Appeals Court Overturns Civil Penalty Against Foreclosure Law Firm​

Man holding house made of paper

The Colorado Court of Appeals has overturned a $119,500 civil penalty imposed against a foreclosure law firm accused of violating consumer fraud laws by failing to disclose an ownership interest in a side business.
Judge Morris Hoffman of Denver had imposed the penalty against the Castle Law Group for failing to tell Fannie Mae and Freddie Mac about its interest in a company that posted notices on properties targeted for foreclosure.
But the court of appeals ruled Thursday that the judge erred because the alleged deceptive practice did not have a significant impact on consumers, the Denver Post reports.

The state had argued the hidden interest affected the public because Fannie Mae and Freddie Mac are partly funded by taxpayers. But the appeals court said the alleged deception didn’t amount to a significant public impact that violates Colorado consumer law.
The fine was the only trial court loss for the Castle firm in a civil suit by the state attorney general alleging a conspiracy to fix prices and make more money on side costs.
Hoffman had ruled in a bench trial in 2017 that there was no conspiracy. The appeals court said the trial judge did not err in reaching that finding.
Castle’s biggest victory was a $1.9 million attorney fee award against the state, according to the Denver Post. The state’s appeal of the award is pending.
Castle law firm principal Larry Castle has closed the firm and now works at Pan Am Legal, the Post reports.

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