Creative Finance, Inc. v. Carlos Rangel

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.
April 24, 2025
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. 2024AP1462 Cir. Ct. No. 2023SC5128

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT IV

CREATIVE FINANCE, INC.,

PLAINTIFF-RESPONDENT,

V.

CARLOS RANGEL,

DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Dane County:
NIA E. TRAMMELL, Judge. Affirmed.

¶1 GRAHAM, J.1 Creative Finance, Inc. initiated this small-claims
collections action against Carlos Rangel and, after Creative’s claim was dismissed,

1
This appeal is decided by one judge pursuant to WIS. STAT. § 752.31(2)(a) (2023-24).
All references to the Wisconsin Statutes are to the 2023-24 version.
No. 2024AP1462

Rangel sought an award of costs and reasonable attorney fees under WIS. STAT.
§ 425.308, the fee-shifting provision of the Wisconsin Consumer Act (the WCA).
See WIS. STAT. chs. 421-427. Rangel appeals the circuit court order that denied
his motion.

¶2 I conclude that Rangel is not entitled to an award of costs and
attorney fees because the record does not show that Creative violated the WCA,
and binding case law conditions fee-shifting awards on such a violation. See
Community Credit Plan, Inc. v. Johnson (Community Credit I), 221 Wis. 2d
766, 774, 586 N.W.2d 77 (Ct. App. 1998). I therefore affirm the circuit court
order. Separately, I deny the motion that Creative filed pursuant to WIS. STAT.
§§ 809.25 and 895.044, which sought an award of the costs, fees, and reasonable
attorney fees that it incurred in responding to this appeal.

BACKGROUND

¶3 Creative financed Rangel’s purchase of a used Hyundai Elantra in
2021. Two years later, Rangel stopped making payments on his loan. It is
undisputed that Creative ultimately recovered the Hyundai through a nonjudicial
repossession and sold it. Creative then filed this small-claims action seeking
$10,000 for the difference between the amount Rangel owed Creative and the
amount Creative recouped when it resold the Hyundai. The WCA refers to this
amount as the “deficiency.” See WIS. STAT. §§ 425.209(1), 425.210.

¶4 The case proceeded to a trial before a court commissioner. No
transcript was made, see WIS. STAT. § 799.207(1)(d), but the minutes of the
hearing state that the commissioner dismissed the claim because Creative “failed
to meet [its] burden of proof – no evidence that vehicle sold in a commercially
reasonable manner.” The parties agree that the reason for the dismissal was that

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Creative did not satisfy its burden of proof under WIS. STAT. § 425.209(1), which
provides that a customer is not liable for the deficiency “unless the merchant has
disposed of the goods in good faith and in a commercially reasonable manner.”
Creative did not seek de novo review of the commissioner’s decision. See
§ 799.207(5) (providing a process by which a party may demand a new trial before
the circuit court on issues decided by a court commissioner).

¶5 Rangel then filed a motion asking the commissioner to award him
costs and attorney fees pursuant to WIS. STAT. § 425.308. The parties briefed the
motion and disputed, among other things, whether Creative had violated the WCA
in some manner. The commissioner declined to order fee shifting under
§ 425.308, and instead awarded Rangel a total of $495 in statutory costs and
attorney fees under WIS. STAT. § 814.04(1). Rangel sought de novo review of the
commissioner’s decision.

¶6 At the subsequent hearing, the circuit court effectively adopted the
commissioner’s decision on the matter. The court stated that, in its view, there
was not “absolute clarity” that Creative had violated the WCA, and that the court
was “not convinced that there was, in fact, a violation, based on what the
commissioner did down below.” Rangel appeals.2

2
Rangel’s briefs do not comply with WIS. STAT. RULE 809.19(8)(bm), which addresses
the pagination of appellate briefs. See RULE 809.19(8)(bm) (providing that, when paginating
briefs, parties should use “Arabic numerals with sequential numbering starting at ‘1’ on the
cover”). This rule was amended in 2021, see S. CT. ORDER 20-07 (eff. July 1, 2021), and the
reason for the amendment is that briefs are now electronically filed in PDF format, and are
electronically stamped with page numbers when they are accepted for e-filing. As our supreme
court explained when it amended the rule, the new pagination requirements ensure that the
numbers on each page of a brief “will match ... the page header applied by the eFiling system,
avoiding the confusion of having two different page numbers” on every page of a brief. S. CT.
ORDER 20-07.

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DISCUSSION

¶7 On appeal, Rangel argues that the circuit court erred when it
determined that he was not entitled to an award of costs and attorney fees under
the WCA. Creative argues that the court’s denial is consistent with binding
precedent and the facts of this case, and it has filed a motion asking me to award
its own costs, fees, and attorney fees as a sanction for what it characterizes as a
frivolous appeal. I address Rangel’s appeal first, and then turn to Creative’s
sanctions motion.

I. Fee Shifting under the WCA

¶8 Under the WCA, a creditor who has recovered and resold the goods
securing a consumer loan is generally entitled to any deficiency remaining after
the proceeds of the resale are credited to the balance on the loan. See WIS. STAT.
§ 425.210. However, the WCA imposes certain restrictions on a creditor’s action
to recover a deficiency. As relevant here, WIS. STAT. § 425.209(1) states that a
customer is not liable for the deficiency “unless the merchant has disposed of the
goods in good faith and in a commercially reasonable manner.”3 This is the
provision that led to the dismissal of Creative’s claim—as stated, the court
commissioner found that Creative failed to prove that it disposed of the Hyundai
in a commercially reasonable manner, and therefore failed to prove that it satisfied
§ 425.209(1).

¶9 The WCA also sets out remedies that are intended to advance one of
its legislatively stated purposes: “[t]o protect customers against unfair, deceptive,

3
In this context, the term “merchant” includes creditors. See WIS. STAT. § 421.301(25).

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false, misleading and unconscionable practices by merchants.” WIS. STAT.
§ 421.102(2)(b); see also First Wisconsin Nat’l Bank v. Nicolaou, 113 Wis. 2d
524, 533, 335 N.W.2d 390 (1983) (remedies including fee shifting are meant to
induce compliance with the provisions of the WCA). Among these remedies is the
fee-shifting provision found in WIS. STAT. § 425.308. That statute allows a
customer who prevails in certain actions that are governed by the WCA to recover
their costs and attorney fees. See § 425.308. Specifically, the statute provides
that, if “the customer prevails in an action arising from a consumer transaction, the
customer shall recover the aggregate amount of costs and expenses determined by
the court to have been reasonably incurred on the customer’s behalf in connection
with the prosecution or defense of such action, together with a reasonable amount
for attorney fees.” See § 425.308(1).

¶10 Case law has established a two-part test to determine whether a
“customer” has “prevail[ed] in an action arising from a consumer transaction.”
See Community Credit I, 221 Wis. 2d at 772. First, the customer must have
“achieve[d] some significant benefit in litigation.” Id. at 774. Second, this benefit
must have been obtained “in litigation involving the creditor’s violation of the
WCA.” Id. This test, initially adopted by this court, was later approved by our
supreme court. See Community Credit Plan, Inc. v. Johnson (Community
Credit II), 228 Wis. 2d 30, 35-36, 596 N.W.2d 799 (1999).

¶11 A significant portion of Rangel’s appellate briefing is devoted to an
argument that, by its plain language, WIS. STAT. § 425.308 makes no reference to
any “violation” of the WCA. Therefore, Rangel argues, courts (including the
circuit court here) err when they impose the second part of the Community Credit
test. Whatever the merits of this argument, it cannot prevail in this court because I
am bound to follow the published decisions of this court and the Wisconsin

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Supreme Court. See Cook v. Cook, 208 Wis. 2d 166, 190, 560 N.W.2d 246
(1997). And binding opinions from both courts unequivocally establish that a
customer is not entitled to a fee-shifting award unless the creditor violated the
WCA. Community Credit I, 221 Wis. 2d at 774; Community Credit II, 228
Wis. 2d at 35-36; see also Credit Acceptance Corp. v. Woodard, 2012 WI App 43,
¶¶11-14, 340 Wis. 2d 548, 812 N.W.2d 525.

¶12 Turning to the application of this two-part test, the parties agree that
Rangel “achieved [a] significant benefit in [this] litigation,” when the
commissioner determined that Rangel is not liable for the $10,000 that Creative
sought. See Community Credit I, 221 Wis. 2d at 774. The dispute, here and in
the circuit court, concerns the second requirement for fee shifting: that Rangel
obtained this benefit “in litigation involving [Creative’s] violation of the WCA.”
See id.

¶13 Rangel contends that his victory on the merits flowed directly from
Creative’s violation of the WCA—specifically, Creative’s failure to dispose of the
Hyundai in a “commercially reasonable manner.” As noted above, WIS. STAT.
§ 425.209(1) makes such disposition a precondition for a deficiency judgment in
these circumstances. Rangel submits that Creative violated § 425.209(1) when,
after disposing of the Hyundai in a commercially unreasonable manner, it
nevertheless sought to hold him liable for the deficiency. As a consequence,
Rangel argues, Creative is liable for his costs and attorney fees under WIS. STAT.
§ 425.308.

¶14 Creative responds that any failure to dispose of the Hyundai in a
commercially reasonable manner cannot be a “violation” of the WCA. According
to Creative, the text of WIS. STAT. § 425.209 does not impose any “prohibition” on

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the creditor, and therefore, a creditor cannot “violate” this section. It asserts that
the overall effect of § 425.209 is to shield the customer from liability for a
deficiency in various circumstances, only one of which is a merchant’s failure to
dispose of goods in a commercially reasonable manner. See § 425.209(1).4 The
fact that any of these circumstances are present, Creative contends, simply means
that the customer does not owe anything more on the debt; it does not mean that
the creditor has violated the WCA and must therefore pay the customer’s costs and
attorney fees.

¶15 The parties do not identify any case that addresses whether, by
failing to dispose of a vehicle in a “commercially reasonable manner” and then
seeking to recover the deficiency, a creditor violates the WCA. And while
Creative is correct that WIS. STAT. § 425.209 does not expressly prohibit anything,
the same is true of WIS. STAT. § 421.401(2), which establishes the proper venue
for actions arising from consumer transactions. Nevertheless, in the Community
Credit cases, both this court and our supreme court held that a creditor violated the
WCA when it filed its claims in the wrong county, and that the customers were
entitled to their attorney fees. Community Credit I, 221 Wis. 2d at 775;
Community Credit II, 228 Wis. 2d at 37. Accordingly, it is not necessarily true
that the lack of express prohibitory language in a given provision renders that
provision incapable of “violation” for these purposes.

¶16 But I need not decide whether, or under what circumstances, a
creditor’s commercially unreasonable disposal of collateral could be said to have

4
The other enumerated circumstances generally concern situations in which the amount
owed at the time of default was less than $1,000. See WIS. STAT. § 425.209(2)-(6).

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No. 2024AP1462

violated the WCA. This is because, as Creative also points out, there is nothing in
the record that demonstrates that Creative actually disposed of the Hyundai in a
commercially unreasonable manner. What the commissioner found—as is clearly
reflected in the hearing minutes—is that Creative “failed to meet [the] burden of
proof” by presenting “no evidence that [the] vehicle [was] sold in a commercially
reasonable manner.”

¶17 Creative’s failure of proof foreclosed its claim against Rangel. This
is because, as we have explained, the burden of showing commercially reasonable
disposal lies with the creditor, and the customer is not obligated to raise the lack of
such reasonable disposal as an affirmative defense. Shoeder’s Auto Ctr., Inc. v.
Teschner, 166 Wis. 2d 198, 200, 479 N.W.2d 203 (Ct. App. 1991). However, the
absence of evidence of commercially reasonable disposal does not necessarily
constitute affirmative evidence of commercially unreasonable disposal. This was
the conclusion of the circuit court on de novo review, and it is also my conclusion:
even assuming Rangel is correct that commercially unreasonable disposal could be
a violation of the WCA, there is nothing in the record showing that Creative
unreasonably disposed of the Hyundai.

¶18 I therefore conclude that the circuit court did not err when it denied
Rangel’s request for an award of the costs and attorney fees he incurred in
defending against Creative’s claim.

II. Creative’s Sanctions Motion

¶19 Separately, Creative has filed a motion asking this court for an
award of costs, fees, and reasonable attorney fees on appeal. WISCONSIN STAT.
RULE 809.25(3)(a) provides authority to this court to impose these costs and fees
as a sanction for a frivolous appeal. Sanctions for frivolous filings serve an

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important function in helping to “maintain[] the integrity of the judicial system
and the legal profession.” Sommer v. Carr, 99 Wis. 2d 789, 799, 299 N.W.2d 856
(1981). Nevertheless, this is “‘an especially delicate area,’” and “court[s] must be
cautious in declaring [actions or appeals] frivolous” to avoid stifling the
development of the law. Juneau County v. Courthouse Emps., 221 Wis. 2d 630,
640, 585 N.W.2d 587 (1998) (citation omitted).

¶20 An appeal is frivolous if either or both of two standards are satisfied:
if the appeal “was filed … solely for purposes of harassing or maliciously injuring
another,” or if the appealing “party or the party’s attorney knew, or should have
known, that the appeal … was without any reasonable basis in law or equity and
could not be supported by a good faith argument for an extension, modification or
reversal of existing law.” See WIS. STAT. RULE 809.25(3)(c)1-2.5 Creative asserts
that Rangel’s appeal is frivolous under both standards, and I begin with Creative’s
argument that the appeal was without any reasonable basis in law.

¶21 Sanctions are not authorized merely because a brief contains one or
more frivolous arguments. Baumeister v. Automated Prods., Inc., 2004 WI 148,
¶26, 277 Wis. 2d 21, 690 N.W.2d 1. To merit sanctions under the “without any
reasonable basis” standard, an entire appeal must be frivolous. Id., ¶¶25-26. If
frivolous arguments provide the sole support for any proposition necessary for an
appellant to prevail, the entire appeal is frivolous. Thompson v. Ouellette, 2023
WI App 7, ¶44, 406 Wis. 2d 99, 986 N.W.2d 338; WIS. STAT. § 895.044(5)
(providing for sanctions “if any element necessary to succeed on [an] appeal is
supported solely by” frivolous arguments).

5
See also WIS. STAT. § 895.044(5) (providing identical standards).

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No. 2024AP1462

¶22 Creative asserts that Rangel has not presented any nonfrivolous
argument that Creative violated the WCA. As noted, Wisconsin case law provides
that a violation of the WCA is a precondition of the relief Rangel seeks; thus,
Creative contends that Rangel has provided only frivolous argument in support of
an “element necessary to succeed on the appeal.” See WIS. STAT. § 895.044(5).

¶23 I need not decide whether Rangel’s argument that Creative violated
the WCA is frivolous. As discussed above, Rangel has also argued that the
requirement of a violation is itself not in the statutory language, and suggested that
the cases imposing this requirement were wrongly decided. By its terms, this is an
“argument for an extension, modification or reversal of existing law,” and I have
no basis to conclude that it was not offered in “good faith.” See WIS. STAT.
RULE 809.25(3)(c)2. This is true even though, as noted, I lack the power to
overturn the published opinions that impose this requirement. See supra, ¶11
(citing Cook, 208 Wis. 2d at 190). The court of appeals is not a court of last
resort, and it would be appropriate for Rangel to assert his argument for a change
in the law here if he were considering seeking relief from our supreme court.
Further, although Creative contends that Rangel forfeited this argument by failing
to present it to the circuit court, “[t]he forfeiture rule is a rule of judicial
administration, and … a reviewing court may disregard a forfeiture and address
the merits of an unpreserved issue in an appropriate case.” State v. Counihan,
2020 WI 12, ¶27, 390 Wis. 2d 172, 938 N.W.2d 530. Because Rangel’s
nonfrivolous argument for a modification of existing law provides an alternative
route to the relief he seeks, I would not conclude that the entire appeal is frivolous,
even if I agreed that Rangel presented no nonfrivolous basis to conclude that
Creative violated the WCA.

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¶24 Creative also asserts that Rangel appealed “solely for purposes of
harassing or maliciously injuring” Creative by causing it to incur legal fees in
responding to the appeal. See WIS. STAT. RULE 809.25(3)(c)1. But Creative does
not point to any support in the record for this assertion. It argues, in part, that
Rangel has asserted “blatantly baseless arguments,” a factor that we have relied on
in determining whether an appeal is meant solely to harass or injure. See NBZ,
Inc. v. Pilarski, 185 Wis. 2d 827, 842, 520 N.W.2d 93 (Ct. App. 1994). Yet, as
discussed above, at least some of Rangel’s arguments are not “blatantly baseless.”
The remainder of Creative’s argument consists of speculation as to Rangel’s
counsel’s pecuniary interests in recovering attorney fees. Even if Creative were
correct in its conjecture about counsel’s motivation, it would undermine, rather
than support, Creative’s position that counsel was solely motivated by a desire to
harass or injure Creative.

¶25 For all of these reasons, I deny Creative’s motion for costs, fees, and
attorney fees.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)4.

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