Garrett v. Credit Bureau of Carbon Cnty.

431 P.3d 698

Deborah GARRETT, Plaintiff-Appellant,

v.CREDIT BUREAU OF CARBON COUNTY, d/b/a Collection Center, Inc., Defendant-Appellee.

Court of Appeals No. 17CA1504

Colorado Court of Appeals, Division II.

Announced October 18, 2018

The Law Office of Gary Merenstein, P.C., Gary Merenstein, Lafayette, Colorado; Berg Hill Greenleaf Ruscitti, LLP, Alan C. Friedberg, Boulder, Colorado, for Plaintiff-Appellant

Edmonds & Logue, P.C., Rocky L. Edmonds, Jeffrey M. Logue, Fort Collins, Colorado, for Defendant-Appellee

Opinion by JUDGE DAILEY

¶ 1 Debt collectors sometimes attempt to collect debts from the wrong person, debts that a consumer has already paid, and debts in an amount a consumer does not owe. Among other things, the Colorado Fair Debt Collection Practices Act (CFDCPA), sections 5-16-101 to - 135, C.R.S. 2018,¹ gives a consumer rights to require debt collectors to provide (1) notice of the consumer’s right to dispute the debt and (2) proof of the validation (or verification) of the debt. With respect to the former right, the supreme court has determined that the CFDCPA prohibits debt collectors from providing notices that would be misleading or confusing to the least sophisticated consumer.

¶ 2 Colorado law is largely silent on the attributes of a "least sophisticated consumer." And it is also silent on who—judge or jury—determines what such a consumer would understand. In this opinion, we address those issues—and others—in reversing the district court’s order granting summary judgment for defendant, Credit Bureau of Carbon County, d/b/a Collection Center, Inc. (Credit Bureau), and against plaintiff, Deborah Garrett.

I. Background

¶ 3 Credit Bureau is an agency that collects or attempts to collect debts owed, due, or asserted to be owed or due to another. On July 12, 2016, it sent Garrett a collection notice demanding payment in the amount of $834.96 on a consumer debt allegedly owed to the University of Colorado Hospital. On August 1, 2016, Credit Bureau sent Garrett a second collection notice.

¶ 4 Subsequently, Garrett sued Credit Bureau based on the contents of the two notices. In her amended complaint, she sought statutory damages, reasonable attorney fees, and costs because of abusive, deceptive, and unfair practices prohibited by the CFDCPA.

¶ 5 Both parties asserted that there were no disputed material facts, and both parties filed dispositive motions. In a very detailed, twenty-seven-page written analysis, the district court concluded that Credit Bureau’s notices had not violated the CFDCPA. Consequently, the court denied Garrett’s motion for judgment on the pleadings, granted Credit Bureau’s motion for summary judgment, and dismissed the case.

II. Credit Bureau’s Notices

¶ 6 Garrett contends that the district court wrongly concluded that Credit Bureau did not violate the CFDCPA. We agree.

¶ 7 We review de novo the district court’s grant of summary judgment. TCD, Inc. v. Am. Family Mut. Ins. Co. , 2012 COA 65, ¶ 6, 296 P.3d 255. Summary judgment should be granted only if there is a clear showing that no genuine issue as to any material fact exists and the moving party is entitled to judgment as a matter of law. Id.¶ 8 Because we agree with the parties that there is no genuine issue of material fact, the question in this case is whether Credit Bureau is entitled to judgment as a matter of law.

A. General Principles

¶ 9 In Flood v. Mercantile Adjustment Bureau, LLC , 176 P.3d 769 (Colo. 2008), the supreme court recognized that the CFDCPA and its federal counterpart, the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 to 1692p (2018), "share[ ] the remedial purpose of protecting consumers against debt collection practices that take advantage of gullible, unwary, trustful, or cowed persons who receive a debt collection communication." 176 P.3d at 773.² To this end, those statutes require debt collectors or collection agencies to (1) provide a "debt validation" notice and (2) refrain from engaging in certain types of acts. See id. at 774.

¶ 10 Regarding the "debt validation" notice, section 5-16-109(1), C.R.S. 2018 requires that a debt collector or collection agency send a consumer debtor a written notice disclosing, as pertinent here, the following:

(a) The amount of the debt;

....

(c) That, unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector or collection agency;

(d) That, if the consumer notifies the debt collector or collection agency in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector or collection agency will obtain verification of the debt or a copy of a judgment against the consumer and a copy of the verification or judgment will be mailed to the consumer by the debt collector or collection agency....³

¶ 11 As to prohibited activities, the CFDCPA forbids a debt collector or collection agency from using "any false, deceptive, or misleading representation" in collecting a debt. § 5-16-107(1), C.R.S. 2018. In Flood , the supreme court noted with approval that federal authorities require that statutorily mandated disclosures

be effectively conveyed in a suitable size that can be "easily read" and does not contain "contradictory" phraseology:

The [FDCPA] 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.

Flood , 176 P.3d at 773 (quoting Swanson v. S. Or. Credit Serv., Inc. , 869 F.2d 1222, 1225 (9th Cir. 1988) ).

¶ 12 Overshadowing occurs when the collection letter contains the requisite validation notice, but that information is obscured or diminished by the letter’s presentation or format. See, e.g. , Pollard v. Law Office of Mandy L. Spaulding , 766 F.3d 98, 104 (1st Cir. 2014) (Overshadowing is "[t]ypically ... based upon the visual characteristics of a collection letter, such as when a letter demands payment in large, attention-grabbing type and relegates the validation notice to fine or otherwise hard-to-read print."); Conquest v. Plaza Servs., LLC , No. 2:17cv106, 2017 WL 3401513, at *4 (E.D. Va. Aug. 8, 2017) ("A validation notice is ‘overshadowed’ when a letter’s ‘manner of presentation’ would mislead a consumer to disregard the notice." (quoting Turner v. Shenandoah Legal Grp., P.C. , No. 3:06cv045, 2006 WL 1685698, at *6 (E.D. Va. June 12, 2006) ) ); Seplak v. IMBS, Inc. , No. 98 C 5973, 1999 WL 104730, at *3 n.3 (N.D. Ill. Feb. 23, 1999) ("Overshadowing ordinarily occurs through the use of inconsistent, unusually small, or confusing typeface.").

¶ 13 Contradiction "occurs where language which accompanies the validation notice is inconsistent with and therefore contradicts the substance of the rights and duties imposed by [the statute]." Morgan v. Credit Adjustment Bd., Inc. , 999 F.Supp. 803, 807 (E.D. Va. 1998) ; see McMurray v. ProCollect, Inc. , 687 F.3d 665, 668 (5th Cir. 2012) ("A debt collector may violate [the FDCPA] if other language in its communication with consumers ... is ‘inconsistent with’ the statutorily-mandated notice." (quoting 15 U.S.C. § 1692g(b) (2018) ) ). "Inconsistencies ... can occur in various shapes and sizes. They may be either literal or apparent." Pollard , 766 F.3d at 104. An example of an "apparent" contradiction is "where [a collection agency’s] letter both demands payment within thirty days and explains the consumer’s right to demand validation within thirty days, [because] confusion will result if the letter does not also explain how these two rights fit together." Wilson v. Quadramed Corp. , 225 F.3d 350, 355 n.4 (3d Cir. 2000).

¶ 14 In Pollard , the First Circuit Court of Appeals aptly noted:

Whether the controversy centers on overshadowing or inconsistency, the inquiry reduces to whether a particular collection letter would confuse the unsophisticated consumer. This inquiry is to be conducted with a recognition that confusion can occur in a myriad of ways, such as when a letter visually buries the required validation notice, contains logical inconsistencies, fails to explain an apparent inconsistency, or presents some combination of these (or similar) vices. In the last analysis, a collection letter is confusing if, after reading it, the unsophisticated consumer would be left unsure of her right to dispute the debt and request information concerning the original creditor.

766 F.3d at 104 (citations omitted).

B. Garrett’s Contentions

¶ 15 There is no dispute that, in its July 12, 2016, debt validation notice, Credit Bureau provided Garrett with the information mandated by subsections 5-16-109(1)(c) and (d).⁴ But Garrett contends that this information was contradicted by other language in the July 12 and August 1 notices or overshadowed by the language or format Credit Bureau used in presenting the information. She also contends that Credit Bureau did not sufficiently disclose the amount of her purported debt, as required by section 5-16-109(1)(a).

¶ 16 We need not address Garrett’s second contention because we conclude that, for purposes of the CFDCPA, Credit Bureau’s debt validation notices were confusing.

C. Credit Bureau’s Notices Were Confusing with Respect to the Required Section 5-16-109(1)(c) and (d) Disclosures

1. Confusing to Whom?

¶ 17 In Flood , the supreme court adopted the "least sophisticated consumer" (or debtor) standard for determining whether a collection agency’s notice was confusing with respect to statutorily required disclosures. 176 P.3d at 773. "This standard recognizes that the [CFDCPA] protects the gullible and the shrewd alike while simultaneously...