July 16, 2019

Archives for February 29, 2016

e-Legislative Report: February 22, 2016

Welcome e-leg report readers to this week’s installment of the world under the Gold Dome. As always, we welcome your feedback, thoughts, comments and questions. This news report is designed to keep you up-to-date on activities at the capitol that are of interest to the bar association and to lawyers across practice areas.

Feel free to drop me a line on how we are doing or raise an issue on a piece of legislation. Contact me at jschupbach@cobar.org.

CBA Legislative Policy Committee

For followers who are new to CBA legislative activity, the Legislative Policy Committee (LPC) is the CBA’s legislative policy making arm during the legislative session. The LPC meets weekly during the legislative session to determine CBA positions from requests from the various sections and committees of the Bar Association. Members are welcome to attend the meetings; please RSVP if you are interested.

LPC Meeting Update

The following bills were discussed by the LPC on 2.19.16. Other bills of interest from that agenda are tracked and updated below.

HB 16-1191 Bill Of Rights For Persons Who Are Homeless
The bill creates the “Colorado Right to Rest Act,” which establishes basic rights for persons experiencing homelessness, including, but not limited to, the right to use and move freely in public spaces without discrimination, to rest in public spaces without discrimination, to eat or accept food in any public space where food is not prohibited, to occupy a legally parked vehicle, and to have a reasonable expectation of privacy of one’s property. The bill does not create an obligation for a provider of services for persons experiencing homelessness to provide shelter or services when none are available.
The LPC considered this bill at the request of the Civil Rights Committee, but took no position on the bill.

HB 16-1110 Parent’s Bill Of Rights
The bill establishes a liberty interest and fundamental right for parents in the care, custody, and control of a parent’s child, restricting governmental entities from infringing on such interests and rights without demonstrating a compelling governmental interest that cannot be accomplished through less restrictive means.
The LPC voted to oppose this bill because it reverses the long-standing policy position of the Colorado Judicial system to act in the best interest of the child.

HB 16-1235 Commissions Evaluating State Judicial Performance
The bill makes revisions to various functions of the state commission on judicial performance (state commission) and the district commissions on judicial performance (district commission), referred to collectively as the “commissions.” The revisions include: changing the makeup of the state commission to include one representative from each judicial district to ensure representation from the entire state; establishing guidelines for when attorneys and nonattorneys are appointed to the state commission by a district commission; not allowing the chief justice to select individuals for the state commission, which reviews the chief justice’s performance; mandating annual public meetings at which the public is invited to attend and confidentially comment on justices and judges; requiring the state commission to obtain and verify required financial disclosures, criminal histories, and driving histories for each justice or judge reviewed by the commissions; requiring judicial evaluations to take place every two years and to be made public at that time; mandating that the commissions make a “do not retain” recommendation when a majority of commissioners determine that it is more probable than not that a justice or judge knowingly committed a dishonest act during the performance of judicial duties, knowingly made inaccurate or insufficient public financial disclosures, or was improperly influenced by a conflict of interest in performing a judicial act; and mandating that the commissions make a “do not retain” recommendation when two-thirds of the attorneys who complete a questionnaire or survey for the commission recommend that the justice or judge not be retained. The bill is funded from any fees and cost recoveries for electronic filings, network access and searches of court databases, electronic searches of court records, and any other information technology services performed pursuant to statute.
The LPC voted to oppose this bill based on the consideration that this is a longstanding and fundamental change that is not in the best interest of the administration of justice in Colorado.

SB 16-085 Uniform Trust Decanting Act
Colorado Commission on Uniform State Laws. “Decanting” is a term used to describe the distribution of assets from one trust into a second trust. The bill enacts the “Colorado Uniform Trust Decanting Act” (Act), which allows a trustee to reform an irrevocable trust document within reasonable limits that ensure the trust will achieve the settlor’s original intent. The Act prevents decanting when it would defeat a charitable or tax-related purpose of the settlor.
The LPC voted to support this Uniform Bill as modified to meet the considerations of Family Law, Trust & Estate and Elder Law sections.

Updates regarding bills the CBA is currently focused on:

SB 16-013 Clean-up Office Of The Child Protection Ombudsman
Senator Newell has pulled the language of concern from the bill.  SB 13 was passed out of committee on Monday.

SB 16-043 Student Loans Consumer Protections
The CBA testified in favor of this bill, at the request of the Colorado Young Lawyers Division. The bill failed to pass out of committee.

SB 16-047 No Detention For Juveniles Who Are Truant
The CBA testified that while detention for truancy is not something the Bar supports as policy, the bill was fundamentally flawed by prohibiting the judicial branch from effecting its own valid orders. Case law from Colorado in the 1990s is directly on point to the Bar’s constitutional concerns.

SB 16-084 Uniform Substitute Health Care Decision-making Documents
The Bar remains neutral on this bill, while the Health Law Section has some concerns and opposition to the language. The bill was heard in committee, but was not voted on. We are waiting for the Senate to take action on the bill.

SB 16-071 Revised Uniform Athlete Agents Act 2015
The CBA has not taken a position on this bill. The Department of Regulatory Affairs has some outstanding concerns that they are addressing with the Uniform Law Commission.

SB 16-088 Revised Uniform Fiduciary Access To Digital Asset
This bill, as amended to accommodate both the Trust & Estate and Business Law Sections, is moving through the legislature as anticipated.

SB 16-115 Electronic Recording Technology Board
The bill, which is supported by the Bar and the Real Estate Section, has passed its first two committee hearings and now heads to Senate Appropriations.

HB 16-1051 Forms To Transfer Vehicle Ownership Upon Death
The CBA is working with the sponsors on some amendments for this bill. The bill is now in its second chamber.

HB 16-1078 Local Government Employee Whistleblower Protection
The CBA is working on this bill, which was amended and is now headed to appropriations in the House.

New Bills of Interest

These are a few new bills recently introduced. They have been sent to CBA sections for review and comment. If you have any questions about these or any other bills, please drop me a line. I’m happy to help you however I can.

HB 16-1270 Security Interest Owner’s Interest In Business Entity
Under current law, the “Uniform Commercial Code” (Code) invalidates contractual limits on the transferability of some assets that can be subject to a security interest. In 2006, the “Colorado Corporations and Associations Act” (Act) was amended to clearly and broadly exempt an owner’s interest in a business entity from these Code provisions to effectuate the “pick your partner” principle that allows small businesses to control their ownership. Section 3 of the bill narrows the exemption in the Act to that necessary for “pick your partner,” and sections 1 and 2 codify this narrowed exemption in the Code.

HB 16-1275 Taxation Of Corporate Income Sheltered In Tax Haven
The bill pertains to an affiliated group of corporations filing a combined report. In a combined report filing, the tax is based on a percentage of the entire taxable income of all of the includable corporations, but the tax is assessed only against the corporation or corporations doing business in Colorado. Including more affiliated corporations in the combined report may result in an increase in income subject to tax. There are jurisdictions located outside of the United States with no tax or very low rates of taxation, strict bank secrecy provisions, a lack of transparency in the operation of their tax system, and a lack of effective exchange of information with other countries. There are several common legal strategies for sheltering corporate income in such jurisdictions, often called “tax havens.” Notwithstanding a current requirement in state law that those corporations with 80% or more of their property and payroll assigned to locations outside of the United States be excluded from a combined report, the bill makes a corporation that is incorporated in a foreign jurisdiction for the purpose of tax avoidance an includable C corporation for purposes of the combined report. The bill defines a corporation incorporated in a foreign jurisdiction for the purpose of tax avoidance to mean any C corporation that is incorporated in a jurisdiction that has no or nominal effective tax on the relevant income and that meets one or more of five factors listed in the bill, unless it is proven to the satisfaction of the executive director of the department of revenue that such corporation is incorporated in that jurisdiction for a legitimate business purpose. The bill requires the state controller to credit a specified amount per fiscal year to the state education fund to be used to help fund public school education. The bill requires the secretary of state to submit a ballot question, to be treated as a proposition, at the statewide election to be held in November 2016 asking the voters to: increase taxes annually by the taxation of a corporation’s state income that is sheltered in a foreign jurisdiction for the purpose of tax avoidance; provide that the resulting tax revenue be used to help fund elementary and secondary public school education; and allow an estimate of the resulting tax revenue to be collected and spent notwithstanding any limitations in section 20 of article X of the state constitution (TABOR).

SB 16-131 Overseeing Fiduciaries’ Management Of Assets
The bill clarifies statutory language concerning the removal of a fiduciary to ensure that a fiduciary’s authority is suspended as soon as a petition to remove the fiduciary is filed. The bill adds a provision to the conservatorship statutes stating that an adult ward or protected person has a right to be represented by a lawyer of their choosing unless the trial court finds that the person lacks sufficient capacity to provide informed consent for representation by a lawyer. The bill states that after a fiduciary receives notice of proceedings for his, her, or its removal, the fiduciary shall not pay compensation or attorney fees and costs from the estate without an order of the court.

SB 16-133 Transfer Of Property Rights At Death
Under current law, a certificate of death, a verification of death document, or a certified copy thereof, of a person who is a joint tenant may be placed of record with the county clerk and recorder of the county in which the real property affected by the joint tenancy is located, together with a supplementary affidavit. The bill removes the requirement that the person who swears to and affirms the supplementary affidavit have no record interest in the real property. The bill includes inherited individual retirement accounts and inherited Roth individual retirement accounts as property exempt from levy and sale under writ of attachment or writ of execution. The bill, which amends provisions concerning determination-of-heirship proceedings, clarifies the definition of “interested person,” so that anyone affected by the ownership of property may commence a proceeding; describes when an unprobated will may be used as part of a proceeding; clarifies notice requirements; and ensures that a judgment and decree will convey legal title as opposed to equitable title. The bill enacts portions of section 5 of the “Uniform Power of Appointment Act,” with amendments.

Tenth Circuit: Credit Reporting Agency Need Not Resolve Legal Disputes Regarding Underlying Debt

The Tenth Circuit Court of Appeals issued its opinion in Wright v. Experian Information Solutions, Inc. on Tuesday, November 10, 2015.

Gary A. Wright is the manager, attorney, and registered agent for Attorneys Title Insurance Agency of Aspen LLC (ATA). In May 27, 2009, the IRS filed a notice of federal tax lien (NFTL) with the Pitkin County Recorder against Mr. Wright in his personal capacity for unpaid employment taxes from 2004. However, Mr. Wright had paid the taxes via a check to the IRS dated May 8, 2009. The Pitkin recorder listed the tax lien on its indexing website as against Mr. Wright in his personal capacity, and it was picked up by credit reporting agencies (CRAs) Experian and TransUnion, who received the information from LexisNexis, their contractor.

Mr. Wright discovered the lien on his personal credit report in 2011 and disputed it to Experian and TransUnion, asserting the IRS had withdrawn the lien because it had been paid in full and the NFTL inaccurately stated the lien was against him personally when it should have been listed as against ATA only. He included with his letters a copy of the NFTL, a copy of his letter to the IRS requesting withdrawal of the lien, and the IRS’s release of the lien. In response, the CRAs checked with LexisNexis and marked the lien released because it had been paid in full. The CRAs did not remove the lien from their credit reports because the IRS reported it as released instead of withdrawn. Mr. Wright requested reinvestigation, attaching the same documentation as before. Experian did not perform a second investigation. TransUnion requested documentation, and when LexisNexis reported the same result previously reached, TransUnion sent a summary of the investigation to Mr. Wright.

Mr. Wright sued the CRAs in federal district court, asserting negligent and willful violations of the federal Fair Credit Reporting Act (FCRA) and Colorado’s counterpart, the Colorado Consumer Credit Reporting Act (CCCRA). He asserted claims against the CRAs for failing to follow reasonable procedures to ensure maximum possible accuracy in preparing the credit report. He also asserted a claim for failure to reasonably reinvestigate his claim. The district court granted summary judgment to the CRAs, finding it was reasonable for them to interpret the NFTL as applying to Mr. Wright personally and that the IRS can issue a tax lien against a business entity and its member. Mr. Wright appealed.

The Tenth Circuit first evaluated Mr. Wright’s argument that the CRAs failed to use reasonable procedures in originally reporting the tax lien. The Tenth Circuit evaluated the legal requirements of the FCRA and CCCRA and found no error in the district court’s grant of summary judgment. The Tenth Circuit noted that, to prevail, a plaintiff must show that the CRA failed to follow reasonable procedures to ensure the accuracy of its reports, the report in question was inaccurate, the plaintiff suffered injury, and the CRAs caused the injury. The Tenth Circuit found that Mr. Wright failed to prove the first element because he could not prove the CRAs failed to follow reasonable procedures. The Tenth Circuit noted that to require the CRAs to employ tax professionals to evaluate every tax lien reported by a county recorder or court clerk is unduly burdensome. The Tenth Circuit affirmed the district court’s summary judgment grant to the CRAs.

Next, the Tenth Circuit considered whether the CRAs used reasonable procedures in reevaluating Mr. Wright’s dispute. The Tenth Circuit again found no error, rationalizing that Mr. Wright again failed to show that the CRAs failed to follow reasonable procedures in their reinvestigation. The Tenth Circuit noted that a reasonable reinvestigation does not require a CRA to resolve a legal dispute about the validity of the underlying debt. Judge Bacharach dissented with this portion of the opinion; he believes that the district court employed an incorrect procedure for evaluating the reasonableness of the CRAs investigation and noted that any ambiguity should have been resolved in the consumer’s favor.

The Tenth Circuit affirmed the district court’s grant of summary judgment to the CRAs. Judge Bacharach dissented only with the portion of the opinion concerning reinvestigation.

Tenth Circuit: Unpublished Opinions, 2/26/2016

On Friday, February 26, 2016, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

United States v. Mickling

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.