author: THUMMA, Chief Judge:

text:
    DIGNITY HEALTH, Plaintiff/Appellant, v. FARMERS INSURANCE COMPANY OF ARIZONA, Defendant/Appellee.
    No. 1 CA-CV 18-0292
    Court of Appeals of Arizona, Division 1.
    FILED June 11, 2019
    Gammage & Burnham PLC, Phoenix, By Richard B. Burnham, Cameron C. Artigue, Christopher L. Hering, Counsel for Plaintiff/Appellant
    Jardine, Baker, Hickman & Houston, P.L.L.C., Phoenix, By Bradley R. Jardine, Counsel for Defendant/Appellee
    Chief Judge Samuel A. Thumma delivered the opinion of the Court, in which Judge Kent E. Cattani and Judge James P. Beene joined.
   THUMMA, Chief Judge:

¶1 The dispositive issue in this appeal is whether payments under optional medical payments coverage in an automobile insurance policy (what the parties call "medpay coverage") are "health insurance" and, therefore, not subject to a health care provider lien. As discussed below, because medpay coverage is not health insurance for purposes of the lien statute, those payments are subject to the health care provider lien. Accordingly, the grant of defendant Farmers Insurance Company of Arizona's motion to dismiss is vacated and this matter is remanded.

FACTS AND PROCEDURAL HISTORY

¶2 Farmers issued an automobile insurance policy to Bethanie Elliott that included optional medpay coverage. Plaintiff Dignity Health, doing business as Mercy Gilbert Medical Center, provided Elliott medical services after she was injured in a car accident. The usual and customary charges for those services exceeded $ 160,000. Dignity perfected and recorded a health care provider lien for more than $ 140,000 to secure payment for those services. See Ariz. Rev. Stat. (A.R.S.) § 33-931 (2019). Notwithstanding that lien, Farmers directly paid Elliott $ 99,000 in medpay benefits under her automobile insurance policy.

¶3 Dignity timely filed this lien enforcement action, claiming Farmers' payment to Elliott violated the lien. Farmers successfully moved to dismiss for failure to state a claim, arguing its payment was not subject to the lien. Dignity timely appealed from the resulting final judgment. See Ariz. R. Civ. P. 54(c). This court has jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-120.21(A)(1) and - 2101(A)(1).

DISCUSSION

¶4 Under A.R.S. § 33-931, a health care provider may obtain a lien to secure payment of customary charges for services provided to an injured person, with certain express exceptions to the scope of such a lien:

A lien pursuant to this section extends to all claims of liability or indemnity, except health insurance and underinsured and uninsured motorist coverage as defined in § 20-259.01 , for damages accruing to the person to whom the services are rendered ... on account of the injuries that gave rise to the claims and that required the services.

A.R.S. § 33-931(A) (emphasis added). Thus, if Farmers' payment of medpay benefits to Elliott was a health insurance benefit, it was exempt from Dignity's lien. But if the payment was not a health insurance benefit, it violated the lien.

¶5 Determining whether medpay is health insurance is complicated by the record and arguments on appeal. The insurance policy containing the medpay coverage is not included in the record. Moreover, the parties cite no statutory definition of "health insurance" or "medpay coverage," and this court has found no such definitions applicable to Section 33-931(A). Although aspects of medpay coverage have been the subject of litigation in Arizona for decades, e.g. , Sahadi v. Mid-Century Ins. Co. , 132 Ariz. 422, 423, 646 P.2d 307, 308 (App. 1982), the issue here is one of first impression.

¶6 In moving to dismiss based on an exception to the lien statute, Farmers had the burden to show Dignity's lien enforcement claim failed as a matter of law. See Ariz. R. Civ. P. 12(b)(6) ; cf. Troutman v. Valley Nat'l Bank of Ariz. , 170 Ariz. 513, 517, 826 P.2d 810, 814 (App. 1992) (stating burden to show applicability of statutory exception is "on the party asserting that exception"). This court reviews de novo both the interpretation of a statute and the grant of a Rule 12(b)(6) motion to dismiss. Coleman v. City of Mesa , 230 Ariz. 352, 355 ¶ 7, 284 P.3d 863, 866 (2012) ; Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co. , 177 Ariz. 526, 529, 869 P.2d 500, 503 (1994).

¶7 "[T]he best and most reliable index of a statute's meaning is its language and, when the language is clear and unequivocal, it is determinative of the statute's construction." State v. Hansen , 215 Ariz. 287, 289 ¶ 7, 160 P.3d 166, 168 (2007) (citation omitted). "In giving effect to every word or phrase, the court must assign to the language its 'usual and commonly understood meaning unless the legislature clearly intended a different meaning.' " Bilke v. State , 206 Ariz. 462, 464-65 ¶ 11, 80 P.3d 269, 271-72 (2003) (citation omitted). Only where statutory text is ambiguous and susceptible to more than one plausible interpretation does the court use tools of statutory construction, looking to "the statute's context; its language, subject matter, and historical background; its effects and consequences; and its spirit and purpose." Hayes v. Cont'l Ins. Co. , 178 Ariz. 264, 268, 872 P.2d 668, 672 (1994).

I. As Used In A.R.S. § 33-931, "Motorist Coverage As Defined In § 20-259.01" Does Not Modify "Health Insurance."

¶8 Farmers argues Section 33-931 should be read so that "motorist coverage as defined in § 20-259.01" modifies not only the words "underinsured" and "uninsured," but also "health insurance." Arguing the statute "is clear and unambiguous," Farmers asserts Section 33-931 excepts from the lien "health insurance ... motorist coverage as defined in § 20-259.01." This, Farmers asserts, means the payment to Elliott is not subject to the lien, because medpay is "the only term that meets the definition of 'health insurance motorist coverage.' "

¶9 Contrary to Farmers' assertion, the text of Section 33-931 excludes from the scope of a health care provider's lien: (1) health insurance (without reference to § 20-259.01); (2) uninsured motorist coverage as defined in § 20-259.01 and (3) underinsured motorist coverage as defined in § 20-259.01. To the extent any ambiguity exists, changes to Section 33-931 over the years refute Farmers' argument and compel a reading of Section 33-931 excepting health insurance without reference to Section 20-259.01. See Carrow Co. v. Lusby , 167 Ariz. 18, 20, 804 P.2d 747, 749 (1990) ("Legislative intent often can be discovered by examining the development of a particular statute.").

¶10 Until 1988, Section 33-931 authorized a health care provider lien on "any and all claims for damages accruing to the person to whom hospital service is rendered," without any exceptions. A.R.S. § 33-931(A) (1988). In 1988, the Legislature amended Section 33-931 to except health insurance from the coverage of such a lien. See 1988 Ariz. Sess. Laws, ch. 298, § 2 (2d Reg. Sess.). It was not until 2004 - 16 years later - that Section 33-931 was amended to also except "underinsured and uninsured motorist coverage as defined in § 20-259.01." 2004 Ariz. Sess. Laws, ch. 154, § 1 (2d Reg. Sess.).

¶11 Contrary to Farmers' argument, there is no suggestion that the 2004 amendment to Section 33-931, which first added the reference to Section 20-259.01, was designed to modify the health insurance exemption added in 1988. Indeed, Legislative materials show the 2004 amendment was made solely to exempt "underinsured and uninsured motorist coverage as defined in § 20-259.01," not to alter the health insurance exemption in Section 33-931. See House Bill Summary, H.B. 2681 (Apr. 20, 2004) (stating 2004 amendment prohibits certain "health care institutions from recovering an injured person's uninsured or underinsured motorist coverage when enforcing a lien to recover hospital charges for medical care"); Senate Fact Sheet, H.B. 2681 (Mar. 30, 2004) (similar). This history of Section 33-931 undercuts Farmers' argument that the statute should be read to exempt from a lien "[h]ealth insurance motorist coverage as defined in § 20-259.01."

¶12 Apart from this history, the term "health insurance" is not defined in Section 20-259.01. Thus, it would be illogical to read Section 33-931 to mean "health insurance as defined in § 20-259.01." Section 20-259.01 is titled "Motor vehicle liability policy; uninsured optional; underinsured optional; subrogation; medical payments liens; definitions." The section contains three definitions: "[u]ninsured motor vehicles;" "[u]ninsured motorist coverage" and "[u]nderinsured motorist coverage." A.R.S. § 20-259.01(D), (E) & (G). The fact that "health insurance" is not used, much less defined, in Section 20-259.01 negates any suggestion that Section 33-931 should be read such that "motorist coverage as defined in § 20-259.01" modifies the phrase "health insurance." See Callen v. Rogers , 216 Ariz. 499, 507, 168 P.3d 907, 915 (App. 2007) ("[W]hen the legislature has specifically included a term in some places within a statute and excluded it in other places, courts will not read that term into the sections from which it was excluded.") (citation omitted).

¶13 Had the Legislature wanted to exempt "[h]ealth insurance motorist coverage as defined in § 20-259.01" from a healthcare provider lien, it could have done so, either by amending Section 33-931 or by defining "health insurance" in Section 20-259.01. It did neither. Based on this history of Section 33-931, and the text the Legislature chose to use (and not use) in that statute and in Section 20-259.01, "motorist coverage as defined in § 20-259.01," as used in Section 33-931, does not modify "health insurance."

II. As Used In A.R.S. § 33-931, "Health Insurance" Does Not Include Medpay Coverage.

¶14 Farmers argued before the superior court that " 'health insurance' from A.R.S. § 20-259.01 is synonymous with terms such as 'medpay,' " meaning "health insurance" as used in Section 33-931 should be read to include medpay. Dignity argues Farmers failed to raise this argument on appeal, which it claims should be treated as a confession of error. Farmers did not raise this argument on appeal, arguing instead that medpay is "health insurance motorist coverage," meaning it is waived. See, e.g., Van Loan v. Van Loan , 116 Ariz. 272, 274, 569 P.2d 214, 216 (1977). Even absent waiver, Farmers' argument would fail.

¶15 An argument that "health insurance" (a phrase not used in Section 20-259.01 ) is the same as medpay coverage would run counter to the directive that different statutory terms or phrases are not to be treated as synonymous unless context permits no other alternative. See P.F. West, Inc. v. Superior Court , 139 Ariz. 31, 34, 676 P.2d 665, 668 (App. 1984). Although not defined in Sections 33-931 or 20-259.01, the A.R.S. Insurance Title (Title 20) defines "health insurance" in the context of a "[p]remium tax credit for health insurance certificates submitted by qualified persons," A.R.S. § 20-224.05(H)(3), to mean a "a licensed health care plan or arrangement that pays for or furnishes medical or health care services and that is issued by a health care insurer." This statute directs that "[h]ealth insurance does not include limited benefit coverage," id. , defined as "an insurance policy that is designed, advertised and marketed to supplement major medical insurance and that includes accident only" and other types of coverage, A.R.S. § 20-1137(B). This definition would exclude from health insurance the medpay coverage at issue here. And although this definition is limited to the premium tax credit context, Farmers has not shown that the Legislature defined "health insurance" to mean two irreconcilably different things depending upon whether the phrase was used in Section 33-931 or Section 20-224.05. Cf. Wyatt v. Wehmueller , 167 Ariz. 281, 284, 806 P.2d 870, 873 (1991) ("A court also should interpret two sections of the same statute consistently, especially when they use identical language.").

¶16 The existence of another statute specifically addressing medpay - with reference to an insurer's lien - also undercuts the thought that health insurance and medpay coverage are the same thing. A qualified insurer providing medpay coverage benefits ("medical payments coverage of a motor vehicle insurance policy") may obtain an insurer's lien for any medpay coverage payment exceeding $ 5,000 "that is paid to or on behalf of that insured." A.R.S. § 20-259.01(J). Farmers did not obtain such a lien and this statute is not applicable to Dignity's lien. This insurer's lien statute, however, is evidence that the Legislature treats health insurance and medpay coverage as two different things. A similar distinction comes from the one other reference to "[m]edical payments coverage" in Title 20 as being one of seven types of "basic coverage" within motor vehicle insurance policies subject to renewal limitations. See A.R.S. § 20-1631(K)(5).

¶17 Apart from these statutory differences, in a different context, this court has recognized the difference between health insurance and medpay coverage. In Haisch v. Allstate Insurance Co. , the plaintiff had health insurance coverage for all "charges resulting from health care services listed in her plan" and had an "automobile liability policy that included optional MedPay coverage." 197 Ariz. 606, 607 ¶ 2, 5 P.3d 940, 941 (App. 2000). After the plaintiff was treated for injuries sustained in a car accident, her automobile insurer refused to pay medpay benefits for any treatment covered by health insurance. Id. at 608 ¶ 3, 5 P.3d at 942. The plaintiff sued her automobile insurer, arguing it "engage[d] in a systematic practice of unfairly marketing MedPay coverage, because it fails to disclose to its customers that MedPay will not cover any medical expenses already covered by the insured's ... health insurance." Id. at 609 ¶ 8, 5 P.3d at 943. Although rejecting the plaintiff's claims, id. at 612 ¶ 27, Haisch repeatedly acknowledged the difference between health insurance and medpay coverage and that the two phrases are not synonymous.

¶18 Had the Legislature wanted to exempt medpay coverage from the reach of a Section 33-931 health care provider lien, it could have done so. It has not, and that has meaning. Padilla v. Indus. Comm'n , 113 Ariz. 104, 106, 546 P.2d 1135, 1137 (1976) ("[W]hat the Legislature means, it will say."). The exclusion of health insurance from Section 33-931 does not also exclude medpay coverage. For these reasons, Farmers has not shown that its medpay coverage payment was included in the health insurance exception to Dignity's health care provider lien under Section 33-931. Accordingly, it was error to dismiss Dignity's complaint.

¶19 Dignity requests an award of attorneys' fees incurred both on appeal and in the superior court pursuant to A.R.S. § 33-934. In the exercise of the court's discretion, Dignity is awarded an amount of reasonable attorneys' fees incurred on appeal, as well as its taxable costs on appeal, contingent upon its compliance with Ariz. R. Civ. App. P. 21. This court leaves to the superior court's discretion on remand any award of attorneys' fees resulting from proceedings before that court.

CONCLUSION

¶20 The dismissal of Dignity's complaint is vacated, and this matter is remanded for further proceedings consistent with this opinion.

      In reviewing the grant of a motion to dismiss, this court assumes the truth of all well-pleaded facts alleged in the complaint. Fid. Sec. Life Ins. Co. v. State , 191 Ariz. 222, 224 ¶ 4, 954 P.2d 580, 582 (1998).

      Absent material revisions after the relevant dates, statutes and rules cited refer to the current version unless otherwise indicated.

      Given this conclusion, the court need not address Dignity's arguments based on the classifications in Arizona's insurance code.


source: Caselaw Access Project

license: Public Domain

text:
    BLOOMING TERRACE NO. 1, LLC, Petitioner v. KH BLAKE STREET, LLC, and Kresher Holdings, LLC, Respondents.
    Supreme Court Case No. 17SC427
    Supreme Court of Colorado.
    June 17, 2019 Rehearing Denied July 29, 2019
    Attorneys for Petitioner: Reilly Pozner LLP, John M. McHugh, Denver, Colorado
    Attorneys for Respondents: Moye White LLP, David A. Laird, Denver, Colorado
    Attorneys for Amici Curiae The Hispanic Chamber of Commerce of Metro Denver and The Colorado LGBTQ Chamber of Commerce: Childs McCune, LLC, Kyle W. Brenton, Denver, Colorado
    En Banc
   JUSTICE HART delivered the Opinion of the Court.

¶1 We granted certiorari to clarify the proper method for determining the effective rate of interest charged on a nonconsumer loan to ascertain whether that rate is usurious under Colorado law. We hold that the effective interest rate should be calculated by determining the total per annum rate of interest that a borrower is subjected to during a given extension of credit. Here, where a forbearance agreement was entered into after an event of default, all charges that accrued during the period of forbearance must be totaled and then annualized using only that timeframe as the annualization period. Such includable interest must then be combined with any interest that continued to accrue pursuant to the original loan terms to determine the effective rate of interest subject to the 45% ceiling set by Colorado's usury statute, section 5-12-103, C.R.S. (2018).

I. Facts and Procedural History

¶2 On April 25, 2013, Blooming Terrace No. 1 ("Blooming Terrace") obtained an $ 11 million loan from KH Blake Street, LLC ("KH Blake Street"), a special purpose entity organized by Kresher Holdings, LLC. The loan was secured by a deed of trust and memorialized by promissory note. Blooming Terrace paid a $ 220,000 origination fee upon execution of that note. The note specified that interest would accrue on the outstanding principal at a rate of 11% per annum. In the event of default, the note provided for a higher default interest rate of 21% per annum. The note required monthly interest payments in the amount of 8% per annum throughout the term of the loan, though these periodic payments did not apply to reduce the principal balance of the loan. In the event of any late monthly payment, a 5% late fee was applicable to the overdue amount. The note was to mature on May 1, 2014. However, KH Blake Street reserved the right to accelerate Blooming Terrace's full loan repayment obligation upon an event of default.

¶3 Prior to paying down any portion of the principal, Blooming Terrace defaulted on its monthly payment obligation. KH Blake Street consequently issued notices of default on April 2, 2014, and April 17, 2014. The parties entered into a forbearance agreement on April 22, 2014. At that time, the parties stipulated that the accrued charges due and owing to KH Blake Street under the original loan agreement were $ 778,583.33. In exchange for KH Blake Street's agreement not to pursue collection of that sum, or any other remedies, until May 1, 2014, Blooming Terrace agreed to pay a $ 110,000 fee. Payment of this new fee did not substitute for any other charges that continued to accrue during the forbearance period, including, but not necessarily limited to, default interest and late fees. Instead, a condition of the forbearance was Blooming Terrace's compliance with all of the original loan terms.

¶4 On May 13, 2014, the parties executed a document titled "First Amendment to Forbearance Agreement." This amendment extended the original 9-day forbearance period by an additional 15.5 days. The amended forbearance agreement specified that all loan-related sums were due on or before 1 p.m. on May 16, 2014. As consideration for 15.5 more days of forbearance, 12 of which had already passed, Blooming Terrace agreed to pay KH Blake Street an additional $ 110,000. Cumulatively, 24.5 days of forbearance cost Blooming Terrace a total fee of $ 220,000.

¶5 On May 15, 2014, Blooming Terrace paid the loan principal ($ 11 million) and all other outstanding charges ($ 1,507,333.53) in full. Two years later, Blooming Terrace sued KH Blake Street and Kresher Holdings, LLC, alleging that the fees, interest, costs, and expenses that accumulated during the post-default forbearance period were usurious in violation of section 5-12-103.

¶6 KH Blake Street and Kresher Holdings, LLC filed a motion to dismiss the complaint pursuant to C.R.C.P. 12(b)(5), arguing that the complaint failed to state a claim upon which relief could be granted because the effective interest rate charged was well below the maximum allowable rate of 45% set by Colorado's usury statute. To assess the merits of this argument, the district court conducted a three-step calculation of the effective interest rate. First, it divided the entire amount of charges assessed over the life of the loan ($ 1,507,333.53) by 387 days-the length of both the initial loan term and the period of forbearance-to arrive at a daily rate of $ 3,894.91. Second, it multiplied that daily rate by 365 days to come up with a yearly rate of $ 1,421,645.32. And finally, it divided this yearly rate by the unpaid principal balance of $ 11 million to arrive at an effective interest rate of 12.924%. The court therefore dismissed Blooming Terrace's complaint.

¶7 A division of the court of appeals affirmed in a split decision. Blooming Terrace No. 1, LLC v. KH Blake St., LLC , 2017 COA 72, ¶¶ 20-22, 446 P.3d 834. The division majority generally agreed with the district court's calculation method but arrived at a slightly higher (yet still legally enforceable) effective interest rate due to its inclusion of additional charges in its calculation of total interest. Id. at ¶¶ 6, 20-22. Rejecting Blooming Terrace's argument that the forbearance fee should be annualized during the period of forbearance alone, and not over the entire life of the loan, the majority concluded that Colorado's usury statute and our opinion in Dikeou v. Dikeou , 928 P.2d 1286 (Colo. 1996), require courts to "determine whether the effective interest rate is usurious by retrospectively applying it to the entire principal over the life of the loan." Id. at ¶ 19. In other words, the majority interpreted Dikeou as compelling identification of the average rate of interest charged over the life of a loan, and then comparing it with the maximum statutorily-permitted rate of 45%. The majority's approach led it to conclude that the effective rate of interest at issue here was 17.6%-again, well below the statutory usury rim. Id. at ¶ 22. Thus, the majority affirmed the district court's judgment of dismissal. Id. at ¶ 39.

¶8 Judge Navarro dissented and presented a different computational approach. Id. at ¶¶ 40-50 (Navarro, J., dissenting). He began by annualizing the total per-day forbearance fee using only the period of forbearance as the annualization period. Id. at ¶¶ 44-45. He then concluded that the resultant per annum rate of interest must be added to the default rate of interest required by the original note since that, too, was accruing during the period of forbearance. Id. at ¶ 45. These two rates, when combined, exceeded the 45% maximum rate set forth in Colorado's usury statute. Id. Accordingly, the dissent would have reversed the decision of the trial court. Id. at ¶ 49.

¶9 Blooming Terrace filed a petition for certiorari review, asking this court to clarify how Dikeou and the usury statute require the effective rate of interest to be calculated to determine whether that rate is usurious. We granted the petition.

II. Analysis

¶10 We begin by addressing the applicable standard of review and then proceed to analyze Colorado's usury statute and our holding in Dikeou . We first explain the approach that Dikeou set forth for identifying an effective interest rate under the usury statute. Our examination of Dikeou leads us to conclude that the "effective rate of interest," or the "applied per annum rate," for purposes of a usury assessment is the total per annum rate of interest that a borrower is subjected to during a given extension of credit. We then apply the necessary calculation to identify the effective interest rate during the 24.5 days of forbearance at issue here and conclude that it exceeded 45%. Accordingly, we reverse the judgment of the court of appeals.

A. Standard of Review

¶11 We review issues of statutory interpretation de novo. See UMB Bank, N.A. v. Landmark Towers Ass'n , 2017 CO 107, ¶ 22, 408 P.3d 836, 840. In so doing, "we look to the entire statutory scheme in order to give consistent, harmonious, and sensible effect to all of its parts, and we apply words and phrases in accordance with their plain and ordinary meanings." Id. If the statutory language is clear and unambiguous, we apply it as written-venturing no further. See Vallagio at Inverness Res. Condo. Ass'n, Inc. v. Metro. Homes, Inc. , 2017 CO 69, ¶ 16, 395 P.3d 788, 792. Ultimately, it is our goal to effectuate the legislature's intent. See St. Vrain Valley Sch. Dist. RE-1J v. Loveland , 2017 CO 54, ¶ 11, 395 P.3d 751, 754.

B. Identifying the Effective Interest Rate Under Dikeou

¶12 Colorado's usury statute permits parties to contract for higher-than-market rate levels of interest, subject to the limitation that the interest rate may not exceed 45%. See § 5-12-103(1). The statute defines interest broadly as "the sum of all charges payable directly or indirectly by a debtor and imposed directly or indirectly by a lender as an incident to or as a condition of the extension of credit to the debtor ...." § 5-12-103(2). We recognized the breadth of the statutory definition of interest in Dikeou when we held that daily late charges were a "condition of extending credit after the initial default," and were therefore includable as interest under the terms of the usury statute. 928 P.2d at 1290. Like the late charges at issue in Dikeou , forbearance fees fit within the statutory definition of interest; they are fees charged as a condition of temporarily abstaining from pursuing available post-loan default remedies thus allowing the continued extension of credit.

¶13 We further recognized in Dikeou the import of the legislature's use of the phrase "sum of all charges" in the definition of interest. Id. ("By using the phrase 'sum of all charges' the legislature contemplated that the parties may provide for more than just a single percentage-based charge."). The usury statute specifically contemplates that the determination of whether an effective interest rate exceeds the statutory cap of 45% will involve adding all the charges imposed as a condition of an extension of credit to determine whether that sum total exceeds the cap. The history of this case-in which the parties, the trial court, the court of appeals majority, and the dissent each read Dikeou to require a slightly different calculation-demonstrates that we were less than clear in that opinion about precisely how to add those charges and calculate an effective interest rate for determination of whether the rate was usurious. See Blooming Terrace , ¶ 40 (Navarro, J., dissenting) (noting this confusion).

¶14 In Dikeou , we were confronted with a loan that prescribed a late payment charge of $ 700 per day on payments that were more than one day late. 928 P.2d at 1287. There, the debtor was late on his payments and was ultimately charged late payment fees for two years, though the creditor in fact charged him a late fee of only $ 413.33 per day. Id. We rejected an argument that late fees could not be usurious interest because they could not be calculated at the time the agreement was originally entered into. We acknowledged that the statute provides that

[t]he rate of interest shall be deemed to be excessive of the limit under this section only if it could have been determined at the time of the stipulation by mathematical computation that such rate would exceed an annual rate of forty-five percent when the rate of interest was calculated on the unpaid balances of the debt on the assumption that the debt is to be paid according to its terms and will not be paid before the end of the agreed term.

Id. at 1293-94 (quoting § 5-12-103(1) ) (emphasis added). We agreed that a literal interpretation of that statutory computation provision "would require a finding that default interest can never be usurious because the effective rate of interest cannot be computed at the loan's inception." Id. at 1294. Seeing no evidence that the legislature intended to limit the usury statute in that way, we concluded that a limited retrospective analysis was required where an element of the total interest charged was only ascertainable after final satisfaction of all loan obligations, including those due and owing on account of the debtor's default. Id. at 1294-95. We explained "that for nonconsumer loans a default interest rate is ... enforceable so long as the applied per annum rate, when added to the initial rate charged on the outstanding principle, is less than 45% of the unpaid principal balance at the time of the default." Id. at 1295.

¶15 We then endeavored to compute the interest at issue in Dikeou . Id. We began by converting the $ 413.33 per day late fee that was actually charged into a percentage of the unpaid balance of the loan. Id. While we did not write out the math in longhand, we concluded that the default interest rate was 31.9%. Id. The mathematical approach that yielded that number was to: (1) translate the daily rate of $ 413.33 into a per annum rate by multiplying it by 365 for a total of $ 150,865.45; and (2) divide that total by $ 472,764.45, which was the total unpaid balance. We then added that 31.9% default interest rate to the still-accruing initial loan interest rate of 13% to reach an effective interest rate of 44.9%. Id. We held that that effective rate was not usurious under section 5-12-103. Id.

¶16 Examination of the Dikeou computation leads us to hold here that "the applied per annum rate," or the "effective interest rate," for a given extension of credit is calculated by determining the total per annum rate of interest that a borrower is subjected to during a given extension of credit-not the average rate of interest assessed over the entire life of the loan. To assess whether an effective interest rate violates Colorado's usury statute where a post-default forbearance fee is charged, the forbearance fee must be annualized using only the timeframe of forbearance as the annualization period. The resulting interest rate must then be added to any other charges accruing during that period to arrive at the effective interest rate, i.e. "the sum of all charges." § 5-12-103(2).

¶17 The parties here argue at length over whether this dispute involves a single extension of credit, as the court of appeals discerned, or multiple extensions of credit. Blooming Terrace argues to this court that there were four separate extensions of credit: the original loan; the first period of forbearance that ran from April 22, 2014, to May 1, 2014; a period of implied forbearance from May 1, 2014, until May 13, 2014 when the parties signed the First Amendment to Forbearance Agreement; and the three-day period covered by that amendment. Not surprisingly, breaking the 24.5 days of forbearance into three distinct, shorter periods would result in a calculation of significantly higher interest for each of the shorter periods and therefore higher potential damages owed to Blooming Terrace.

¶18 KH Blake Street, by contrast, argues that there were two extensions of credit-the initial loan and then a 24.5-day period of forbearance. Consequently, it contends that there were two independent interest rates, neither of which was usurious. According to KH Blake Street, Blooming Terrace continued to pay default interest on the initial loan at the same time that it was paying the forbearance fee under the entirely separate extension of credit memorialized by the Forbearance Agreement. KH Blake Street therefore argues that this situation is different from Dikeou in that the default interest from one extension of credit (here, the loan) should not be added to the fee charged for a second, separate extension of credit (here, the forbearance) in determining "the sum of all charges" for statutory purposes.

¶19 We disagree with both parties' arguments. As to Blooming Terrace's argument that there were three distinct periods of forbearance, the agreements signed by the parties demonstrate otherwise. The First Amendment to Forbearance Agreement signed on May 13 specifies that it is an amendment to the original forbearance agreement that extends the forbearance period. That amendment, among other things, deletes Section 2.2 of the original Forbearance Agreement (which specified payment of a single $ 110,000 forbearance fee) and replaces it with a new Section 2.2 (which specifies payment of a single $ 220,000 forbearance fee). It also provides that "Section 4 of the Forbearance Agreement is hereby revised by replacing the 'May 1, 2014' dates with 'May 16, 2014 at 1:00 pm (MT).' " These provisions demonstrate the parties' intent that the First Amendment to Forbearance Agreement was neither a new contract nor an independent extension of credit, but simply an amendment, which operated as a modification of the credit extended rather than a serial extension.

¶20 KH Blake Street's argument that because the Forbearance Agreement was a separate extension of credit from the initial loan the default interest on the loan cannot be combined with the forbearance fee is also foreclosed by the parties' agreements. The terms of the Forbearance Agreement and First Amended Forbearance Agreement incorporate the default interest rate imposed as a result of the initial loan agreement. The Forbearance Agreement, for example, provides that it is a condition of forbearance that the borrower will comply with all the original loan terms and "shall pay all costs, fees, and expenses incurred by Lender in connection with Borrower's default under the Loan Documents." The Forbearance Agreement further states that the "Lender shall temporarily forbear from enforcing remedies under the Loan Documents on account of the existing default" but only if "Borrower and Guarantor comply with the terms of this Agreement and the Terms of the Loan Documents." Given the Forbearance Agreement's incorporation of the terms of the initial loan, the sum of all charges imposed during the period of forbearance includes both the default interest and the forbearance fee.

¶21 Therefore, applying Dikeou here, we will look to the 24.5-day period of forbearance and inquire whether the forbearance fee, annualized over that period, together with any other interest and fees charged during that time exceeds a 45% effective interest rate. Step one in that calculation is the conversion of the total forbearance fee ($ 220,000) into a daily rate. This is accomplished by dividing that post-default fee by the length of the full forbearance period (24.5 days), which yields a rate of $ 8,979.59 per day. The same must be done for any other charges accrued during the forbearance period that are not already set out in the form of an annualized percentage interest rate. The daily rates of all such accrued charges includable as interest must then be added together.

¶22 Second, we must annualize the aggregate daily rate. This is accomplished by multiplying the aggregate daily rate by 360 days (the number of days the parties agreed to consider as a year) to arrive at a per annum rate and then dividing that per annum rate by the unpaid principal balance at the commencement of the forbearance period ($ 11 million). The daily rate of the converted forbearance fee alone produces a per annum rate of 29.4% when annualized using only the forbearance period as the annualization period.

¶23 Finally, because both the promissory note and each iteration of the forbearance agreement also provided for accrual of 21% default interest during the forbearance period, we must, at a minimum, combine the default interest rate with the annualized rate of interest imposed by way of the forbearance fee to reach the total effective rate imposed during the forbearance period. Here, that combined rate is 50.4%. Under Colorado law, the total effective rate of interest charged during the forbearance period was usurious. § 5-12-103(1).

III. Conclusion

¶24 For the purpose of Colorado's usury statute, the effective rate of interest to be assessed is the total per annum interest rate that a borrower is subjected to during a given extension of credit. To compute the effective interest rate here, the forbearance fee must be annualized using only the forbearance period as the annualization period. The resulting per annum rate must then be added to any other interest being charged during the post-default forbearance period to arrive at the "sum of all charges" contemplated by the usury statute.

¶25 Because Blooming Terrace was charged an effective interest rate during the forbearance period that exceeds 45% when annualized and totaled in conformity with the formula we set forth in Dikeou , we reverse the decision of the court of appeals. We remand with instructions for the district court to reinstate Blooming Terrace's erroneously dismissed complaint. The eventual computation, if any, of the actual effective interest rate at issue should be conducted in conformity with this opinion.

      We granted certiorari to review the following mutually exclusive issues:
      1. Whether the calculation of an interest rate for a nonconsumer loan under section 5-12-103, C.R.S. (2017), requires late fees and default interest accrued during a forbearance period to be totaled with all other interest charges from the entire loan period and annualized using the entire loan period as the annualization period; or
      2. Whether the calculation of an interest rate for a nonconsumer loan under section 5-12-103, C.R.S. (2017), requires late fees and default interest accrued during a forbearance period to be totaled and annualized using only the forbearance period as the annualization period.

      Given the resulting 44.9% rate, it does not look like a coincidence that the creditor in Dikeou only charged $ 413.33 per day, instead of the $ 700 daily fee specified in the loan agreement.

      Given the pre-discovery procedural posture of this case, it would be premature for us to endeavor to incorporate any other charges accrued during the forbearance period into our effective interest rate demonstration. Here, an assessment of the forbearance fee and default interest rate alone is sufficient to demonstrate a violation of Colorado's usury statute.

      KH Blake Street requested an award of attorney's fees in this dispute. Given our resolution of the merits question, that request is denied.


author: JUSTICE SAMOUR delivered the Opinion of the Court. JUSTICE GABRIEL, dissenting.

text:
    The PEOPLE of the State of Colorado, Petitioner v. Frederico Alvarado HINOJOS, Respondent.
    Supreme Court Case No. 17SC728
    Supreme Court of Colorado.
    June 17, 2019 Rehearing Denied July 29, 2019
    Attorneys for Petitioner: Philip J. Weiser, Attorney General, Joseph G. Michaels, Senior Assistant Attorney General, Denver, Colorado
    Attorneys for Respondent: The Noble Law Firm, LLC, Antony Noble, Matthew Fredrickson, Lakewood, Colorado
    En Banc
   JUSTICE SAMOUR delivered the Opinion of the Court.

¶1 Is a noncitizen defendant entitled to a hearing on the timeliness of his Crim. P. 35(c) postconviction motion when he invokes the justifiable excuse or excusable neglect exception and alleges that plea counsel provided him erroneous advice regarding the immigration consequences of his plea? The answer generally depends on the specific allegations set forth in the motion. However, when the plea agreement or the plea hearing transcript is submitted, the trial court should consider it in conjunction with the allegations advanced.

¶2 In this case, we hold that Frederico Alvarado Hinojos is not entitled to a hearing. The factual allegations in his motion (which we must assume are true), when considered in conjunction with the plea agreement, are insufficient to establish justifiable excuse or excusable neglect for failing to collaterally attack the validity of his misdemeanor conviction within the applicable eighteen-month limitations period. The immigration advisement contained in the plea agreement, at a minimum, gave Alvarado Hinojos reason to question the accuracy of his plea counsel's advice regarding the immigration consequences of the plea. Thus, even taking at face value the allegations in his motion, he was on notice at the time of his plea that he needed to diligently investigate his counsel's advice and, if appropriate, file a timely motion challenging the validity of his conviction.

¶3 In the companion case we announce today, People v. Chavez-Torres , 2019 CO 59, 442 P.3d 843, we reach the opposite conclusion because we determine that the allegations set forth there, when considered together with the plea agreement and the plea hearing transcript, are sufficient to establish justifiable excuse or excusable neglect. Chavez-Torres alleged that his plea counsel provided him no advice regarding the immigration consequences of the plea and that he had no reason to question or investigate counsel's omission. Further, although he was not required to do so, Chavez-Torres submitted the plea agreement and the plea hearing transcript with his motion, and neither referenced the immigration consequences of his plea.

¶4 The court of appeals ruled in this case that Alvarado Hinojos's motion merited a hearing on the applicability of the justifiable excuse or excusable neglect exception. We disagree and therefore reverse its judgment. We remand for further proceedings consistent with this opinion.

I. Factual and Procedural History

¶5 Alvarado Hinojos, a citizen of Mexico, immigrated to the United States in 1991 with his wife and two daughters. Sixteen years later, in 2007, he pled guilty to menacing with a deadly weapon (a class five felony) and third-degree assault (a class one misdemeanor). The plea agreement included the following immigration advisement:

I understand that if I am not a citizen of the United States and I plead guilty or nolo contendere ("no contest") to a crime, my plea may result in deportation and/or exclusion from the United States or denial of naturalization in the United States.

¶6 Consistent with the plea agreement, the trial court imposed a two-year deferred judgment and sentence on the felony count and a two-year sentence to probation on the misdemeanor count. Alvarado Hinojos successfully completed both his deferred judgment and his probation sentence. Therefore, in 2009, the trial court dismissed the guilty plea to the felony count and terminated the probation sentence on the misdemeanor count.

¶7 In July 2015, Alvarado Hinojos filed a motion for postconviction relief in which he collaterally attacked his third-degree assault conviction under Crim. P. 35(c). Alvarado Hinojos asserted that his plea was invalid because he received ineffective assistance from his plea counsel. More specifically, Alvarado Hinojos alleged that: (1) his plea counsel had advised him that his guilty plea "would not have adverse immigration consequences"; (2) he pled guilty based on his plea counsel's advice; (3) he had "recently" consulted an immigration attorney and had discovered that his guilty plea does have immigration consequences; (4) his guilty plea "renders him inadmissible and therefore prevents him from remaining in the United States"; and (5) had he not pled guilty, "he could have applied for adjustment to" his current immigration status. Alvarado Hinojos acknowledged that he filed his motion after the expiration of the eighteen-month deadline in section 16-5-402(1), C.R.S. (2018), which governs collateral attacks on the validity of misdemeanor convictions. But he maintained that the justifiable excuse or excusable neglect exception in subsection (2)(d) of the statute applied. Alvarado Hinojos submitted a copy of the plea agreement with his motion. The prosecution objected to the motion, arguing that it was untimely and, if timely, then meritless, and that, in any event, the trial court lacked jurisdiction.

¶8 The trial court denied Alvarado Hinojos's Rule 35(c) motion without a hearing, ruling that it was filed after the applicable limitations period and that the facts alleged, if true, would not constitute justifiable excuse or excusable neglect pursuant to subsection (2)(d). Alvarado Hinojos appealed, and a division of the court of appeals reversed in a split decision. People v. Alvarado Hinojos , No. 15CA1780, ¶ 25, 2017 WL 3912757 (Colo. App. Sept. 7, 2017). The majority reasoned that Alvarado Hinojos's factual allegations, if true, established that he had received incorrect advice from plea counsel, that he had no reason to question the validity of his conviction until he learned from an immigration attorney that he had been erroneously advised by plea counsel, and that it would be unreasonable to expect a defendant who receives incorrect advice to file a collateral attack on a conviction just in case the plea results in adverse immigration consequences. Id. at ¶¶ 18, 21-25. Therefore, concluded the majority, Alvarado Hinojos alleged facts which, if true, "could support a finding of justifiable excuse or excusable neglect." Id. at ¶ 25.

¶9 In his dissent, Judge Dailey explained that he was persuaded by the prosecution's contention that "the use of [an ineffective-assistance-of-counsel] merits argument to procedurally circumvent the time period prescribed in section 16-5-402 defeats the very purpose of section 16-5-402 's time limits." Id. at ¶ 32 (Dailey, J., dissenting) (emphases added). Alternatively, Judge Dailey observed that the immigration advisement in the plea agreement gave Alvarado Hinojos reason to question the accuracy of his plea counsel's advice. Id. at ¶ 35. Thus, concluded Judge Dailey, at a minimum, the plea agreement should have placed Alvarado Hinojos on notice "that counsel's advice may need to be subjected to further scrutiny" and investigation, and that, if appropriate, a motion seeking postconviction relief may need to be filed within the applicable limitations period. Id.

¶10 The prosecution petitioned for certiorari review, and we granted the petition.

II. Analysis

¶11 We start by setting forth the controlling standard of review. We then discuss the time bar in section 16-5-402(1) and the justifiable excuse or excusable neglect exception in section 16-5-402(2)(d). After examining these provisions, we transition to our decision in People v. Wiedemer , where we interpreted the subsection (2)(d) exception. 852 P.2d 424, 440-42 (Colo. 1993). We end by applying Wiedemer to the facts alleged by Alvarado Hinojos, which we must assume are true, and conclude that, when considered in conjunction with the plea agreement, they would not establish justifiable excuse or excusable neglect.

Accordingly, we hold that Alvarado Hinojos is not entitled to a hearing.

A. Standard of Review

¶12 Whether the facts alleged, if true, would constitute justifiable excuse or excusable neglect pursuant to section 16-5-402(2)(d) so as to entitle the defendant to a hearing is a question of law. Close v. People , 180 P.3d 1015, 1019 (Colo. 2008). Therefore, our review is de novo. Id.

B. Sections 16-5-402(1), (2)(d)

¶13 Section 16-5-402(1) establishes an eighteen-month limitations period to bring a collateral attack against the validity of a misdemeanor conviction. Subsection (2) provides four exceptions to that time bar, one of which is relevant here:

(d) Where the court hearing the collateral attack finds that the failure to seek relief within the applicable time period was the result of circumstances amounting to justifiable excuse or excusable neglect.

Alvarado Hinojos invoked this exception, asserting justifiable excuse or excusable neglect for filing his motion after the limitations period expired.

C. People v. Wiedemer

¶14 In Wiedemer , we observed that a defendant who invokes the justifiable excuse or excusable neglect exception in subsection (2)(d) is not required to provide evidentiary support for his allegations. 852 P.2d at 440 n.15. Instead, his motion must allege facts which, if true, would entitle him to relief from the time bar. Id. To determine the applicability of this exception, the trial court has to consider "the particular facts of [the] case," mindful of "the overriding concern" under the Due Process Clause that defendants must "have a meaningful opportunity to challenge their convictions." Close , 180 P.3d at 1019.

¶15 We have identified a nonexhaustive list of factors that are relevant to the justifiable excuse or excusable neglect exception in subsection (2)(d):

• whether circumstances or outside influences prevented a timely challenge to a conviction;
• the extent to which the defendant, having reason to question the constitutionality of a conviction, timely investigated its validity and took advantage of available avenues of relief;
• whether the defendant had any previous need to challenge a conviction and either knew it was constitutionally infirm or had reason to question its validity;
• whether the defendant had other means of preventing the government's use of a conviction, so that a postconviction challenge was previously unnecessary; and
• whether the passage of time affects the prosecution's ability to defend against the challenge.

Id. at 1019-20 (citing Wiedemer , 852 P.2d at 441-42 ).

¶16 But the question here is not whether Alvarado Hinojos was justifiably excused in filing his Rule 35(c) motion late or whether any neglect in his failure to file a timely motion is excusable. The question is narrower:

Is Alvarado Hinojos entitled to a hearing on the timeliness of his motion?

¶17 Wiedemer provides guidance on this point as well. There, we said that "a Crim. P. 35(c) motion must allege facts that if true would establish justifiable excuse or excusable neglect in order to entitle the moving party to a hearing on the applicability of this exception to the time bar of § 16-5-402(1)." Wiedemer , 852 P.2d at 440 n.15. Consistent with Wiedemer , in Close , we determined, as a matter of law, that Close's Rule 35(c) postconviction motion merited a hearing because it "alleged facts which, if true, would establish justifiable excuse or excusable neglect." 180 P.3d at 1022. Thus, whether a defendant who invokes the subsection (2)(d) exception to the applicable time bar is entitled to a hearing will generally depend on the specific factual allegations advanced in his motion.

¶18 However, we now conclude that, while a defendant is not required to provide evidentiary support for his allegations regarding justifiable excuse or excusable neglect, the trial court may rely on the plea agreement or the plea hearing transcript in denying his Rule 35(c) motion without a hearing on timeliness grounds. Cf. Kazadi v. People , 2012 CO 73, ¶ 17, 291 P.3d 16, 22 ("A court must hold an evidentiary hearing on a Crim. P. 35(c) motion unless the motion, the files, and the record clearly establish that the allegations in the motion lack merit and do not entitle the defendant to relief."). Hence, when the plea agreement or the plea hearing transcript is submitted, the trial court should consider it in conjunction with the allegations set forth in the Rule 35(c) motion.

¶19 With these principles in mind, we proceed to address Alvarado Hinojos's motion. Our inquiry is whether he alleged facts which, taken at face value and considered in conjunction with the plea agreement, establish justifiable excuse or excusable neglect and therefore entitle him to a hearing on the applicability of the subsection (2)(d) exception.

D. Application

¶20 Alvarado Hinojos advanced factual allegations related to some of the Wiedemer factors. See Wiedemer , 852 P.2d at 441-42. He asserted that:

• he received erroneous advice about the immigration consequences of his plea-specifically, his plea counsel informed him that the guilty plea "would not have adverse immigration consequences";
• he accepted the prosecution's plea offer based on plea counsel's advice;
• he consulted an immigration attorney eight years later and only then learned that his guilty plea has immigration consequences;
• he had no reason to question the validity of his plea counsel's advice until he met with the immigration attorney; and
• his guilty plea bars him from applying for adjustment to his current immigration status, thereby preventing him from lawfully remaining in the United States and rendering him inadmissible into this country.

¶21 The majority of the division concluded that these allegations, if true, establish that Alvarado Hinojos "had no reason to question the validity of his assault conviction until he learned that he had been erroneously advised." Alvarado Hinojos , ¶ 21. Further, according to the majority, since plea counsel's advice gave Alvarado Hinojos no reason to question the validity of his conviction, "the alleged facts could also support [the conclusion] that he was prevented from making a timely challenge." Id. at ¶ 22. We disagree.

¶22 In granting Alvarado Hinojos relief, the majority appears to have accorded no weight to the plea agreement, choosing instead to focus exclusively on the facts alleged in the Rule 35(c) motion. Were we to adopt that approach, it would render any prehearing legal analysis largely meaningless. All noncitizen defendants untimely challenging a conviction could force the trial court to grant them a hearing by simply advancing the types of factual allegations set forth in Alvarado Hinojos's motion. That the plea agreement or the plea hearing transcript (or both) directly contradict those allegations would be of no consequence; the trial court would still have to hold a hearing. Such an analytical framework would risk improperly opening the floodgates to Rule 35(c) hearings.

¶23 Here, the plea agreement expressly alerted Alvarado Hinojos that his guilty plea "may result in deportation and/or exclusion from the United States." As Judge Dailey soundly reasoned in his dissent, this advisement, at a minimum, gave Alvarado Hinojos reason to question the accuracy of his plea counsel's advice regarding the immigration consequences of the plea. Id. at ¶ 35 (Dailey, J., dissenting). Consequently, Alvarado Hinojos was on notice that he needed to diligently investigate his counsel's advice and, if appropriate, file a timely motion challenging the validity of his conviction.

¶24 Thus, applying the Wiedemer factors, and considering Alvarado Hinojos's factual allegations (which we presume to be true) together with the plea agreement, we conclude that: (1) he had a present need to challenge his conviction, see People v. Mershon , 874 P.2d 1025, 1036-37 (Colo. 1994), and the plea agreement gave him a reason to question the validity of his conviction; (2) he failed to diligently investigate the validity of his conviction or to take advantage of available avenues of relief; and (3) circumstances or outside influences did not prevent him from filing a timely challenge. Under these circumstances, we hold that Alvarado Hinojos is not entitled to a hearing.

¶25 There is one other circumstance that causes us pause in this case, though our holding does not hinge on it. Because Alvarado Hinojos's motion does not include the date when he consulted an immigration attorney, we cannot tell how long he waited thereafter to file his Rule 35(c) motion. While this is not one of the factors we included in the nonexhaustive list in Wiedemer , we find it relevant to the analysis. After all, the justifiable excuse or excusable neglect exception was never intended to give defendants who invoke its protection an unfair advantage.

¶26 Having addressed the merits of this appeal, we take a moment to emphasize that the scope of our analysis is quite narrow-it is limited to Rule 35(c) claims in which a noncitizen defendant alleges justifiable excuse or excusable neglect under subsection (2)(d) based on plea counsel's purported failure to fulfill his legal duty to provide proper advice about the immigration consequences of the plea. As Judge Dailey observed in his dissent, neither our court nor any division of the court of appeals has ever held in any other type of ineffective assistance case that "an attorney's affirmative misadvice [can] constitute justifiable excuse or excusable neglect for belatedly filing a Crim. P. 35(c) motion." Alvarado Hinojos , ¶ 34 (Dailey, J., dissenting).

¶27 There is a compelling reason why we chart a carefully circumscribed course today related to the immigration consequences of a plea. Changes to the immigration-law landscape "have dramatically raised the stakes of a noncitizen's criminal conviction" and have rendered removal from the country "an integral part-indeed, sometimes the most important part -of the penalty that may be imposed" when such a defendant pleads guilty to certain crimes. Padilla v. Kentucky , 559 U.S. 356, 364, 130 S.Ct. 1473, 176 L.Ed.2d 284 (2010) (emphasis added).

¶28 Recognizing that it is the courts' responsibility to ensure that no criminal defendant "is left to the 'mercies of incompetent counsel,' " id. at 374, 130 S.Ct. 1473 (quoting McMann v. Richardson , 397 U.S. 759, 771, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970) ), the U.S. Supreme Court explained in Padilla that "[t]he weight of prevailing professional norms supports the view that [constitutionally effective] counsel must advise her client regarding the risk of" removal from the country, id. at 367, 130 S.Ct. 1473.

See also People v. Pozo , 746 P.2d 523, 529 (Colo. 1987) ("When defense counsel in a criminal case is aware that his client is an alien, he may reasonably be required to investigate relevant immigration law" because "thorough knowledge of fundamental [immigration] principles" may have a "significant impact on a client's decisions concerning plea negotiations and defense strategies."). "The severity of deportation-'the equivalent of banishment or exile'- ... underscores how critical it is for counsel to inform her noncitizen client that he faces a risk of deportation." Padilla , 559 U.S. at 373-74, 130 S.Ct. 1473 (quoting Delgadillo v. Carmichael , 332 U.S. 388, 390-91, 68 S.Ct. 10, 92 L.Ed. 17 (1947) ). The Sixth Amendment can require nothing less of an attorney representing a noncitizen criminal defendant than "to provide advice about the risk of deportation arising from a guilty plea." Chaidez v. United States , 568 U.S. 342, 344, 133 S.Ct. 1103, 185 L.Ed.2d 149 (2013).

¶29 Characterizing deportation as "uniquely difficult to classify as either a direct or a collateral consequence" of a criminal conviction, Padilla , 559 U.S. at 366, 130 S.Ct. 1473, the U.S. Supreme Court has placed counsel's obligation to inform a "client whether his plea carries a risk of deportation," id. at 374, 130 S.Ct. 1473, in virtually a class by itself. We see no reason why this same consideration should not be taken into account in assessing the entitlement of a criminal defendant to a hearing concerning a claim of justifiable excuse or excusable neglect for failing to challenge the validity of a conviction within the statutorily prescribed period.

¶30 In this case, though, even accepting at face value the allegations advanced by Alvarado Hinojos in his motion, he is not entitled to a hearing on the applicability of the justifiable excuse or excusable neglect exception. The plea agreement, at a minimum, gave Alvarado Hinojos reason to question and investigate that advice.

¶31 In sum, since the plea agreement was submitted to the trial court, Alvarado Hinojos's factual allegations must be considered in conjunction with it. Doing so leads us to conclude that Alvarado Hinojos's motion does not merit a hearing on the applicability of the subsection (2)(d) exception.

III. Conclusion

¶32 We conclude that Alvarado Hinojos's postconviction motion does not merit a hearing on the applicability of the justifiable excuse or excusable neglect exception set forth in subsection (2)(d). Accordingly, we reverse the judgment of the division and remand for further proceedings consistent with this opinion.

JUSTICE GABRIEL dissents, and JUSTICE HOOD and JUSTICE HART join in the dissent.

JUSTICE GABRIEL, dissenting.

¶33 This case presents a narrow issue: Does a non-citizen defendant's allegation that plea counsel misadvised him of the immigration consequences of his guilty plea suffice to warrant a hearing as to whether justifiable excuse or excusable neglect should excuse the defendant's belated filing of a Crim. P. 35(c) claim alleging the ineffective assistance of counsel. Because I believe that Alvarado Hinojos's allegations here were sufficient to warrant a hearing, and because the majority's contrary view decides the very fact questions on which Alvarado Hinojos seeks to be heard and imposes on him an unrealistic duty to second-guess his counsel's advice (even though counsel was legally obligated to give him correct advice), I respectfully dissent.

I. Factual Background

¶34 The facts that Alvarado Hinojos alleged in his petition and that we must accept as true are undisputed.

¶35 Alvarado Hinojos, a non-United States citizen, pleaded guilty to menacing with a deadly weapon and third-degree assault. He stipulated to a deferred judgment on the menacing count and a probationary sentence on the assault count. The matter now before us concerns only the assault charge.

¶36 At the time of Alvarado Hinojos's guilty plea, his plea paperwork advised him that his plea "may result in deportation and/or exclusion from the United States or denial of naturalization in the United States."

His plea counsel, however, advised him that his guilty plea "would not have adverse immigration consequences."

¶37 Alvarado Hinojos successfully completed both the terms of his deferred judgment and his probationary sentence. The trial court thus dismissed the menacing count and terminated the probationary sentence on the assault charge.

¶38 Approximately six years later, Alvarado Hinojos filed a Crim. P. 35(c) motion, in which, as pertinent here, he collaterally attacked his third-degree assault conviction. In this motion, Alvarado Hinojos alleged that he had received ineffective assistance from his plea counsel because counsel had incorrectly advised him that his guilty plea "would not have adverse immigration consequences." Specifically, he alleged that (1) he accepted the prosecution's plea offer based on plea counsel's advice; (2) he consulted an immigration attorney eight years after he entered his plea and only then learned that the plea, in fact, had immigration consequences; (3) he had no reason to question the validity of his plea counsel's advice until he met with the immigration attorney; and (4) his guilty plea bars him from applying for adjustment to his lawful permanent resident status and thus prevents him from remaining in the United States and renders him inadmissible here. Alvarado Hinojos acknowledged that he had filed his motion beyond the applicable eighteen-month deadline set forth in section 16-5-402(1), C.R.S. (2018), but he asserted that justifiable excuse or excusable neglect should excuse his late filing.

¶39 The postconviction court summarily denied Alvarado Hinojos's claim, finding that it was filed late and without justifiable excuse or excusable neglect. Alvarado Hinojos appealed, and in a split, unpublished decision, a division of the court of appeals reversed, concluding that Alvarado Hinojos's allegations, if true, could support a finding of justifiable excuse or excusable neglect. People v. Alvarado Hinojos , No. 15CA1780, ¶¶ 25-26, 2017 WL 3912757 (Colo. App. Sept. 7, 2017). Accordingly, the division remanded the case for a hearing. Id. at ¶ 26.

¶40 The People then sought review, and we granted certiorari.

II. Analysis

¶41 I begin by setting forth the applicable law. I then apply the pertinent principles to the facts before us.

A. Applicable Law

¶42 Section 16-5-402(1) requires a defendant to bring a collateral attack on the validity of a misdemeanor conviction within eighteen months.

¶43 Section 16-5-402(2)(d) provides an exception to this time bar and allows an otherwise untimely motion to proceed "[w]here the court hearing the collateral attack finds that the failure to seek relief within the applicable time period was the result of circumstances amounting to justifiable excuse or excusable neglect."

¶44 To be entitled to a hearing on the applicability of this exception, a defendant need not provide evidentiary support for his or her allegations. People v. Wiedemer , 852 P.2d 424, 440 n.15 (Colo. 1993). Instead, the defendant need only allege facts that, if true, would establish justifiable excuse or excusable neglect. Id.

¶45 In assessing whether a defendant has established justifiable excuse or excusable neglect, courts consider, among other things, (1) the existence of circumstances or outside influences that prevented the defendant from challenging his or her prior conviction; (2) the extent to which a defendant who had reason to question the constitutionality of a conviction investigated its validity and availed himself or herself of avenues of relief; (3) whether the defendant had any previous need to challenge his or her conviction; (4) whether the defendant either knew that his or her conviction was constitutionally infirm or had reason to question its validity; (5) whether he or she had other means of preventing the government's use of the conviction so that a postconviction challenge was previously unnecessary; and (6) the time that elapsed between the date of conviction and the defendant's challenge and the effect that such passage of time may have on the prosecution's ability to defend against the challenge. Id. at 441-42.

¶46 In addition, as to the merits, in discussing counsel's duty to advise a defendant of the immigration consequences of a guilty plea, the Supreme Court has stated:

Immigration law can be complex, and it is a legal specialty of its own. ... There will, therefore, undoubtedly be numerous situations in which the deportation consequences of a particular plea are unclear or uncertain. ... When the law is not succinct and straightforward ..., a criminal defense attorney need do no more than advise a noncitizen client that pending criminal charges may carry a risk of adverse immigration consequences. But when the deportation consequence is truly clear, ... the duty to give correct advice is equally clear.

Padilla v. Kentucky , 559 U.S. 356, 369, 130 S.Ct. 1473, 176 L.Ed.2d 284 (2010) (footnote omitted).

B. Alvarado Hinojos's Entitlement to a Hearing

¶47 Applying the foregoing principles here, I believe that Alvarado Hinojos has alleged facts that, if true, would establish justifiable excuse or excusable neglect. Accordingly, I believe that the division below correctly concluded that he was entitled to a hearing on that issue.

¶48 As noted above, Alvarado Hinojos alleged, as pertinent here, that (1) his plea counsel had advised him that his guilty plea "would not have adverse immigration consequences"; (2) he accepted the prosecution's plea offer based on counsel's advice; (3) he consulted an immigration attorney eight years after he entered his plea and only then learned that the plea, in fact, had immigration consequences; (4) he had no reason to question the validity of his plea counsel's advice before that time; and (5) his guilty plea bars him from applying for adjustment to his lawful permanent resident status and thus prevents him from remaining in the United States and renders him inadmissible here.

¶49 In my view, these allegations more than suffice to establish a viable claim for justifiable excuse or excusable neglect. If true, these allegations show that Alvarado Hinojos's plea counsel misadvised him of the immigration consequences of his guilty plea and that his reliance on that faulty advice explains why he did not file his postconviction motion on a timely basis. Moreover, I am unwilling to say that, as a matter of law, Alvarado Hinojos's plea paperwork establishes that he had a duty to second-guess counsel's advice and that his not doing so defeats any claim of justifiable excuse or excusable neglect. For present purposes, and subject to contrary proof at a hearing, I believe that a party like Alvarado Hinojos was entitled to rely on his counsel's advice. This is particularly true in the present context, in which counsel had a legal obligation to advise Alvarado Hinojos correctly as to the immigration consequences of his plea. See Padilla , 559 U.S. at 369, 130 S.Ct. 1473.

¶50 In concluding otherwise, the majority opines that Alvarado Hinojos is not entitled to a hearing in this case because his plea paperwork gave him reason to question the accuracy of his plea counsel's advice. Maj. op. ¶ 2. For several reasons, I disagree.

¶51 First, in reaching this conclusion, the majority essentially determines, as a matter of law, that Alvarado Hinojos had a reason to question the validity of his plea counsel's advice. In my view, however, this is a factual issue to be explored at a hearing. The evidence may show, for example, that Alvarado Hinojos in fact questioned his counsel about the plea paperwork and that it was in this context that counsel advised him that the plea would not have adverse immigration consequences (it is not difficult to imagine counsel responding that the plea paperwork was just required boilerplate and that the client should not be concerned). Were these the facts, it may well be that Alvarado Hinojos reasonably did not inquire further. Conversely, it may turn out that Alvarado Hinojos received the plea paperwork after his counsel advised him of the immigration consequences of his plea, that he noted the discrepancy between counsel's advice and the paperwork, and that he nonetheless chose not to inquire further. Such facts could undermine a claim of justifiable excuse or excusable neglect. Either way, I do not believe that we can say, as a matter of law, that Alvarado Hinojos had a reason to question the accuracy of his counsel's advice.

¶52 Second, the majority's conclusion strikes me as unrealistic. Parties in these cases (as in many cases) often have little or no understanding of the law, and they naturally will rely on their counsel to provide proper and correct legal advice, particularly with respect to legal papers that the parties are asked to sign. This is especially true in the present context, in which plea counsel was legally obligated to provide "correct advice" regarding the immigration consequences of Alvarado Hinojos's plea. See Padilla , 559 U.S. at 369, 130 S.Ct. 1473. In these circumstances, I would not impose on a party like Alvarado Hinojos a duty, as a matter of law, to second-guess his counsel. Rather, the question of whether he had reason to question his counsel's advice is a factual one that I believe can be decided only after proper evidentiary development at a hearing.

¶53 I likewise am unpersuaded by the People's contentions that a defendant has a present need to make a timely postconviction claim as soon as the judgment enters and that under People v. Mershon , 874 P.2d 1025, 1036-37 (Colo. 1994), subsequent events can never establish a present need and are irrelevant to justifiable excuse or excusable neglect.

¶54 As an initial matter, I note that Alvarado Hinojos has never argued that the lack of a present need justified his late filing here. Accordingly, the People's argument is inapposite.

¶55 More important, the People's assertion that Alvarado Hinojos had a present need from the moment a judgment entered is so broad that it would swallow the statutory justifiable excuse/excusable neglect exception. Specifically, if present need is dispositive and if it exists from the moment a judgment enters, then in every case, a defendant would need to file a Crim. P. 35(c) motion within the statutory time limits, and justifiable excuse or excusable neglect can never apply to excuse a late filing. This analysis renders section 16-5-402(2)(d) meaningless, and we obviously cannot adopt such a construction.

¶56 Finally, I do not agree with the People's assertion that allowing Alvarado Hinojos a hearing in this case would establish a rule that would allow future defendants to extend indefinitely their time to file a Crim. P. 35(c) motion merely by failing to inquire or adopting a practice of willful ignorance. The evidence in such a case may show that a defendant's failure to inquire and willful ignorance were unreasonable, thereby defeating a claim of justifiable excuse or excusable neglect. Again, to me, this is a factual question to be determined at a hearing, and I have every confidence that a district court judge can act to avoid the kind of abuse that the People hypothesize.

¶57 For these reasons, I would conclude that Alvarado Hinojos's motion alleged facts that, if true, would entitle him to relief from the applicable time bar, and I would therefore conclude that he was entitled to a hearing on his postconviction motion.

III. Conclusion

¶58 In support of his claim of justifiable excuse or excusable neglect for his untimely Crim. P. 35(c) motion, Alvarado Hinojos alleged that his plea counsel had advised him that his guilty plea "would not have adverse immigration consequences," that he relied on this advice, and that he had no reason to question it until he met with an immigration attorney years later and learned, for the first time, that the advice was wrong. In my view, these allegations more than suffice to establish a viable claim of justifiable excuse or excusable neglect so as to entitle Alvarado Hinojos to a hearing on the question.

¶59 Accordingly, I would affirm the judgment of the division below, and I therefore respectfully dissent.

I am authorized to state that JUSTICE HOOD and JUSTICE HART join in this dissent.

      In the same pleading, Alvarado Hinojos sought to withdraw his guilty plea to felony menacing pursuant to Crim. P. 32(d). The trial court denied that request and the court of appeals affirmed the ruling. Because that issue is not before us, we limit our discussion to Alvarado Hinojos's collateral attack on his third-degree assault conviction.

      We granted certiorari to review the following issue:
      Whether the court of appeals erred when it held that a non-citizen defendant's allegation that plea counsel misadvised him of the adverse immigration consequences of a guilty plea was sufficient to warrant a hearing on whether he established justifiable excuse or excusable neglect for the untimely filing of his Crim. P. 35(c) motion.

      We recognize that our case law articulates the governing standard as both whether the facts alleged, if true, would constitute justifiable excuse or excusable neglect and whether the facts alleged, if true, could constitute justifiable excuse or excusable neglect. See, e.g. , Close , 180 P.3d at 1019 (using "would"); id. (using "could"). We clarify today that the correct standard is whether the facts alleged, if true, would constitute justifiable excuse or excusable neglect. See Wiedemer , 852 P.2d at 440 n.15.

      The limited number of exceptions reflects the General Assembly's "recognition of the difficulties attending the litigation of stale claims and the potential for frustrating various statutory provisions directed at repeat offenders, former offenders, and habitual offenders." § 16-5-402(2).

      Alvarado Hinojos did not file a direct appeal. Therefore, his conviction became final for purposes of subsection (1) in 2007 when the deadline to file a direct appeal expired. See People v. Hampton , 876 P.2d 1236, 1239-40 (Colo. 1994). Because Alvarado Hinojos challenges a class-one-misdemeanor conviction, he was required to file any collateral attack within eighteen months of the conviction becoming final.

      We do not address whether the trial court may rely on any other part of the record (or on any other evidence) to reject without a hearing an assertion related to justifiable excuse or excusable neglect.

      We decline to speculate about why Alvarado Hinojos did not act diligently based on the immigration advisement in the plea agreement or whether he asked plea counsel about the alleged inconsistency between that advisement and counsel's advisement. Instead, we limit our review to the allegations actually advanced by Alvarado Hinojos in his motion, which we assume are true, and the contents of the plea agreement.