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No harm, no foul under FDCPA

A Mayville law firm was properly granted summary judgment on a debtor’s claim that it violated the Fair Debt Collection Practices Act (FDCPA), even if it did so, because the debtor suffered no damages.

In an unpublished Wisconsin Court of Appeals opinion decided Oct. 13, the court found it unnecessary to decide an important issue of first impression – whether the Notice of Intent to File Claim for Lien, required before filing suit against a property owner under sec. 799.06(2), must include the disclosure requirements imposed by the FDCPA.

The court concluded that even if the FDCPA covers the lien notice, the debtor could not recover from the law firm, because it suffered no actual damages.

Erik and Stacy Hanson contracted to have Donald and Darlene Braunschweig perform work on the wood flooring of the Hanson’s home. After the Hansons refused to pay for the work, the Braunschweigs retained the Madden Law Firm to collect the debt.

After the Madden firm filed suit, the Hansons counterclaimed, alleging that the lien notice was a “communication” related to a debt, and thus, the firm violated the FDCPA by not including the required disclosures.

On motion for summary judgment, the circuit court concluded that the Hansons suffered no actual damages, even if the disclosures should have been included. Because no actual damages were awarded, the court declined to award statutory damages or attorney fees.

The Hansons appealed, but the Court of Appeals affirmed in a per curiam opinion.

It was undisputed that the Hansons suffered no actual damages. At issue was the circuit court’s authority to award statutory damages (up to $1,000 per violation, when no actual damages were sustained.)

The court adopted the same standard as the 8th Circuit in Lester E. Cox Medical Center v. Huntsman, 408 F.3d 989 (8th Cir. 2005).

In Cox Medical Center, the court held that courts may refuse to award statutory damages for de minimis or technical violations.

The Wisconsin Court of Appeals agreed, also citing several cases that characterize significant litigation under the FDCPA as a “cottage industry” to generate attorney fees without furthering the purpose of the Act.

Because the Hansons suffered no actual damages, the Court of Appeals held that the circuit court properly exercised its discretion in denying statutory damages and attorney fees.

However, it declined to address whether the firm violated the FDCPA in the first place.

In 2004, the 7th Circuit held that a civil complaint is a “communication” under the FDCPA, and thus, it must include the FDCPA disclosures. Thomas v. Law Firm of Simpson and Cybak, 392 F.3d 914 (7th Cir. 2004((en banc). But, in 2006, Congress overturned the holding by including the following language in the Act: “A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication…”

In the case at bar, the Madden firm contended that, because state statutes require filing of the lien notice before filing suit, it is a “formal pleading” exempt from the rule.

The Hansons argued that such a notice is not a “pleading” as that term is commonly understood, and thus the disclosures were required.

But the court found it unnecessary to resolve the issue given its holding on damages.

Jeremy Vanderloop, who represented the Madden firm, said he was pleased with the result, but disappointed that it remains unsettled whether the lien notice is subject to the FDCPA.

“I don’t think we did anything wrong; we used the standard form from the state bar’s Wisconsin Construction Lien Law Handbook,” Vanderloop said. “It was a very aggressive defense tactic – sue the lawyer rather than pay a $4,000 debt, and seek $16,000 in attorney fees.”

There was another issue before the circuit court that the parties briefed: whether any error by the Madden firm was a bona fide mistake of law, and thus exempted from liability. The court did not address the issue, however.

After briefing was completed, the U.S. Supreme Court resolved this issue against debt collectors, holding that the bona fide error defense applies only to mistakes of fact, not mistakes of law. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 130 S.Ct. 1605 (2010).

David Ziemer can be reached at david.ziemer@wislawjournal.com

What the court held

Case: Braunschweig v. Banco Services, Inc., No. 2009AP2716

Issues: Can a court deny statutory damages under the FDCPA, when the debtor suffers no actual damages?

Holdings: Yes. A circuit court has discretion to deny statutory


Attorneys: For Plaintiffs: Anthony A. Coletti, Elkhorn; For Defendants: Jeremy Vanderloop, Mayville.


  1. Don’t we live in a beautiful society today?? Have a contractor come into YOUR home to do repairs, REFUSE TO PAY THE BILL LIKE A TRUE DEADBEAT, and then have the nerve to file suit on bogus claims??? People can point the finger at every president that takes office, but we are to blame for where our economy is. People don’t pay their bills then cry foul when someone comes after you to collect the debts. How is a president responsible for you ignoring your bills??? Our economy sucks because of our own doings, not a president. We as Americans think we can sit back and abuse the credit system without any consequences. Wake up consumers!!!!

  2. This is another example of why Debt Collectors ignore the rules and the law in their efforts to collect a debt. They don’t have to because nothing ever happens to them when they don’t.

  3. Ummm, how about the fact these deadbeats had a contractor do work on their home AND VOLUNTARILY REFUSED, IGNORED THE CONTRACTOR’S INVOICE????? The court made the correct decision because they recongnized consumers who contracted for repairs and NEVER had intentions on paying for the services rendered?? Do you condone that type of behavior Credit Restoration, or do you still only see the other side of what the collector “did wrong?”. This wouldn’t even be a story if the consumer would have been a responsible citizen and paid their bill!!!!!!!!!!

  4. Credit Restoration what about this verdict do you not understand. You really need to get your facts straight before you offer opinions that are factless and baseless and learn to teach and accept responsilbility.

  5. When did it become a crime to pay your bills? WHy is it a crime to attempt to collect a bill? Talk about being upside down on your mortgage, the whole world is upside down!!!

  6. An Honest Collector

    HOORAY!!! Finally a judge that does the right thing! There are hundreds of attorneys out there that are filing erroneous law suits against collection agencies. They file a huge claim for lets say $250000. Then they make up make believe charges to back their fake claim. Then they call up your agency and say they will accept $4000 as settlement for the claim. In the meantime he agency did absolutely nothing wrong. This becoming a very common occurrence. I agree that there needs to be laws in place to protect debtors from the “bad agencies”, but there must be a stop to all of these attorneys filing these bogus claims. Just pay your bill.

  7. Credit Restoration: How would you have any business if people paid all their bills on time? Your handle suggests that you restore credit. Do you do that by advising and assisting your clients to pay their bills or do you assist your clients in beating the system, finding a loop hole or changing their identity? If you came to my house and performed your duties to restore my credit and I did not pay you for your services, how would you handle that! Your response above suggests that would be OK with you!

    Isn’t great that everyone has to ID themselves now instead of hiding behind anonymous?

  8. Marshall McKenzie

    Cheers Skip.. Well said .. I worked for you before… I always liked your direct approach to the simple issue.

  9. Even from the consumer’s position, this ruling was well within the purview of the court’s discretion. He merely ruled that without damages, a $1000 fine was not warranted, and if no fine is warranted, there is no reason to pursue the case.

    Don’t see this as a huge victory, because if the consumer can show damages or repeating patterns of abusive contact, the consumer can prevail. If he had found that the collector had violated, his penalty should have been $1.

    Note that the article above shows that the nail is in the coffin of the bona fide error on the part of collectors for errors of law and interpretation of law.

  10. The fdcpa violation was and still is the controversy in this case being discussed not the alleged debt and the judge ignored the statute he should have awarded a very small some if the plaintiff prevailed on the counter suit or dismissed the counter without prejudice. The judge did not have the discretion to ignore the statute and throw a case out that appeared to have some merit.Nowhere in the fdcpa statutes does it say someone must be harmed the judge made this up out of thin air and the appelate affirmed, this is a pathetic situation.Statute always rules. The legislators would have added “no harm no statutory damages” if that was the intent but it clearly was not they’re intent otherwise it would have been articulated in the statute language.The judge was probably trying to head off a vexatious litigant attorney but he clearly handled it the wrong way and the appelate apaulingly affirmed the decision.Its amazing to me how a judge who makes his living refereeing statute can’t even read it or just plain ignored it.I would also like to recomend a google video its called “The Money Masters” even though the author comes to the wrong conclusions.For me the answer to central banks is obviously decentralization.That aside this is the best documentary ever made on central banking if you watch you will know more about the world then 99.9% of the population.Thankyou for the article but next time please list all the judges involved so your readers can file judicial complaints.Peace

  11. I like how you also did not mention that the Supreme Court in the same action of Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 130 S.Ct. 1605 (2010) – also would have “overturned” this court decision as well.

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