Carlsen v. Global Client Solutions, LLC
171 Wash. 2d 486
Wash.2011Background
- Consumers sued Global Client Solutions LLC (GCS) and RMBT over alleged illegal debt adjustment practices in Washington, with four questions certified by federal court about RCW ch. 18.28.
- Plaintiffs’ special purpose accounts were held at RMBT and administered via GCS as custodian/processor, funded by automatic transfers and used to pay debt settlement fees and creditors as negotiated by debt settlement companies like Freedom.
- GCS charged processing fees (e.g., setup, monthly service, wire fees) funded by the special purpose accounts; RMBT held balances without paying interest and did not receive fees from GCS or plaintiffs.
- FDIC issued a 2009 cease-and-desist order affecting RMBT’s third-party relationships, leading GCS to shift most accounts to a custodian in another state.
- The statutory issue centers on whether such for-profit debt adjusting activities fall within RCW 18.28.010(1)’s debt adjusting definition and are regulated under RCW ch. 18.28, and whether any exemptions apply to GCS.
- The court notes the remedial nature of the statute and addresses whether debt settlement companies may be debt adjusters and thus subject to fee limits and civil remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is GCS a debt adjuster under RCW 18.28.010(1)? | GCS receives funds in its name and distributes them to creditors, satisfying the last prong of the definition. | GCS is not directly contacting debtors/creditors, suggesting it does not engage in debt adjusting. | Yes; GCS is a debt adjuster under the plain language. |
| Does RCW 18.28.010(2)(b) exemption apply to GCS as a non-listed entity doing business with regulated banks? | The exemption is narrow and reserved for entities fully regulated under other statutes; not satisfied by GCS. | GCS qualifies as an exempt entity because it acts as an agent of RMBT (a bank) and is subject to FDIC/NACHA oversight. | No; exemption does not apply to GCS; only the listed entities are exempt. |
| Do the fee limitations in RCW 18.28.080 apply to debt settlement companies involved in custodial accounts? | Fee limits apply if the entities are debt adjusters providing debt adjusting services. | Debtors settlement companies might not be debt adjusters, and applicability depends on whether they actually perform debt adjusting. | Depends on whether the debt settlement companies are debt adjusters; the court leaves factual determination to district court. |
| Does RCW 18.28.190 create an aider-and-abettor civil remedy, or is RCW 18.28.185 sufficient for civil relief? | Aider-and-abettor liability should be recognized; civil remedies exist under CPA via RCW 18.28.185. | Civil remedy is implied via RCW 18.28.185; no separate implied action needed for aiding and abetting. | RCW 18.28.185 provides direct civil relief for aiding and abetting; no separate implied action required. |
Key Cases Cited
- Campbell & Gwinn, LLC v. Dep’t of Ecology, 146 Wn.2d 1 (Wash. 2002) (statutory interpretation; plain meaning governs)
- Kelleher v. Minshull, 11 Wn.2d 380 (Wash. 1941) (interpretation of exemptions as applying to listed entities only)
- State v. Pike, 118 Wn.2d 585 (Wash. 1992) (remedial statutes construed liberally in consumer protection contexts)