adobestock_85250363A recent case from the Colorado Court of Appeals makes it easier to pursue subrogation claims without the burdens and risks posed by Colorado’s Fair Debt Collection Practices Act.  The court addressed the question of whether the CFDCPA, sections 12-14-101 to -137, C.R.S. 2015, apply to subrogation claims for damages arising from a tortious act.  The Court in Ybarra v. Greenberg & Sada, P.C. found that a subrogation claim arising from tortious activity is not a “debt” under the CFDCPA and, as such, can be collected by insurers and law firms outside of the confines of the CFDCPA.  In the underlying matter, Ybarra drove her car into a parked car insured by State Farm who, in turn, hired the law firm of Greenberg & Sada to sue Ybarra under a theory of negligence.  A default judgment was entered against Ybarra who then filed a separate suit alleging violations of the CFDCPA for making false representations and using deceptive means to collect a debt.  The Court was presented with a question of whether the underlying tortious act was a “transaction” leading to a “debt” subject to the provisions of the CFDCPA.  The Colorado Court of Appeals ultimately found that the subrogation claim did not amount to a “transaction” or a “debt” within the Act.  The ruling by the Colorado Court of Appeals provides freedom of insurers and law firms in Colorado to collect on subrogation claims outside of the strict confines of the Colorado Fair Debt Collection Practices Act.

If you have any questions about this update, please contact Timothy M. Murphy.