Group, Inc. v. Spanier, 96CA1330

• Decision Date: 26 June 1997
• Docket Number: No. 96CA1330,96CA1330
• Parties: 21 Colorado Journal 902 The GROUP, INC., Plaintiff-Appellee, v. Judith A. SPANIER, Defendant-Appellant. . V
• Court: Colorado Court of Appeals

Page 1120

940 P.2d 1120

21 Colorado Journal 902

The GROUP, INC., Plaintiff-Appellee, v. Judith A. SPANIER, Defendant-Appellant.

No. 96CA1330.

Colorado Court of Appeals,

Div. V.

June 26, 1997.

No Appearance for Plaintiff-Appellee.

Daniel W. Alexander, Fort Collins, for Defendant-Appellant.

Opinion by Judge ROTHENBERG.

In this action to collect on a check returned because of insufficient funds, defendant, Judith A. Spanier, appeals the summary judgment in favor of plaintiff, the Group, Inc. (Group). We reverse and remand with directions.

Group was the listing broker for a real estate transaction in which Spanier was buyer. Spanier sent a $10,000 check to Group as an earnest money deposit. Without waiting for Spanier's check to clear, Group sent its own check for $10,000 to seller. Spanier's check did not clear and the real estate transaction was never completed.

Later, Group served Spanier with a written notice that her check had failed to clear, and it demanded payment pursuant to § 13-21-109, C.R.S. (1996 Cum.Supp.). Group's notice claimed that the following amounts were payable as a result of the returned check: (1) the $10,000 face value of Spanier's check; (2) a $20 returned check charge; and (3) $175 in collection/attorney fees. The notice listed the total amount due as $10,195.

The notice also contained an advisement that, if Spanier failed to pay the amount listed within fifteen days, she could be found liable for three times the face amount of the check, plus attorney fees and costs.

When Spanier failed to pay within fifteen days, Group filed this action in which it sought, pursuant to § 13-21-109(2)(a), C.R.S. (1996 Cum.Supp.), an award of damages equal to three times the face value of the check. The trial court granted Group's motion for summary judgment and awarded it three times the face amount of the check, plus attorney fees and costs.

Spanier contends the trial court erred in determining that: (1) she had waived her right to assert defects in the notice by failing to inform Group of such alleged defects within fifteen days after receipt of the notice; and (2) the notice sent by Group was sufficient under § 13-21-109(4), C.R.S. (1996 Cum.Supp.). We agree with both contentions.

I. Strict Compliance

As pertinent here, § 13-21-109(1), C.R.S. (1996 Cum.Supp.) provides that a person who obtains money, merchandise, property, or other thing of value, or who makes any payment of any obligation by means of making any check which is not paid upon its presentment (a dishonored check), is liable to the holder of such check for the face value of the check plus additional charges permitted under the statute.

Section 13-21-109(2)(a), C.R.S. (1996 Cum.Supp.) further authorizes a holder or assignee of a dishonored check to file a civil action for three times the face value of the check. However, before bringing such an action, the holder or assignee of the check must provide notice to the maker of the check in the manner prescribed in §§ 13-21-109(3) and 13-21-109(4), C.R.S. (1996 Cum.Supp.). The notice must inform the maker of the check that he or she has fifteen days to pay the amount due or risk liability for treble damages.

Section 13-21-109(4) specifies that the contents of the notice must include the date the check was issued; the name of the bank, depository, person, firm, or corporation on which it was drawn; the name of the payee; the face amount; and a statement of the total amount due, which shall be itemized and shall not exceed the amount permitted under the statute.

Failure to comply with these statutory notice provisions precludes the collection of treble damages. See § 13-21-109(2), C.R.S. (1996 Cum.Supp.); Stadler v. Devito, 931 P.2d 573 (Colo.App.1996).

In determining whether a statutory notice requirement has been satisfied, courts require a degree of compliance consistent with the objective sought to be achieved by the legislation under consideration. Woodsmall v. Regional Transportation District, 800 P.2d 63 (Colo.1990) (discussing whether strict or substantial compliance with notice statute is required under the Colorado Governmental Immunity Act).

Strict compliance leaves no margin for error and even technical deficiencies may be unacceptable. Substantial compliance is less than absolute, but still requires a significant level of conformity. Woodsmall v. Regional Transportation District, supra.

We conclude that strict compliance with the notice requirements of § 13-21-109(4) is necessary for two reasons.

First, the language of § 13-21-109 indicates that it was enacted to discourage "bad" checks and to encourage the prompt resolution of disputes involving dishonored checks. The statute advances this purpose by permitting civil actions for treble damages if the maker of a dishonored check fails to pay the amount due within fifteen days after notice is given. The treble damages provision in § 13-21-109(2)(a) creates a penalty if the maker fails to make timely payment and is not intended purely to compensate the holder or assignee of a dishonored check. See Singer v. Strauss, 851 P.2d 256 (Colo.App.1993).

Such a penalty is analogous to a forfeiture. Cf. People v. Maestas, 748 P.2d 1351 (Colo.App.1987) (strict compliance with statutory terms is required before forfeiture of bond may occur), aff'd sub nom. Moreno v. People, 775 P.2d 1184 (Colo.1989).

Secondly, § 13-21-109 does not specify the procedure which the maker of a dishonored check must use to contest the validity or sufficiency of the notice given by the holder or assignee of the check. Nor does it specify how the maker must raise other defenses to the treble damages penalty. Cf. 15 U.S.C. § 1692g(a)(3) (1994) (Fair Debt Collection Practices Act requires that notice of debt be given to consumer and that notice contain statement informing consumer of right to dispute the debt or any portion thereof within thirty days after receipt of notice); and § 12-14-109(1)(d), C.R.S. (1991 Repl.Vol. 5A) (Colorado Fair Debt Collection Practices Act, containing equivalent language).

Thus, the maker of a dishonored check who disputes the amount due or who has other defenses is left with difficult choices. The maker may pay the entire amount listed in the notice within fifteen days, even if erroneous, and then attempt to obtain reimbursement of any amounts in excess of the actual amount owed. However, the maker risks incurring substantial expenses, including litigation costs, while attempting to recover the disputed amount.

Alternatively, the maker may withhold all of the payment, or at least the disputed portion of the total amount claimed, but risk liability to the holder or assignee for "three times the face amount of the check" under § 13-21-109(2)(a), as well as attorney fees and costs under § 13-21-109(6), C.R.S. (1996 Cum.Supp.). See Singer v. Strauss, supra (failure to pay entire amount owed within statutory period gives rise to liability for treble damages even if the entire amount is paid after the period has elapsed). The plain language of the statute appears to penalize both non-payment and partial payment.

Thus, a maker who withholds even a small portion of the total amount claimed by the holder or assignee of the check risks liability for three times the face amount of the check, as well as attorney fees and costs. But cf. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975) (if landlord does not return security deposit within seven-day notice requirement specified by statute, penalty provision allowing treble damages attaches only to that portion of the money wrongfully retained plus attorney fees and costs).

Statutes in derogation of the common law must be construed strictly. Leader Federal Bank v. Saunders, 929 P.2d 1343 (Colo.1997). We also presume the General Assembly intended legislation to have just and reasonable results and we construe and apply statutes accordingly. Westminster v. Dogan Construction Co., 930 P.2d 585 (Colo.1997).

We therefore hold that the holder or assignee of a check who fails strictly to comply with the statutory notice requirements is precluded from obtaining treble damages under § 13-21-109(2)(a). Accordingly, if a charge listed in the notice is erroneous, the notice is defective as a matter of law. Cf. Stadler v. Devito, supra; Postlewait v. Midwest Barricade, 905 P.2d 21 (Colo.App.1995) (strict compliance is required with notice provision of workers' compensation statute). This does not affect the rights of a holder or assignee of a dishonored check to obtain relief under other applicable portions of the statute.

II. Waiver

The trial court did not determine whether Group had strictly...