Shekarchian v. Maxx Auto Recovery, Inc.

          City and County of Denver District Court No. 17CV30557 Honorable Elizabeth A. Starrs, Judge

          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

          OPINION

          HARRIS JUDGE

          ¶ 1 Defendant, Maxx Auto Recovery, Inc., appeals from a judgment entered in favor of plaintiffs, Omid Shekarchian and his company, Nationwide Telecom U.S. 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 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 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 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 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 U.S. 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 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');">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, 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 ...