Shapiro and Meinhold v. Zartman

Decision Date13 January 1992
Docket NumberNo. 90SC758,90SC758
Citation823 P.2d 120
PartiesSHAPIRO AND MEINHOLD, Gerald M. Shapiro, Don H. Meinhold, P.C., Haligman and Lottner, P.C., Kevin H. Burke & Associates, P.C., Janet M. Adams, in her official capacity as Clerk of the Denver District Court and on behalf of the class of persons herein described, E. Marie Gardner, in her official capacity as Clerk of the El Paso District Court and on behalf of the class of persons herein described, Patricia Patterman, in her official capacity as Clerk of the Boulder District Court and on behalf of the class of persons herein described, Petitioners, v. James ZARTMAN, Mary DeLancy, Robert Morphew, Individually and on behalf of the class of persons herein described, Respondents.
CourtColorado Supreme Court

Phillip A. Vaglica, Shapiro and Meinhold, Don H. Meinhold, Elizabeth A. Bassler, Retherford, Mullen, Rector & Johnson, Jerry A. Retherford, Colorado Springs, for petitioners Shapiro and Meinhold, Gerald M. Shapiro and Don H. Meinhold, P.C.

Haligman and Lottner, P.C., Richard I. Brown, Scott L. Levin, Solomon L. Leftin, Englewood, Faegre & Benson, John D. Shively, Anne West Klienkopf, Judith D. Sprunger, Denver, for petitioner Haligman and Lottner, P.C.

Hall & Evans, Edward H. Widmann, Alan Epstein, John E. Bolmer, II, Denver, for petitioner Kevin H. Burke & Associates, P.C.

Law Office of Kathleen Mullen, P.C., Kathleen Mullen, Benjamin Sachs, Denver, Stone, Sheehy, Rosen & Byrne, P.C., Andrew Rosen, Boulder, for respondents.

Justice ERICKSON delivered the Opinion of the Court.

We granted certiorari to review Zartman v. Shapiro & Meinhold, 811 P.2d 409 (Colo.App.1990), and now affirm. We limited our review to a determination of whether the petitioners, attorneys who sought to enforce a power of sale contained in a deed of trust securing a note pursuant to C.R.C.P. 120, are "debt collectors" for purposes of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692o (1988) (FDCPA).

The named respondents, James Zartman, Mary DeLancy, and Robert Morphew (debtors), allegedly defaulted on consumer loans secured by real property in Colorado. The petitioners, Shapiro and Meinhold, Gerald M. Shapiro, Don H. Meinhold, P.C., Haligman and Lottner, P.C., and Kevin H. Burke & Associates, P.C. (attorneys), represented creditors who held the security interests. Pursuant to C.R.C.P. 120, the attorneys, on behalf of the secured creditors, sought court orders authorizing the sale of real property securing the loans. The foreclosure proceedings, as permitted by C.R.C.P. 120(f), 1 were brought in counties other than those in which the real property was located.

The debtors, individually and on behalf of a class of similarly situated debtors, brought this action against the attorneys for damages and declaratory relief. They claim the attorneys violated section 1692i of the FDCPA by filing the C.R.C.P. 120 actions in counties other than those in which the property was located. 2 Section 1692i provides in relevant part:

Legal actions by debt collectors

(a) Any debt collector who brings any legal action on a debt against any consumer shall--

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; ....

....

(b) Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

(Emphasis added.)

The trial court granted the attorneys' motion to dismiss for failure to state a claim upon which relief can be granted and entered a ruling and order that provided in pertinent part:

[Debtors] bring suit alleging that the filing of C.R.C.P. 120 actions in counties other than where the real property is located violates the venue provision of the Federal Fair Debt Collection Practices Act. The act requires that all legal actions brought by debt collectors to enforce an interest in real property be brought in the county where the real property is located. [Attorneys] argue that Rule 120 proceedings do not constitute "legal actions" under the Federal Fair Debt Collection Practices Act. The Court agrees. A Rule 120 proceeding is a non-judicial proceeding limited in scope to a summary determination of the issue of default. As such, it is not a legal action to which the venue provision of the act is applicable.

[Debtors] further allege that the law firm defendants are debt collectors under the act and subject to its provisions by virtue of the fact that they file Rule 120 actions. [Attorneys] argue that their actions in filing Rule 120 actions do not bring them under the purview of the act. The Court agrees. The purpose of the act is to regulate traditional debt collection activities. [Attorneys'] actions do not fall within this category of activities.

The court of appeals reversed the trial court's dismissal and determination that the attorneys were not debt collectors under the FDCPA and remanded the case to the trial court for further proceedings.

I

The debtors contend they alleged sufficient facts to support a claim that the attorneys are debt collectors under 15 U.S.C. § 1692a(6) (1988), for the purposes of the filing requirement contained in section 1692i. We agree.

In their amended complaint the debtors alleged that the attorneys are " 'debt collectors' because they use the mails in their business, the principal purpose of which is the collection of debts, and regularly collect or attempt to collect consumer debts." As to each defendant, debtors also asserted, "A substantial part of their practice involves collections, including foreclosures of real estate."

"A short and plain statement of the claim showing that the pleader is entitled to relief" is all that C.R.C.P. 8(a)(2) requires. See Hinsey v. Jones, 159 Colo. 326, 329, 411 P.2d 242, 244 (1966). In determining a motion to dismiss a complaint, a court must accept all averments of material fact contained in the complaint as true. C.R.C.P. 12(b)(5); Board of County Comm'rs v. City of Thornton, 629 P.2d 605, 609 (Colo.1981). A complaint is sufficient to withstand a motion to dismiss if the plaintiff states a claim that would entitle him to relief. Dillinger v. North Sterling Irrigation Dist., 135 Colo. 100, 101, 308 P.2d 608, 609 (1957). The same standards for determining a motion to dismiss apply to both the trial court and the appellate court. See Espinoza v. O'Dell, 633 P.2d 455, 467 (Colo.1981); McDonald v. Lakewood Country Club, 170 Colo. 355, 461 P.2d 437 (1969).

To state a claim for relief under section 1692i, the debtors must allege sufficient facts in their complaint to show that a "debt collector" brought a "legal action" 3 against them "to enforce an interest in real property securing a consumer's 4 obligation" in a county other than that in which the real property is located. The issue is whether the debtors' averments support their claim that the attorneys are debt collectors. Section 1692a(6) 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.... For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. 5

The debtors' averments, which must be accepted as true in considering the merits of the motion to dismiss, substantially track the statutory definition of a debt collector and are sufficient to state a claim for relief.

II

The attorneys assert that, except for 15 U.S.C. § 1692f(6) (1988), they are exempted from the provisions of the FDCPA because the principal purpose of their businesses is the enforcement of security interests, or foreclosures. The attorneys admit that those engaged in traditional debt collection activities are subject to all the provisions of the FDCPA. They contend, however, that those in a "business the principal purpose of which is the enforcement of security interests" are subject only to section 1692f(6), 6 and not to the filing requirements of section 1692i.

We recently stated in Griffin v. S.W. Devanney & Co., 775 P.2d 555, 559 (Colo.1989), and again in Darby v. All J Land & Rental Co., 821 P.2d 297, 298 (Colo.1991):

[A] court's primary task in construing a statute is to give effect to the legislative purpose underlying the enactment. E.g., Colorado Common Cause v. Meyer, 758 P.2d 153, 160 (Colo.1988); People v. Guenther, 740 P.2d 971, 975 (Colo.1987); Engelbrecht v. Hartford Accident and Indemnity Co., 680 P.2d 231, 233 (Colo.1984). To determine legislative purpose we first look to the statutory language itself, giving words and phrases their commonly accepted and understood meaning. Colorado Common Cause, 758 P.2d at 160; Guenther, 740 P.2d at 975; People v. District Court, 713 P.2d 918, 921 (Colo.1986). Where the statutory language is clear and unambiguous there is no need to resort to interpretative rules of statutory construction; the statute, in that instance, should be applied as written, since it may be presumed that the General Assembly meant what it clearly said. E.g., State Board of Equalization v. American Airlines, Inc., 773 P.2d 1033, 1040 (Colo.1989).

A plain reading of section 1692a(6) indicates that any person who qualifies under the first sentence in the definition is a debt collector for purposes of the FDCPA. In addition, section 1692a(6) states, "For the purpose of section 1692f(6) of this title, [the term debt collector] also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests." (...

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