The Wisconsin Bankers Association -- a campaign contributor to two State Supreme Court justices in their most recent races – is asking the court to rule in its member’s favor in a case the court has not even accepted yet.
The association wants the court to find that a man who signed away his right to take disputes with the bank to a jury – ever – must stick to the agreement even though the bank representative would not let the man consult a lawyer before signing the document, did not give him time to review the document, and threatened to pull a loan if he did not sign, threatening the viability of a real estate project and the $30,000 the man already had sunk into it.
Then, after the man sued, the bank waited three years after the start of litigation to invoke the jury waiver and insist on a court trial.
Speaking of sunk money – the Wisconsin Bankers Association (WBA) gave Supreme Court Chief Justice Patience D. Roggensack a $1,000 campaign contribution in 2013. Justice Michael G. Gableman got a $250 campaign contribution from the association 2008.
WBA filed a “friend of the court” brief urging the court to reject a lower court’s decision finding that the waiver was obtained through fraud and extortion. The appeals court overturned Milwaukee County Circuit Judge Jeffrey A. Conen’s finding that the waiver was A-OK.
“The WBA believes that the jury waiver at issue here is valid and enforceable under the circumstances of this loan,” the association said in its brief, filed in support of a petition asking the Supreme Court to hear the case. It is unusual for friend of the court brief to be filed with the Supreme Court this early in a case, according to lawyers asked about the matter.
State Financial Bank was acquired by Associated Banc-Corp. in 2006.
The man, Taft Parsons, whose day job was running his own single-person structural engineering firm, signed a loan document waiving his right to a jury trial in any dispute involving the bank, ever, whether or not the dispute was related to the loan involved. Parsons signed the document after loan officer Aaron Moeser said the bank would withdraw a $774,000 loan offer if Parsons refused to sign.
Taft and his wife, Carol Parsons, sought the loan to support conversion of some rundown properties in their neighborhood into townhouses. They discussed their plans with a contractor, Central City Construction (CCC), and asked its vice president, Joseph Bowles, whether CCC would be the general contractor in the project, according to the Court of Appeals decision in the case.
Eventually, the Parsons signed agreements for two loans offered through Moeser. The first was a $40,000 home equity loan; the second was a $774,000 construction loan. They already had a $30,000 loan from the bank for pre-construction costs.
For months, CCC did not perform agreed-upon work. After about seven months, Bowles and Moeser gave the Parsons a packet of documents to sign, the Court of Appeals said.
According to the Parsons’ lawsuit, the Appeals Court said, “the Parsons were not allowed any time to review the documents or consult with an attorney before signing, and...Moeser threatened to withdraw the construction loan if Taft did not promptly sign the documents.”
(Moeser later was convicted in federal court of a felony in an unrelated bank case.)
The packet contained almost 30 pages of documents, including a promissory note that had a jury waiver printed at the bottom of the last page, in all capital letters. The waiver called for Parsons and the bank to give up the right to have a jury resolve disputes rooted in “any relationship between the borrower and the lender.”
Taft Parsons signed the document. If he had not, according to court documents, he would have lost the $30,000 he already had borrowed from the bank and put into the project.
CCC continued to collect money directly from the bank, over Taft Parsons’ objections, despite no work getting done on the project. Eventually, the project went belly up.
State Financial Bank foreclosed on the Parsons’ home, which secured the bank loans, and the foreclosure action continued after Associated acquired State. Taft Parsons filed for bankruptcy, but managed to save his home.
The Parsons sued in 2011, alleging, among other things, that bank negligently hired, supervised, and trained Moeser.
The Parsons demanded a jury trial and paid the jury fee. Litigation went on for three years, with the bank fully participating. Then, six months before the case was to go to trial, Associated argued the Parsons did not have a right to a jury trial.
Writing for the three-judge appeals panel, Appeals Judge Joan F. Kessler said the bank missed its statutory deadline to seek a court trial and that Conen “ignored the fact” that Parsons mostly likely already had incurred costs preparing for a jury trial.
In addition, Kessler wrote, “it is abundantly clear that the Parsons have provided facts to support their allegations that the jury waiver clause was fraudulently obtained by the bank.” The waiver was unconscionable, she said.
WBA, in its friend of the court brief, disagreed.
“Here, Borrower was a sophisticated , educated, experienced business owner taking on a complex project, in a state where there are plenty of lenders, and he had the right to walk away from the loan if he did not like the terms or the timing,” WBA said.
The association did not address Associated’s delay in trying to enforce the waiver.
Gretchen Schuldt is executive director of the Wisconsin Justice Initiative.
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