Credit unions must use attorneys, not employees, to sue debtors

October 29 – The New Mexico Supreme Court issued a ruling clearing the way for a previously dismissed class action lawsuit against Guadalupe Credit Union.

The court ruled unanimously that the credit union broke the law by allowing employees who were not lawyers to file lawsuits in Magistrate Court to collect money from the credit union’s borrowers.

“In affirming the Court of Appeals, we clarify that companies, like Guadalupe, must appear before our courts through duly qualified counsel unless otherwise permitted by the rules of this Court,” the Supreme Court wrote in an opinion written by Judge Michael E. Vigil.

The opinion issued Monday affirms a ruling that found the state district court improperly dismissed a lawsuit filed in 2019 by eight people and a group of what their attorneys said Monday could be hundreds, if not thousands, of other consumers who faced with the unlawful collection efforts in violation of the state’s Unfair Trade Practices Act.

“This ruling provides protections for consumers who are being taken advantage of by financial institutions that pursue collection actions without attorneys,” the plaintiff’s attorney, Rob Treinen, who worked on the case with attorney Robert David Humphreys, said in a telephone interview Monday.

“Lawyers are limited by ethical and professional requirements, and the court recognizes that courts must be fair to protect consumers,” Treinen added.

Guadalupe Credit Union did not respond to messages seeking comment on this story.

In its appeal, the credit union had maintained that state law allows non-attorneys to practice in magistrate courts — which have the authority to hear civil lawsuits up to $10,000 — and that they essentially acted as self-represented litigants in the collection lawsuits. This is evident from a statement from the Administrative Office of the Court.

The Supreme Court disagreed, ruling that companies can appear before the Magistrate Court through non-attorneys only in limited cases, which do not include Guadalupe’s debt collection measures.

“Businesses must meet different standards than individuals,” the court wrote. “As a corporation, Guadalupe cannot represent itself or appear pro se. Instead, a corporation must act through an agent, such as an employee, and that agent can only represent the corporation if he is authorized to practice law.”

The state Supreme Court’s ruling sends the 2019 lawsuit back to the trial court, where, Treinen said, the primary question will be how much money the plaintiffs and class members are owed in connection with having suffered illegal debt collection efforts. Treinen said the case was dismissed by the court before these calculations began, so he doesn’t yet know how much money is at stake in the case.