August 24, 2019

Colorado Supreme Court: Laches Defense Does Not Conflict with Statute of Limitations

The Colorado Supreme Court issued its opinion in Hickerson v. Vessels on Monday, January 13, 2014.

Statute of Limitations—CRS § 13-80-103.5(1)(a)—Partial Payment Doctrine—Laches.

The Supreme Court held that the separation of powers doctrine does not bar application of the defense of laches to a debt collection action filed within the original or restarted six-year statute of limitations period. Laches does not conflict with the plain meaning of the relevant statute of limitations, nor does it conflict with the partial payment doctrine, which is a creature of Colorado common law. Since early statehood, Colorado case law has recognized the application of equitable remedies to legal claims. Accordingly, the Court reversed the judgment of the court of appeals and remanded the case for consideration of issues it did not reach.

Summary and full case available here.

Colorado Court of Appeals: Health Savings Account Not Exempt From Garnishment

The Colorado Court of Appeals issued its opinion in Commercial Research LLC v. Roup on Thursday, December 5, 2013.

Garnishment—Health Savings Account—Retirement Plan—Exemption.

Gary S. Roup appealed the trial court’s order denying his claim of garnishment exemption in favor of Commercial Research, LLC (creditor). The order was affirmed.

Creditor obtained an assignment of a default judgment that had been entered against Roup in a Texas court. Creditor then filed the judgment in Colorado and began collection proceedings against Roup’s assets, including $3,729 held in a health savings account (HSA).

On appeal, Roup contended that his HSA is a “retirement plan” and therefore exempt from garnishment under CRS § 13-54-102(1)(s). An HSA is not intended to replace income lost as a result of retirement; it is intended to cover medical costs incurred at any point during an individual’s lifetime. Therefore an HSA is not a “retirement plan” and is not exempt from garnishment.

Summary and full case available here.

Colorado Court of Appeals: In Garnishment Action, Earnings Exemption Does Not Apply to Independent Contractor Since Indebtedness Owed to Contractor Not Earnings

The Colorado Court of Appeals issued its opinion in Idaho Pacific Lumber Co., Inc. v. Celestial Land Co. Ltd. on Thursday, September 26, 2013.

Judgment—Creditor—Debtor—Garnishment—Independent Contractor—Exemption—Writ of Assistance.

Plaintiff Idaho Pacific Lumber Company, Inc. (judgment creditor) appealed the trial court’s order in favor of Celestial Land Company Limited (garnishee) regarding a debt it owed defendant Jack B. Kaufman (judgment debtor). The order was affirmed in part and reversed in part, and the case was remanded.

Judgment creditor served garnishee with a writ of garnishment on personal property and a writ of continuing garnishment for any debt owed to judgment debtor. Garnishee, who was an independent contractor rather than an employee, answered the writs on the basis that the debt owed to judgment debtor constituted earnings, and therefore only 25% was subject to garnishment.

On appeal, judgment creditor contended that the trial court erred in concluding that the debt owed to judgment debtor by garnishee constituted earnings under CRS § 13-54.5-101(2)(a)(I). Because indebtedness owed to an independent contractor is not earnings, the exemption was inapplicable.

Judgment creditor also contended that the trial court erred by denying its motion for a writ of assistance to collect all of judgment debtor’s property. There is no Colorado authority that supports judgment creditor’s request for such a broad writ of assistance under CRCP 69. Accordingly, the trial court did not err in denying judgment creditor’s motion for a writ of assistance. Finally, judgment creditor’s request for attorney fees pursuant to CRCP 103(8)(b)(5) was denied.

Summary and full case available here.

Tenth Circuit: Attorney Not “Debt Collector” Under Fair Debt Collection Practices Act

The Tenth Circuit Court of Appeals published its opinion in James v. Wadas on Wednesday, July 31, 2013.

George James filed this action against Cheryl Wadas and Wadas Law Office (“Wadas”) and Abby Shadakofsky, d/b/a Personal Collection Service (“Shadakofsky”), asserting violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p. James appealed from the district court’s order granting summary judgment in favor of Wadas on the basis that she is not a “debt collector” within the meaning of the FDCPA.

At issue was the district court’s interpretation of the term “debt collector” under the FDCPA, and its conclusion that Wadas was not a “debt collector” because she did not engage in debt collection “regularly.”

Congress enacted the FDCPA with the express purpose to “eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). A defendant can be held liable for violating the FDCPA only if she is a “debt collector” within the meaning of the FDCPA. The FDCPA defines the term “debt collector” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” In Heintz v. Jenkins, the Supreme Court determined that attorneys may qualify as “debt collectors” under the FDCPA, holding that the Act applies to “attorneys who ‘regularly’ engage in consumer-debt collection activity, even when that activity consists of litigation.” 514 U.S. 291, 292, 299 (1995).

Based on the evidence, the district court determined that there were “no indicia” that debt collection was either a principal purpose of Wadas’s law practice or that Wadas “regularly” engaged in debt collection. Nor were there any discernible patterns, either through debt collection or litigation, that would support a finding that Wadas engaged in debt collection regularly. The court agreed with the district court’s analysis. The record did not demonstrate that Wadas engaged in debt collection with any sort of regularity.

The Tenth Circuit AFFIRMED.

Colorado Supreme Court: LLC Act Does Not Allow LLC’s Creditor to Assert Claim Against Managers of LLC

The Colorado Supreme Court issued its opinion in Weinstein v. Colborne Foodbotics LLC on Monday, June 10, 2013.

Limited Liability Company (LLC)—LLC Creditor’s Claims Against Members and Managers—CRS § 7-80-606—Fiduciary Duty of LLC Manager.

The Supreme Court held that, pursuant to CRS § 7-80-606, an LLC’s members are liable for an unlawful distribution to the LLC but not to the LLC’s creditors. The Supreme Court also held that an insolvent LLC’s managers do not owe the LLC’s creditors the same common law fiduciary duty an insolvent corporation’s directors owe the corporation’s creditors. Accordingly, plaintiff, a creditor of an LLC, may not assert a claim for either unlawful distribution against the defendant members or common law breach of fiduciary duty against the defendant managers absent express statutory authority.

Summary and full case available here.