On October 15, the Colorado Supreme Court issued an opinion affirming the judgment of the appeals court dismissing a Colorado Fair Debt Collection Practices Act (CFDCPA) action involving a tort claim. According to the opinion, the consumer alleged that a law firm representing a subrogee auto-insurance company violated the CFDCPA when the firm obtained a judgment against her for damages in tort. In affirming the appeals court, the supreme court held that that damages arising from the tort does not qualify as a debt under the CFDCPA. The court reasoned that because a tort does not obligate the tortfeasor to pay for damages, it cannot be a transaction giving rise to an obligation to pay money and is therefore not a “debt” within the meaning of the CFDCPA.
In its decision, the Court reasoned that both the federal and state FDCPA “clearly exclude from the definition of debt any obligation to pay money for many, if not all, non-consumer related purpose.” The Court concluded that “because an insurance contract providing for the subrogation of the rights of a damaged insured is not a transaction giving rise to an obligation of the tortfeasor to pay money, but merely changes the person to whom the tortfeasor’s obligation to pay is owed,” it is not a transaction that creates debt under the CFDCPA.