Repossession News
"Taking It Back"
People can fight car loan repossessions in court
TODD RICHMOND, Associated Press
MADISON, Wis. - A car title loan company can't force a customer to fight
repossession through arbitration rather than through the court system, a
state appeals court ruled Thursday.
The 4th District Court of Appeals ruled a section of Wisconsin Auto
Title Loans Inc.'s contract with Kenneth M. Jones is unreasonable and
unenforceable because it would force him to settle disputes with the
company through arbitration.
The ruling upheld a decision by Milwaukee County Circuit Judge Michael
Guolee.
Jones' attorney, James Walrath, issued a statement praising the
decision, saying payday lenders that charge large amounts of interest
use arbitration clauses to prevent customers from attacking their
business practices in court.
"Today the consumer won," Walrath said.
Wisconsin Auto's attorney, Kenneth Nowakowski, didn't return a message
The Associated Press left at his office Thursday.
According to the ruling, Jones was unemployed when he borrowed $800 from
Wisconsin Auto to pay his bills in 2001. He agreed to a contract that
said he must repay the company at 300 percent interest and settle any
disputes with the company through arbitration.
Jones defaulted on the loan. The company filed a complaint in court to
seize Jones' car, as required by Wisconsin law.
Jones filed counterclaims. The company made a motion to settle the
counterclaims in arbitration, pursuant to the contract. But Guolee ruled
the contract was unreasonable because it was too one-sided - the company
could pursue actions in court, but Jones could not.
Wisconsin Auto argued on appeal that state law forces it to bring the
repossession action in court, but that doesn't mean Jones can skip
arbitration.
But the appeals court agreed with Guolee, saying the contract created an
unfair advantage for the company.
"Jones is required to arbitrate all claims and disputes arising out of
the (contract) while Wisconsin Auto remains free to enforce its rights
to repayment of the debt ... in the circuit court," the court's ruling
said.