Flood v. Mercantile Adjustment Bureau, LLC

• Decision Date: 22 January 2008
• Docket Number: No. 06SC699.,06SC699.
• Citation: 176 P.3d 769
• Parties: Elizabeth FLOOD, Petitioner v. MERCANTILE ADJUSTMENT BUREAU, LLC, Respondent.
• Court: Colorado Supreme Court

176 P.3d 769

Elizabeth FLOOD, Petitioner v. MERCANTILE ADJUSTMENT BUREAU, LLC, Respondent.

No. 06SC699.

Supreme Court of Colorado, En Banc.

January 22, 2008.

Rehearing Denied February 19, 2008.^*

Gary Merenstein, Boulder, Colorado, Pendleton, Friedberg, Wilson & Hennessey, P.C., Richard F. Hennessey, Susan M. Hargleroad, Karen E. Lorenz, Denver, Colorado, Attorneys for Petitioner.

Adam L. Plotkin, P.C., Adam L. Plotkin, Makyla M. Moody, Patricia A. Douglas Denver, Colorado, Attorneys for Respondent.

John W. Suthers, Attorney General, Laura E. Udis, First Assistant Attorney General, Denver, Colorado, Attorneys for Amicus Curiae Colorado Attorney General.

Justice HOBBS delivered the Opinion of the Court.

We granted certiorari in this Colorado Fair Debt Collection Practices Act¹ case to review a decision of the District Court for Boulder County upholding a decision of the County Court for Boulder County.² Both courts ruled that the debt collection communication that Mercantile Adjustment Bureau, LLC ("MAB") sent to Elizabeth Flood complied with the notice provisions of section 12-14-109, and that MAB did not violate section 12-14-105(2) when it utilized an automated mailing service to print and mail the communication.

We reverse the district court's judgment in part and affirm its judgment in part. We hold that MAB's debt collection communication violated the notice provisions of section 12-14-109, but the use of an automated mailing service to print and mail the communication did not violate section 12-14-105(2). Accordingly, we remand this case to the district court, with directions to return it to the county court for entry of judgment consistent with this opinion, including a determination of whether Flood is entitled to damages, costs, and attorney's fees pursuant to section 12-14-113.³

I.

In January 2000, Flood purchased a used automobile. She financed the purchase through Citi Financial-Transouth ("Transouth"). Shortly after purchasing the car, Flood discovered it was damaged and returned it to the dealership. The dealer refused Flood's request for a refund; instead, the dealer provided Flood with a replacement vehicle.

In May 2000, the replacement vehicle began to exhibit electrical problems and, a few months later, broke down. Flood again sought to rescind the sale, but the dealer refused. Shortly thereafter, Flood lost her job and began to experience financial difficulties. After Flood missed several payments, Transouth repossessed her car and sold it for an amount less than what Flood owed on the vehicle. Transouth then transferred Flood's account to MAB.

On July 13, 2004, MAB sent Flood the written debt collection communication that is attached to this opinion as Appendix A.

MAB uses a mailing service, Unimail Corp. ("Unimail"), to print and mail its debt collection communications. It electronically transmits the necessary information to Unimail. Unimail then uses a mechanized process to print the communication, stuff and seal the envelopes, and place the sealed envelopes in the mail for delivery to the consumer. Unimail printed and mailed the above communication to Flood.

Flood filed suit against MAB in county court, bringing several claims under the Colorado statute. Flood alleged that the debt collection communication did not comply with section 12-14-109, because it failed to include necessary information and was contradictory about her rights and obligations under Colorado's statute. Flood also alleged that MAB impermissibly communicated with a third party, in violation of section 12-14-105(2), by outsourcing the printing and mailing of its collection communications to Unimail. Flood sought damages, costs, and attorney's fees against MAB pursuant to section 12-14-113 of the statute.

The county court entered judgment in favor of MAB, ruling that the collection communication complied with the notice requirements of section 12-14-109, and use of an automated mailing service did not violate the statute's prohibition against third party communication in connection with the collection of a debt.

MAB then filed a bill of costs in the county court, as well as a motion requesting attorney's fees pursuant to section 12-14-113(1.5) of the statute. The county court denied MAB's request for attorney's fees pursuant to section 12-14-113(1.5), holding that this provision was preempted by the federal Fair Debt Collection Practices Act. However, the trial court did award MAB certain costs pursuant to Colorado's general costs statute, section 13-16-105, C.R.S. (2007).

Flood appealed the county court's judgment to the district court. MAB cross-appealed the county court's denial of its motion for attorney's fees. The district court upheld the judgment of the county court.

II.

We hold that MAB's debt collection communication violated the provisions of section 12-14-109, but the use of an automated mailing service to print and mail the communication did not violate section 12-14-105(2). Accordingly, we remand this case to the district court, with directions to return it to the county court for entry of judgment consistent with this opinion, including a determination of whether Flood is entitled to damages, costs, and attorney's fees pursuant to section 12-14-113 of the statute.

A. Standard of Review

We review issues of statutory construction de novo. See CLPF-Parkridge One, L.P. v. Harwell Invs., Inc., 105 P.3d 658, 661 (Colo.2005); Colo. Dep't of Labor & Employment v. Esser, 30 P.3d 189, 194 (Colo. 2001). Our primary responsibility is to effectuate the General Assembly's intent. CLPF-Parkridge One, 105 P.3d at 660; People v. Yascavage, 101 P.3d 1090, 1093 (Colo.2004).

We construe a statute as a whole, giving consistent, harmonious, and sensible effect to all of its parts, and we will not adopt an interpretation that leads to illogical or absurd results. Colo. Water Conservation Bd. v. Upper Gunnison River Water Conservancy Dist., 109 P.3d 585, 593 (Colo.2005); Bd. of County Comm'rs, Costilla County v. Costilla County Conservancy Dist., 88 P.3d 1188, 1192 (Colo.2004).

In construing a statute, we may consider persuasive authority of another jurisdiction —for example, when Colorado's statute is closely patterned on a related federal statute, as here. Furlong v. Gardner, 956 P.2d 545, 551 (Colo.1998); see also Udis v. Universal Commc'ns Co., 56 P.3d 1177, 1179 (Colo.App.2002) (relying on caselaw arising under the federal Fair Debt Collection Practices Act to assist in construing the Colorado Fair Debt Collection Practices Act).

In the case before us, the relevant provisions of the Colorado statute parallel the federal statute.⁴ Because the Colorado statute is patterned on the federal statute, we look to federal caselaw for persuasive guidance bearing on the construction of our state's law. See Udis, 56 P.3d at 1180.

B. The Federal Statute

The purpose of the federal statute is to protect consumers from harassing and abusive debt collection practices. See Russell v. Equifax, 74 F.3d 30, 33 (2d Cir.1996). We have previously observed that the federal statute is a remedial consumer protection statute and should be liberally construed in favor of the consumer. See Shapiro & Meinhold v. Zartman, 823 P.2d 120, 124 (Colo. 1992). In construing the federal statute, courts assess compliance with its statutory provisions using the "least sophisticated consumer" standard. E.g., Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir.1998) ("[I]f we find that the least sophisticated debtor would likely be misled by the notice [sent to the consumer] . . . we must hold that the credit service has violated the Act."); United States v. Nat'l Fin. Servs. Inc., 98 F.3d 131, 135-36 (4th Cir.1996) (collecting cases); Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir.1993).

As the United States Court of Appeals for the Second Circuit observes, "The basic purpose of the least-sophisticated-consumer standard is to ensure that the [federal statute] protects all consumers, the gullible as well as the shrewd. This standard is consistent with the norms that courts have traditionally applied in consumer-protection law." Clomon, 988 F.2d at 1318.

The federal statute requires debt collectors to inform consumers about their right to require verification of the alleged debt, or any portion of the debt, by the collection agency. See 15 U.S.C. § 1692g (2007). This provision is intended to eliminate the ongoing problem of debt collectors pursuing the wrong person, or seeking to collect a debt that has already been paid. See Terran v. Kaplan, 109 F.3d 1428, 1431 (9th Cir.1997). In determining whether a collection communication complies with this provision, the federal courts have required that the information required by section 1692g must be effectively conveyed in a suitable size that can be "easily read" and does not contain "contradictory" phraseology:

The [Federal Act] is not satisfied merely by inclusion of the required debt validation notice; the notice Congress required must be conveyed effectively to the debtor. It must be large enough to be easily read and sufficiently prominent to be noticed—even by the least sophisticated debtor. Furthermore, to be effective, the notice must not be overshadowed or contradicted by other messages or notices appearing in the initial communication from the collection agency.

Swanson, 869 F.2d at 1225; see also Equifax, 74 F.3d at 35 (holding that a collection communication that had all information required by section 1692g nevertheless violated that section because it impermissibly contained contradictory language that could cause the consumer to forgo her rights to contest the debt).

Contradictory language can impermissibly confuse the consumer about his or her rights and responsibilities under the statute. Macarz v. Transworld Sys., Inc., 26 F.Supp.2d 368, 371 (D.Conn.1998). In Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir.1997), the United States Court of Appeals for the...