Background
Discover Bank sued Jeffrey Lancaster in small claims court to recover $4,988 in defaulted consumer credit card debt, asserting breach of contract, account stated, and unjust enrichment. The initial complaint alleged Lancaster had entered into a charge account agreement and defaulted by failing to make payments when due. Lancaster moved to dismiss, arguing the complaint failed to comply with Wisconsin Consumer Act (WCA) pleading standards by not specifying facts constituting the alleged default.
Discover filed an amended complaint in July 2024, adding factual allegations including specific dates of missed payments (July 2023 through February 2024) and attaching charge account statements and a right-to-cure notice. Lancaster agreed the amendment mooted his motion to dismiss but then filed an answer, affirmative defenses, and two counterclaims. The first alleged Discover willfully violated the WCA by failing to include required information in its initial complaint. The second claimed the cardmember agreement was void because it contained four illegal clauses that violated different WCA provisions.
Discover moved to dismiss both counterclaims. The circuit court granted the motion, finding Lancaster’s first counterclaim failed to allege a plausible claim of willful noncompliance under prior Wisconsin case law, and his second counterclaim failed because none of the allegedly illegal clauses violated provisions of the WCA that specifically authorize voiding a contract. Discover then moved for summary judgment on its debt claim, which the circuit court granted after Lancaster stated in a letter he had no defenses or offsets. Lancaster appealed.
The Court’s Holding
The Wisconsin Court of Appeals affirmed the dismissal of both counterclaims. On the first counterclaim, the court held that even assuming Discover’s initial complaint was deficient under WIS. STAT. § 425.109 (requiring complaints to specify facts constituting default), the WCA provides no damages remedy for such noncompliance. Section 425.109(4) allows only attorney fees if the debtor proves the noncompliance was willful or intentional. Lancaster’s allegations that Discover was a “serial filer” using form complaints to save money and time were conclusory and legally insufficient to demonstrate willfulness—merely showing a creditor prioritizes efficiency does not establish intentional disregard of legal requirements. The court rejected Lancaster’s argument that Discover’s decision to amend the complaint proved willfulness, finding that amending in response to a motion to dismiss is insufficient to demonstrate intentional noncompliance as a matter of law.
On the second counterclaim, the court held that WIS. STAT. § 425.305 (providing that void transactions entitle customers to retain all benefits received and recover all payments made) applies only to violations of specific WCA sections that expressly reference § 425.305 as a remedy. The four clauses Lancaster challenged—relating to the definition of default, acceleration without notice, attorney fee recovery, and choice of law—violate sections 425.103, 425.105, 422.411, and 421.201 respectively, none of which provide that their violation is subject to the void-contract remedy. The court rejected Lancaster’s reliance on residential lease cases, holding they involved different statutory schemes with different remedial structures. The court stated it must enforce the WCA as written by the legislature, and policy arguments about what remedy best serves the WCA’s purposes are properly directed to the legislature, not the courts.
Key Takeaways
- Defects in WCA pleading compliance have limited remedial consequences—only attorney fees (if willful/intentional), not statutory damages, are available.
- Proving willful noncompliance with WCA pleading requirements requires more than showing a creditor uses form complaints for efficiency; conclusory allegations of cost-cutting do not state a plausible claim.
- The WCA’s void-contract remedy under § 425.305 applies only to violations of sections that expressly reference that remedy—courts cannot extend it to violations of other WCA provisions on policy grounds.
- Amending a complaint in response to a motion to dismiss does not constitute evidence of willful or intentional noncompliance sufficient to overcome a motion to dismiss.
Why It Matters
This decision significantly limits the remedies available to consumers challenging technical violations of the Wisconsin Consumer Act. By holding that the void-contract remedy applies only to violations of specific WCA sections that expressly authorize that remedy, the court prevents consumers from using § 425.305 as a catch-all to void contracts based on violations of other WCA provisions—even if those violations involve illegal contract clauses. The decision emphasizes that the WCA’s remedial scheme is narrow and codified; courts must apply remedies only as the legislature prescribed, not as policy considerations might suggest.
For debt collectors and creditors, the decision provides important protection by confirming that pleading defects in collection actions carry minimal consequences. The decision establishes a high bar for proving willful noncompliance based on a creditor’s use of efficient collection practices, effectively insulating large-scale debt buyers who use form complaints from successful challenge under § 427.104 (prohibited debt-collector practices). The ruling also makes clear that consumers seeking contract remedies must find those remedies expressly stated in the WCA itself, not rely on general consumer-protection principles or state contract law.