Zartman v. Shapiro and Meinhold, No. 89CA1769

• Docket Nº: No. 89CA1769
• Citation: 811 P.2d 409
• Case Date: October 25, 1990
• Court: Court of Appeals of Colorado

Page 409

811 P.2d 409 James ZARTMAN, Mary DeLancy, Roger Morphew, Individually and
on behalf of the class of persons herein
described, Plaintiffs-Appellants,
v.
SHAPIRO 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, Defendants-Appellees. No. 89CA1769. Colorado Court of Appeals,
Div. A. Oct. 25, 1990.
Rehearing Denied Nov. 23, 1990.
Certiorari Granted May 20, 1991.

Page 410

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

Phillip A. Vaglica, Retherford, Mullen, Rector & Johnson, Jerry A. Retherford, Colorado Springs, for defendants-appellees Shapiro and Meinhold, Gerald M. Shapiro and Don H. Meinhold, P.C.

Richard I. Brown, Scott L. Levin, Solomon L. Leftin, Englewood, for defendants-appellees Haligman and Lottner, P.C.

Hall & Evans, Edward H. Widmann, John E. Bolmer, II, Denver, for defendant-appellee Kevin H. Burke & Associates, P.C.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Neil L. Tillquist, Asst. Atty. Gen., Denver, for defendants-appellees District Court Clerks.

Opinion by Chief Judge STERNBERG.

The plaintiffs, property owners, filed a class action suit against defendant-attorneys for violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. (1982), and against defendant-district court clerks under 42 U.S.C. § 1983 (1982) for violations of the Due Process Clause of the United States Constitution. The property owners appeal the order which granted the defendants' motions

Page 411

to dismiss pursuant to C.R.C.P. 12(b)(5). We affirm as to the clerks, reverse as to the attorneys, and remand for further proceedings.

The property owners held title to certain real property in various counties within the state of Colorado. Alleging that the property owners had defaulted on consumer debts secured by public trustee's deeds, the attorneys brought actions against them pursuant to C.R.C.P. 120. The actions were filed in counties other than where the property was located, as permitted by C.R.C.P. 120(f).

The property owners then filed this suit against the attorneys and clerks. They sought damages and declaratory relief against the attorneys, alleging that the attorneys had engaged in forum abuse in violation of the FDCPA. They sought an injunction against the district court clerks under 42 U.S.C. § 1983 alleging that the clerks violated the Due Process Clause of the United States Constitution by continuously accepting distant forum filings and setting hearings in distant forums with respect to C.R.C.P. 120 proceedings.

The attorneys and the clerks filed motions to dismiss the action pursuant to C.R.C.P. 12(b)(5) for failure to state a claim upon which relief can be granted. The district court granted the motions.

At the outset, we note that "[i]n reviewing the action of a trial court in dismissing a complaint for failure to state a claim, an appellate court is in the same position as the trial judge" and "[t]he court must consider only matters stated within the four corners of the pleading." Espinoza v. O'Dell, 633 P.2d 455 (Colo.1981). "[A]ll averments of material fact in a complaint must be accepted as true." Board of County Commissioners v. Thornton, 629 P.2d 605 (Colo.1981).

"Motions to dismiss for failure to state a claim are viewed with disfavor and are rarely granted under our 'notice pleadings'." Davidson v. Dill, 180 Colo. 123, 503 P.2d 157 (1972). In fact, as the Davidson court stated:

"[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

I.

The trial court held that a C.R.C.P. 120 proceeding is not a legal action to which the venue provision of the FDCPA applies. We agree with the property owners that this was error.

The venue provision of the FDCPA provides:

"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 the real property is located ...." (emphasis added)

15 U.S.C. § 1692i(a).

A consumer is defined as "any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692a(3). A debt is defined as:

"any obligation of a consumer to pay money arising out of a transaction in which the money ... which [is] the subject of the transaction [is] primarily for personal, family, or household purposes whether or not such obligation has been reduced to judgment."

15 U.S.C. § 1692a(5).

There can be no question but that the property owners are "consumers" under the FDCPA. Further, all of the properties involved are the debtors' personal residences. Since the debts were incurred for personal, family, or household purposes, they are "debts" covered by the FDCPA. This leaves remaining the questions whether the C.R.C.P. 120 action is a "legal action" and whether the attorneys are "debt collectors".

In Colorado, foreclosures of real property based on public trustee's deeds are governed by §§ 38-37-101, et seq., and 38-39-101, et seq., C.R.S. (1982 Repl.Vol. 16A). Section 38-37-140, C.R.S. (1982 Repl.Vol. 16A) requires that an order authorizing

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sale must be obtained before the property may be sold. This order is obtained through the Rule 120 proceeding. It is initiated by filing a verified motion. Then a hearing is set, C.R.C.P. 120(a), and notice is sent to the debtor telling him of the hearing date and his rights. C.R.C.P. 120(b). If the debtor fails to file a response at least 5 days before the hearing, C.R.C.P. 120(c), the court may issue an order authorizing sale without a prior hearing. C.R.C.P. 120(e).

We disagree with the trial court's finding that the C.R.C.P. 120 procedure is "a 'non-judicial proceeding' limited in scope to a summary determination of the issue of default." A judicial proceeding is "[a]ny proceeding wherein judicial action is invoked and taken." Black's Law Dictionary 986 (rev. 4th ed.1968).

In Moreland v. Marwich, Ltd., 665 P.2d 613 (Colo.1983), the court stated that the purpose of a C.R.C.P. 120 hearing is to provide the debtor with:

"due process protections against summary foreclosure actions consistent with those protections against deprivations of property without a prior judicial hearing that have received...