Facts: Chad Carlsen and other customers of Global Client Solutions, L.L.C., which performs services related to debt adjustment on its customers’ behalf, filed a class action suit against Global Client Solutions in the United States District Court for the Eastern District of Washington, asserting that Rocky Mountain Bank and Trust, which held the custodial accounts maintained by Global Client Solutions’ on its customers behalf for purposes of paying for the negotiation and satisfaction of settlements with creditors, had failed to provide adequate and effective oversight of these accounts. The district court subsequently certified to the Supreme Court of Washington the question of whether Global Client Solutions is engaged in debt adjustment for purposes of Washington Revised Code §18.28.010(1), the question of whether Washington Revised Code §18.28.010(2)’s exclusion of banks and other entities applies to Global Client Solutions, the question of whether the debt settlement companies that work with Global Client Solutions and Rocky Mountain Bank and Trust are subject to Washington Revised Code §18.28.080’s fee limitations, and the question of whether there is an implied cause of action for aiding and abetting violations of §18.28.080.

Question(s): Is Global Client Solutions engaged in debt adjustment for purposes of §18.28.010(1)?

Does §18.28.010(2)’s exclusion of banks and other entities apply to Global Client Solutions?

Are the debt settlement companies that work with Global Client Solutions and Rocky Mountain Bank and Trust subject to §18.28.080’s fee limitations?

Is there an implied cause of action for aiding and abetting violations of §18.28.080?

Conclusion: Justice Fairhurst’s opinion for the Court concluded that Global Client Solutions is engaged in debt adjustment for purposes of §18.28.010(1) despite the fact that it does not serve as a direct intermediary between debtors or creditors insofar as it receives debtors’ funds in custodial accounts in its own name that are used for purposes of satisfying debts. The Court also held that §18.28.010(2)’s exclusion of banks and other entities does not exempt Global Client Solutions as this exclusion was intended to exempt entities already subject to other regulatory schemes and is therefore to be construed narrowly. Finally, the Court also found that the debt settlement companies that work with Global Client Solutions and Rocky Mountain Bank and Trust are subject to §18.28.080’s fee limitations if their activities fall within §18.28.080’s plain language despite the fact that the precise business model used by these debt settlement companies in conjunction with Global Client Solutions and Rocky Mountain Bank and Trust was not contemplated by the legislature and that the plaintiffs need not establish an implied cause of action for aiding and abetting violations of §18.28.080 as Washington Revised Code §18.28.185 provides a direct civil remedy for such conduct.

Docket No. 84855-6 (from Court of Appeals Division II Case No. 30880-1)

Petitioner: Chad Carlsen

(Counsel: Darrell W. Scott, Matthew John Zuchetto, and Timothy W. Durkop)

Respondent: Global Client Solutions, L.L.C.

(Counsel: Sally Gustafson Garratt, Richard W. Epstein, Haas A. Hatic, Rebecca F. Bratter, and Gregory Eugene Jackson)

Briefs:

Argument: Tuesday, March 15, 2011 9:00am

[Source: TVW, http://tvw.org]

Decided: Thursday, May 12th, 2011

Prevailing Party: Chad Carlsen (Petitioner)

Vote: 9-0

Citation: Pending

Court: Madsen2 Court (2011-)

Madsen

Johnson

Alexander

Chambers
(Concurs)

Owens

Fairhurst
(Majority)

Johnson

Stephens

Wiggins