the loan defined
by the agreement here is a closed-end loan as that term is used in the federal guidance.
18
For the sake of accuracy we note that Weathers argues that 59 days passed, but that the
correct calculation is 60 days—from his alleged date of first default, July 24, to the alleged date of
charge off, September 22. But this one-day difference does not affect our analysis on this issue.

21
No. 2022AP746

¶47 We conclude that the charge-off allegations fail to state a claim for a
violation of CreditBox’s obligations of good faith either in its performance or
enforcement of the loan agreement or the EFT authorization form, or in CreditBox’s
performance or enforcement of duties under WIS. STAT. § 421.108. They could not
support a claim that CreditBox lacked an honest intention to avoid unfair advantage
or that its conduct could have violated “reasonable commercial standards of fair
dealing.” To the extent that they may be based more generally on failures of
CreditBox to communicate sufficiently with Weathers about the loan and
outstanding debts before filing suit against Weathers, they could relate to the notice
of right to cure allegations discussed in the next subsection. But we do not discern
a basis for a claim specifically related to communication regarding the charge-off
decision.

¶48 We begin with the loan agreement and the EFT authorization form.
Based on these documents, we do not discern that the allegations in the counterclaim
suggest a lack of honesty in fact or lack of observance of reasonable commercial
standards of fair dealing, even construing every reasonable inference in Weathers’
favor. Nothing in these documents required CreditBox to wait more than 60 days
after the first failure to make a payment before charging off the debt. Nor did these
documents require that, instead of or before charging off the debt, CreditBox had to
continue to attempt to generate EFT payments more than 60 days after the last
unsuccessful attempt. We search the counterclaim in vain for a suggestion of
subterfuges, evasions, or other opportunistic behavior by CreditBox related to the
charge-off decision.

¶49 Weathers’ heavy reliance on the federal guidance, which to repeat is
not referenced in his counterclaim, is misplaced. In Weathers’ own words, this
guidance gives creditors “up to 120 days to charge off a bad debt”—which is a “not

22
No. 2022AP746

later than” concept, as opposed to a “not earlier than” concept. Further, he does not
argue that the guidance purports to establish a minimum time period that a creditor
must wait before charging off a debt.

¶50 Putting to the side the federal guidance, the counterclaim itself does
not suggest a relevant objective standard that a factfinder could use to determine
that CreditBox failed in its obligation of good faith by charging off the debt on day
60, as opposed to on day 75 or day 120. Weathers now asks us to deem 60 days as
acting “rather rapidly,” but he provides an insufficient basis to think, given the
counterclaim allegations, that 60 days fell outside what is allowed under reasonable
commercial standards of fair dealing.

¶51 It is the same with the allegations of failures to communicate more, or
perhaps to communicate differently, with Weathers specifically about the charge
off. For example, the counterclaim does not allege that CreditBox representatives
ignored communications that Weathers initiated with CreditBox regarding the
charge off or that representatives were evasive or inaccurate in responding to
communication from him on that topic. The counterclaim alleges that CreditBox’s
“conduct as alleged herein demonstrates that plaintiff did not act in good faith with
respect to its collection of this debt,” but this is merely a legal conclusion, which we
are required to ignore. See Data Key Partners, 356 Wis. 2d 665, ¶19.

¶52 Turning to the requirements of the Act, as CreditBox points out,
Weathers does not argue that any provision in the Act required CreditBox to delay
a charge off beyond 60 days or to communicate with Weathers more or in a different
manner, and Weathers concedes the point by failing to reply to it.

¶53 At oral argument, Weathers argued that the failure of CreditBox to
communicate with him more than it did, “especially after [CreditBox] charged off

23
No. 2022AP746

the debt early, can be seen as a misrepresentation by omission”—that is, stated in
the terms of WIS. STAT. § 421.108, it could be seen as a failure of “honesty in fact
in the conduct or transaction concerned.” We disagree. We do not discern in the
allegations about CreditBox’s communication or lack of communication regarding
the charge off a basis to allege a dishonest intention to create an unfair advantage.
See Foseid, 197 Wis. 2d at 793 n.14. The counterclaim alleges that a CreditBox
representative left Weathers “a phone call and voicemail message” about one week
before the alleged charge off.19 Assuming without deciding that it could state a
claim based on a dishonest intention to gain an unfair advantage for a creditor in the
circumstances alleged here to charge off the debt without first making some attempt
to contact the debtor about a possible charge off based on an alleged default, the
counterclaim provides no basis to infer a dishonest intention in not contacting him
more than is alleged (through the one voicemail) or in not contacting him in a
different manner regarding the charge off. The counterclaim also alleges that, after
the charge off, CreditBox made “little to no effort to notify Weathers that it believed
he was in default or that payment of any amounts were still required,” but we fail to
see how this could support a claim of dishonesty regarding the charge-off decision.
In terms of the Foseid “honesty in fact” formulation, Weathers fails to explain how
the counterclaim states a claim that CreditBox failed to “provide information or to
give notice” about the charge off in a way that “render[s] the transaction unfair.”
See id.

¶54 In sum, as with the EFT withdrawal allegations, the charge-off
allegations do not support a good faith claim. In both instances, Weathers rests

The wording in the counterclaim is ambiguous, but in Weathers’ favor we interpret this
19

to mean that there was a single telephone call that resulted in a single voicemail message notifying
him that CreditBox was contemplating a charge off as a result of default.

24
No. 2022AP746

heavily on the assertion of legal conclusions, which is not sufficient. See Data Key
Partners, 356 Wis. 2d 665, ¶19.

The Notice of Right to Cure Allegations

¶55 Weathers’ notice of right to cure allegations rest on counterclaim
allegations already summarized above, along with the following additional
allegation. CreditBox never gave Weathers “a statutorily-compliant notice of any
asserted default” or “a chance to cure said default” before it filed its small claims
action against him.

¶56 In addition, Weathers now points to the fact that, in the loan
agreement, CreditBox appeared to obligate itself to provide a notice of right to cure
default before accelerating the debt, referring to Weathers as “you”:

In the event of default and, if you have the right to cure the
default pursuant to sec. 425.105, WIS. STATS., you fail to
cure the default within 15 days after you are given notice of
the default, the lender may declare the whole outstanding
balance due under this agreement payable at once and
proceed to collect it, including commencing legal action.

¶57 As we now explain further, the notice of right to cure allegations are
based in part on WIS. STAT. §§ 425.104 and 425.105(1), with CreditBox countering
based almost entirely on the reasoning in Security Finance v. Kirsch, 2019 WI 42,
386 Wis. 2d 388, 926 N.W.2d 167, which we address below.

¶58 Under pertinent language in WIS. STAT. § 425.105(1), “[a] merchant
may not accelerate the maturity of a consumer credit transaction” or “commence
any action” “unless the merchant believes the customer to be in default …, and then
only upon the expiration of 15 days after a notice is given pursuant to [WIS. STAT.

25
No. 2022AP746

§] 425.104 if the customer has the right to cure under this section.” Section 425.104
provides:

(1) A merchant who believes that a customer is in
default may give the customer written notice of the alleged
default and, if applicable, of the customer’s right to cure any
such default ([§] 425.105).

(2) Any notice given under this section shall contain
the name, address and telephone number of the creditor, a
brief identification of the consumer credit transaction, a
statement of the nature of the alleged default and a clear
statement of the total payment, including an itemization of
any delinquency charges, or other performance necessary to
cure the alleged default, the exact date by which the amount
must be paid or performance tendered and the name, address
and telephone number of the person to whom any payment
must be made, if other than the creditor.

¶59 Weathers argues that the notice of right to cure allegations state a good
faith claim in part because, if the allegations are true, CreditBox both breached the
loan agreement and violated the Act, specifically WIS. STAT. § 425.105(1), when it
allegedly accelerated the debt and commenced its action against him without giving
him the 15-day notice described in WIS. STAT. § 425.104. CreditBox does not
dispute that these allegations state a violation of § 425.105(1).

¶60 Turning to Kirsch, our supreme court there emphasized that it was
addressing a single question related in part to statutory provisions not at issue here,
namely WIS. STAT. § 427.104(1)(g) and (1)(j). Section 427.104(1)(g) and (j)
respectively define the following as “prohibited practices” under the Act: a creditor
“[c]ommunicate[s] with the customer … in such a manner as can reasonably be
expected to threaten or harass the customer”; a creditor makes a “[c]laim, or
attempt[s] or threaten[s] to enforce a right with knowledge or reason to know that
the right does not exist.” Specifically, the court in Kirsch answered one question:
Could a creditor’s failure to comply with the notice of default and right to cure

26
No. 2022AP746

provisions of WIS. STAT. ch. 425, prior to commencing a collections action,
constitute violations of § 427.104(1)(g) and (1)(j)? Kirsch, 386 Wis. 2d 388, ¶¶11,
18-19.

¶61 The Kirsch court answered this question in the negative: Such a
failure to comply with the notice and right to cure requirements as a prerequisite to
commencing a collections action could not constitute violations of either of these
WIS. STAT. § 427.104 subparts. Kirsch, 386 Wis. 2d 388, ¶19. More specifically,
the court reasoned that, because a creditor’s failure to provide notice of default and
right to cure is a mere “procedural” failing, it could not be a “prohibited practice”
under the definitions in § 427.104, and therefore the debtor’s counterclaim citing
§ 427.104(1)(g) and (1)(j) must be dismissed. Kirsch, 386 Wis. 2d 388, ¶19. The
court rejected what it characterized as the debtor’s attempt to “shoehorn [the
creditor’s] failure to comply with ch. 425 into a [WIS. STAT.] ch. 427 violation in
order to recover the significant remedies and penalties ch. 427 imposes.” Kirsch,
386 Wis. 2d 388, ¶19. A creditor’s failure to comply with this procedural
requirement “did not disrupt [the creditor’s] right to payment,” and therefore,
“[w]hile [the debtor] was entitled to dismissal of [the creditor’s] action [without
prejudice,] ... [the debtor’s] counterclaims fail[ed] to state a claim for additional
relief under § 427.104(1)(j)” or (1)(g). Kirsch, 386 Wis. 2d 388, ¶30.

¶62 CreditBox argues that, based on the reasoning in Kirsch, this aspect
of Weathers’ counterclaim based on WIS. STAT. § 421.108 must be dismissed
because the alleged failure of CreditBox to give him this notice would have been,
in the words of the court in Kirsch, “merely a failure to comply with a procedural
requirement that warranted dismissal of” the creditor’s action against the debtor, as
opposed to constituting a substantive violation of the Act. See Kirsch, 386 Wis. 2d
388, ¶30. That is, CreditBox essentially argues that, while § 421.108 generally

27
No. 2022AP746

imposes the obligation of good faith on the performance or enforcement of duties
that are defined in the Act, under the reasoning in Kirsch the particular duties
defined in WIS. STAT. §§ 425.104 and 425.105(1) must fall outside the ambit of the
good faith doctrine. We disagree.

¶63 CreditBox asks us to extend Kirsch from the context of the Act’s
“prohibited practices” in debt collection to the context of the Act’s obligation of
good faith, despite the explicit caution of the supreme court that it intended to “cabin
[its] analysis” to the specific issue raised in that appeal. See Kirsch, 386 Wis. 2d
388, ¶11. In the pertinent discussion, the court explicitly limited its attention to the
reach of WIS. STAT. ch. 427—specifically, whether a debtor could have a remedy
under WIS. STAT. § 427.105—and made no statements about the meaning of WIS.
STAT. § 421.108.

¶64 Further, even putting to the side the court’s caution that its opinion is
narrow in scope, the reasoning in Kirsch does not dictate that no consumer action
for a violation of WIS. STAT. § 421.108 could be based on allegations involving a
lender’s failure to provide notice of default and a right to cure. Specifically, the
court had no occasion to consider whether a debtor could prove that a creditor’s
decision to accelerate a loan and then file a claim in a manner that violates the Act—
together with all other relevant facts that might be produced in discovery that could
support a claim of bad faith—violates § 421.108 because, according to the debtor,
the creditor’s conduct was motivated by a dishonest intent to obtain an unfair
advantage or could violate reasonable commercial standards of fair dealing.

¶65 It is true that Kirsch explains that a debtor is entitled to have a
creditor’s claim dismissed without prejudice based on the creditor’s failure to
provide the required notice of default and right to cure before commencing its action

28
No. 2022AP746

against the debtor. See Kirsch, 386 Wis. 2d 388, ¶18. Given this, an initial
impression might be that creditors lack an incentive to violate the Act in this manner.
But, as Weathers points out, a creditor’s claim will be dismissed in these
circumstances only if the debtor knows enough to move for dismissal on this
ground. As the facts alleged here suggest, when not represented by counsel a debtor
such as Weathers may frequently not know enough to move for dismissal on this
ground.

¶66 CreditBox’s argument in its briefing on this issue is entirely limited
to its reliance on Kirsch, offering no additional reason for dismissal of the notice of
right to cure allegations.

¶67 At oral argument, CreditBox attempted to suggest an additional basis
for dismissal of the notice of right to cure allegations. This additional argument is
based on the statement in Hauer v. Union State Bank of Wautoma, 192 Wis. 2d
576, 532 N.W.2d 456 (Ct. App. 1995), that WIS. STAT. § 401.203 of the uniform
commercial code in Wisconsin “does not support an independent cause of action for
failure to act in good faith under a contract.” See Hauer, 192 Wis. 2d at 597 & n.7
(citing commentary to the code). CreditBox’s argument appears to be that, under
the reasoning in Hauer and Kirsch, when the allegation is that a creditor violated a
specific provision of the Act, then a debtor’s remedies must be limited to those
which the Act provides for violation of that specific provision, and the violation
cannot be part of an independent claim under WIS. STAT. § 421.108. We cannot
discern such a rule in Hauer and Kirsch. Further, this would insert limiting
language into § 421.108 that does not appear there and it would also contradict the
meaning of the second sentence of § 421.108 explained above.

29
No. 2022AP746

¶68 Having rejected CreditBox’s limited arguments on this issue, we
conclude that Weathers’ notice of right to cure allegations cannot be dismissed at
this stage in the proceedings because the counterclaim allows for at least one
reasonable set of inferences to the following effect: CreditBox violated the Act’s
notice and right to cure requirement as part of a dishonest attempt to gain an unfair
advantage over Weathers and violated reasonable commercial standards of fair
dealing by intentionally and unfairly depriving him of his lawful opportunity to
attempt to stave off acceleration and a meritorious lawsuit against him. Whether
the facts that the parties here could adduce in discovery, to the extent permitted by
the circuit court following remand, would require expert opinion in order to survive
a possible motion for summary judgment by CreditBox is among the potential issues
that would have to be presented to the court following remand if developed by the
parties. What is important for present purposes is that, based on all inferences
arising from the counterclaim, it is not difficult to infer potential testimony on these
topics that could support a good faith claim, whether coming from an expert or other
sources.

II. Weathers’ Unconscionability Counterclaim Under WIS. STAT.
§ 425.107

¶69 Weathers alleges that the totality of the conduct by CreditBox,
including the same allegations underlying the EFT withdrawal, charge off, and
notice of right to cure allegations described above, was unconscionable in violation
of WIS. STAT. § 425.107. CreditBox argues that we should affirm the dismissal of
this counterclaim based heavily on its interpretation of Duncan. CreditBox does
not argue that the unconscionability counterclaim is defective in some other way.
Duncan stated that a consumer may bring such a claim “only in response to ‘actions
or other proceedings brought by a creditor to enforce rights arising from consumer

30
No. 2022AP746

credit transactions.’” See Duncan, 400 Wis. 2d 1, ¶28 (quoting WIS. STAT.
§ 425.102). The circuit court also relied exclusively on Duncan in granting the
motion to dismiss this counterclaim. We conclude that Duncan does not apply to
the facts here and we reject the related arguments made by CreditBox on this issue.
In short, CreditBox triggered the potential for the counterclaim by filing suit against
Weathers and therefore § 425.102 is not a bar to this counterclaim. Duncan does
not dictate or suggest a different result on these facts.

¶70 WISCONSIN STAT. § 425.107(1) provides:

With respect to a consumer credit transaction, if the
court as a matter of law finds that any aspect of the
transaction, any conduct directed against the customer by a
party to the transaction, or any result of the transaction is
unconscionable, the court shall, in addition to the remedy
and penalty authorized in sub. (5), either refuse to enforce
the transaction against the customer, or so limit the
application of any unconscionable aspect or conduct to avoid
any unconscionable result.[20]

¶71 While we do not have occasion to address the substance of an
unconscionability claim under the Act, or the specifics of Weathers’
unconscionability allegations here, we note for context that WIS. STAT. § 425.107
lists nine factors as being pertinent to determining unconscionability, including
these varied sources: “[d]efinitions of unconscionability in statutes, regulations,

20
Regarding the reference to “the remedy and penalty authorized in” WIS. STAT.
§ 425.107(5), that subsection provides:

In addition to the protections afforded in sub. (1), the
customer shall be entitled upon a finding of unconscionability to
recover from the creditor or the person responsible for the
unconscionable conduct a remedy and penalty in accordance with
[WIS. STAT. §] 425.303.

Section 425.303 provides for a fine of $100 and the “actual damages, including any incidental and
consequential damages, sustained by the customer by reason of the violation.”

31
No. 2022AP746

rulings and decisions of legislative, administrative or judicial bodies.” See
§ 425.107(3)(i).

¶72 At issue in Duncan is the statement of scope for subchapter I
(“Creditors’ remedies”), within WIS. STAT. ch. 425 (“Consumer transactions –
remedies and penalties”). Subchapter I contains the unconscionability statute, WIS.
STAT. § 425.107. The scope statement provides:

[Subchapter I] applies to actions or other proceedings
brought by a creditor to enforce rights arising from consumer
credit transactions and to extortionate extensions of credit
under [WIS. STAT. §] 425.108.

WIS. STAT. § 425.102.

¶73 Interpreting the scope statement, our supreme court determined in
Duncan that the plaintiff could not bring an unconscionability claim under WIS.
STAT. § 425.107 because the plaintiff brought it in a separate lawsuit, and not “in
response to ‘actions or other proceedings brought by a creditor.’” Duncan, 400
Wis. 2d 1, ¶27 (quoting WIS. STAT. § 425.102). The court also determined that it
did not change the result that the plaintiff brought the claim in response to a non-
judicial repossession by the creditor under WIS. STAT. § 425.206(1)(d). Duncan,
400 Wis. 2d 1, ¶29. While this creditor conduct was adverse to the debtor, it was
“not one of the ‘actions or other proceedings brought by a creditor’ contemplated
by” § 425.102. Id.

¶74 We conclude that Duncan’s interpretation of WIS. STAT. § 425.102
does not address the circumstances here. We further conclude that, under the most
reasonable interpretation of § 425.102, the fact that CreditBox moved for voluntary
dismissal of its claim before Weathers brought his unconscionability counterclaim
does not prevent Weathers from pursuing it. Weathers brought the counterclaim “in

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response to” what was, in the terms of § 425.102, CreditBox’s “action[]” brought
“to enforce” its rights, even though CreditBox had already filed its motion for
voluntary dismissal under WIS. STAT. § 805.04(1) or (2). Thus, unlike the non-
judicial repossession context in Duncan, Weathers’ counterclaim was brought in
response to an action against him filed by CreditBox.

¶75 The court in Duncan explained that a plaintiff may not seek to enforce
WIS. STAT. § 425.107 “‘via a separate civil lawsuit,’” Duncan, 400 Wis. 2d 1, ¶26
(quoting Riel v. Navient Sols., Inc., No. 16-CV-1191-JPS, 2017 WL 168900, *3
(E.D. Wis. Jan. 17, 2017)), because such an enforcement is in the nature of “a
defense to contract enforcement, not an affirmative claim available outside a
contract-enforcement or breach-of-contract action,” id., ¶27. In this case, however,
Weathers did not bring his unconscionability counterclaim in a “separate civil
lawsuit” or “outside a contract-enforcement or breach-of-contract action.” He
brought it after CreditBox sued him on the loan agreement. If Weathers had sought
to enforce the unconscionability provision against CreditBox in a separate lawsuit,
as the plaintiff did in Duncan, dismissal would be appropriate. See id., ¶2. Instead,
in the words of Duncan, he brought the counterclaim “in response to [an] ‘action[]
… brought by a creditor.’” Id., ¶27 (quoting WIS. STAT. § 425.102).

¶76 As Weathers points out, our supreme court did not determine in
Duncan that the rights conferred on debtors by WIS. STAT. § 425.107 are precisely
coextensive with common law unconscionability, nor did it define those rights as
being exclusively an affirmative defense. Instead the court observed, in support of
its determination that the plaintiff in that case could not pursue the claim in a
plaintiff-initiated lawsuit, that the specific limitations in the scope statement in WIS.
STAT. § 425.102 “are in line with the common law doctrine of unconscionability,
which is a defense to contract enforcement, not an affirmative claim available

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outside a contract-enforcement or breach-of-contract action.” Duncan, 400 Wis. 2d
1, ¶27 (citing Rosecky v. Schissel, 2013 WI 66, ¶57, 349 Wis. 2d 84, 833 N.W.2d
634, which identifies common law unconscionability as a “defense”). As Weathers
points out, WIS. STAT. ch. 425 contains options for relief that are not strictly
defensive in nature, which signals a legislative intent in creating § 425.107 that
differs from a mere duplication of the common law defensive doctrine. See WIS.
STAT. §§ 425.107, 425.303.

¶77 Further, our application of WIS. STAT. § 425.102 to these particular
counterclaim allegations is consistent with the Act’s rules of construction,
referenced supra ¶22. As Weathers contends, a contrary ruling would effectively
allow a creditor to decide whether a counterclaim alleging that it had committed
unconscionable conduct under WIS. STAT. § 425.107 may be pursued against it.
Notably, a creditor could obtain voluntary dismissal of a claim whenever a debtor
retains counsel or the creditor suspects that the debtor has some personal
understanding of the debtor’s legal rights, perhaps including proof of actionable
unconscionable conduct by the creditor. This is an easily foreseeable scenario.
Thus, the construction urged by CreditBox is not one designed to promote the
protection of customers from unfair practices, see WIS. STAT. § 421.102(2)(b), (c),
and would significantly limit the practical utility of § 425.107.

¶78 It is true that, under some circumstances, a creditor could unilaterally
obtain voluntary dismissal under WIS. STAT. § 805.04(1), and CreditBox argues that
this occurred here. See § 805.04(1) (allowing dismissal of action by plaintiff
“without order of court”). But we do not see how that could reasonably affect the
application of WIS. STAT. § 425.107. Even when a creditor unilaterally obtains
voluntary dismissal of its suit against a debtor, the creditor’s conduct in filing suit
triggers the availability of counterclaims; in that case, the voluntary dismissal does

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not alter the fact that the creditor brought an “action[]” “to enforce rights arising
from [a] consumer credit transaction[].”

¶79 CreditBox defends its interpretations of WIS. STAT. § 425.107 and
Duncan in part based on the premise that a debtor claiming unconscionability would
still have available remedies against a creditor under the federal Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq., as well as potential state law claims of
abuse of process and common law remedies. But, assuming without deciding the
availability of such alternative remedies to someone in Weathers’ shoes, that does
not change the fact that under CreditBox’s interpretation the ability for a debtor to
obtain relief under § 425.107 would be essentially under the control of creditors.
Further, CreditBox does not direct us to language in § 425.107 or a closely related
statute that reflects an intent to limit the exercise of consumer rights under the Act
to only those situations in which other remedies may not be available.

¶80 CreditBox emphasizes that, as summarized above, it filed its motion
for voluntary dismissal before Weathers brought his counterclaims, and therefore
the motion for voluntary dismissal was not, in the words of Duncan, “a direct
response to” the counterclaims. This amounts to an argument that, under WIS. STAT.
§ 425.102, the timing of the filing of a creditor’s motion for voluntary dismissal
dictates whether a counterclaim is made “in response to” an action filed by a
creditor. We see no basis for this interpretation. Instead, we conclude that the only
reasonable interpretation of § 425.102 is that all counterclaims made by debtors in
actions brought by creditors are “in response to” those actions. Further, this
interpretation is not inconsistent with any statement of our supreme court in
Duncan, including its observation that the scope limitations in § 425.102 generally
align with the defense-oriented common law doctrine.

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¶81 CreditBox asserts that the unconscionability counterclaim here is “an
independent, stand-alone claim.” This assertion ignores the fact that the
counterclaim was brought in the same action that CreditBox initiated against
Weathers—indeed, after discovery in the action was initiated. To repeat, CreditBox
sought a remedy in court that constituted an “action” “to enforce” its “rights arising
from [a] consumer credit transaction[],” in response to which Weathers filed his
counterclaims. See Duncan, 400 Wis. 2d 1, ¶28 (quoting WIS. STAT. § 425.102).21

¶82 CreditBox does not develop additional arguments to support
affirmance of the circuit court’s decision to grant its motion to dismiss the
unconscionability counterclaim, beyond those arguments already addressed, and we
resolve this motion to dismiss issue based on our rejection of those specific
arguments.

CONCLUSION

¶83 For all of these reasons, we affirm the circuit court’s decision to grant
CreditBox’s motion for voluntary dismissal, reverse its decision to grant
CreditBox’s motion to dismiss Weathers’ good faith counterclaim, and reverse its
decision to grant CreditBox’s motion to dismiss Weathers’ unconscionability
counterclaim.

By the Court.—Order affirmed in part; reversed in part and cause
remanded.

21
CreditBox cites a non-precedential but potentially persuasive opinion of this court
addressing circumstances similar in some respects to those in this case. See Security Fin. v. Kirsch,
No. 2017AP1408, unpublished slip op. (WI App Apr. 11, 2018). That opinion resolved the issue
in a single, conclusory paragraph that we do not consider persuasive.

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