DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO 1437 Bannock Street Denver, CO 80202

DATE FILED: April 8, 2014 CASE NUMBER: 2013CV35182

Plaintiffs: STATE OF COLORADO ex rel. JOHN W. SUTHERS, ATTORNEY GENERAL FOR THE STATE OF COLORADO, and JULIE ANN MEADE, ADMINISTRATOR, UNIFORM CONSUMER CREDIT CODE v. Defendants: Case Number: 2013CV35182

COURT USE ONLY

UNITED CREDIT RECOVERY, LLC; LEONARD Courtroom: 269 POTILLO; GTF SERVICES, LLC; and STANDLEY & ASSOCIATES ORDER (Plaintiffs Motion for Preliminary Injunction) This matter is before the Court on Plaintiffs Motion for Preliminary Injunction. The

Court, having reviewed the motion, the responsive pleadings, the Courts file, and the applicable legal authorities, finds, concludes, and orders as follows: 1. On March 3, 2014, Plaintiffs filed a motion for preliminary injunction. There, Plaintiffs

assert that this Court should grant injunctive relief for their claims brought under the Colorado Fair Debt Collection Practices Act (CFDCPA), based on the statutory procedures set forth in the CFDCPA. Plaintiffs further argue that the normal standard for reviewing injunctive relief set forth in Rathke v. MacFarlane, 648 P.2d 648 (Colo. 1982), should not apply to Plaintiffs CFDCPA claims. 1

Although Plaintiffs initially asserted that the Rathke factors should not be applied to their Colorado Consumer Protection Act (CCPA) claims, Plaintiffs concede in their reply that the CCPA claims are subject to the Rathke factors. 1

2.

In their response, Defendants United Credit Recovery, LLC (UCR) and Leonard Potillo

(Potillo) assert that the Rathke factors should be applied in determining whether injunctive relief is appropriate. 3. Defendants GTF Services, LLC (GTF) and Standley and Associates, LLC (Standley)

assert that the CFDCPA statutory provisions only modify the Rathke factors and that, unless a Rathke factor is specifically obviated by the CFDCPA, it should continue to apply. The Rathke Factors Do Not Apply to Plaintiffs Request for Injunctive Relief Under the CFDCPA. 4. The test that is usually applicable in addressing a motion for injunctive relief is set forth

in Rathke v. MacFarlane, 648 P.2d 648 (Colo. 1982). In Rathke, the Colorado Supreme Court found as follows: In exercising its discretion, the trial court must find that the moving party has demonstrated: (1) a reasonable probability of success on the merits[;] (2) a danger of real, immediate, and irreparable injury which may be prevented by injunctive relief[;] (3) that there is no plain, speedy, and adequate remedy at law[;] (4) that the granting of a preliminary injunction will not disserve the public interest [;] (5) that the balance of equities favors the injunction[;] and (6) that the injunction will preserve the status quo pending a trial on the merits[.] 648 P.2d at 653-54. 5. However, when injunctive relief is sought under a comprehensive regulatory licensing

statute, the specific statutory procedure for obtaining injunctive relief applies instead of the Rathke factors. Kourlis v. District Court , 930 P.2d 1329, 1335-36 (Colo. 1997). 6. Here, Plaintiffs have sufficiently shown that the CFDCPA applies. More specifically,

Plaintiffs have shown that the Defendants have engaged, either directly or indirectly, in the collection of debts within this state, and that Defendants are collection agencies, as defined in section 12-114-103. Further, the Court finds that the CFDCPA is a comprehensive regulatory

licensing statute, that Plaintiffs are seeking injunctive relief under the CFDCPA, and that the Rathke factors therefore do not apply to Plaintiffs CFDCPA claims. section 12-14-135, C.R.S. govern. 7. Defendants UCR and Potillo assert that the Kourlis Courts holding only applies when an This Court disagrees. Instead, the provisions of

agency seeks to enforce a previously issued cease and desist order.

Nothing in Kourlis indicates that its holding was meant to be limited to cases where a cease and desist order had previously been issued by an agency. Plaintiffs Have Satisfied the Rathke Factors. 8. Further, even if Rathke applied to Plaintiffs CFDCPA claims, this Court finds that

Plaintiffs have satisfied the Rathke factors in requesting injunctive relief on both their CFDCPA and CCPA claims. their claims. Plaintiffs have shown a reasonable probability of success on the merits of

Plaintiffs have also demonstrated that the continued creation, use, or distribution of

false bank documents poses a danger of real, immediate, and irreparable injury to Colorado consumers and other third parties. 2 9. The Court further finds that there is that there is no plain, speedy, and adequate remedy at The requested relief is tailored to prevent

law, except the issuance of a preliminary injunction.

the continuing creation, use, or distribution of false bank documents or the continued collection of debts where false documents have been used in connection with the collection of the debt. Although GTF and Standley argue that private consumer actions are available under the CFDCPA and CCPA, relief would not apply as immediately and to as many consumers as a preliminary injunction. For example, a Colorado consumer who has received a false bank Further, there does not

document may have no reason to know that it is not a real affidavit.

2

The Court finds that, under the CFDCPA, Plaintiffs clearly are not required to show irreparable injury. See 1214-135 (The administrator shall not be required to show irreparable injury[.]) The Courts above analysis of whether there is a danger of real, immediate, and irreparable injury applies only to Plaintiffs CCPA claims. 3

appear to be any specific relief that would prevent Defendants from dissipating funds already received in connection with false bank documents. 10. The Court further finds that granting the preliminary injunction will not disserve the

public interest and that the balance of equities favors the injunction. Finally, the Court finds that the injunction will preserve the status quo pending a trial on the merits. The Court notes that, in granting a preliminary injunction, Defendants will be prohibited from creating, using, or distributing any false bank documents, or collecting any debt obtained in connection with the use of false bank documents. In this way, the requested preliminary injunction will preserve the

status quo until a trial on the merits is held. Plaintiffs Requested Relief is Permissible. 11. Defendants UCR and Potillo next assert that the injunctive relief requested by Plaintiffs is More specifically, Defendants UCR and Potillo assert that the requested relief

impermissible.

does not preserve the status quo, would have the effect of granting the relief that would be granted after a trial on the merits, and that the relief requested is moot. 12. The Court will first address the question of whether the relief requested through the An injunction is intended to prevent future harm. May Dept.

preliminary injunction is moot.

Stores Co v. State ex. Rel. Woodard, 863 P.2d 967, 978 (Colo. 1993)(internal citation omitted). A claim becomes moot when a judgment, if rendered, would have no practical legal effect upon the existing controversy. Tesmer v. Colorado High School Activities Assn, 140 P.2d 249, 252 (Colo. App. 2006). Defendants assert that they ceased the use of false documents years ago, and therefore, Plaintiffs request for injunctive relief is moot. This Court disagrees. First, Plaintiffs

have requested a variety of injunctive relief, including the following: that (1) Defendants be enjoined from creating, distributing, or using false bank documents, (2) Defendants be required

to disclose the false nature of the bank documents to every Colorado resident to whom a false bank document has been sent, to every court case in which a false bank document has been filed, and to every third party to whom false bank documents have been provided, (3) Defendants provide the State with copies of every notification provided to the above mentioned groups, (4) Defendants be prohibited from collecting from Colorado residents when a false bank document was in any way used in connection with the collection of that debt, (5) Defendants be prohibited from withdrawing, transferring, spending, or in any way disposing of monies already collected from residents when a false bank document was used in the collection of the debt, and (6) Defendant UCR be enjoined from collecting debt in Colorado without first obtaining a collection agency license. On review of Plaintiffs requested relief, it is clear that Plaintiffs are seeking to

enjoin Defendants from causing continuing or future harm to consumers and third parties. Defendants claim that they have ceased creating or using false bank documents does not defeat Plaintiffs requested relief. 13. The Court also rejects Defendants UCR and Potillos claim that the relief sought would

effectively grant Plaintiffs all the relief they would have obtained after a trial on the merits. Although Plaintiffs request in their Complaint that this Court issue a permanent injunction to prevent violations of the CDFPCA and the CCPA, Plaintiffs also request civil penalties, actual damages, and restitution. Accordingly, the granting of the requested preliminary injunction

would not have the effect of granting Plaintiffs all the relief they would have obtained through a trial on the merits. 14. Finally, Defendants UCR and Potillo assert that that the requested relief does not preserve

the status quo. For the reasons set forth above, the Court disagrees.

Relief Granted. Accordingly, the Court orders that a preliminary injunction is hereby issued: 1. enjoining UCR from creating affidavits or other false bank documents that incorrectly

purport to have been executed by a bank officer; 2. created; 3. enjoining GTF and Standley from distributing to third parties any false bank documents enjoining UCR from distributing to third parties any false bank documents that it has

that it has created; 4. enjoining all Defendants from using false bank documents to collect on any debt alleged

to be owed by a resident of Colorado; 5. enjoining all Defendants from collecting or otherwise accepting any payments for debts

alleged to be owed by residents of Colorado to the extent that a false bank document was provided to or otherwise used against the Colorado resident in connection with the collection of such debt; 6. requiring each Defendant to identify every Colorado resident to whom it has sent a false

bank document or against whom it has used a false bank document in court and requiring each Defendant to mail each such Colorado resident a written notification stating that the false bank document is not a real affidavit, was instead created by a mail merge program, and thus was not actually signed by a bank representative; 7. requiring each Defendant to provide the State with a copy of every written notification

that it mails pursuant to paragraph 6;

8.

prohibiting Defendants from withdrawing, transferring, spending, encumbering, giving

away, or in any way disposing of any monies in any bank accounts that any of the Defendants have collected from residents of Colorado identified pursuant to paragraph 6; 9. requiring each Defendant to file a notice in every court case in which each Defendant

filed a false bank document, notifying each court that the filed false bank document is not a real affidavit, was instead created by a mail merge program, and thus was not actually signed by a bank representative; 10. requiring each Defendant to provide the State with a copy of every written notification

that it mails pursuant to paragraph 9; 11. requiring each Defendant to identify every third party to whom it provided false bank

documents in connection with the sale of debt alleged to be owed by Colorado residents, or in connection with the placement for collect of debt alleged to be owed by Colorado residents, and requiring each Defendant to mail each such third party a written notification stating that the false bank document is not a real affidavit, was instead created by a mail merge program, and thus was not actually signed by a bank representative; 12. requiring each Defendant to provide the State with a copy of every written notification it

mails pursuant to paragraph 12; 13. enjoining UCR from collecting on debt in Colorado without first obtaining the requisite

collection agency license. DATED: April 8, 2014 BY THE COURT:

Shelley I. Gilman District Court Judge

7