Shekarchian v. Maxx Auto , 2019 COA 60 ( 2019 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
April 25, 2019
2019COA60
No. 18CA0321, Shekarchian v. Maxx Auto — Consumers —
Colorado Consumer Protection Act — Deceptive Trade Practices
— Damages
The plaintiff, a car owner whose car had been towed and
impounded, brought a private action under the Colorado Consumer
Protection Act (CCPA) against the towing company, alleging that the
company’s practice of requiring car owners to sign a release of
claims before having an opportunity to inspect their vehicles
constituted an unfair or deceptive trade practice. The district court
agreed, entered judgment for the plaintiff, and imposed treble
damages against the towing company.
A division of the court of appeals first determines that the
company’s practice of refusing to release vehicles from the impound
lot until car owners sign a release that contains false statements
concerning their ability to inspect their cars amounts to an unfair
or deceptive trade practice under the CCPA. Next, the division
concludes that the practice significantly impacts the public, as
potential consumers, because hundreds of vehicle owners were
subjected to the practice and the vehicle owners are parties to a
financial and legal transaction with the towing company.
However, because the district court applied the incorrect legal
standard in awarding treble damages, the division reverses and
remands for further findings on damages.
COLORADO COURT OF APPEALS 2019COA60
Court of Appeals No. 18CA0321
City and County of Denver District Court No. 17CV30557
Honorable Elizabeth A. Starrs, Judge
Omid Shekarchian and Nationwide Telecom US Corp, a Colorado corporation,
Plaintiffs-Appellees,
v.
Maxx Auto Recovery, Inc.,
Defendant-Appellant.
JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
AND CASE REMANDED WITH DIRECTIONS
Division IV
Opinion by JUDGE HARRIS
Hawthorne and Fox, JJ., concur
Announced April 25, 2019
DLG Law Group LLC, Michael J. Davis, Cassandra S. Wich, Denver, Colorado,
for Plaintiffs-Appellees
Elkus & Sisson, P.C., Reid J. Elkus, Lucas Lorenz, Denver, Colorado, for
Defendant-Appellant
¶1 Defendant, Maxx Auto Recovery, Inc., appeals from a
judgment entered in favor of plaintiffs, Omid Shekarchian and his
company, Nationwide Telecom US Corp, 1 on their claim under the
Colorado Consumer Protection Act (CCPA).
¶2 Maxx Auto runs a repossession service and impound lot. It
repossessed and impounded Shekarchian’s car, then refused to
return it unless Shekarchian agreed to sign a form release — before
seeing the car — representing that he had “carefully examined” the
car and had “made sure that there [was] no damage” and releasing
Maxx Auto from any claims. The district court found that Maxx
Auto routinely required car owners to sign the release without an
opportunity to inspect their vehicles and determined that the
practice violated the CCPA.
¶3 On appeal, Maxx Auto contends that the district court clearly
erred in finding that it had engaged in the challenged conduct, and
that, even if it had, the conduct did not violate the CCPA.
Furthermore, it says, the court applied an incorrect standard in
1 Shekarchian and his company jointly owned the car in question.
For ease of reference, we generally refer to the plaintiffs, in the
singular, as Shekarchian.
1
determining that it had acted in bad faith and awarding treble
damages.
¶4 We conclude that Maxx Auto’s standard practice of demanding
that car owners execute a release containing misrepresentations to
avoid potential liability constitutes an unfair or deceptive trade
practice under the CCPA and that the practice significantly
impacted the public. But we agree with Maxx Auto that the court
misapplied the standard of proof in awarding treble damages.
¶5 Accordingly, we reverse the damages award and remand for
reconsideration under the proper standard. In all other respects,
we affirm the judgment.
I. Background
¶6 Shekarchian bought the car under a retail installment
agreement with BMW Financial Services (BMW FS). He later failed
to make payments in accordance with the agreement, and BMW FS
hired Maxx Auto to repossess the car. Maxx Auto towed the car to
its secure impound lot.
¶7 About a month later, Shekarchian paid off the loan and BMW
FS released its lien. But when Shekarchian appeared at the
impound lot to recover his car, Maxx Auto refused to release it
2
unless Shekarchian signed a form release, prior to any inspection,
representing that he had carefully inspected the car and its
contents, agreeing that there was no damage, and releasing Maxx
Auto from any claims:
In sole consideration of the delivery to me of
the above described vehicle and personal
property, I agree that I have carefully examined
the above described vehicle and made sure
that there is no damage, other than any
pre-existing damage marked and accounted for
on the vehicle condition report. I further agree
that I have examined all personal belongings
that were left in the above vehicle and that
everything is accounted for and has no
damage.
By signing this Release, I fully understand the
above statements and do agree to Release and
Hold Harmless Maxx Auto Recovery . . . from
all claims, demands and or actions, which
I . . . may have against Maxx Auto
Recovery . . . .
¶8 Shekarchian noted that the release contemplated a prior
examination and asked to see his car, but Maxx Auto’s employee
refused to retrieve it until he obtained a signed release. Eventually,
Shekarchian left the lot without his car.
¶9 Shekarchian then filed this lawsuit, asserting, as relevant
here, a claim under the CCPA and a claim for replevin. After a
3
hearing on the replevin claim, the district court ordered Maxx Auto
to return the car to Shekarchian. By that time, though, the car had
been parked in the impound lot for more than seven months, and it
needed repairs because of the protracted storage.
¶ 10 The case proceeded to a bench trial on Shekarchian’s CCPA
claim and Maxx Auto’s counterclaim for additional storage fees. In
a well-reasoned written order, the district court found that Maxx
Auto routinely forced vehicle owners to “endorse a false statement
on a release so that [it] could escape liability for harms it may have
caused” its customers and that this practice was “plainly unfair and
deceptive” within the meaning of the CCPA. The court entered
judgment in favor of Shekarchian on his claim and Maxx Auto’s
counterclaim, awarded damages in the amount of the cost of
repairs, and then trebled the damages upon a finding, “by a
preponderance of the evidence,” that Maxx Auto had engaged in bad
faith conduct pursuant to section 6-1-113(2)(a)(III), C.R.S. 2018.
¶ 11 On appeal, Maxx Auto first argues that neither Shekarchian
nor his company has standing to bring a CCPA claim. As for the
merits, Maxx Auto contends that it did not engage in the conduct
forming the basis of the court’s finding of a CCPA violation, and
4
that, in any event, the conduct is not an unfair or deceptive trade
practice that significantly impacts the public, as required by the
CCPA. Maxx Auto also contends that the court erred in awarding
treble damages.
II. Standing Under the CCPA
¶ 12 At trial, Shekarchian testified that the cost of repairs to his car
was paid by a nonparty company of which he was the owner. Maxx
Auto contends that because a nonparty incurred the cost of repairs,
neither Shekarchian nor Nationwide Telecom US Corp is the real
party in interest under C.R.C.P. 17(a) and, therefore, neither
plaintiff has standing to bring a CCPA claim. We disagree.
A. Preservation and Standard of Review
¶ 13 Maxx Auto appears to conflate the real party in interest
doctrine with the concept of standing. To the extent it presents an
independent argument under Rule 17, we conclude that it has
waived the argument, and so we address only its claim challenging
plaintiffs’ standing.
¶ 14 At trial, Shekarchian testified about the somewhat
complicated ownership status of the car. Upon learning that the
car was partly owned by a subsidiary of the named plaintiff
5
company, rather than the named company itself, Maxx Auto
initially moved to dismiss on the grounds that “the proper party”
had not been named and that Shekarchian did not have standing.
But after further explanation by Shekarchian, Maxx Auto’s counsel
appeared to agree that the issue had been sufficiently clarified and
resolved, prompting Shekarchian’s counsel to ask, “[S]o is he
withdrawing his motion to dismiss?” The court responded, “Well,
I’m denying the motion to dismiss,” to which Maxx Auto’s counsel
added, “Yeah. I – I think that ship has sailed. I – I think it’s a little
clearer.”
¶ 15 We construe Maxx Auto’s counsel’s comments as a withdrawal
of its claim that neither plaintiff was a “proper party.” Therefore,
Maxx Auto has waived review of that claim on appeal. See, e.g.,
Marriage of Corak, 2014 COA 147, ¶ 23 (“A litigant who abandons
an argument in the trial court likewise abandons it for the purposes
of appeal.”); see also Ajay Sports, Inc. v. Casazza, 1 P.3d 267, 272
(Colo. App. 2000) (party waives real party in interest claim if it fails
to raise the claim “in a timely manner” in the district court).
¶ 16 Later, Shekarchian testified that a nonparty company had
paid the cost of repairs. But this time, Maxx Auto argued only that,
6
as a consequence of the nonparty’s payment, neither Shekarchian
nor the named company had standing to pursue a claim under the
CCPA. The court did not separately address standing in its written
order, and, while we generally require a party to request a ruling in
order to preserve an issue for appeal, see Herrera v. Anderson, 736
P.2d 416, 418 (Colo. App. 1987), the rule does not apply to a claim
challenging standing, which may be raised at any time, Anson v.
Trujillo, 56 P.3d 114, 117 (Colo. App. 2002).
¶ 17 Whether a plaintiff has standing to sue is a question of law
that we review de novo. Ainscough v. Owens, 90 P.3d 851, 856
(Colo. 2004).
B. Analysis
¶ 18 The CCPA incorporates as elements of a claim the traditional
standing requirements: an injury in fact to a legally protected
interest. See Hall v. Walter, 969 P.2d 224, 235 (Colo. 1998).
¶ 19 In reviewing the elements of the claim, the district court found
that Shekarchian had suffered injuries to a legally protected
interest, as he was deprived of the use of his car for more than
seven months and the car was damaged from being left in the
impound lot. Maxx Auto says that because Shekarchian was able
7
to borrow a vehicle and another company paid the cost of repairs,
Shekarchian did not suffer an injury in fact.
¶ 20 But the injury-in-fact inquiry turns on whether the plaintiff
suffered an injury, not whether the injury caused the plaintiff to
incur out-of-pocket losses. In Hall, for example, the supreme court
concluded that “injury to property . . . lies squarely within the
interests that the CCPA is intended to protect” and constitutes an
injury in fact for standing purposes. 969 P.2d at 236. The court’s
conclusion did not depend on whether the landowners as opposed
to a third party — an insurance company, for example — paid to
repair the damaged fences and broken locks on their land; rather, it
was sufficient that the plaintiffs had shown an injury to “property
[or] property value.” Id. at 237.
¶ 21 As a general matter, we are not ordinarily concerned, when it
comes to determining a party’s right to sue, with the precise
financial arrangement under which the party has covered its losses.
Cf. Mullins v. Kessler, 83 P.3d 1203, 1204-05 (Colo. App. 2003) (the
defendant had the right to be reimbursed for costs of the litigation
even though a third party may have covered those costs). That
principle is particularly relevant in the context of a CCPA claim,
8
because the primary purpose of the statute is “not to make an
injured party whole, but to punish wrongdoers for illegal acts.” May
Dep’t Stores Co. v. State ex rel. Woodard, 863 P.2d 967, 972 (Colo.
1993); see also Hall, 969 P.2d at 231 (“[T]he CCPA serves more than
a merely restitutionary function.”).
¶ 22 Accordingly, we agree with the district court that Shekarchian
suffered an injury in fact to a legally protected interest, and we
conclude that plaintiffs had standing to sue under the CCPA.
III. CCPA Claim
A. The District Court Did Not Err in Finding That Maxx Auto
Violated the CCPA
¶ 23 The CCPA was enacted to regulate commercial activities and
practices which, because of their nature, “may prove injurious,
offensive, or dangerous to the public.” Rhino Linings USA, Inc. v.
Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146 (Colo. 2003)
(citation omitted). The CCPA deters and punishes businesses that
commit unfair or deceptive practices in their dealings with the
9
public by providing prompt, economical, and readily available
remedies against consumer fraud. Id. 2
¶ 24 To prevail on a CCPA claim, a plaintiff must prove that (1) the
defendant engaged in an unfair or deceptive trade practice; (2) the
challenged practice occurred in the course of the defendant’s
business, vocation, or occupation; (3) the practice significantly
impacts the public as actual or potential consumers of the
defendant’s goods, services, or property; (4) the plaintiff suffered an
injury in fact to a legally protected interest; and (5) the challenged
practice caused the plaintiff’s injury. Id. at 146-47.
¶ 25 Maxx Auto challenges the district court’s findings only with
respect to the first and third elements of the claim.
1. Unfair or Deceptive Trade Practice
¶ 26 Maxx Auto maintains that the court clearly erred in finding
that it refused to return owners’ vehicles unless they signed a
release before they had an opportunity to inspect their vehicles.
But, even if it did engage in such conduct, Maxx Auto argues, its
2 The CCPA does not supplant or preempt other causes of action or
remedies available to a plaintiff under the common law or other
statutes. See § 6-1-105(3), C.R.S. 2018.
10
mere use of an exculpatory agreement “that is later held to be
invalid” does not amount to an unfair or deceptive trade practice
within the meaning of the CCPA. We are not persuaded.
a. The Record Supports the Court’s Factual Finding That Maxx
Auto Engaged in the Challenged Conduct
¶ 27 The district court’s determination that Maxx Auto had engaged
in an unfair or deceptive trade practice by “forcing consumers to
endorse a false statement on a release” was based on its factual
finding that Maxx Auto required vehicle owners to sign the release
“without being able to inspect the vehicle.” Maxx Auto challenges
that factual finding.
¶ 28 Where, as here, the district court acts as the factfinder, we
defer to its credibility determinations and will not disturb its
findings of fact unless they are clearly erroneous — that is, lack any
support in the record. Jehly v. Brown, 2014 COA 39, ¶ 8.
¶ 29 The district court acknowledged that, in some circumstances
— though not in Shekarchian’s case — a Maxx Auto employee
might move a vehicle to give the owner a cursory view of it. Still,
the district court found that, despite the release’s contemplation of
a “careful examination,” under no circumstances could owners
11
conduct a “meaningful inspection” of their vehicles before signing
the release. This finding is supported by the record.
¶ 30 At trial, a Maxx Auto employee testified to the following:
• The impound lot is “completely secured.” There are two
fences, each with a gate, surrounding the lot. The first
fence is a corrugated metal fence with barbed wire on
top. A gate in that fence leads to a “middle section,” and
then to a second fence and gate that allows access to the
inner lot. The second fence is a chain link fence, also
with barbed wire on top.
• Vehicle owners are not permitted to enter the secured lot.
• At best, Maxx Auto will give the vehicle owner an
opportunity to view his or her vehicle by pulling the car
up “between the gates” so that the car is between the
inner and outer fences.
• From that vantage point, the owner cannot “walk[]
around the vehicle” or “do[] a close inspection” because
the owner is separated from the car by the outer fence.
The owner can only “see the outside of” the car, “see
[that] it runs,” and see that it is “intact.”
12
• He did not offer to pull Shekarchian’s car up to the inner
fence. Instead, he asked Shekarchian to sign the release
“prior to any inspection.”
• Even though Shekarchian had signed a receipt and paid
the $1000 in storage fees, Maxx Auto would not let him
into the lot to inspect his car because he might have
“driv[en] off” without signing the release.
• The lenders who contract with Maxx Auto are aware that
it “ask[s] [the vehicle owner] to release the vehicle without
a full inspection,” but the lenders have “never had a
problem with it.”
• Maxx Auto’s “standard operating procedure” is to require
vehicle owners to sign the release “without having a full
inspection.”
¶ 31 We conclude that the evidence amply supports the court’s
finding that Maxx Auto requires vehicle owners to sign the release
without giving them an opportunity to carefully examine the vehicle
and its contents, contrary to the representations in the release
itself. And, as a result, the court’s conclusion that Maxx Auto
13
“force[d] consumers to endorse a false statement on a release” is
likewise supported by the evidence.
b. Maxx Auto’s Conduct Constitutes an Unfair or Deceptive Trade
Practice
¶ 32 Next, Maxx Auto says that even if it required owners to sign
the release without an opportunity to carefully examine their
vehicles, that conduct does not amount to an unfair or deceptive
trade practice under the CCPA.
¶ 33 While the occurrence of challenged conduct is a factual
question on which we defer to the district court, whether the
challenged conduct constitutes an unfair or deceptive trade practice
is a question of law that we review de novo. See S. Atl. Ltd. P’ship of
Tenn., L.P. v. Riese, 284 F.3d 518, 534 (4th Cir. 2002).
¶ 34 A business’s conduct in making false representations about its
services may constitute an unfair or deceptive trade practice. See
Rhino Linings, 62 P.3d at 147-48. In the release, Maxx Auto
represented that vehicle owners would have an opportunity to
carefully examine their cars before releasing any claims for
damages. But in practice, Maxx Auto refused to return the owners’
vehicles unless they signed the release without examining their
14
cars. The fact that owners eventually became aware of (and were
forced to agree to) the false representations does not eliminate the
underlying deception. See State ex rel. Coffman v. Castle Law Grp.,
LLC, 2016 CO 54, ¶ 28 (the fact that the defendant disclosed its
deceptively high prices to consumers did not render the prices fair
and nondeceptive).
¶ 35 We are not persuaded by Maxx Auto’s argument that because
its conduct in forcing customers to sign the release is not expressly
included in the statutory list of prohibited practices, the conduct
cannot qualify as an unfair or deceptive trade practice. As Maxx
Auto concedes, the statutory list is not exhaustive. See Showpiece
Homes Corp. v. Assurance Co. of Am., 38 P.3d 47, 54 (Colo. 2001).
The CCPA does not — and could not — list “all, or even most, of the
practices that the CCPA was intended to cover.” Id.
¶ 36 Nor are we convinced that characterizing Maxx Auto’s conduct
as an unfair or deceptive trade practice would impermissibly
expand the scope of the CCPA. Contrary to Maxx Auto’s assertion,
the conduct at issue is not merely “employing an exculpatory
agreement that is later held to be invalid.” Rather, as we have
described, Maxx Auto refused to return owners’ cars unless the
15
owners agreed — prior to conducting a meaningful inspection — to
sign a release representing that they had conducted a meaningful
inspection and releasing Maxx Auto from all claims. A division of
this court has determined that fraudulently inducing consumers to
sign a release constitutes a deceptive trade practice. See Dodds v.
Frontier Chevrolet Sales & Serv., Inc., 676 P.2d 1237, 1238 (Colo.
App. 1983). We therefore have no difficulty concluding that Maxx
Auto’s conduct falls squarely within the CCPA’s broad prohibition
on practices that are “injurious” or “offensive” to consumers. Rhino
Linings, 62 P.3d at 146.
¶ 37 But even if we perceived the question as a close call, we would
have to err on Shekarchian’s side: the supreme court has directed
that, “in determining whether conduct falls within the purview of
the CCPA, it should ordinarily be assumed that the CCPA applies to
the conduct.” Showpiece Homes, 38 P.3d at 53.
¶ 38 We conclude, therefore, that Maxx Auto engaged in the
challenged conduct and that the conduct amounts to an unfair or
deceptive trade practice within the meaning of the CCPA.
2. Public Impact
16
¶ 39 To prove a violation of the CCPA, a plaintiff must show not
only an unfair or deceptive trade practice, but also that the practice
“significantly impacts the public as actual or potential consumers of
the defendant’s goods, services, or property.” Hall, 969 P.2d at 235.
Thus, if a wrong is private in nature and does not affect the public,
a claim is not actionable under the CCPA. Rhino Linings, 62 P.3d at
149.
¶ 40 Maxx Auto contends that its practice of forcing vehicle owners
to sign the release as a condition of obtaining their vehicles did not
impact the public as consumers because the lenders, not the
vehicle owners, are the consumers of its repossession and impound
services. And, Maxx Auto says, there was otherwise no evidence of
a significant impact on the public. We disagree.
¶ 41 When the controlling facts are in dispute, as here, the
existence or lack of public impact is a question of fact that we
review under the clear error standard. One Creative Place, LLC v.
Jet Ctr. Partners, LLC, 259 P.3d 1287, 1289 (Colo. App. 2011).
Accordingly, we must accept the district court’s public impact
finding unless it is so clearly erroneous as to find no support in the
record. Id. at 1290.
17
¶ 42 Some of the factors relevant to whether a challenged practice
significantly impacts the public are the number of consumers
directly affected by the challenged practice, the relative
sophistication and bargaining power of the affected consumers, and
evidence that the challenged practice has impacted other
consumers or has a significant potential to do so in the future.
Martinez v. Lewis, 969 P.2d 213, 222 (Colo. 1998). No single factor
is determinative, One Creative Place, 259 P.3d at 1290, “nor is it
necessary that all be present,” Rush v. Blackburn, 361 P.3d 217,
228 (Wash. Ct. App. 2015) (citation omitted). Instead, the factors
“represent indicia of an effect on public interest from which a trier
of fact could reasonably find public interest impact.” Id. (citation
omitted).
¶ 43 We turn first to Maxx Auto’s argument that the vehicle owners
are not consumers of its services and therefore the challenged
practice does not significantly impact the public as consumers. A
case from Washington, a state that has consumer protection
legislation similar to the CCPA, see Hall, 969 P.2d at 233-34
(recognizing the similarity in the states’ legislation and relying on
case law from Washington to interpret the CCPA), is instructive. In
18
Rush, a car owner sued a towing company under Washington’s
consumer protection statute. The towing company sought
summary judgment, arguing — as Maxx Auto does here — that the
plaintiff had failed to establish a public impact because the towing
services were solicited not by the plaintiff but by a third party. 361
P.3d at 228. The court of appeals rejected that argument. It
concluded that, by towing and impounding the plaintiff’s car, the
towing company had “in effect, forced [the plaintiff] into a consumer
relationship” with it. Id. Once the towing company had possession
of the car, the court reasoned, the plaintiff “had no choice but to
interact with” the company. Id.
¶ 44 The same is true in this case. While the lender generally
initiates repossession and impoundment services, every owner
whose vehicle is towed to the secure impound lot becomes, as the
district court aptly described it, an “unwitting customer” of Maxx
Auto’s services. The owner pays Maxx Auto to retrieve his or her
vehicle and executes a series of releases for its benefit.
¶ 45 The parties’ direct financial and legal relationship distinguish
this case from State ex rel. Weiser v. Castle Law Group, LLC, 2019
COA 49, in which a division of this court concluded that the law
19
firm’s deceptive practice did not have a significant impact on the
public. In Castle Law Group, the trial court found that the law firm
had engaged in a deceptive practice by failing to disclose certain
information to two mortgage servicers, Fannie Mae and Freddie
Mac, for which it had provided foreclosure services. Id. at ¶ 102. 3
The court also found that the deceptive practice significantly
impacted the public because the two mortgage servicers are
partially funded by taxpayers. Id. at ¶ 103.
¶ 46 On appeal, the division reversed the judgment against the law
firm on the CCPA claim, concluding that the deceptive practice
“directly affected” only the two mortgage servicers. Id. at ¶¶ 116-
122. The division reasoned that the law firm made
misrepresentations through retainer agreements to the mortgage
servicers, not to members of the public, and therefore the public
had not been “exposed to” the firm’s CCPA violations and had not
“undertake[n] other activities in reliance on the” violations. Id. at ¶
124 (citing May Dep’t Stores Co., 863 P.2d at 973-74).
3 Fannie Mae and Freddie Mac are the commonly used monikers for
the Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation.
20
¶ 47 In contrast, the impact to the vehicle owners from Maxx Auto’s
unfair trade practice is neither derivative nor attenuated. The
vehicle owners pay storage fees directly to Maxx Auto and are
parties to the coercive release agreement that constitutes the unfair
trade practice. Thus, the vehicle owners are all “directly affected”
by Maxx Auto’s CCPA violations.
¶ 48 We turn next to the issue of whether Maxx Auto’s practice has
affected, or will affect, a sufficient number of consumers, and in the
requisite manner, to establish a public impact.
¶ 49 The evidence showed that, at any given time, Maxx Auto has
between 300 and 500 vehicles parked in its lot. And according to
Maxx Auto’s employee, the company’s “standard operating
procedure” is to refuse to return the owner’s car unless he or she
signs the release prior to an inspection of the vehicle. Thus, the
evidence supported a reasonable inference that Maxx Auto engages
in the unfair or deceptive practice in virtually every interaction with
consumers. See Crowe v. Tull, 126 P.3d 196, 209 (Colo. 2006)
(finding a public impact where lawyer advertising “potentially affects
a large swath of the public”).
21
¶ 50 And, as the district court found, those consumers have only
“two options: take [it] or leave it.” The inequality in bargaining
power between a towing company and vehicle owners can prove
particularly problematic. Many adults depend on their cars as their
primary mode of transportation. See Crane Towing, Inc. v. Gorton,
570 P.2d 428, 433 (Wash. 1977). Thus, “[i]t cannot be doubted that
the unexpected loss of the use of one’s vehicle directly affects the
safety and welfare of vehicle operators and owners.” Id. at 434.
¶ 51 Given the relatively “coercive” nature of the relationship
between towing companies and car owners, the owners are “likely
more vulnerable to abuse.” Rush, 361 P.3d at 228. Indeed, the
evidence at trial showed that when Shekarchian balked at signing
the release before inspecting his car, the Maxx Auto employee told
him that, even if he stayed at the lot “all day,” he would not get his
car unless he signed the release — “end of story.”
¶ 52 Still, Maxx Auto contends that there is a relevant “distinction
between something happening to a consumer, and whether that has
any impact on the consumer.” Relying on Hildebrand v. New Vista
Homes II, LLC, 252 P.3d 1159 (Colo. App. 2010), Maxx Auto appears
to argue that Shekarchian failed to prove that the challenged
22
practice adversely affected other vehicle owners, who might simply
have signed the releases with no qualms.
¶ 53 In Hildebrand, after shifting soils caused their basement
flooring to fail, the owners of a home sued the builder under the
CCPA, asserting that the builder had misrepresented information
about soil composition and various flooring options. Id. at 1167-68.
A division of this court concluded that the homeowners had failed
to establish that the builder’s misrepresentations impacted the
public because, although other homes were constructed similarly,
the plaintiffs did not present any evidence that the basement
flooring in other homes had failed or was likely to fail, or that the
same misrepresentations had been made to other homeowners, or
that the parties had unequal bargaining power. Id. at 1169-70.
¶ 54 Hildebrand does not support Maxx Auto’s position. The
problem in Hildebrand was the absence of evidence of any exposure
to, or an adverse effect from, the builder’s misrepresentations with
respect to anyone other than the plaintiffs. But here, the vehicle
owners are necessarily exposed to the challenged practice — as a
routine matter, owners must sign the false release in order to
recover their vehicles — and the adverse effect is inherent in the
23
release itself — the owners must release claims against Maxx Auto
without knowing whether they have any claims. We therefore reject
the argument that the challenged practice did not affect other
consumers.
¶ 55 Accordingly, because the district court’s public impact finding
is supported by the record, we will not disturb it on appeal.
¶ 56 In sum, then, we conclude that the district court did not err in
finding that Maxx Auto engaged in an unfair or deceptive trade
practice that significantly impacted the public, in violation of the
CCPA.
B. The District Court Applied the Wrong Standard in Awarding
Treble Damages
¶ 57 A private plaintiff who prevails on his CCPA claim is entitled to
damages in the amount of his actual loss or, if greater, $500. § 6-
1-113(2)(a)(I)-(II). But, “if it is established by clear and convincing
evidence that [the defendant] engaged in bad faith conduct,” the
court must award the plaintiff three times the amount of actual
damages sustained. § 6-1-113(2)(a)(III). “Bad faith conduct” means
“fraudulent, willful, knowing, or intentional conduct that causes
injury.” § 6-1-113(2.3).
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¶ 58 The court made the following finding with respect to bad faith
conduct:
The Court also finds that Plaintiffs proved by a
preponderance of the evidence this business
practice was conducted by Defendant in bad
faith. Maxx Auto conducted this practice
when it knew that it was forcing customers to
sign a document saying they had inspected
their vehicle, without actually giving them a
chance to do so.
¶ 59 Maxx Auto asserts, Shekarchian acknowledges, and we agree
that the district court applied an incorrect standard of proof in
determining that Maxx Auto had engaged in bad faith conduct.
¶ 60 Shekarchian urges us to disregard the error, while Maxx Auto
asks that we either reverse the judgment because the district court
applied the incorrect standard of proof or make a factual finding,
based on a defense never presented to the district court, that it did
not act in bad faith. We decline to take any of these approaches.
¶ 61 Instead, because we cannot say with certainty whether the
district court would have found bad faith conduct under the clear
and convincing standard of proof, we must reverse the damages
award and remand to the district court for reconsideration of treble
damages under the proper standard. See People v. Shifrin, 2014
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COA 14, ¶¶ 134-35 (where district court applied the wrong
standard in ruling on a motion for directed verdict on a CCPA claim,
appellate court would not decide, in the first instance, the
discretionary issue of whether motion should have been denied, but
instead remanded for district court to consider motion under proper
standard).
IV. Conclusion
¶ 62 The treble damages award is reversed, and the case is
remanded to the district court for reconsideration, on the existing
record, of treble damages under the proper standard. In all other
respects, the judgment is affirmed. 4
JUDGE HAWTHORNE and JUDGE FOX concur.
4 Maxx Auto says that if we reverse the judgment in favor of
Shekarchian on the CCPA claim, “[t]his will necessitate vacating the
District Court’s judgment as to the unjust enrichment claim.” But
because we have affirmed the judgment with respect to the CCPA
claim, we do not address the unjust enrichment claim.
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