Court Opinion

ID: 9901022
Source: CourtListenerOpinion
Date Created: 2023-11-20 22:11:44.463347+00
Date Added: 2024-06-11T09:21:24.429680
License: Public Domain

2023 UT App 117

               THE UTAH COURT OF APPEALS

     SAMIR MENESES, ALISSA BLAKE, DANIEL LOWRANCE, AND
                        RODNEY HILL,
                         Appellants,
                             v.
                SALANDER ENTERPRISES LLC,
                          Appellee.

                             Opinion
                         No. 20210720-CA
                     Filed September 28, 2023

           Third District Court, Salt Lake Department
                   The Honorable Kara Pettit
                          No. 200901992

           Daniel M. Baczynski, Attorney for Appellants
           Brett B. Larsen and Gregory M. Constantino,
                      Attorneys for Appellee

  JUDGE DAVID N. MORTENSEN authored this Opinion, in which
   JUDGES GREGORY K. ORME and RYAN M. HARRIS concurred.

MORTENSEN, Judge:

¶1     Salander Enterprises LLC (Salander) is in the business of
buying debts and then seeking to recover the amounts owed.
Salander purchased debts owed by Samir Meneses, Alissa Blake,
Daniel Lowrance, and Rodney Hill (collectively, Meneses Parties),
the recovery of which Salander obtained through lawsuits and
wage garnishments. Because Salander had failed to register as a
debt collector as required by Utah statute, the Meneses Parties
filed suit, alleging that Salander had engaged in unconscionable
and deceptive practices in violation of the Utah Consumer Sales
Practices Act (UCSPA). The district court granted summary
judgment in Salander’s favor after it determined that Salander
was not required to register as a debt collector. Alternatively, the
                  Meneses v. Salander Enterprises

court determined that a “violation” of the Utah Collection Agency
Act (UCAA), “with nothing more,” does not support a cause of
action under the UCSPA. We affirm the district court’s order on
this alternative ground.

                         BACKGROUND

¶2    Salander—a Wisconsin limited liability company that does
not own, maintain, or operate a physical office in Utah—is in the
business of purchasing debts. Salander purchased the debts owed
by the Meneses Parties and subsequently filed lawsuits against
them to recover the debts. After obtaining judgments against the
Meneses Parties, Salander sought to enforce those judgments
through wage garnishment proceedings.

¶3      In March 2020, the Meneses Parties sued Salander, alleging
that “Salander engaged in a deceptive and unconscionable
practice in violation” of the UCSPA. See Utah Code §§ 13-11-1
to -23. Specifically, the Meneses Parties argued that Salander had
engaged in debt collection “against vulnerable Utah consumers
without the mandatory license required” by the UCAA. See id.
§§ 12-1-1 to -11 (2022). 1 The then-effective statute required
registration and bonding of any “collection agency, collection
bureau, or collection office” that conducts business in Utah. See id.
§ 12-1-1.

¶4     Salander was not registered or bonded as required by
section 12-1-1 when it brought suit or pursued garnishment
proceedings against the Meneses Parties. The Meneses Parties did
not raise this as a defense in the actions Salander filed against

1. With the exception of its final section—authorizing creditors to
recover collection fees in addition to other amounts owed by a
debtor—the UCAA was recently repealed by the Utah
Legislature. See Act of May 3, 2023, ch. 32, § 3, 65th Leg., Gen.
Sess.; Act of May 3, 2023, ch. 213, § 1, 65th Leg., Gen. Sess.

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                   Meneses v. Salander Enterprises

them, but in the later action now before us, they argued Salander
was “a ‘collection agency, collection bureau, or collection office’
under [s]ection 12-1-1 and was therefore required to register and
file a bond pursuant to the UCAA.” “[B]ecause Salander was not
registered and did not have a bond as described in the UCAA,”
the Meneses Parties asserted that “Salander lacked standing to file
suit against them in a Utah court and was not entitled to recover
the subject debts.” Given these circumstances, the Meneses Parties
alleged “that Salander engaged in deceptive and/or
unconscionable acts in violation” of the UCSPA.

¶5      On summary judgment, the district court ruled that the
undisputed facts established that Salander (1) did “not conduct a
collection agency, collection bureau, or collection office in this
state”; (2) did “not engage in this state in the business of soliciting
the right to collect or receive payment for another of any account,
bill, or other indebtedness”; and (3) did “not advertise for or
solicit in print the right to collect or receive payment for another
of any account, bill, or other indebtedness within the meaning of
[s]ection 12-1-1.” Given that Salander did not engage in any of
these three categories of activity, the court concluded that
“Salander was not required to register and file a bond pursuant to
the UCAA prior to filing suit against” the Meneses Parties. And
because the Meneses Parties’ claims were “based entirely on
Salander’s alleged noncompliance with” the UCAA, they failed
“as a matter of law.”

¶6      The district court also ruled that even if Salander had
violated the requirements of section 12-1-1, the Meneses Parties’
claims would “still fail and must be dismissed” because “[a]n
alleged violation of the UCAA, with nothing more,” does not
support a cause of action under the UCSPA “or a claim under
common law.” The court stated that the Meneses Parties had
improperly “attempt[ed] to shoehorn a violation of the UCAA,
which only has criminal penalties” and does not provide a cause
of action, “into either a violation of the UCSPA or [some] other
State law cause of action.” Put succinctly, the court concluded that

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                 Meneses v. Salander Enterprises

the Meneses Parties “must establish more than a registration
violation of the UCAA to have a claim under the UCSPA.”

            ISSUES AND STANDARD OF REVIEW

¶7     The Meneses Parties argue that the district court erred in
granting summary judgment in favor of Salander when it
determined that Salander was not required to register under the
UCAA. The Meneses Parties also maintain that the district court
erred in granting summary judgment on the alternative ground
that a violation of the UCAA, standing alone, could not support
UCSPA and common law claims. Whether a district court
properly grants summary judgment is a conclusion of law
reviewed for correctness. See Viertel v. Body Firm Aerobics LLC,
2022 UT App 96, ¶ 9, 516 P.3d 791.

                           ANALYSIS

      I. Whether Salander Was Bound by the Registration
                        Requirement

¶8    The UCAA’s registration           requirement      (with    our
bracketing) provided as follows:

      No person shall
             [1] conduct a collection agency, collection
             bureau, or collection office in this state, or
             [2] engage in this state in the business of
             soliciting the right to collect or receive
             payment for another of any account, bill, or
             other indebtedness, or
             [3] advertise for or solicit in print the right to
             collect or receive payment for another of any
             account, bill, or other indebtedness,

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                  Meneses v. Salander Enterprises

       unless at the time
              [a] of conducting the collection agency,
              collection bureau, collection office, or
              collection business, or
              [b] of advertising or soliciting,
       that person or the person for whom he may be
       acting as agent, is registered with the Division of
       Corporations and Commercial Code and has on file
       a good and sufficient bond as hereinafter specified.
Utah Code § 12-1-1 (2022).

¶9      The Meneses Parties rely on Lawrence v. First Financial
Investment Fund V, LLC, 444 F. Supp. 3d 1313 (D. Utah 2020), to
support the position that Salander was bound by the UCAA’s
registration requirement, even though Salander was recovering
the debt it owned for its own benefit. Observing that the
legislature had not defined “collection office,” the Lawrence court
consulted “dictionaries to assess [the] ordinary meaning” of the
term. Id. at 1320–21 (“None of the disputed terms are terms of art,
so the court must turn to other sources, primarily dictionaries, to
derive the relevant terms’ meanings.”). After conducting a survey
of dictionary definitions, the Lawrence court concluded that a debt
purchaser’s “activities fit squarely within the definition of
‘collection office.’ Indeed, the purchasing and collection of debt is
[a debt purchaser’s] raison d'être. . . . That [a debt purchaser]
collects debts for its own account does not obviously place it
outside [section 12-1-1’s] reach.” Id. at 1323; see also id. at 1328
(“The court concludes [a debt buyer’s] business of buying debt
originated by someone else and then collecting on that debt brings
it within the Statute’s ambit.”). 2

2. Other Utah federal cases have relied on Lawrence’s conclusion.
See Chamberlain v. Crown Asset Mgmt., 608 F. Supp. 3d 1091, 1100,
                                                   (continued…)

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                   Meneses v. Salander Enterprises

¶10 But the statute is open to multiple interpretations. See id. at
1328 (noting that section 12-1-1 left “room for disagreement about
the contours” of its meaning); see also Holmes v. Crown Asset Mgmt.,
LLC, No. 2:19-cv-00758, 2021 WL 3473050, at *4 (D. Utah Aug. 6,
2021) (concluding that “[a]bsent clearer statutory language,” a
debt buyer “could have reasonably believed that the UCAA could
not properly be construed to limit” its ability to file suit in state
court to collect on the debt it owned). Most notably, a reading of
the wider statutory scheme of the UCAA suggests that its purpose
was not to protect the interests of those who owed a debt but to
protect the interests of those to whom the debt was owed, which
supports the position that the registration requirement applied
only to those who collect debt on behalf of others. For example,
the UCAA identified the purpose of obtaining the bond
mentioned in section 12-1-1 as being not for the benefit of debtors
but “to protect the persons for whom the collection is
undertaken.” Utah Code § 12-1-2(2) (2022); see also id. § 12-1-8
(stating that the collector could bring suit “at the direction” of the
debt originator to recover the debt). From this perspective, the
registration and bonding requirement would appear to have
applied to only traditional debt collectors (i.e., those who collect
debt owed to a third party) rather than to a party like Salander,
which buys debts and attempts to directly recover the amounts
owed for itself.

¶11 But we do not need to decide, in the context of this case,
whether we think Lawrence was correctly decided. We will assume

1104 (D. Utah 2022); Cotte v. CVI SGP Acquisition Trust, No. 2:21-
cv-00299-JNP-DAO, 2022 WL 464307, at *2 (D. Utah Feb. 15, 2022).
In another case, the federal district court determined that section
12-1-1 applied to a “collection agency” that purchased “debts
from various lending agencies.” Buhler v. BCG Equities, LLC, No.
2:19-cv-00814-DAK, 2020 WL 888733, at *1–2 (D. Utah Feb. 24,
2020).

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                  Meneses v. Salander Enterprises

without deciding that the registration requirement applied to
companies whose business is to buy and recover debt. 3

    II. Whether a UCAA Registration Violation Provides an
 Independent Basis for a Cause of Action Under the UCSPA or
                        Common Law

¶12 Even if the registration requirement applied to Salander,
the Meneses Parties still must show that a violation of this
requirement supports a cause of action under either the UCSPA
or common law. We are not persuaded they have done so.

¶13 The UCAA carried only a criminal penalty for debt
collectors who failed to comply with its registration and bonding
requirement: “Any person, member of a partnership, or officer of
any association or corporation who fails to comply with any
provision of this title is guilty of a class A misdemeanor.” Utah
Code § 12-1-6 (2022).

¶14 Noting the lack of a private right of action in the UCAA,
the district court concluded that “[e]ven if Salander was required
to register and file a bond pursuant to the UCAA, . . . all of [the
Meneses Parties’] claims still fail and must be dismissed.” It went
on to explain that an “alleged violation of the UCAA, with

3. Salander also argues that the UCAA registration requirement
applied only to businesses that have a physical location in Utah.
We do not share this view. It would make little sense to say that a
collection agency could free itself of the registration and bonding
requirements imposed by the UCAA simply by locating its office
a few feet over the border in, say, Nevada and then conducting all
of its business in Utah. Under the plain meaning of the statute, a
collection agency could certainly “conduct” a collection business
in Utah without having an office in the state. See Utah Code § 12-
1-1 (2022). And with the act of so “conducting” its business in
Utah, the collection business would accordingly be governed by
the UCAA. See id.

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                   Meneses v. Salander Enterprises

nothing more, does not provide” the basis for a cause of action or
a claim under common law, concluding that the Meneses Parties
“may not attempt to shoehorn a violation of the UCAA . . . into
either a violation of the UCSPA or any other State law cause of
action, including a cause of action for unjust enrichment or
intrusion upon seclusion.”

¶15 To fill this apparent lacuna, the Meneses Parties assert their
claims were not brought under the UCAA. Instead, they argue
that the criminal act associated with the violation of the UCAA, see
id., not the UCAA itself, supports civil liability. More specifically,
the Meneses Parties argue that “unlawful debt collection has
routinely been found to be deceptive and unconscionable” under
the UCSPA. They assert that “[e]ven if a statute does not provide
members of the public a direct enforcement mechanism, the
statutory violation can still substantiate an independent claim
under common law, equity, or a statute that does provide” a cause
of action. Thus, the Meneses Parties argue that “[w]hether the
UCAA contains a private cause of action is irrelevant here because
[they] do not allege a claim under the UCAA. . . . Rather, [they]
rely on the UCAA violation, in part, to establish independent
claims for unjust enrichment [and] intrusion upon seclusion . . .
under the UCSPA.” In support of this position, the Meneses
Parties assert that statutory violations routinely serve “as
evidence of negligence,” such as when “traffic law violations . . .
support . . . negligence claims related to auto accidents.”
Moreover, the Meneses Parties argue that the Division of
Consumer Protection—which is identified as the “[e]nforcing
authority” for the UCSPA, see Utah Code §§ 13-11-3(3), -17(4)(a)—
has determined that “[i]t shall be a deceptive act or practice in
connection with a consumer transaction . . . for a supplier to . . .
[m]isrepresent that the supplier has the particular license, bond,
insurance, qualifications, or expertise that is related to the work
to be performed,” Utah Admin. Code R152-11-5(B)(5).

¶16 We are unpersuaded by this reasoning. In spite of the
Meneses Parties’ assertion that their claims do not sound in the

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UCAA, the only violation they identify Salander as having
committed is failing to register and bond under the UCAA. But a
UCAA violation is not enough to support a cause of action under
the UCSPA or the common law doctrines they invoke. “To hold
that [a debt buyer’s] failure to disclose its unregistered status to
[debtors] is alone enough to constitute a UCSPA violation would
have the same effect as transforming a violation of the UCAA”
into a cause of action. Buhler v. BCG Equities, LLC, No. 2:19-cv-
00814-DAK, 2020 WL 888733, at *5 (D. Utah Feb. 24, 2020). “Such
a holding would not require a [debtor] to allege anything beyond
a violation of the UCAA’s registration provision.” Id.

¶17 We acknowledge that UCAA noncompliance could
theoretically be part of the basis for a claim under the UCSPA or
common law. See id. (“Indeed, it may be a violation of the UCSPA
if a debt collector affirmatively misrepresented its registration
status or evidence is presented that an agency concealed its
registration status with knowledge or intent to deceive a
debtor.”). But even if a debt collector’s misrepresentation
regarding its UCAA registration status could—in an appropriate
case—constitute a violation of the UCSPA, the Meneses Parties
have failed to demonstrate such a violation here. While the
Meneses Parties repeatedly alleged in their complaint before the
district court that “Salander misrepresented its licensure status to
debtors,” they failed to plead any facts to support this allegation.
The only improper actions that the Meneses Parties identify in
their factual pleadings—actions Salander does not dispute—is
that Salander engaged in the “business of collecting debts
acquired in default and filed collection lawsuits in Utah courts”
without first having obtained “the mandatory license required by
Utah law” pursuant to section 12-1-1. Similarly, the Meneses
Parties’ claim of unjust enrichment was based on Salander’s
failure “to obtain a license to act as a collection agency.” And the
intrusion upon seclusion claims were also based on Salander’s
failure to obtain a license. No other act of wrongdoing on the part
of Salander is asserted in the complaint or, more importantly, in

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                  Meneses v. Salander Enterprises

the factual statement filed in opposition to Salander’s summary
judgment motion. Put simply, the Meneses Parties allege that
Salander’s only wrong act was its failure to comply with the
UCAA’s registration requirement, not that Salander
misrepresented this status to them or that they were somehow
harmed by any such misrepresentation. 4

¶18 But a UCAA registration violation, standing alone, is—as
the district court correctly concluded—not enough. To support a
cause of action under the UCSPA or common law, the Meneses
Parties needed to claim something more, such as an affirmative
misrepresentation. But that is not what Salander purportedly did
here.

¶19 The Meneses Parties never claim that Salander made any
affirmative statements about its registration and bonding status
under section 12-1-1. They have presented no factual claims that
Salander ever affirmatively represented that it was operating as a
collection agency and was accordingly bound by the UCAA’s
registration requirement. As the Meneses Parties argued below,
Salander did represent that it had “the same right to collect on

4. In their brief on appeal, the Meneses Parties claim Salander
“violated the UCSPA through false and misleading
misrepresentation and omissions concerning its failure to register
and post a bond.” And they contend that “unlicensed debt
collection, which inherently misrepresents the collector’s ability
to lawfully enforce the debt, is deceptive and unconscionable.”
Further, they argue that “criminal acts,” like a misdemeanor for
not complying with the UCAA, are “deceptive and
unconscionable.” They assert that by filing debt collection actions,
“Salander implicitly represented it was entitled to collect the
debt,” which was false and therefore deceptive because it could
not legally do so given its violation of the UCAA. But in the end,
the Meneses Parties do not carry their burden of persuasion on
appeal with respect to any of these precepts.

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                   Meneses v. Salander Enterprises

[purchased] debt as the original creditor.” 5 But Salander’s
representation that it had the right to collect on a debt it owned is
not the same as Salander representing that it was a debt collector
operating in full compliance with the laws of Utah. Indeed,
Salander—not knowing (given the UCAA’s ambiguity on the
point) that it was required to register and bond—could hardly be
said to have withheld its registration status since there was no
information for Salander to withhold from the Meneses Parties. 6

¶20 By the Meneses Parties’ own estimation—namely, that
Salander told debtors that it had the “same right . . . as the original
creditor” to recover debt it owned—Salander represented that it
was the legitimate holder of debt and was collecting on the debt
in its own name, not necessarily that it was a debt collector
operating in compliance with Utah law. Without something
beyond a mere violation of the UCAA, the Meneses Parties simply
do not have a cause of action available to them. Federal courts
considering this question have consistently come to the same
conclusion. See, e.g., Buhler, 2020 WL 888733, at *5 (“[A] debt
collector must engage in unfair or misleading conduct beyond what
the UCAA prohibits to support a finding that a collection agency
also violated the UCSPA.” (emphasis added)); Gunther v. Midland

5. The Meneses Parties argued that this statement amounted to an
“affirmative misrepresentation” because, they argue, Salander
“did not have the same right to collect” the debt it purchased
when it “had no right to collect the debt in Utah.” We see the
statement differently. It is difficult to characterize it as an
“affirmative misrepresentation” when the applicability of section
12-1-1 to third-party debt buyers was open to question. See supra
¶ 10.

6. This same reasoning applies to the Meneses Parties’ common
law claims: a violation of the UCAA, standing alone, does not
provide support for the Meneses Parties’ common law causes of
action.

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                   Meneses v. Salander Enterprises

Credit Mgmt., Inc., No. 2:17-cv-704, 2018 WL 4621764, at *9 (D.
Utah Sept. 26, 2018) (rejecting an argument that “the unlawful
collection of debts under the UCAA results in a violation of the
UCSPA since it bars unfair or deceptive practices . . . because the
court cannot transform a (purported) violation” of the UCAA into
a cause of action under the UCSPA (cleaned up)).

¶21 In sum, the Meneses Parties have not alleged Salander did
anything wrong apart from violating the UCAA’s registration
requirement. Without some other affirmative misrepresentation
or attempt to conceal its registration status on the part of Salander,
saying that a UCAA violation is enough to support a UCSPA or
common law claim is an improper attempt to “transform[] a
violation of the UCAA” into a cause of action. See Buhler, 2020 WL
888733, at *5. Thus, the Meneses Parties have failed to support
their claim that Salander’s violation of the UCAA’s registration
requirement is sufficient to sustain a cause of action under the
UCSPA or common law. Accordingly, we conclude that the
district court properly dismissed their claims on summary
judgment under the alternative ground it identified.

                          CONCLUSION

¶22 Even assuming that Salander was bound by the UCAA’s
registration requirement, its failure to comply with that
requirement does not, without more, support a cause of action
under the UCSPA or common law. Accordingly, we affirm the
district court’s grant of summary judgment.

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