NM Supreme Court rules credit unions must use attorneys to sue debtors

A ruling from the New Mexico Supreme Court will allow a 2019 class-action lawsuit against Santa Fe-based Guadalupe Credit Union to proceed after it was previously dismissed in state district court.

The Oct. 28 ruling from the state Supreme Court found that the credit union’s borrowers should be allowed to sue the financial institution over having their workers — notably those who are not attorneys — file debt collection lawsuits in magistrate courts.

Rob Treinen, the plaintiff’s attorney, told the Journal “the rules clearly require a business like the credit union to use attorneys, not just employees, except in some very narrow circumstances that don’t apply here.”

Treinen represents the plaintiffs alongside cocounsel David Humphreys.

“As the Supreme Court pointed out, that’s because attorneys have ethical and professionalism requirements that don’t extend to non-attorneys, and the courts shouldn’t be used as unfair forums for debt collection,” Treinen said. “They need to be fair.”

Treinen said there stands to be “hundreds, if not thousands, of people who had money taken from them by the credit union using non-attorneys in court,” noting that the case was dismissed in 2020 right “before we were allowed to do discovery,” when the plaintiffs could’ve asked questions and for documents from the defendants.

“Now the credit union has to figure out what they’re going to do to address all the people they did this to,” he added.

The unanimous ruling follows a 2019 class-action lawsuit filed in the 1st Judicial District Court by seven members of Guadalupe Credit Union, who alleged the bank had at least three employees file pleadings in debt collection lawsuits arranged by the bank and violated the state’s Unfair Practices Act.

The new state Supreme Court ruling effectively reinstates the class-action lawsuit. And it follows a decision from the state Court of Appeals, which found that the state District Court wrongly dismissed the members’ lawsuit against the credit union.

“In affirming the Court of Appeals, we clarify that corporations, such as Guadalupe, must appear before our courts through duly licensed counsel unless otherwise authorized by this Court’s rules,” the Supreme Court wrote in an opinion by Justice Michael E. Vigil.

Guadalupe Credit Union officials following the ruling said they acknowledge the Supreme Court’s stance regarding debt collection practices before 2019, noting they “proactively implemented policy and procedural changes upon first notification of this case.”

“We acted swiftly in 2019 to strengthen our policies and provide our staff with the training needed to ensure our members are treated fairly and ethically,” Tanya Romero-Sturgeon, president and CEO of Guadalupe Credit Union, said in an Oct. 30 statement. “Our commitment to transparency and member wellbeing guides us, and we will continue to uphold those values in every aspect of our operations.”

The credit union in its appeal maintained that there was no legal basis for the lawsuit, arguing that state law allows non-attorneys to practice law in magistrate courts — which can hear civil cases of up to $10,000.

The credit union, according to the Supreme Court, also claimed its employees represented its interests, “in effect making it a self-represented litigant in the debt collection lawsuits.”

But the state Supreme Court disagreed. It said corporations can appear in magistrate court through non-attorneys in “limited instances” but not in debt collection actions.

“Corporations are held to 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 they are authorized to practice law.”