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Colorado Supreme Court Rules on Potential Deceptive Practices

Foreclosure Two BHColorado’s attorney general has won a procedural victory against one firm in her state over alleged deceptive foreclosure practices. According to two dissenting justices in the court, however, the firm's foreclosure practices may not have been deceptive after all.

The Colorado Supreme Court Tuesday said it would allow Attorney General Cynthia Coffman to introduce critical evidence at trial to demonstrate that the Castle Law Group of Colorado Springs used affiliated businesses to artificially inflate foreclosure-related costs.

The decision overturned a trial court ruling that Coffman could not seek reimbursement and penalties for the deceptive profits retained by the affiliated businesses rather than the law firm itself, according to a statement by her office. The Supreme Court, however, concluded, based on the allegations in the case, that the affiliated businesses “themselves also benefited from the common scheme,” and the defendants could be held accountable for the amounts retained by those businesses.

“The supreme court further holds that evidence of the market rates charged by unaffiliated vendors for foreclosure-related services is directly relevant to establishing whether the costs invoiced by the vendors were the actual or reasonable costs of such services,” the decision stated. “The supreme court therefore reverses a trial court order excluding testimony concerning the market rate for foreclosure-related services.”

The Supreme Court also determined that the defendants are not immune from claims that their costs were deceptive merely because they disclosed the inflated costs to lenders and the public.

In her statement, Coffman said the decision was an important victory in her fight to “hold the largest foreclosure law firm in Colorado accountable for allegedly charging grossly inflated costs in foreclosure proceedings.”

Coffman alleges that Castle and its principals, in concert with affiliated foreclosure-related businesses, systematically charged inflated and deceptive costs for routine services necessary to complete home foreclosures, while falsely representing that those costs were “actual, reasonable and necessary.” The inflated costs—which she estimates exceed $12 million—“were passed on to homeowners, lenders, investors, and taxpayers,” she said.

Castle asserts that market rate evidence was irrelevant based on a November 2014 ruling from the trial court, as well as a series of rulings from November 2014 to January 2016 that also found market rate evidence was irrelevant.


Two justices out of the seven on the Colorado Supreme Court dissented from the majority opinion. In the dissenting opinion, Justice Richard Gabriel wrote that in its petition to for an order to show cause pursuant to C.A.R. 21, the state asserted one week before the trial and without briefing or arguments from the parties that the district court issued two orders, ruling sua sponte that charging high prices is not deceptive or unjust if the prices were accurately disclosed. Gabriel wrote that the state claimed the district court's ruling reflected that the court had suggested the market rates for the services at issue were irrelevant to the state's case and that the rulings by the district court on the eve of the trial foreclosed the state from presenting its principal theory of the case.

"Because the subsequent briefing that we received from the defendants in this case showed that the State’s representations of the record were incorrect, and because it is not clear to me that the district court misunderstood the claims as set forth in the State’s amended complaint, I would vacate the order to show cause and dismiss this appellate proceeding," Gabriel wrote.

The case will now go back to Denver District Court for trial.

Click here to view the complete ruling from the Colorado Supreme Court, including the dissenting opinion.

About Author: Scott Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.

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