Oct. 17, 2017 – The last in a line of successive companies that acquired auto loan debt portfolios failed to establish ownership of a specific debt with sufficient evidence for summary judgment against the individual debtors, a state appeals court has ruled.

Leroy and Roger Jones (Jones) purchased a used car in 2007, financing the purchase with a loan and security agreement establishing an installment payment schedule. Jones stopped payments, resulting in repossession and sale of the car in 2009.

The finance company that owned the loan obtained a default judgment against Jones for a deficiency. In 2015, Gemini Capital Group LLC filed a lawsuit against Jones to recover on the default judgment obtained by the previous loan holder.

To establish ownership of the debt, Gemini submitted an affidavit from its records custodian, Roger Neustadt, who listed the dates and names of companies involved in successive transfers of auto debt portfolios containing many individual debts.

The circuit court in Sawyer County granted summary judgment to Gemini, concluding Gemini provided sufficient evidence to show Gemini owned the Jones debt.

But in Gemini Capital Group, LLC v. Jones, 2016AP2123 (Oct. 17, 2017), a three-judge panel for the District III Appeals Court reversed, concluding Gemini’s evidence was not sufficient and summary judgment was not properly granted.

“Gemini argues the documents attached to Neustadt’s affidavit establish its ownership of the debt,” wrote Judge Lisa Stark. “We conclude, however, that the documents attached to Neustadt’s affidavit are insufficient to establish Gemini’s ownership.”

The panel noted that, aside from the first assignment, “none of the documents attached to Neustadt’s affidavit specifically reference Jones’ debt.” Records showed transactions involving auto loan portfolios without showing whether the Jones debt was part of it. That is, the transactions did not include reference to individual accounts or debts.

“We believe it self-evident that, in order to make a prima facie showing that it is the owner of the debt, Gemini must present evidence showing that it is the owner of Jones’ debt. Gemini must present evidence that it owns that specific debt,” Judge Stark wrote.

Evidence of a transfer of unspecified debts was “insufficient to make a prima facie showing that Gemini currently owns Jones’ debt, such that it is the real party in interest and has standing to obtain a deficiency judgment against Jones,” Judge Stark wrote.

The panel also concluded that the record custodian’s affidavit, which averred that the Jones account was part of the portfolio transfers was insufficient. “We have already concluded those documents are insufficient to make a prima facie showing that Jones’ debt, specifically, was transferred between the listed entities,” Judge Stark wrote.

“Because the documents themselves are insufficient to make a prima facie showing that Gemini owns the debt, Neustadt’s averments based on those documents are also insufficient.”

Jones, through attorney Matthew Lein of Lein Law Offices in Hayward, also argued that summary judgment was improperly granted because Gemini did not show compliance with Wis. Stat. section 425.209(1), which says consumers are “not liable for deficiencies unless the merchant has disposed of the goods in good faith and in a commercially reasonable manner.” On this point, the panel also agreed with Jones.

“[I]n order to make a prima facie case for summary judgment, Gemini was required to present evidence demonstrating that Jones’ vehicle was disposed of in a commercially reasonable manner,” Judge Stark wrote.

“Because it is undisputed Gemini failed to present any evidence on that issue, we agree with Jones that the circuit court erred by granting Gemini summary judgment.”

Finally, the panel agreed with Jones that a disputed issue of material fact still exists with respect to Jones’ last payment, which bears on whether Gemini timely filed the lawsuit within the six-year statute of limitations period.

“[W]e conclude there is a genuine issue of material fact as to whether Jones consented to the July 29, 2009, payment being made on his behalf, such that the payment triggered operation of the partial payment doctrine and therefore tolled the statute of limitations.”