As the new year turns the page, the Supreme Court of Wisconsin, in Duncan v. Asset Recovery Specialists, Inc., held that a repo agency violated the Wisconsin Consumer Act by repossessing a vehicle parked in the borrower’s apartment building garage when the garage door was left open.

The borrower lived in a multi-story, multi-unit apartment building in which the ground floor was the building’s parking garage. When the recovery agents arrived at the borrower’s address, they found the garage door open. The recovery agents entered the garage, located the car, and towed it away. Neither the borrower nor employees of the apartment building interacted with the recovery agents.

Subsequently, the borrower sued the recovery agency and the lender alleging, among other things, the vehicle repossession was a violation of Section 425.206 (2)(b) of the Wisconsin Consumer Act, which prohibits merchants, when taking possession of collateral, from breaching the peace or “enter[ing] a dwelling used by the customer as a residence except at the voluntary request of a customer.” After engaging in a lengthy exercise of statutory construction, the court concluded that, for purposes of Section 425.206 (2)(b), “dwelling” extends to the parking garage, “because it is located in the building.”

This ruling may severely limit the ability of a creditor to obtain possession of collateral in the State of Wisconsin. Up until this decision, it was fairly well understood that a vehicle parked in an open or unlocked parking garage, whether single family or multi-unit, could be legally repossessed, all other things being equal. One issue now facing the automobile finance sector is whether this holding will be expanded to other contexts in Wisconsin and whether this holding will gain traction in other jurisdictions. The court leaves the door open for future caselaw to further extend the definition of “dwelling” to potentially incorporate the broader definition provided by the Wisconsin Administrative Code, which includes “any garage, shed, barn or other building on the premises whether attached or unattached,” into Section 426.104(1)(e). Only time and future litigation will tell what effect this constraint on repossession will have on the automobile finance industry.