This matter comes before the Court on a motion for partial summary judgment and preliminary injunction and cross motion for partial summary judgment.

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1 DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO Court Address: 1437 Bannock St. Denver, CO OASIS LEGAL FINANCE GROUP, LLC, OASIS LEGAL FINANCE, LLC, OASIS LEGAL FINANCING OPERATING COMPANY, LLC, AND PLAINTIFF FUNDING HOLDING, INC, D/B/A/ LAWCASH, EFILED Document CO Denver County District Court 2nd JD Filing Date: Sep :03PM MDT Filing ID: Review Clerk: Tara L Nelson COURT USE ONLY Plaintiffs v. JOHN SUTHERS, IN HIS CAPACITY AS ATTORNEY GENERAL OF THE STATE OF COLORADO, AND LAURA UDIS, IN HER CAPACITY AS THE ADMINISTRATOR, UNIFORM CONSUMER CREDIT CODE, Defendants Case Number: 10CV8380 Division: Civil Ctrm: 203 ORDER This matter comes before the Court on a motion for partial summary judgment and preliminary injunction and cross motion for partial summary judgment. In this action, Plaintiffs filed a Complaint for Declaratory Judgment. In an Amended Complaint, the Plaintiffs request declaratory relief in three claims: 1) a judicial declaration that their funding agreement are not loans under the Colorado Uniform Consumer Credit Code (UCCC); 2) a judicial declaration that the UCCC and Colorado Consumer Protection Act (CCPA) violate Due Process if those acts impose liability for making legal funding transactions absent being licensed as a Supervised Lender; and, 3) a judicial declaration that Plaintiffs are

2 protected by the Bona Fide Error Defense of the UCCC. Defendants filed an answer and asserted twenty counterclaims requesting equitable, declaratory and other judicial relief. Defendants move for partial summary judgment to dismiss Plaintiff s First Claim for Relief and for an order preliminarily enjoining Plaintiffs pursuant to their first and eleventh counterclaims. Plaintiffs responded to the Defendants motion and cross motioned for partial summary judgment on their second claims for relief. Briefing proceeded on both motions and the issues are now ripe for review. General Background The Plaintiffs are engaged in a practice of legal funding transactions. While the specifics of the transactions are contested, in the very general sense, the Plaintiffs provide plaintiffs with current funding for their expenses prior to or during litigation with an expectation that if the plaintiff s litigation results in proceeds to the plaintiff in the action, Plaintiffs have a right to a portion of those proceeds. Plaintiffs believe that such transactions are not governed by the provisions of the UCCC and are requesting, among other determinations, such a determination. The Defendants believe that the UCCC applies to such transactions and move in their capacity to regulate the transactions. Their Motion for Partial Summary Judgment and Injunction requests a judicial determination that Plaintiffs transactions are loans. They further request the Court dismiss or stay the remaining litigation without prejudice because the claim that the Plaintiffs lacked authority to do business in Colorado. While the implications are procedurally intertwined due to the nature of the pleadings, the parties are, in essence, requesting that the Court make an initial determination whether the transactions are loans and governed by the UCCC. Once this question has been determined, the procedural implications will be sorted out by application to the pleadings. While the parties dispute the nature and interpretation of the facts presented, the facts themselves are not in dispute. The facts are contained in the documents provided to the Court

3 and are a matter for interpretation, not a weighing of the evidence. 1 Contract and statutory interpretation are questions of law. As such, the issue presented is one of law, not fact. While the issue may not be dispositive, it will have a significant impact on the litigation and is thus proper for Court review under C.R.C.P. 56. Partial summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. C.R.C.P. 56; American Water Dev., Inc. v. Alamosa, 874 P.2d 352, 360 (Colo. 1994). In determining whether summary judgment is proper, the nonmoving party is entitled to the benefit of all favorable inferences that may be reasonably drawn from the undisputed facts and all doubts must be resolved against the moving party. St. Paul Fire and Marine Ins. Co. v. Mid-Century Ins. Co., 18 P.3d 854, 855 (Colo. App. 2001). Applicability of the UCCC The UCCC regulates the law governing consumer credit, small loans, and usury. As noted above, the gravamen of the party s dispute at this juncture is whether the UCCC applies to the Plaintiffs transactions. Specifically, are the transactions loans under the Code s definition in C.R.S (25). Once the Court settles this questions, its applicability to the requested relief will need further determination. Pursuant to C.R.S and case law, the UCCC is to be liberally construed and applied to promote the underlying purposes and policies enunciated in the statute. The applicable provision of the UCCC states that a Loan Includes: (a) Except as otherwise provided in paragraph (b) of this subsection (25): 1 The facts as applicable to this Court s determination shall be discussed within the Court s ruling.

4 (I) The creation of debt by the lender's payment of or agreement to pay money to the consumer or to a third party for the account of the consumer; (II) The creation of debt by a credit to an account with the lender upon which the consumer is entitled to draw immediately; (III) The creation of debt pursuant to a lender credit card in any manner, including a cash advance or the card issuer's honoring a draft or similar order for the payment of money drawn or accepted by the consumer, paying or agreeing to pay the consumer's obligation, or purchasing or otherwise acquiring the consumer's obligation from the obligee or his or her assignees; (IV) The forbearance of debt arising from a loan; and (V) The creation of debt by a cash advance to a consumer pursuant to a seller credit card.

5 C.R.S (25). Paraphrased, the statute defines the term loan as including methods by which debt is created or the forbearance of debt arising from a loan. Salazar v. The Cash Now Store, Inc., 31 P.3d 161. The Parties challenge the holding of Cash Now, supra, as including or not applying to the transactions at issue here for a variety of reasons. Primarily, the party s arguments surround recourse. However, Cash Now clearly demonstrates the Supreme Court s intention that recourse is not a prerequisite to applying the term loan under the UCCC. That holding, however, does not stand for the proposition that non-recourse aspects put the transaction under the definition; instead, non-recourse does not remove it from the definition. The primary holding of the Court is that a loan is made when a creditor creates debt by advancing money to a debtor. Cash Now, supra at 166. Thus the inquiry for this Court is not concerning recourse, but the definition of the term debt. The definitions of the word debt are many, and depend on the context and the general subject with reference to which it is used. Perl-Mack Civic Ass n v. Board of Directors of Metropolitan and Sanitation Dist., 344 P.2d 685 (Colo. 1959). Webster s Dictionary defines debt simply as something owed, recoverable when due. Legal dictionaries define debt as a sum of money due by certain and express agreement or by operation of law. Notably, the definitions contain types of debt including active and passive, bonded, consumer, convertible, funded, installment, liquid, mutual, public, secured, and, as noted by the State, contingent debt. Contingent debt is one that is not presently fixed, but may become so in the future with the occurrence of some uncertain event. Black s Law Dictionary (8 th Edition). While Colorado Courts have not specifically defined debt under the UCCC or in these circumstances, the Court is guided by a very old principle of Colorado law; nothing is my debt unless a judgment for its amount can be recovered against me upon it Shields v. City of Loveland, 218 P 913 (Colo. 1923). While there are potential instances where the Plaintiffs cannot render judgment to

6 recover against the individual plaintiffs they have given funds to, their contracts generally allow for such judgments to be rendered in a myriad of other instances. Thus, while there is risk involved, the Plaintiffs have minimized such risk to a feasible level to continue transacting such arrangements. Again, this Court cannot find that, because of a possibility of non-recovery on some of the transactions, such possibility per se removes the Plaintiffs transactions from regulation by the UCCC. The Plaintiffs transactions advance money to plaintiffs with an expectation of repayment upon collection or judgment in the plaintiffs favor in the future. While the Plaintiffs transactions have a quantity of recourse provisions, or may be contingent upon receipt of proceeds by the plaintiff funded, or may never be collected due to abandonment of otherwise, the transactions create debt under the plain language of the UCCC and the definitions observed by the Court. As, such and according to Cash Now and the official comment to the UCCC, the transactions are loans governed by the UCCC. Cash Now, supra at 166. Having found that the transactions are subject to the UCCC as a matter of law, the Court hereby GRANTS the Defendants Motion for Partial Summary Judgment dismissing the Plaintiff s First Claim for Relief.

7 Preliminary Injunction While the Court has determined that the Plaintiffs transactions are loans subject to regulation under the UCCC, the Court cannot grant an injunction based upon pleadings. C.R.S plainly states If the Court finds after a hearing that there is reasonable cause to believe the respondent is engaging in or is likely to engage in conduct sought to be restrained While the Court has made a determination of applicability of the provisions of the UCCC to the Plaintiffs transactions, the Court will not, without evidence presented, make a determination that Plaintiffs are engaged in or likely to engage in conduct sought to be restrained. Such is a question of fact that mandates a hearing. Such a hearing will also allow the Court to determine the breadth of the injunctive relief, if necessary and allow the Court to weigh the Plaintiffs theory under the doctrine of latches. Therefore, the Court DENIES IN PART the Defendants request for injunctive relief and ORDERS the Defendants to set the matter for hearing by notice to the Plaintiffs. Motion to Dismiss or Stay C.R.S (1)(b) states that a court may stay a proceeding commenced by a foreign entity until it determines whether a foreign entity should have a statement of foreign entity authority on file with the Secretary of State. Defendants do not argue that the filing and maintaining of this lawsuit was transacting business requiring such filing, but transactions entered into by the Plaintiffs previously. While this Court has resolved the applicability of the UCCC, the Court has insufficient information to allow it to make a determination of whether the Plaintiffs should have a statement of authority on file for the prior transactions entered. Such argument and evidence can and should be elicited at hearing. As such, the Court GRANTS IN PART the Defendants Motion to Dismiss or Stay until it can make such a determination. The Court shall hear testimony or argument concerning this point at the preliminary injunction hearing. Until that time, the proceedings are stayed.

8 Cross Motion for Partial Summary Judgment The Court s ruling on the applicability of the UCCC in this matter does not negate Plaintiffs argument for its cross-motion. Nor does the stay prohibit this Court from making a ruling on a matter of law. However, unlike the prior issue, this is not only a question of contract interpretation and law. Partial summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The Parties pleadings alone demonstrate that there exist material questions of fact as to what may or may not have constituted sufficient or insufficient notice concerning what the Court has previously decided due to this matter being one of first impression. The Court finds that these questions require a weighing of the evidence rather than mere application of the facts. There are subjective aspects to the facts including expert opinions that preclude summary judgment at this time. This subjectivity cannot be cured by the benefit of reasonable inferences as the Court finds the facts are not truly undisputed. Therefore, the Court will DENY the Plaintiffs Cross Motion for Partial Summary Judgment at this time. WHEREFORE, the Court orders a hearing concerning injunctive relief and possible continuation of a stay of the proceedings as detailed above. The Court further dismisses the Plaintiffs First Claim for Relief. DATED this 28 th day of September, BY THE COURT, Brian Whitney District Court Judge City and County of Denver