Pro's Closet, Inc. v. City of Boulder

457 P.3d 763

The PRO’S CLOSET, INC., a Delaware corporation, Plaintiff-Appellant,

v.CITY OF BOULDER, Colorado, and Michael Dougherty, in his official capacity as the District Attorney for the 20th Judicial District of Colorado, Defendants-Appellees.

Court of Appeals No. 18CA1275

Colorado Court of Appeals, Division IV.

Announced August 22, 2019

LaszloLaw, Theodore E. Laszlo, Jr., Michael J. Laszlo, Boulder, Colorado; Sean Connelly, Denver, Colorado, for Plaintiff-Appellant

Thomas A. Carr, City Attorney, Luis Toro, Senior Assistant City Attorney, Boulder, Colorado, for Defendant-Appellee City of Boulder

Ben Perlman, County Attorney, David Hughes, Deputy County Attorney, Catherine R. Ruhland, Assistant County Attorney, Boulder, Colorado, for Defendant-Appellee Michael Dougherty

Opinion by JUDGE J. JONES

¶ 1 Plaintiff, The Pro’s Closet, Inc., appeals the district court’s summary judgment in favor of defendant, the City of Boulder. The court ruled that Pro’s Closet is a "pawnbroker" as defined in section 29-11.9-101, C.R.S. 2018, and is therefore subject to the requirements, restrictions, and potential sanctions of the state pawnbroker laws, sections 29-11.9-101 to - 104, C.R.S. 2018. Because we conclude that the district court didn’t err in interpreting the pawnbroker statutes, we affirm the judgment.

I. Background

¶ 2 Pro’s Closet is licensed in Boulder as a secondhand dealer under the Boulder Revised Code. It sells used bicycles, bicycle parts, and bicycle gear. Though it has a warehouse in Boulder, Pro’s Closet does most of its business online.

¶ 3 In 2016, the Twentieth Judicial District’s District Attorney’s Office told the Boulder Police Department to treat Pro’s Closet as a "pawnbroker" under state law, meaning, among other things, that Pro’s Closet must hold used goods it buys for thirty days before reselling them instead of ninety-six hours as required by the Boulder Revised Code’s secondhand dealer ordinances. See § 29-11.9-103(6), C.R.S. 2018; Boulder Rev. Code 4-17-10. Pro’s Closet filed suit, seeking a declaratory judgment that it isn’t subject to state pawnbroker laws.

¶ 4 Both Pro’s Closet and the City moved for summary judgment. The district court granted the City’s motion, concluding that, since Pro’s Closet regularly makes "purchase transaction[s]" as defined by section 29-11.9-101(8), it is a pawnbroker under state law.

II. Discussion

¶ 5 Pro’s Closet argues on appeal that (1) the district court erred in ruling that it is a pawnbroker under section 29-11.9-101 ; and (2) because Colorado’s and the City’s secondhand dealer laws are more specific to its business, it isn’t subject to state pawnbroker laws.¹ We reject both arguments.

A. Pro’s Closet is a Pawnbroker Under State Law

¶ 6 Pro’s Closet argues first that the district court incorrectly interpreted section 29-11.9-101 in concluding that it is a "pawnbroker."

1. Standard of Review and Interpretive Principles

¶ 7 We review issues of statutory interpretation de novo. Colo. Oil & Gas Conservation Comm’n v. Martinez , 2019 CO 3, ¶ 19, 433 P.3d 22.

¶ 8 In construing a statute, we look to the entire statutory scheme to give consistent, harmonious, and sensible effect to all of its parts, and we apply words and phrases in accordance with their plain and ordinary meanings. Id. ; Denver Post Corp. v. Ritter , 255 P.3d 1083, 1088-89 (Colo. 2011). When the statutory language is clear, we apply it as written, without resorting to other principles of statutory interpretation. Martinez , ¶ 19 ; Denver Post Corp. , 255 P.3d at 1088.

2. Analysis

¶ 9 Article 11.9 of title 29 of the Colorado Revised Statutes regulates certain activities of "pawnbrokers." §§ 29-11.9-101 to - 104. It both requires and prohibits specified acts by pawnbrokers, §§ 29-11.9-103, - 104, and it creates criminal penalties for noncompliance, § 29-11.9-104(3)(b), (4).² The required act that Pro’s Closet apparently considers the most onerous is the requirement to "hold all property purchased by [the pawnbroker] through a purchase transaction for thirty days following the date of purchase...." § 29-11.9-103(6).

¶ 10 Section 29-11.9-101(7) defines a "pawnbroker" as "a person regularly engaged in the business of making contracts for purchase or purchase transactions in the course of his or her business." (Emphasis added.) Section 29-11.9-101(1) defines a "contract for purchase" as

a contract entered into between a pawnbroker and a customer pursuant to which money is advanced to the customer by the pawnbroker on the delivery of tangible personal property by the customer on the condition that the customer, for a fixed price and within a fixed period of time, to be no less than thirty days, has the option to cancel said contract.

And section 29-11.9-101(8) defines a "purchase transaction" as

the purchase by a pawnbroker in the course of his or her business of tangible personal property for resale, other than newly manufactured tangible personal property that has not previously been sold at retail, when the purchase does not constitute a contract for purchase.

¶ 11 The City doesn’t claim that Pro’s Closet makes "contracts for purchase"; it claims that Pro’s Closet regularly engages in the business of making "purchase transactions," as that term is statutorily defined. For its part, Pro’s Closet doesn’t dispute that it regularly makes purchase transactions. Instead, it argues that to be a "pawnbroker" under the state statutes, a person or business must regularly make contracts for purchase. A business that makes purchase transactions only counts as a "pawnbroker," Pro’s Closet says, if its primary business is making contracts for purchase.

¶ 12 Pro’s Closet’s reading of the definitional statute is untenable. Giving the language in that statute its plain and ordinary meaning — that is, applying well-established rules of grammar and the common understanding of the words’ usage — we conclude that section 29-11.9-101(7) expressly provides two alternative means of qualifying as a "pawnbroker." See § 2-4-101, C.R.S. 2018 ("Words and phrases shall be read in context and construed according to the rules of grammar and common usage," unless they have otherwise "acquired a technical or particular meaning."). It does so by articulating those means — regularly making contracts for purchase or regularly making purchase transactions — in the disjunctive by use of the word "or." See Lombard v. Colo. Outdoor Educ. Ctr., Inc. , 187 P.3d 565, 571 (Colo. 2008) ("Generally, we presume the disjunctive use of the word ‘or’ marks distinctive categories."); Bloomer v. Bd. of Cty. Comm’rs , 799 P.2d 942, 946 (Colo. 1990) ("The legislature’s use of the disjunctive ‘or’ demarcates different categories."), overruled on other grounds by Bertrand v. Bd. of Cty. Comm’rs , 872 P.2d 223 (Colo. 1994). A "pawnbroker" within the meaning of section 29-11.9-101(1), (7), (8) is therefore an entity that regularly engages either in the business of making contracts for purchase or in the business of making purchase transactions.

¶ 13 It is undisputed that Pro’s Closet regularly engages in the business of making purchase transactions. It is therefore a "pawnbroker" under state law.

¶ 14 Pro’s Closet’s proposed interpretation of "pawnbroker" — that only businesses that regularly make contracts for purchase qualify — fails for two main reasons. First, accepting it would require us to contravene the principle that a court must give sensible effect to all parts of a statute. § 2-4-201(1)(b), C.R.S. 2018 (court must presume the General Assembly intended all parts of a statute to be effective); Martinez , ¶ 19. After all, if, as Pro’s Closet argues, a business must regularly make contracts for purchase to be a "pawnbroker," then the General Assembly would have had no reason to include the phrase "or purchase transactions" in subsection 101(7)’s definition of a "pawnbroker": businesses regularly engaged in making contracts for purchase but that also regularly make purchase transactions would be a mere subset of businesses regularly engaged in making contracts for purchase.³ Put a bit differently, every business that regularly makes contracts for purchase qualifies as a "pawnbroker" under subsection 101(1), regardless of whether it also makes purchase transactions: saying, as Pro’s Closet proposes, that "pawnbroker" only includes businesses that regularly make contracts for purchase, including those that also make purchase transactions, is no different, in terms of defining covered entities, from saying "pawnbroker" includes only businesses that regularly make contracts for purchase. So Pro’s Closet’s proposed interpretation impermissibly renders the last phrase of subsection 101(7) — "or purchase transactions in the course of his or her business" — and all of subsection 101(8) — defining a "purchase transaction" — superfluous. Kinder Morgan CO2 Co., L.P. v. Montezuma Cty. Bd. of Comm’rs , 2017 CO 72, ¶ 24, 396 P.3d 657 (we must strive to avoid any interpretation that would render words or phrases superfluous).

¶ 15 Second, Pro’s Closet’s position is inconsistent with and would undermine certain purposes of the pawnbroker statutes, as reflected in the entire statutory scheme. Martinez , ¶ 19 (we must consider the entire statutory scheme when discerning legislative intent). Those purposes include enabling law enforcement to track and recover stolen tangible personal property and assisting law enforcement officials in apprehending those trafficking in stolen tangible personal property. To those ends, the statutes imposing record-keeping, holding, and other related requirements apply expressly, and largely to the same extent, to both property held via contracts for purchase and property obtained via purchase transactions. § 29-11.9-103(1) - (7) ; § 29-11.9-104(1). Pro’s Closet hasn’t explained why the General Assembly would want to exempt from this scheme that category of persons regularly engaged in making purchase transactions who aren’t primarily in the business...