2019 COA 60
Colo. Ct. App.2019Background
- Plaintiff Omid Shekarchian (and his company) purchased a car subject to a retail installment agreement; after missed payments the lender hired Maxx Auto to repossess and impound the vehicle.
- After Shekarchian paid off the loan and the lien was released, Maxx Auto refused to release the car unless he signed a form release before any meaningful inspection; the form stated the signer had "carefully examined" the vehicle and released Maxx Auto from all claims.
- Maxx Auto’s employee testified the impound lot is secured and owners generally cannot enter; owners at best are shown the car between fences and are routinely asked to sign the release prior to inspection as a standard operating procedure.
- Shekarchian left without the car, sued under the Colorado Consumer Protection Act (CCPA) and for replevin; the district court ordered return of the car, found Maxx Auto violated the CCPA, awarded damages for repair costs, and trebled them after finding bad faith by a preponderance standard.
- On appeal the Court of Appeals affirmed liability (CCPA violation and public impact) but reversed the treble award because the district court applied the wrong standard of proof for bad faith and remanded for reconsideration under the clear-and-convincing standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue under the CCPA | Shekarchian suffered injury in fact (loss of use and damage to car) and thus has standing despite third-party payment of repairs | Nonparty paid repairs so named plaintiffs were not the real parties in interest and lack standing | Plaintiffs have standing; injury to property suffices even if a third party paid costs; Rule 17 real-party argument waived |
| Whether Maxx Auto engaged in deceptive or unfair trade practice | Maxx Auto required owners to sign a false release before inspection, which is deceptive and violates the CCPA | Use of an exculpatory release does not, by itself, constitute an unfair or deceptive practice | Court affirmed: factual record supports that Maxx Auto forced owners to sign without meaningful inspection, and that practice is deceptive under the CCPA |
| Whether the practice significantly impacts the public | The coercive, routine practice affects many owners who become "unwitting customers," so public impact is met | Lenders, not owners, are Maxx Auto’s customers; any impact is private and limited | Court affirmed public impact: many owners affected, unequal bargaining power, owners directly and routinely exposed to the practice |
| Treble damages: standard for bad faith | Trebling appropriate because conduct was knowing/willful | District court applied preponderance standard; defendant argued wrong standard used | Reversed on this point: bad faith must be proven by clear and convincing evidence; remanded to reassess treble damages under correct standard |
Key Cases Cited
- Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142 (Colo. 2003) (CCPA scope and purpose)
- Hall v. Walter, 969 P.2d 224 (Colo. 1998) (injury in fact to property satisfies CCPA standing)
- Showpiece Homes Corp. v. Assurance Co. of Am., 38 P.3d 47 (Colo. 2001) (CCPA’s list of prohibited practices is not exhaustive; assume statute applies when in doubt)
- May Dep’t Stores Co. v. State ex rel. Woodard, 863 P.2d 967 (Colo. 1993) (CCPA’s remedial and punitive purposes)
- Crowe v. Tull, 126 P.3d 196 (Colo. 2006) (public impact may be found where challenged conduct affects many consumers)
- Dodds v. Frontier Chevrolet Sales & Serv., Inc., 676 P.2d 1237 (Colo. App. 1983) (inducing consumers to sign releases by fraud can be a deceptive trade practice)
- Rush v. Blackburn, 361 P.3d 217 (Wash. Ct. App. 2015) (towing company’s possession can force a consumer relationship and supports public-impact finding)