LVNV Funding, LLC v. Cheu Thao

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.
August 28, 2024
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. 2023AP2282 Cir. Ct. No. 2023SC381

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II

LVNV FUNDING, LLC,

PLAINTIFF-RESPONDENT,

V.

CHEU THAO,

DEFENDANT-APPELLANT.

APPEAL from a judgment of the circuit court for Sheboygan
County: ANGELA W. SUTKIEWICZ, Judge. Affirmed.

¶1 LAZAR, J.1 Cheu Thao appeals from a judgment entered against
him in favor of LVNV Funding, LLC (“LVNV”). Thao argues that the circuit

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This appeal is decided by one judge pursuant to WIS. STAT. § 752.31(2)(a) (2021-22).
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise noted.
No. 2023AP2282

court misinterpreted the loan agreement between Thao and WebBank, the latter of
whose rights under the agreement were ultimately sold and assigned to LVNV.
Upon Thao’s motion for reconsideration, this court has withdrawn its prior opinion
in order to correct a potential inaccuracy regarding the identity of the original
creditor and original servicer of the loan, which are not the same entity. This
correction does not alter the court’s ultimate conclusion that the circuit court
correctly interpreted the contract. For the following reasons, the judgment is
affirmed.

¶2 Thao borrowed $8,500.00 from WebBank on June 29, 2016. The
loan was serviced by Avant, Inc., meaning that Thao was to make payments to
Avant and communicate with Avant regarding things like changes he wished to
make in his method and amount of payments. Thao made his last payment on the
loan on March 6, 2017, leaving an outstanding payoff balance of $7,310.81. In
September 2017, Avant informed Thao that the loan had been sold to Sherman
Originator III LLC, c/o Resurgent Capital Services LP, and that entity was
reflected as the owner of the account in Avant’s web portal. Soon after, LVNV
purchased the account and filed suit to collect on Thao’s outstanding debt, which,
after accrual of interest, amounted to $8,551.41. The circuit court granted
LVNV’s motion for summary judgment and awarded $8,967.91, including costs.
Thao appeals, asserting that the loan agreement defines Avant’s web portal as the
only valid record of ownership and that LVNV, which is not reflected therein, has
no claim to the debt.

¶3 “We review summary judgment rulings independently, applying the
well-established standards set forth in WIS. STAT. § 802.08.” Hirschhorn v. Auto-
Owners Ins. Co., 2012 WI 20, ¶20, 338 Wis. 2d 761, 809 N.W.2d 529.
“Summary judgment ‘shall be rendered if the pleadings, depositions, answers to

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interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.’” Id. (quoting § 802.08(2)).

¶4 Here, summary judgment turns upon the interpretation of the loan
agreement, which includes the following paragraph titled “Assignment”:

We may assign this Note at any time without your
permission. Our transfer may be made by causing a
registration of transfer in the record of ownership as
described below, without providing you with any other
notice (except where such notice is required by applicable
law). Your obligations under this Note apply to all of your
heirs, successors and permitted assigns, if any. Our rights
under this Note apply to us and each of our successors and
assigns. Ownership of this Loan Agreement and
Promissory Note (and rights hereunder, including with
respect to principal and interest) shall be registered in a
record of ownership maintained by an entity specifically
designated for such purposes. You hereby irrevocably
appoint Avant, Inc. as your agent acting solely for the
purpose of maintaining such record of ownership. Any
assignment or transfer of, or participation in, this Note (or
rights hereunder) will be valid only if and when it is
registered in such record of ownership. You shall treat
each person whose name is registered in the record of
ownership as the owner, assignee or participant, as
applicable, for all purpose of this Loan Agreement and
Promissory Note, including, but not limited to, the rights to
payments of principal and interest. The record of
ownership shall be made available to you in a form and
manner determined by the agent maintaining it from time to
time upon reasonable prior written notice.

¶5 Contract language is construed according to its plain or ordinary
meaning, Huml v. Vlazny, 2006 WI 87, ¶52, 293 Wis. 2d 169, 716 N.W.2d 807,
consistent with “what a reasonable person would understand the words to mean
under the circumstances.” Seitzinger v. Community Health Network, 2004 WI
28, ¶22, 270 Wis. 2d 1, 676 N.W.2d 426. For a business contract, that means “the
manner that it would be understood by persons in the business to which the

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contract relates.” Columbia Propane, L.P. v. Wisconsin Gas Co., 2003 WI 38,
¶12, 261 Wis. 2d 70, 661 N.W.2d 776. If the language used by the parties is
unambiguous, a court’s “attempt to determine the parties’ intent ends with the four
corners of the contract, without consideration of extrinsic evidence.” Huml, 293
Wis. 2d 169, ¶52

¶6 “If the contract language is fairly susceptible to more than one
reasonable construction, the contract is ambiguous and extrinsic evidence may be
used to determine the parties’ intent.” State ex rel. Massman v. City of Prescott,
2020 WI App 3, ¶14, 390 Wis. 2d 378, 938 N.W.2d 602. Whether ambiguity
exists in a contract is a question of law reviewed de novo. Mattheis v. Heritage
Mut. Ins. Co., 169 Wis. 2d 716, 720, 487 N.W.2d 52 (Ct. App. 1992). Likewise,
“interpretation of an unambiguous contract presents a question of law”
reviewed de novo. Town Bank v. City Real Est. Dev., LLC, 2010 WI 134, ¶32,
330 Wis. 2d 340, 793 N.W.2d 476.

¶7 Thao argues that the loan agreement unambiguously binds all
subsequent parties with acquired rights to ensure that a record of their ownership
is reflected in documentation maintained by Avant and that, while creditors other
than WebBank “can [be] assign[ed] the debt,” they must be listed in a record of
ownership maintained by Avant to have any rights. According to Thao, purported
owners who are not registered by Avant (and listed in Avant’s web portal) are not
valid. Thao concludes that because “Avant[’s] [web] portal record of ownership is
not LVNV Funding, LLC, it’s Sherman Originator III, LLC,” LVNV does not own
and has not been assigned the debt and, therefore, cannot collect.

¶8 Thao bases this argument on a portion of the contractual language
reproduced above, which he claims states: “Ownership of this Loan Agreement

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and Promissory Note … shall be registered in a record of ownership maintained by
… Avant.” (Emphasis supplied by Thao). In fact, the loan agreement states that
“Ownership … shall be registered in a record of ownership maintained by an
entity specifically designated for such purposes.” (Emphasis added.) While it is
true that the agreement provides that “[a]ny assignment or transfer of … [the loan]
will be valid only if and when it is registered in such record of ownership,” it is
not true that the contract specifies Avant as the perpetual maintainer of that
record.2

¶9 Thao’s argument “focuse[s] on particular language that
ignores context provided by other language in the contract.” See Arrowhead Sys.
v. Grant Thornton LLP, No. 2019AP2268, unpublished slip op. ¶35 n.9 (WI App
Oct. 15, 2020). Specific contract language is to be interpreted in the context of the
contract as a whole. Little Chute Area Sch. Dist. v. Wisconsin Educ. Ass’n
Council, 2017 WI App 11, ¶25, 373 Wis. 2d 668, 892 N.W.2d 312.

¶10 The rest of the paragraph addressing assignment of the loan
agreement adds context supporting an interpretation of the clause at issue that does
not require Avant to maintain a record of ownership of all subsequent assignees.
To the contrary, it indicates significant freedom in assigning the debt, explicitly

2
Besides clarifying for this court that WebBank (the original creditor) and Avant (the
original third party loan servicer) are not the same entity, Thao’s motion for reconsideration states
that “Avant is the ‘irrevocably’ appointed third-party for the record of ownership.” This is a
misleading characterization of the language of the contract, which actually states that Thao
“irrevocably appoint[s] Avant, Inc. as [his] agent acting solely for the purpose of maintaining
such record of ownership.” Given that the contract provides for Thao’s ability to assign his
obligations under the note—with WebBank’s permission—this sentence, along with the ones
surrounding it, seems clearly to explain that such an assignment from Thao is not effective until
recorded in the record of ownership and that Avant is to be Thao’s agent in this regard. It has
nothing to do with the designated agent of WebBank’s subsequent assignees for the purposes of
maintaining a record of ownership.

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stating: “We may assign this Note at any time without [Thao’s] permission.” An
interpretation that requires Avant to continue documenting ownership even after
WebBank sells the loan is contrary to that freedom of alienation. Furthermore, the
possibility of multiple future owners is acknowledged in the explicit statement that
the creditor’s “rights under this Note apply to [the creditor] and each of [its]
successors and assigns.” (Emphasis added.)

¶11 A reasonable person would understand the paragraph at issue to
mean any assignment or transfer will be valid only upon registration in a record of
ownership and that Avant shall maintain this record at the outset of the loan, and
for as long as WebBank engaged Avant to service the debt, not forever after. In
particular, a person in the relevant creditor-debtor business would understand that
the parties’ intentions were not to bind Avant to record every subsequent owner
and assignee of debt for the perpetuity of the debt. See Columbia Propane, 261
Wis. 2d 70, ¶12. As the contract makes clear, future owners of the account have
the same rights as the original lender. The original lender had the right to choose
its own servicer and to sell and assign the debt; subsequent owners, therefore, have
the same right to maintain their own records of ownership and to sell and assign
the debt.

¶12 Based upon the foregoing, this court determines that the contract
does not require Avant to maintain a record of ownership for all subsequent
owners of Thao’s loan. Because there is no apparent dispute that the owners after
WebBank maintained sufficient records of ownership to show their rights under
the agreement and to communicate their ownership to Thao, and because Sherman
Originator III LLC “registered … such record of ownership” reflecting that LVNV
is the current owner of the account, Thao’s appeal fails. Accordingly, the
judgment of the circuit court is affirmed.

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By the Court.—Judgment affirmed.

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

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