Appeals Court Reverses $3M+ Jury Award To Equity Stripping Victims; Homeowners Forced To "Settle" For Triple Damages Under State Consumer Fraud Act

In a 2004 case, the Colorado Court of Appeals reversed a $3+ million jury verdict (which included $1.5 million in punitive damages) in favor of a Colorado couple who were victimized in a foreclosure rescue scam. In its ruling, the appellate court found that the damages awarded by the jury on six separate claims were duplicative. Accordingly, the court let stand only one of the awards and disallowed the remainder. That award, in the amount of $247,000 representing actual damages against those participating in the foreclosure rescue scam for violation of the Colorado Consumer Protection Act (CCPA), §6-1-101, et seq., was then tripled (for clear and convincing evidence of the existence of bad faith conduct on the part of the scammers) pursuant to §6-1-113 of the CCPA. Accordingly, the final award to the aggrieved homeowners was limited to $741,000.(1)

Source: Martinez v. Affordable Hous. Network, Inc., 109 P.3d 983, 2004 Colo. App. LEXIS 867 (Colo. Ct. App. 2004), rev'd on other grounds by Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005).

(1) 6-1-113(2)(b) entitles the winning homeowners to an additional award to cover their legal fees and court costs.