text:
    Dylan Michael STELL, Petitioner, v. BOULDER COUNTY DEPARTMENT OF SOCIAL SERVICES and The State of Colorado Department of Health Care Policy and Financing, Respondents.
    No. 03SC511.
    Supreme Court of Colorado, En Banc.
    June 14, 2004.
    As Modified on Denial of Rehearing July 12, 2004.

      .Sagrillo, Hammond & Dineen, LLC, Robert L. Sagrillo, Henry M. Kohnlein, Claire E. Dineen, Denver, Colorado, Attorneys for Petitioner.
    Ken Salazar, Attorney General, Ann Hause, First Assistant Attorney General, Laurie A. Schoder, Assistant Attorney General, Aune Baudino Holton, Assistant Attorney General, Denver, Colorado, Attorneys for Respondent.
    Chief Justice MULLARKEY delivered the Opinion of the Court.
   I. Introduction

Federal and state laws allow a disabled person who has financial assets exceeding $2,000 to qualify for Medicaid benefits under certain cireumstances if the assets are placed in a qualified trust. In this opinion, we review the court of appeals' decision in Stell v. Colorado Department of Health Care Policy and Financing, 78 P.3d 1142 (Colo.App.2003), which held that the trust established for the petitioner, Dylan Michael Stell, did not qualify. The Colorado Department of Health Care Policy and Financing (the "Department") rejected Stell's trust because it provided that, when the trust terminates after Stell dies, the trustee could use the funds to pay outstanding state and federal taxes prior to reimbursing the state for medical assistance rendered. The court of appeals concluded that the state must have absolute priority to the trust funds when the trust ends and affirmed the Department's determination that Stell's trust failed to meet federal and state statutory requirements. We reverse.

We hold that upon termination of a disability trust, a trustee may use the corpus of the trust to pay state and federal taxes before the state is reimbursed for medical assistance rendered to the beneficiary. This construction of Colorado's disability trust statute, section 15-14-412.8, 5 C.R.S. (2008), is consistent with the language of the statute, the federal enabling act, the applicable federal guidelines, as well as state and federal tax law.

In reaching the merits of the case, we determine that Stell's case is not moot and is ripe for this court's review. These arguments are raised because after the Department issued its final ageney action terminating Stell's Medicaid benefits, the United States Court of Appeals for the Tenth Circuit decided that recipients of social security income ("SSI") benefits such as Stell are categorically eligible for Medicaid. Ramey v. Reinertson, 268 F.3d 955 (10th Cir.2001). The consequent reinstatement of Stell's benefits does not moot the case. To the contrary, the priority of payments upon termination of a disability trust is justiciable because the court of appeals' construction of section 15-14-412.8 inevitably exposes a trustee to personal liability for taxes due upon termination of the trust. Stell's trust remains in effect, and he is entitled to a judicial determination of the trustee's legal obligations in administering the trust.

Accordingly, we reverse the court of appeals' decision in this case and return it to the court of appeals for further proceedings consistent with this opinion.

II. Background and Facts

To put this case in context, we first discuss the Medicaid program as well as the definition and purpose of disability trusts. Medicaid, formally known as the Medical Assistance Program, was created by Title XIX of the Social Security Act, 42 U.S.C.A. §§ 1396a-1896v (West 2003) (the "Act"). It is a "cooperative federal-state venture designed to afford medical assistance to persons whose income and resources are insufficient to meet the financial demands of necessary care and services." Ramey, 268 F.3d at 957 (internal citations omitted).

A person's eligibility for Medicaid is a function of the applicant's countable assets; onee the assets exceed the statutory ceiling, the applicant is disqualified from receiving benefits. 42 U.S.C.A. § (West 2008); Ramey, 268 F.3d at 958. Under qualifying circumstances, a disabled applicant with assets in excess of the Medicaid resource limit may place those assets in a trust, and thus exempt them from consideration when determining Medicaid eligibility. 42 U.S.C.A. § 1896p(d)(d)(A) (West 20083). Onee established, funds from a disability trust may be used to satisfy the beneficiary's supplemental needs, including the purchase of medical services not available through Medicaid.

States may elect to participate in the Medicaid program. See Schweiker v. Gray Panthers, 453 U.S. 34, 36-37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981). However, once they decide to participate, states must comply with the requirements imposed by the Act and by the Secretary of Health and Human Services in order to receive federal funds. Id.; see also Hern v. Beye, 57 F.3d 906, 913 (10th Cir.1995) ("[Blecause Colorado has decided to participate and accept federal Medicaid funds, it must do so on the terms established by Congress.") The Centers for Medicare and Medicaid Services ("CMS") are charged with administering the federal Medicaid program, and the Social Security Administration ("SSA") administers the SSI program. See Pediatric Specialty Care, Inc. v. Ark. Dept. of Human Servs., 364 F.3d 925, 926 (8th Cir.2004); Graham v. Barnhart, 278 F.Supp.2d 1251, 1260 (D.Kan.2003).

Through enactment of the Colorado Medical Assistance Act, Colorado elected to participate in the Medicaid program. §§ 26-4-101 to -1408, 8 C.R.S. (2008). Colorado is a so-called section 1634 Medicaid state. Program Operations Manual System ("POMS") § SI 0715.020. Under this section of the Act, the SSA enters into an agreement to make Medicaid eligibility determinations for the state, provided the individual is SSI eligible and meets all Medicaid eligibility requirements. POMS $ SI 01730.005. In a 1634 state, an SSI application is also an application for Medicaid. Id.

Colorado's Department of Health Care Policy and Financing reviews and must approve all disability trusts, determining whether they comply with federal and state law. See § 26-4-104, 8 CRS. (2008). At the time Stell submitted his proposed trust for review by the Department, he was receiving Medicaid and SSI benefits due to his disability. -

Stell's disability was caused in September 1998 when he suffered catastrophic injuries in a fall at a construction site. As a result of a personal injury claim, Stell received a net settlement of $638,495.58, which was placed in a disability trust.

Upon review, the Department recommended termination of Stell's Medicaid benefits because it objected to two of the trust's provisions: 1) the directive that upon termination of the trust, the payment of funeral, burial, administrative, and tax expenses: would precede state Medicaid reimbursement, and 2) the requirement that the Department file a creditor's claim upon termination of the trust. The Boulder Department of Social Services notified Stell that his Medicaid benefits would be terminated because the trust did not meet the legal requirements to exempt the assets held within it for the purpose of determining Medicaid eligibility.

Stell timely appealed the proposed termination of his Medicaid benefits. At the initial hearing, the administrative law judge ("ALJ") determined that the Department's objections to the trust were not well founded, and that the trust was valid pursuant to federal and state law. The ALJ concluded that the trust assets should not be counted for purposes of determining Stell's Medicaid eligibility, and therefore, that his benefits could not be terminated. The Department's Office of Appeals reversed, rejecting the ALJ's interpretation of the statutes. In its final agency action, the Department determined that because Stell's trust provided for payment of other expenses before reimbursing the state for Medicaid benefits, it was invalid.

The district court affirmed the agency's ruling. In doing so, the court held the trust provisions at issue failed to meet the requirements of the governing federal and state laws, and that the Department should receive any amount remaining in the trust upon its termination "without any consideration and with absolute priority."

The court of appeals agreed, interpreting section 15-14-412.8 to prohibit deductions prior to the reimbursement of the state for Medicaid assistance. Stell, 78 P.3d at 1145. The court of appeals considered the Department to have the highest priority with respect to the remainder in a disability trust and held that the state must be compensated in full upon termination of the trust prior to any other expenditures. Id. To reach this conclusion, the court of appeals decided that Colorado's disability trust statute refers to the gross remainder of funds left in the trust upon its termination, and not to the funds left in the trust after the deduction of expenses arising from its administration, including federal and state taxes. See id. at 1145-46.

Stell petitioned this court for review of the court of appeals' ruling with regard to the priority of federal and state taxes upon termination of a disability trust. He does not challenge the court of appeals' ruling as to burial and funeral expenses, nor is the issue of whether the Department is required to file a claim against Stell's estate before this court.

Notably in this case, Stell's Medicaid benefits have not been terminated. The United States Court of Appeals for the Tenth Circuit decided in Ramey that the Department's practice of independently reviewing the trusts of SSI recipients to determine Medicaid eligibility was invalid, and that SSI recipients are automatically eligible for Medicaid. 268 F.3d at 964. The application of Ramey to this case renders Stell, as an SSI recipient, eligible for Medicaid regardless of whether the Department finds his assets are exempted through a disability trust. Because Stell is still receiving Medicaid benefits, the Department has urged that this case is moot. Alternatively, the Department argues the case is not ripe for this court's adjudication because the conflict is contingent on the amount of funds left in the trust upon its termination. The Department filed a motion to dismiss this case before this court based on mootness. We denied the motion with leave to raise the issue in the briefs and the Department has done so.

III. Justiciability

The threshold issue in this case is whether this court has the subject matter jurisdiction to hear it. We hold that this case is not moot and that it is ripe for adjudication because we conclude that Stell, as the beneficiary of a disability trust, has the ability to object to the interpretation of a statute that creates inevitable personal liability for his trustee. The fact that Stell is categorically eligible for Medicaid benefits under Ramey does not change this result. As a disabled person, Stell continues to need the protection of a trust and the reinstatement of benefits does not resolve the question of priority of payments upon eventual termination of Stell's trust.

When possible, the policy of this court has been to resolve disputes on their merits. Craig v. Rider, 651 P.2d 397, 402-03 (Colo.1982). However, a case is deemed moot when the relief granted by the court would not have a practical effect upon an actual and existing controversy. Archibold v. Pub. Utils Comm'n, 58 P.3d 1031, 1036 (Colo.2002) (internal quotations omitted).

The doctrine of ripeness additionally requires an injury to be sufficiently immediate and real in order to warrant adjudication. Beaupre v. Avalos, 42 P.3d 642, 648 (Colo.2002) (internal citations omitted). In the interest of judicial efficiency, courts will not consider "uncertain or contingent future matters" because the injury is speculative and may never occur. Id. In deciding ripeness, courts look to the hardship of the parties of withholding court consideration and the fitness of the issues for judicial decision. Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). To be fit, there must be an adequate record to permit effective review. Id.

Upon termination of Stell's trust, one of three scenarios will arise: 1) the trustee will have prepaid the federal and state taxes due, with the remainder of funds going to reimburse the state for medical assistance rendered; 2) the trust will contain assets sufficient to reimburse the state and pay any outstanding federal and state taxes owed by the trust; or 3) the trust will owe federal and state taxes, and not contain sufficient funds to both pay those taxes and reimburse the state.

The Internal Revenue Code governs the taxation of trusts, and mandates the payment of taxes by the fiduciary or trustee on trust earnings. 26 U.S.C.A. § 641(b) (West 2003). If a trustee does not pay the taxes due, the trustee then becomes personally liable for the tax. 26 U.S.C.A. § 6901(a)(1)(B) (West 2008).

-It is a basic tenet of trust law that a person may refuse an appointment to act as trustee, or resign the post so long as resignation is not unduly detrimental to the administration of the trust. In re White, 506 Pa. 218, 484 A.2d 763, 766 (1984); George T. Bogert, Trusts § 31 (6th ed.1987). It also has long been recognized that a court will not permit a properly created trust to fail for want of a trustee. Jeffreys v. Int'l Trust Co., 97 Colo. 188, 195, 48 P.2d 1019, 1022 (1985). If a trustee is named and refuses to act, the court will appoint a trustee to administer an otherwise valid trust. See id.; George T. Bogert, Trusts § 29.

We recognize that a beneficiary has both an interest in retaining a trustee to manage the trust's assets, and the ability to object to a statutory interpretation that inevitably exposes his trustee to potential personal liability for unpaid taxes on the trust. There is also a public interest in ensuring that the Department has properly interpreted the applicable laws because the courts may be called upon to appoint a trustee for Stell if his trustee resigns due to the threat of personal liability when the trust terminates.

The Department differentiates the final year of the trust from all prior years. Stell's trustee has the ability to pay state and federal taxes prior to reimbursement of the state for medical assistance for every year of the trust's administration except in the year the trust terminates. In that final year, the Department asserts its right to receive reimbursement prior to the trustee's payment of taxes due. Although Stell is now qualified for Medicaid under the Tenth Circuit's decision in Ramey, the Department has not surrendered its claim to seek reimbursement from any trust funds remaining after Stell's death. What remains unclear is only whether there will be sufficient funds remaining for the trustee to first fully reimburse the state, and then pay any remaining federal and state taxes due.

Thus, we conclude that this is a live controversy and the case is not moot. Because of the deterrent effect of the court of appeals construction of the disability trust statute on trustees, the injury also is not speculative and Stell's case is ripe for review. Finally, the record in this case is well developed, permitting effective review. Therefore, we conclude this court has jurisdiction to decide whether a disability trust is valid when it permits the payment of state and federal taxes prior to the state's reimbursement for medical assistance rendered.

IV. Standard of Review

We review the administrative agency's interpretation of section 15-14-412.8 de, novo. See Colo. Dept. of Labor and Employment v. Esser, 30 P.3d 189, 193 (Colo.2001). The interpretation of a statute or regulation by the agency charged with its administration is ordinarily accorded deference. Lucero v. Climax Molybdenum Co., 732 P.2d 642, 646 (Colo.1987). If it has a reasonable basis in law and is warranted by the record, a court will generally accept an agency's interpretation of the statute or regulation. Ohlson v. Weil, 953 P.2d 939, 941 (Colo.App.1997). However, we will reverse an administrative agency's determination if the agency erroneously interpreted the law. § 24-4-106(7), 7B C.R.S. (2008); McClellan v. Meyer, 900 P.2d 24, 29 (Colo.1995).

In this case, we are deciding the validity of a disability trust, which is governed by both federal and state statutes and regulations. As stated above, states are not required to participate in the Medicaid program, but if they choose to do so, they must comply with federal requirements. Alexander v. Choate, 469 U.S. 287, 290 n. 1, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985). Therefore, in construing Colorado's disability trust statute, we must coordinate it to conform to its concomitant federal enactment. See Ind. Comm'n v. Bd. of County Comm'rs, 690 P.2d 839, 844 (Colo.1984) ("[If the legislature intends that a state statutory scheme be administered in cooperation with and to conform to a concomitant federal enactment, the courts, in interpreting the state statute, should construe the state and federal statutes together to maintain institutional harmony.").

V. Analysis

Whether federal and state disability trust statutes preclude the payment of accrued income tax from the trust corpus prior to reimbursing the state for medical assistance is a matter of first impression for this court, and we have found no other jurisdiction that has addressed the question. We hold that upon termination, a trustee may pay federal and state taxes due from the corpus of the trust before reimbursing the state for medical assistance it rendered to the beneficiary. This is not a question of conflict preemption; rather, it is a matter of statutory construction. We conclude it is both reasonable and necessary to construe Colorado's disability trust statute to accord with federal and state tax law. In reaching this conclusion, we consider the relevant federal and state laws, as well as applicable administrative guidelines.

In Colorado, the Department administers the Medicaid program, and has the duty to comply with its federal requirements. See §§ 26-4-104 to -105, 8 C.R.S. (2008). Under federal law, in order to be eligible for a disability trust, an applicant must comply with three criteria: the trust must 1) contain the assets of an individual under age 65 who is disabled; 2) be established by a parent, grandparent, guardian, or court; and 3) include a provision that the state will be repaid all amounts remaining in the trust up to an amount equal to the total medical assistance paid by the state upon the death of the beneficiary. 42 U.S.C. § 1896p(d).

Colorado's disability trust statute, section 15-14-412.8, mirrors the federal law. A disability trust is not valid unless it is created for the purpose of medical assistance and meets the following criteria: the trust must 1) contain the assets of a disabled individual and be established by the individual's parent, grandparent, guardian, or the court; 2) provide that upon the death of the beneficiary or termination of the trust, the Department receives "any amount remaining in the trust up to the total medical assistance paid on behalf of the individual"; and 3) provide that "no person is entitled to payment from the remainder of the trust until the state medical assistance agency has been fully reimbursed for the assistance rendered to the person for whom the trust was created." § 15-14-412.8(2).

Both the federal enabling act and Colorado's disability trust statute require that, upon termination, the remainder of trust funds be paid to the state as reimbursement up to the total medical assistance paid on behalf of the beneficiary. The crux of the issue in this case is the meaning of the term "remaining" or "remainder." There are two basic interpretive approaches. The term could be interpreted to mean the gross remainder, precluding all deductions, including the payment of state and federal taxes, prior to the state's reimbursement for medical assistance. Alternatively, the term could be read to denote the net remainder, meaning the funds left in the trust after federal and state taxes are deducted.

In this case, the court of appeals adopted the former view, holding that upon termination of a disability trust, section 15-14-412.8 prohibits the deduction of any funds prior to full repayment to the state. Stell argues the court of appeals' interpretation is preempted by federal tax law, and interferes with the purposes and objectives of Congress to collect taxes and provide medical assistance to needy individuals. The Department contends Colorado's disability trust statute comports with federal law, and that preemption analysis does not apply in this case because any conflict that may exist is between the Internal Revenue Code and the federal Medicaid disability trust statute, not between federal and state law.

The language of the federal and state statutes regarding the reimbursement of the state upon termination of a disability trust is nearly identical. Federal section 1396p(d)(4)(A) instructs "the State will receive all amounts remaining in the trust upon the death of [the beneficiary] up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan. ..." 42 U.S.C. § 1896p(d)(4)(A). Colorado's section 15-14-412.8 similarly states that, upon the trust's termination, the Department receives "any amount remaining in the trust up to the total medical assistance paid on behalf of the individual," and that "no person is entitled to payment from the remainder of the trust until the state medical assistance agency has been fully reimbursed for the assistance rendered to the person for whom the trust was created." § 15-14-412.8. Neither statute specifies whether the remainder is gross or net.

A trustee has prior obligations under both federal and state tax law to pay taxes due on trust income. Those taxes must be paid, regardless of whether the state is fully reimbursed for the medical assistance it rendered. If there are not enough funds to both pay taxes and reimburse the state, it is neither reasonable nor equitable to impose personal liability on the trustee of a disability trust for the difference. Therefore, we construe the term "remainder" in section 15-14-412.8 to mean the net remainder, after all taxes due are paid.: Our holding, that the payment of taxes must take precedence over reimbursement of the state for medical assistance rendered, harmonizes tax and trust law.

Our holding is supported by guidelines published by the SSA in its operating manual POMS regarding the priority of payments upon termination of a disability trust. POMS guidelines are the internal operating instructions used by SSA field employees when processing claims for Social Security benefits. POMS guidelines do not have the foree and effect of law; they do not bind the Commissioner of Social Security. Berger v. Apfel, 200 F.3d 1157, 1161 (8th Cir.2000). However, POMS guidelines may be viewed as binding on an ALJ in a case that falls squarely within one of its provisions. See Sabo v. Chater, 955 F.Supp. 1456, 1463 (M.D.Fla.1996).

POMS guidelines expressly permit the deduction of taxes and administrative expenses prior to reimbursing the state for medical assistance made to the individual POMS § SI 1120.208.B.3.a. The payment of funeral expenses, on the other hand, is subordinate to state reimbursements. - POMS § SI 1120.208.B.8.b.

We note that the State Medicaid Manual, published by CMS, the federal agency administering the Medicaid program, does not conflict with the POMS guidelines, The CMS guidelines use the same non-specific language found in section 1896p(d) and seetion 15-14-412.8, requiring the trust to "contain a provision stating, that upon the death of the individual, the State receives all amounts remaining in the trust, up to an amount equal to the total amount of medical assistance paid on behalf of the individual...." State Medicaid Manual § 8259.7 (2002). Therefore, the CMS manual provides no additional guidance in resolving the priority of payments upon termination of a disability trust.

The Uniform Probate Code ("UPC"), which Colorado has adopted in relevant part, provides additional support for the SSA's reading of the federal enabling act. Colorado follows the UPC in its outline of the procedures a trustee must follow in making final distributions from a regular trust. § 15-1-406(1)(b)(II)-(III), 5 C.R.S. (2008). After a beneficiary dies, or after an income interest in a trust ends, the remainder beneficiary receives "net income" from the trust. Id. Net income is that which arises after taxes and administrative expenses are paid. Id.

Our construction of section 15-14-412.8 brings the state disability trust statute into accord with its federal counterpart. It is also supported by sound public policy. With the Social Security Act, Congress intended to provide medical assistance to needy individuals. Enactment of the Internal Revenue Code served to ensure the comprehensive collection of taxes. The court of appeals' interpretation of section 15-14-412.8 erodes both of these purposes; it deters trustees from administering a disability trust by creating an inevitable potential for personal liability, and improperly shifts tax liabilities.

We note that under either party's interpretation of the law, the trust remainder ultimately will end up in the hands of the federal and state government. The difference is only whether the money takes the form of taxes paid or of a reimbursement for medical assistance. In this dispute, the equities do not favor the Department's position. There is no public policy served by leaving the trustee exposed to personal liability for any unpaid taxes upon termination of a disability trust.

If a trustee is able to pay taxes due on a disability trust upon the trust's termination and before reimbursing the state for medical assistance rendered, then the trustee can both satisfy the trust's tax obligations and also complete her service as trustee without risking personal liability for unpaid taxes. Interpreting section 15-14-412.8 to refer to the net remainder of funds aligns tax and trust law in a reasonable and equitable manner, and protects the goals Congress intended to promote through its disability trust scheme.

VI. Conclusion

Because we hold that upon termination of a disability trust a trustee may pay federal and state taxes due from the trust corpus prior to reimbursement of the state for medical assistance rendered, we conclude that the treatment of taxes in Stell's disability trust is valid and in compliance with applicable federal and state law. Upon termination of the trust, Stell's trustee may pay any taxes due prior to reimbursement of the state, regardless of whether there are trust funds sufficient to cover both the taxes and the full cost of reimbursement. Hence, we reverse the court of appeals' decision in this case, and remand it to the court of appeals for further proceedings consistent with this opinion.

      . Because the statutes relevant to this dispute have not changed since this case arose, we refer to their current codification in this opinion.

      . Federal law surrounding disability trusts has evolved considerably over the last two decades. Prior to 1986, an irrevocable trust was not considered to be an assel in determining an applicant's eligibility for Medicaid. Ramey, 268 F.3d at 958. This loophole allowed individuals to shield their personal assets, and continue to receive public welfare benefits. Id. In 1986, Congress enacted a statute to control this practice. 42 U.S.C.A. § 1396a(k) (West 1993) (repealed by Pub.L. 103-66, Title XHI § 13611(d)(1)(C) (1993)). Section 1396a(k), also known as the Medicaid qualifying trust statute, prohibited set-tlor-beneficiaries from sheltering assets in discretionary trusts in order to qualify for Medicaid. Id. Under section 1396a(k), the amount "available" to an applicant for purposes of determining Medicaid eligibility must include the maximum amount permitted under the terms of the trust, and assumes the full exercise of the trustee's discretion to distribute the maximum amount. Id.; Ramey, 268 F.3d at 959. In 1993, Congress repealed section 1396a(k) and replaced it with section 1396p(d). 42 U.S.C.A. § 1396p(d) (West 2003). Section 1396p(d) makes it even more difficult for people to use trusts to protect their assets and still qualify for Medicaid benefits. Ramey, 268 F.3d at 959. Under section 1396p(d), the trust corpus is counted as a resource and used to determine Medicaid eligibility, regardless of the discretion of the trustee, so long as the trust benefits the individual in some way. 42 U.S.C.A. § 1396p(d). However, like its predecessor, section 1396p(d) still allows the use of trusts to exclude the assets of an individual for the purpose of maintaining Medicaid eligibility if they meet certain criteria. Id.

      . SSI is a federal income program created in 1972 that provides cash assistance to the needy and disabled for basic necessities, but not for medical expenses. 42 U.S.CA. §§ 1381-1385 (West 2003). f

      . The court of appeals also rejected two statutes Stell relied upon on appeal as inapplicable to this case. The first, section 15-12-805(1), 5 CRS. (2003), sets forth the order in which claims against the estate of a decedent are paid and lists the payment of taxes, funeral and burial expenses as higher in priority than the Department's claims. The second, section 15-12-803, 5 C.R.S. (2003), outlines the limitations on presentation of claims in probate and requires all creditors to file a claim against the estate. The court of appeals held that neither statute applied to disability trust funds because upon Stell's death, they will not be considered part of his estate. Stell, 78 P.3d at 1145-46.

      . We granted certiorari on the following issue: Whether the court of appeals erred in holding that a disability trust, within the meaning of § 15-14-412.8, 5 C.R.S. (2003), is not valid for the purpose of establishing or maintaining the beneficiary's resource eligibility for medical assistance because the trust permits the payment of taxes due from the trust upon the death of the beneficiary prior to reimbursement of medical assistance to the state.

      . A court may find a conflict is ripe for judicial review even in the context of uncertain future facts so long as there is no uncertainty regarding the facts relevant to the dispute and no pending actions that might resolve the issue prior to the court's determination. See Beauprez, 42 P.3d at 648; Bd. of Educ. v. Booth, 984 P.2d 639, 644 (Colo.1999).

      . In Keith v. Rizzuto, the United States Court of Appeals for the Tenth Circuit clarified the meaning of conflict preemption in a similar case involving an income trust. 212 F.3d 1190 (10th Cir.2000). The statute at issue in Rizzuto, section 15-14-409.7, 5 C.R.S. (1999), provided that only those individuals whose monthly incomes fell short of the average cost of nursing home care in their region, could establish valid income trusts. Id. at 1192. Federal law did not include the same sort of income ceiling. Id. at 1193. The court held that Colorado's statute was not preempted because it was possible to comply with both federal and state law. Id. at 1193.

      . 42 U.S.CA. § 1382c(a)(3)(A) (West 2003) defines disability; in relevant part, a person is disabled if "he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months."


source: Caselaw Access Project

author: Justice COATS

license: Public Domain

text:
    WYSE FINANCIAL SERVICES, INC; Irvin Borenstein, individually; Marilyn C. Green, Public Trustee, Douglas County; Realamerica Ventures, LLC; and all other persons who may claim an interest in the subject matter of this action, Petitioners, v. NATIONAL REAL ESTATE INVESTMENT, LLC., Respondent.
    No. 02SC534.
    Supreme Court of Colorado, En Banc.
    June 21, 2004.

      Jean E. Dubofsky, P.C., Jean E. Dubofsky, Boulder, CO, Burke & Neuwirth, P.C., Dean Neuwirth, Denver, CO,, Attorneys for Petitioners.
    John M. Dudgeon, Lakewood, CO, Attorney for Respondent.
   Justice COATS

delivered the Opinion of the Court.

Realamerica Ventures, and defendants Wyse and Borenstein, sought review of the court of appeals judgment in National Beal Estate Investment, LLC v. Wyse Financial Services, Inc., 66 P.3d 111 (Colo.App.2002), reversing the summary judgment of the district court. The district court quieted title to a residential property in Realamerica, the purchaser at a foreclosure sale, despite the prior recording of a redemption certificate by National Real Estate. The district court held that although National, as the assignee of a judgment creditor, tendered redemption funds to the public trustee and both received and recorded a certificate of redemption, Realamerica, on behalf of the judgment debtor, was entitled to, and did, satisfy the judgment prior to expiration of National’s redemption period, thereby extinguishing National’s right to redeem. The court of appeals reversed, holding it to be within the discretion of the public trustee to issue a certificate of redemption to a lienor immediately upon payment of the redemption amount, and concluding that once the public trustee issued'the certificate to National, its right to redeem could no longer be extinguished.

Because the redemption by National actually occurred upon payment of the required redemption amount to the public trustee, and at that point it became statutorily entitled to a certificate of redemption, National's right to redeem could not be extinguished by any subsequent satisfaction of the judgment. The judgment of the court of appeals is therefore affirmed.

L.

The dispute at issue here, over the timing and significance of the issuance of a certificate of redemption, arises from the cireum-stances of a residential foreclosure. Because National Real Estate, LLC, had obtained a certificate of redemption, but Realamerica Ventures, LLC, had obtained both a certificate of purchase and a certificate of satisfaction of the judgment upon which National's status as a lenor was predicated, the public trustee declined to issue a deed to either party. National brought an action to quiet title in itself and for breach of the agreement assigning it the judgment, naming as defendants Realamerica and the public trustee, as well as the judgment creditor, Wyse Financial Services, Inc., and its attorney, Irvin Borenstein.

Treating the motion to dismiss jointly filed by defendants Realamerica, Wyse, and Bor-enstein as a motion for summary judgment, the district court granted the motion; dismissed all of National's claims for relief; and ordered the public trustee to issue a deed to Realamerica and return the redemption funds paid by National. Although the legal significance of various actions taken by the parties was vigorously contested, the facts pertinent to the issues on review, as alleged in the pleadings and exhibits of the parties, were not in dispute.

Title to the house in question was in the name of Colette Marin, who lived there with her husband. Greenpoint Mortgage Company, which held a deed of trust on the house, began foreclosure proceedings. On March 21, 2000, Realamerica bought the house at a foreclosure sale for $394,200, the amount of the mortgage and foreclosure costs, and was issued a certificate of purchase by the public trustee that same day. Colette Marin, the owner, did not redeem within the 75 days permitted by statute.

On June 5, 2000, the last day of the 75-day redemption period, Wyse assigned its $10,000 judgment against Colette Marin, which had been made a lien of record, to National, and National gave notice of its intent to redeem. On June 8, after learning the payoff figures from Realamerica, National tendered payment of the statutory redemption amount to the public.trustee and was delivered a certificate of redemption, which it recorded on June 12.

On June 14, after the redemption amount had already been paid and the certificate of redemption recorded, Realamerica contracted with Colette Marin, the judgment debtor, for the right to act as her agent and satisfy the judgment against her. On the same day, Realamerica tendered a cashier's check to the county court in satisfaction of the judgment. The county court declined acceptance of the check, instead directing Realam-erica to pay Borenstein, Wyse's lawyer of record. On June 15, the last day of the redemption period for the senior lienor, Realamerica tendered the cashier's check to Borenstein, who accepted it and gave Real-america an acknowledgement of satisfaction of judgment, with which Realamerica obtained a certificate of satisfaction from the county court and recorded it with the Douglas County Clerk and Recorder, all on the same day.

The district court found that Realamerica satisfied the judgment by tendering payment to the county court on June 14. Because it also held that a judgment lienor loses its right to redeem if its judgment is satisfied any time prior to the expiration of its redemption period, the district court granted summary judgment in favor of the defendants and ordered that a deed issue to Real-america. On appeal, the court of appeals found it unnecessary to address the question whether Realamerica was a proper party to demand acceptance of payment in satisfaction of the judgment. Instead it reversed on the grounds that nothing prohibited the public trustee from issuing a certificate of redemption immediately upon payment of the redemption funds; and once the public trustee actually issued a certificate of redemption to National, National's right to redeem the property as a lienor could no longer be affected by satisfaction of the judgment.

IL.

The right to redeem from an execution sale is purely a creature of statute and depends entirely upon the provisions of the statute creating it. Johnson v. Smith, 675 P.2d 307, 310 (Colo.1984); Walker v. Wallace, 79 Colo. 380, 246 P. 553 (1926). Although legislation has provided judgment creditors a right of redemption in this jurisdiction, in one form or another, since before statehood, see, e.g., see. 14, 1861 Colo. Sess. Laws 264,

267, redemption following the sale of property by virtue of any foreclosure of a mortgage, deed of trust, or other lien, or by virtue of an execution and levy, at the time of the sale in this particular case, was governed by Parts 3 through 5 of Article 38 of Title 38, 10 C.R.S. (2001). The applicable statutory scheme allows the owner, or any other person who would be liable for a deficiency remaining after a foreclosure sale, a period of 75 days within which to redeem the property. See § 38-38-302. In the event that no redemption is made during this period, the scheme then permits lienors to protect their security interests, which would be lost upon transfer of title to the purchaser, see § 88-38-501, by redeeming within successive, shorter periods. See § 88-38-8038.

A lienor therefore has no right to redeem if the owner or deficiency debtor redeems within the 75-day period provided in section 38-38-3802. See $ 38-88-304(1)-(2). If, however, no redemption has been made pursuant to section 302, the lHienor having the senior lien may redeem within the first ten days following expiration of the owner's redemption period. See § 88-88-8083. Whether or not any other lienor has exercised its option to redeem, all subsequent lienors are permitted, according to the priority of their liens, successive redemption periods of five days each. Id. .

Furthermore, in clear and unambiguous language the statute specifies precisely how a lienor wishing to redeem must do so. Within the initial 75-day redemption period, for owners and deficiency debtors, the lien in question must appear by instruments duly recorded or filed as permitted by law, and the redeeming lienor must file notice with the public trustee or sheriff, attaching a copy of these instruments and advising of his intention to redeem. See § 38-88-3083(2) If these conditions are met, redemption by the lienor is actually made or accomplished by paying to the public trustee or sheriff, within the statutory redemption period for that lien- or, the redemption amount required by statute. See § 38-88-808(1) ("lienor ... may redeem ... by paying the public trustee or sheriff").

The statutes require no further act by the lienor in order to redeem. Payment of the redemption money in the manner prescribed by section 808 entitles the lienor to the execution and delivery of a certificate of redemption by the officer to whom the redemption money was paid. See § 38-88-402(1). It is clear, therefore, that according to the provisions of the statutory scheme, redemption by a lienor is in no way defined by, or made contingent upon, the execution and delivery of a certificate of redemption. Quite the opposite, the delivery of a certificate of redemption is a right to which a redeeming lienor becomes entitled upon making redemption. Id.

While a certificate of redemption therefore evidences payment of the redemption money by the lienor, neither the redemption itself, nor the execution and delivery of the certificate of redemption, vests title in a redeeming lienor or entitles it to a deed to the sold property. The statutory scheme clearly contemplates that unless the property is earlier redeemed by the owner or deficiency debtor, redemption may be made by any number of lienors, in succession, each of which is entitled to a certificate of redemption. See § 38-88-402(1) & 501. While each duly recorded certificate of redemption operates as an assignment of the estate and interest acquired by the purchaser, all such assignments nevertheless remain subject to the rights of subsequent lienors entitled to redeem. See $ 38-88-304(B). In the event that redemption is made by more than one lienor, title to the property vests in the holder of the certificate of redemption issued to the lienor last redeeming, and in the last redeeming lienor alone. See § 88-38-501.

Unless redemption is made by the owner or deficiency debtor, title to the sold property can therefore vest only upon expiration of all of the statutory redemption periods. See § 501. The failure of title to vest until all lienors have had an opportunity to redeem, however, does not render the already completed redemptions of the more senior lienors any less valid or final. In the ordered lienor redemption scheme of the Colorado statutes, a number of lienor redemptions can be made with regard to the same property, and it is the sequence of the redemptions that determines the lienor in which title to the property will ultimately vest.

In the clear language of the statute, a lienor is entitled to redeem property purchased at a foreclosure sale if neither the owner nor a deficiency debtor has redeemed before the expiration of the 75-day redemption period, and before the expiration of the same period, the lienor has duly recorded its lien and properly given notice of his intent. The lienor actually makes redemption by paying the statutory redemption amount, to the proper officer and within the statutorily permitted period, and by doing so it is entitled to the rights that flow from redemption. Nothing in the statutory scheme suggests that a lHienor can be divested of those rights, once payment of the redemption amount has been lawfully made to the public trustee or sheriff, in accordance with the statute.

Nor has this court ever held otherwise. In Plute v. Schick, 101 Colo. 159, 71 P.2d 802 (1937), relied upon by Realamerica, this court addressed the question whether a tender of payment, under the particular cireumstances of that case, was sufficient to satisfy the judgment of a lienor. Its holding, however, intimated virtually nothing about the time frame within which satisfaction of judgment

could affect a lHienor's right to redeem. The equities of the case clearly figured prominently in the court's holding that a judgment lienor was required to accept payment in satisfaction of its judgment, from the purchaser at a foreclosure sale, who had already acquired title through a quitclaim deed from the previous owner and who had already taken possession of and made substantial improvements to the premises. Whatever was intended in Plute concerning the credentials required to entitle someone to demand the acceptance of payment in satisfaction of a judgment, because the satisfaction in that case occurred before even a tender of the redemption amount by the lienor, the court neither considered nor implied anything about the effect on redemption of an attempt to satisfy a judgment after the judgment lienor had already exercised its right to redeem. And we have never held that it did.

In Craft v. Storey, 942 P.2d 1211 (Colo.App.1996), a different panel of the court of appeals held, for the first time in the published case law of this jurisdiction, that a lHenor could lose its right to redeem after it had already paid the statutory redemption amount to the public trustee. Conflating redemption with the vesting of title, the court of appeals held that because title cannot vest in a lienor until the expiration of all statutory periods of redemption, see § 38-38-501, any satisfaction of the judgment upon which a lienor's redemption right is predicated, before that point in time, extinguishes the lien- or's right to redeem. This court has never sanctioned such a reading, and in light of the statute's clear distinction between redemption and the vesting of title, which is specifically a right acquired by the last redeeming lienor, we overrule this holding of Croft.

IIL

Because the purchase price paid by Realamerica equaled the amount of the mortgage being foreclosed plus all foreclosure costs, there was no deficiency for which anyone could remain liable; and Colette Marin, the owner, did not redeem within the statutory period. As Wyse's assignee, National occupied the position of lienor with the most senior lien when it gave notice of its intent to redeem on June 5, 2000, and subsequently, on June 8, when it actually paid the statutory redemption amount to the public trustee. In the absence of any satisfaction of its judgment by at least the point at which it paid the public trustee, National was entitled to, and did, make redemption as permitted by statute. Its statutory rights to the execution and delivery of a certificate of redemption, and ultimately (in the absence of any later redeeming lienor and after payment of all statutory fees) to a deed confirming transfer of title to the property, were necessarily. unaffected by Realamerica's later attempts to satisfy the judgment, however successful.

IV.

Because National Real Estate, LLC, was the assignee of a duly recorded judgment, which had not been satisfied at the time National complied with the statutory requirements for redemption by a lienor, and because National is the holder of the certificate of redemption of the last redeeming lienor, it is entitled, upon the payment of all statutory fees, to a deed confirming transfer of title to the property. Although on slightly different grounds, the judgment of the court of appeals is therefore affirmed.

      . See § 38-38-302, 10 C.R.S. (2001).

      . The parties agreed that for a consideration of ten dollars, National would purchase the judgment for the total sum of $7,500. The total balance would become due upon National redeeming and reselling the property. In the event of National's inability to redeem and resell the property, the judgment would be reassigned to Wyse. The contract specifically precluded Wyse from collecting or receiving the amount due on the judgment.

      . Coleite Marin signed a notarized document designated "Agency Power and Authority", in which she granted Realamerica the authority to satisfy the judgment on her behalf. In addition, Colette Marin, her husband, and Realamerica executed a document entitled "Agreement of Satisfaction of Judgment and Termination of Tenancy." Under this agreement, in exchange for the right to satisfy Wyse's debt, Realamerica agreed that upon receiving the trustee deed to the property, it would lease the property to the Marins free through July 2000, and would pay the Ma-rins $20,000 when they vacated the property at the end of July. The parties agreed that the satisfaction agreement would terminate automatically if the public trustee failed to issue Realam-erica the deed.

      . See § 38-38-303, 10 C.R.S. (2001).

      . Effective July 1, 2002, the Colorado General Assembly enacted Senate Bill 02-161, significantly amending the statutory provisions governing foreclosures and redemptions. See Ch. 315, § 38-38-301, ef seq., 2002 Colo. Sess. Laws 1345-49.

      . Effective July 1, 2002, a redeeming lienor may no longer wait until the last day of owner's redemption period but must record his lien and give notice of his intent to redeem "within the time for filing a notice of intent to redeem provided for in section 38-38-302." See Ch. 215, sec. 14, § 38-38-303, 2002 Sess. Laws 1345, 1346; cf. William T. Hudgins, Artificial Redemption Rights: A tool of Foreclosure Investing, 28 Colo. Law. 100 (1999) (noting various investment techniques of third party invgsjcofs). .

      . Of course, the owner retains title after the annulment of the foreclosure sale, which occurs upon redemption by the owner. See § 38-38-304(1).

      . See Jonathan A. Goodman & Richard Byron Peddic, Redemption in Purgatory: Who Can Thwart Lienholder Redemption Rights?, Colo. Law. 139 (1998) (explaining that redemption statutes follow either the "scramble" system, in which any junior lienholder can redeem property at any time after the debtor's failure to redeem, or the "order system," which establishes time periods for each redeeming lienor, starting with the most senior lien).


text:
    In the Matter of Jerold Lewis TRUPP, Attorney-Respondent.
    No. 03SA344.
    Supreme Court of Colorado, En Banc.
    June 28, 2004.

      Jaudon & Avery, LLP., Joseph C. Jau-don, David H. Yun, Denver, Colorado, Attorney for Petitioner.
    Michael D. Gross, Colorado Springs, Colorado, Attorney for Respondent.
    Chief Justice MULLARKEY delivered the Opinion of the Court.
   I. Introduction

This is the second time that this attorney regulation case has come before this court. In the prior decision, People v. Trupp ("Trupp I "), we held that: Colorado Rule of Civil Procedure 11(a) applies to attorney regulation proceedings; the presiding disciplinary judge has exclusive authority over a C.R.C.P. 11(a) motion; and only the assistant attorney regulation counsel who signed the complaint is answerable to the motion. 51 P.3d 985 (Colo.2002). In that earlier case, we did not decide whether the assistant attorney regulation counsel had violated Rule 11(a). Instead, we remanded the case to the presiding disciplinary judge, emphasizing that only in the rarest of cireumstances will a Rule 11(a) sanction be appropriate in an attorney regulation case.

Upon remand, the presiding disciplinary judge ruled that the assistant attorney regulation counsel, Teresa Garcia, violated Rule 11(a) when she advanced the claim that attorney Jerold Lewis Trupp violated Colorado Rule of Professional Conduct 8.4(c). We now reverse the decision of the presiding disciplinary judge, and hold that there is not evidence to support the finding that Garcia violated Rule 11(a) when she filed charges against Trupp.

II. Facts and Procedural History

Under the rules governing the practice of law in Colorado, every attorney must pay an annual registration fee to defray the costs associated with functions such as attorney regulation, continuing legal education, and client protection. C.R.C.P. 227(A)(1). In addition, each attorney must provide certain information under oath or affirmation. C.R.C.P. 227(A)(2). As relevant to this case, each attorney must state whether he or she is subject to a child support order and whether the attorney is in compliance with any such order. C.R.C.P. 227(A)@)(a)(4).

Jerold Lewis Trupp first came to the attention of the Office of Attorney Regulation Counsel in early 2001. Trupp had indicated on his attorney registration forms for 2000 and 2001 that he was not in compliance with his child support obligations. In an attempt to mitigate this admission, Trupp wrote on both forms: "but I have taken measures to pay back child support."

After receiving these forms, the intake division of the Office of Attorney Regulation Counsel initiated an investigation to determine whether there appeared to be a violation of the Rules of Professional Conduct. Pursuant to this inquiry, an intake investigator spoke with Trupp on January 16, 2001. The investigator's contemporaneous notes stated: "there is no child support order, but he [Trupp] will send me payment plan ete. He made a bad investment (he is 62) and now will have social security pay his child support. He needs t[wlo weeks to get documents to us." The investigator's notes also said that Trupp's "'measures' and payment plan do not appear to be court approved. PROCESS for further investigation." Trupp never provided the documents he promised.

On February 1, 2001, the case was transferred from intake to Teresa Garcia, an assistant attorney regulation counsel with the trial division. Garcia had started working for the Office of Attorney Regulation Counsel only days prior to being assigned the case. Garcia reviewed the intake file and requested further information from Trupp. In March, Trupp responded with a letter explaining that the Jefferson County District Court had entered a child support order requiring him to make $350 monthly payments and that he was in arrears in the amount of $3,668. He then wrote:

I stated in my answer to the Attorney Registration Office that I have taken measures to pay back child support.... In August, 2000, I went on Social Security, and my son began receiving $576.00 per month. The child support order provides for $350.00 per month. He, therefore, is receiving $226.00 per month in. excess of the order, which is being applied for the back child support. In 16 months, his child support amount will be current; and the child support being paid will be $226.00 more than the current order.

In response, Garcia continued her inquiry, asking her investigator to obtain relevant court records and to interview the mother of Trupp's child. The investigator obtained Trupp's complete child support payment record from the court registry, spoke with the mother of the child more than onee to confirm the payments, reviewed the paternity file, and determined the total payments Trupp had made. The investigator then calculated that Trupp owed $2,204.57 in back child support, including twelve percent interest. Garcia reviewed all of this information.

In the meantime, Garcia interviewed Trupp, who has experience as an attorney representing clients in domestic relations cases. He informed her that "he had never been able to pay the child support ... in the amount that had been ordered on the due dates." He told Garcia that he had not sought to have the order modified because he believed his son was "worth $350 a month, so that amount is okay." He further said that he did not believe that it was a problem to be under a court order that he could not satisfy, and did not have any plans to seek modification to the order or to otherwise improve his ability to pay. Finally, Trupp explained what he meant when he said he had taken "measures" to satisfy his back child support payments. He said that he had applied to receive social security retirement benefits, and that as an automatic component of Trupp's benefits, his son would directly receive $576 per month-$226 more than the court order required, according to Trupp's calculations. Trupp did not, however, agree to seek modification to his child support order to apply these payments to his legal obligations.

After this conversation, Garcia contacted the social security office. She learned that Trupp had started receiving benefits in August 2000. She also learned that Trupp's child automatically began receiving benefits when Trupp did. An employee of the social security office, however, told Garcia that the social security payments to the child did not reduce either Trupp's child support obligations or Trupp's own social security benefits. After this conversation, Garcia noted in a written memo to the file that "[the child] gets 576.00 per month since August 2000-[Trupp] thinks this will be applied to child support arrearages."

Finally, Garcia conducted legal research on the issue of whether the social security payments eliminated Trupp's obligations under the 'child support order. During her research, she interpreted In re Marriage of Wright to hold that a court must modify the child support order before social security benefits can legally reduce the amount of support that must be paid to the child by the parent. 924 P.2d 1207 (Colo.App.1996). She concluded that under Wright, Trupp was obligated to continue making $300 monthly payments until he obtained a modification of the court order to substitute the social security payments. She also understood that case to hold that the parent's obligations could only be reduced prospectively from the date when the motion for modification was filed.

In early April 2001, Garcia telephoned Trupp to inform him of the Wright case, and told him that he needed to comply with the court mandated child support order. He responded: "I understand" and indicated that the following week he would address the matter with the court, and that he would call Garcia to update her. Trupp, however, never followed up with either the court or Garcia.

Then, on April 13, 2001, Garcia presented the Trupp case at a meeting of the intake and trial attorneys. In a memorandum she had prepared for the meeting attendees, Gar-cla stated that Trupp was currently in arrears in the amount of $2,204.57. Moreover, Garcia's memo urged that social security payments to a child are independent of a noneustodial parent's child support obligations until a court modifies the order so that the social security payments substitute for the noncustodial parent's obligations. Because Trupp had not obtained a new court order, Garcia claimed that the son's social security payments did not substitute for Trupp's court-ordered payments or reduce his arrearage. Finally, Garcia's memo stated:

The respondent understands that the Social Security payments to his son do not impact or decrease the amount of his benefits. He realizes that the two are independent of each other. Nevertheless, he stated that he figured that the Social Security payments to his son could be counted to make up for the respondent's arrearages on child support.

Thus, Garcia argued, because Trupp had not sought to modify the court order, he "has not taken any measures to pay by way of his Social Security benefits."

The attorneys at the meeting discussed and debated the case. Ultimately, they agreed that the next step was to file a petition for suspension of Trupp's law license pursuant to C.R.C.P. 251.8.5, which calls for the immediate suspension of an attorney who is behind in child support payments.

On May 23, 2001, the presiding disciplinary judge ("PDJ") held a hearing to determine whether Trupp should be suspended. At this hearing, Trupp admitted being behind in his payments by $850 and, as a result, the PDJ suspended his license to practice law. First, the PDJ noted that Trupp's admission that he was in arrears was sufficient to order an immediate suspension. Second, the PDJ reasoned that under In re Marriage of Wright, social security payments do not offset child support requirements until the parent files a motion for modification of child support, or until the payments go through the child support registry. The PDJ pointed out that Trupp had taken neither of these measures at the time of the hearing and consequently suspended him.

A suspension under C.R.C.P. 251.8.5 does not constitute a disciplinary proceeding, is not considered discipline, and does not bar disciplinary action. - C.R.C.P. 251.8.5(1). Therefore, after Trupp's suspension, Garcia had the option to dismiss the disciplinary allegations against Trupp, divert the matter to the alternatives for discipline program, or present the case to the Attorney Regulation Committee to determine whether to file a formal complaint.

Garcia chose to submit the case to the Committee to decide whether there was reasonable cause to bring a formal complaint. She proposed charging Trupp with violating Colorado Rules of Professional Conduct 3.4(c) (knowingly disobeyling] an obligation under the rules of a tribunal") and 8.4(c) ("engag[ing] in conduct involving dishonesty, fraud, deceit or misrepresentation"). Garcia urged that Trupp had violated the first rule by failing to satisfy or modify the court order requiring him to make monthly child support payments of $300. She claimed that Trupp violated the second rule when he wrote on his attorney registration forms that he had taken measures to satisfy his prior child support obligations. In support of her arguments, Garcia presented the Committee with the report of the investigation to date.

~ After reviewing Garcia's recommendations and the report of her investigation, the Committee authorized the Office of Attorney Regulation Counsel to bring formal charges against Trupp. Pursuant to the Committee's approval, Garcia filed a formal complaint on June 29, 2001, and later amended it. The first claim alleged that Trupp violated Colorado R.P.C. 3.4(c) by knowingly disobeying the Jefferson County District Court's Order requiring him to pay monthly child support. The second claim alleged that Trupp violated Colorado R.P.C. 8.4(c) by making misrepresentations to the Clerk of the Supreme Court in connection with paying his attorney registration fees. Before filing the complaint, Garcia submitted it to her superior, Nancy Cohen, who made minor editing changes, and then approved the document.

After the complaint was filed and prior to trial, Trupp entered into a stipulated agreement with the mother of his child, in which the two agreed that the social security payments would satisfy the child support payments that were due. The stipulated agreement was filed with the court and served to modify Trupp's child support order. It provided that the social security payments would cover the $250 monthly child support obligations and that the approximate remaining $330 of the payment would be applied toward arrearages. The stipulation was backdated to August 2000, which was the date that the social security payments began.

Before trial, Trupp made various motions to dismiss the charges against him, arguing that Rule 3.4(c) was unconstitutionally vague, that the first claim should be dismissed on summary judgment, and that the second claim failed to state a claim against him. The PDJ denied the motions and the case proceeded to trial. "

At trial, Trupp contradicted his numerous prior admissions by claiming that he had never, since 1996, been behind on his child support obligations. Trupp further argued that when he wrote on his attorney registration form that he had "taken measures to pay back child support," he simply meant that he had applied for social security benefits that he knew would also: provide support for his child. In sum, Trupp argued that he was never behind in child support payments, did not misrepresent his child support situation on his attorney registration form, and thus, was not guilty of either charge against him.

In support of the first claim, Garcia presented evidence showing that Trupp's child support payments were erratic and often late, and that he then owed over $2,000. The financial calculations that Garcia presented, however, turned out to be contradictory and inaccurate, and the hearing board fully discounted this evidence. Regarding the second claim, Garcia pointed out that Trupp did not take legal measures to apply the social security payments to his child support obligations until August 2001, long after he represented on his attorney registration form that he had "taken measures to pay back child support."

After the close of all the evidence, Trupp moved for a directed verdict pursuant to C.R.C.P. 50. The hearing board granted the motion, saying that no reasonable hearing board could find by clear and convincing proof that the charges had been established. The dismissal of the first claim was based on the fact that during trial, the attorney regulation investigator was unable to fully explain discrepancies in a critical exhibit containing a list of Trupp's payments. - Consequently, there was no persuasive evidence that Trupp was ever actually behind on his payments. The dismissal of the second claim was based on Trupp's testimony that at the time he filed his attorney registration forms, he intended that the social security payments would cover his child support payments, although, as the PDJ noted, Trupp did not take legal action "as quickly as all of us would have liked ...."

After the trial, Trupp filed a motion asking the PDJ to sanction Garcia, numerous other staff members of the Office of Attorney Regulation Counsel, and several members of the Attorney - Regulation - Committee under C.R.C.P. 11(a) ("Rule 11"). Rule 11 creates a duty upon every attorney to investigate and accurately represent both the facts and the law relevant to any pleading that that attorney files with a court. C.R.CP. 11(a). It also forbids an attorney from filing a pleading for an improper purpose such as delay or harassment. Id. Trupp claimed that Garcia and others from the Office of Attorney Regulation Counsel violated Rule 11 by filing the complaint against him alleging that he had violated Colorado R.P.C. 3.4(c) and 8.4(c).

After Trupp's motion, the PDJ entered an order directing that the motion be set for an evidentiary hearing and stating that the requested relief under Rule 11 would only be considered as against Garcia and John Gleason, the attorneys whose names appeared on the complaint. The Office of Attorney Regulation Counsel appealed the PDJ's order, and this court held that the charges could only be considered against Garcia, not John Cleason, and the PDJ had sole authority to conduct the hearing and decide the issue, rather than the entire disciplinary board. Trupp I, 51 P.3d 985 (Colo.2002). This court then remanded the matter to the PDJ, emphasizing that Rule 11 sanctions are only appropriate in the rarest of circumstances in attorney regulation cases. Id. at 992.

On remand, the PDJ conducted a hearing, which included several exhibits and the testimony of Garcia, Trupp, and the investigator. More than one year after this hearing, the PDJ issued a written decision, finding that Garcia had not violated Rule 11 when she alleged that Trupp had broken Colorado R.P.C. 8.4(c), which forbids "knowingly disobey{ing] an obligation under the rules of a tribunal."

However, the PDJ did find that Garcia violated Rule 11 when she alleged that Trupp disobeyed Colorado R.P.C. 84(c) by "en-gagling]) in conduct involving dishonesty, fraud, deceit or misrepresentation." The PDJ reasoned that Garcia was required to present proof that Trupp's misrepresentation was either reckless or deliberate, and he concluded that Garcia had no evidence whatsoever to this effect. Instead, the PDJ found, all of Garcia's investigation reflected that Trupp "believed that those measures taken were sufficient to have the portion of the social security in excess of the current child support payment to be eredited toward any arrearage."

Because Garcia knew that Trupp did not have the requisite state of mind to violate R.P.C. 8.4(c), the PDJ continued, "Ms. Garcia's allegation that Trupp knowingly and intentionally made a misrepresentation regarding measures taken by him to pay back child support was not well-grounded in fact and was not an objectively reasonable interpretation of the facts developed in the investigation." The PDJ found that this constituted a violation of Rule 11. Moreover, the PDJ found that because Garcia did not reveal any evidence pertaining to Trupp's state of mind to the Attorney Regulation Committee prior to filing the formal complaint, the ordinary checks and balances in the attorney regulation process did not insulate Garcia from a Rule 11 violation.

Nonetheless, the PDJ did not impose any sanction, saying that:

Any ruling finding that a lawyer has violated C.R.C.P. lla) has consequences extending beyond that immediate case. Insurance rates can be affected, employment opportunities may diminish, and the lawyer's reputation is altered. Taking into account those adverse consequences, Ms. Garcia's lack of experience and the delay in resolving the motion, no additional sanction is required beyond that already suffered by Ms. Garcia as the result of this ruling.

Garcia now appeals the PDJ's holding that she violated Rule 11 when she alleged that Trupp violated Colorado Rule of Professional Conduct 8.4(c).

IIL - Analysis

Because the PDJ's finding of a Rule 11 violation was based only on the second claim, we limit our discussion to that allegation. The second claim alleged that Trupp violated Colorado R.P.C. 8.4(c) by making misrepresentations to the Clerk of the Supreme Court when he stated that he had "taken measures to pay back child support." To determine whether Garcia violated Rule 11 when she filed this claim, we begin our analysis by describing the requirements of Rule 11 itself Then, because Rule 11 requires that an attorney only advance charges that are well-grounded in fact and warranted by existing law or a good faith argument for the extension of the law, we examine whether Garcia conducted adequate research and whether she accurately represented both the facts and the law in the complaint. Ultimately, we hold that Garcia properly investigated the facts and the law, and that she properly represented both in her complaint. This is not one of those rare cases where the attorney regulation counsel violated Rule 11. Thus, we reverse the PDJ's ruling against Garcia.

1. Rule 11

Rule 11 requires "that to the best of [the submitting attorney's] knowledge, information, and belief formed after reasonable inquiry, [the pleading] is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law...." C.R.C.P. 11(g). A Rule 11 inquiry focuses on pre-filing, pre-pleading behavior of the attorney, in light of an objective reasonableness standard. Trupp I, 51 P.3d 985, 991 (Colo.2002). As we said in Trupp L "[the C.R.C.P. 11(a) inquiry does not turn on the outcome of the case; instead, it turns on whether the attorney met the reasonable inquiry and proper purpose threshold in preparing and filing the pleading." Id. Bad faith is not a prerequisite of Rule 11 sanctions. Stepanek v. Delta County, 940 P.2d 364, 870 (Colo.1997). Instead, an attorney may violate Rule 11 simply by failing to conduct an objectively reasonable inquiry pri- or to filing a signed pleading. Id.

In Trupp I, we held that "the seope of the C.R.C.P. 11(a) inquiry in this case is limited to whether the attorney who signed the complaint and amended complaint: (1) read them; (2) undertook reasonable inquiry into them; and (8) possessed a proper purpose in filing them." 51 P.8d at 988. Because both parties in this case acknowledge that Garcia read the complaint and amended complaint, and that she did not harbor any improper purpose in filing them, we need only focus on whether Garcia conducted a reasonable inquiry prior to filing the complaints.

In Trupp I we further noted that "in view of the [Attorney Regulation] Committee's function to determine whether reasonable grounds for discipline exist, we observe that it will be a rare cireamstance in which the attorney regulation counsel who signed a complaint or amended complaint is properly subject to a C.R.CP. l1(a) sanction." Id. (citations omitted). This is because of the procedural safeguards that are part of the structure of the Office of Attorney Regulation Counsel.

Above, we described the process that Garcia followed as she prepared to file the complaint in this case. This procedure is standard, and indeed required by the Colorado Rules of Procedure Regarding Attorney Discipline. See generally C.R.C.P. 251.1 to 251.84. Prior to filing a complaint in an attorney regulation case, the attorney regulation counsel must submit both a report of investigation and a recommendation to the Attorney Regulation Committee C.R.C.P. 251.12. The Committee consists of six lawyers and three members of the public. C.R.C.P. 251.2. It has the options of asking the attorney regulation counsel for further investigation, dismissing the allegations, diverting the matter to the alternatives to discipline program, ordering private admonition, or authorizing the regulation counsel to "prepare and file a complaint against the attorney." CRCP. 251.12(a)-(e) In deciding whether a complaint should be filed the Committee must consider:

(1) Whether it is reasonable to believe that misconduct warranting discipline can be proved by clear and convincing evidence;
(2) The level of injury;
(3) Whether the attorney previously has been disciplined; and
(4) Whether the conduct in question is generally considered to warrant the commencement of disciplinary proceedings because it involves misrepresentation, conversion or commingling of funds, acts of violence, or eriminal or other misconduct that ordinarily would result in public censure, suspension or disbarment.

CRCP. 251.126). Thus, any complaint filed in an attorney discipline case must be investigated to the satisfaction of the Committee, the Committee must have reasonable belief that grounds for discipline exist, and the alleged infraction must be serious enough, in the Committee's opinion, to warrant a formal complaint rather than a private admonition or an alternative to discipline.

We now turn to the question of whether Garcia conducted a reasonable investigation prior to filing the complaint against Trupp, and whether she accurately represented the facts and the law in the complaint. As discussed below, we hold that there is no evidence that Garcia failed to investigate either the facts or the law, and she did not misrepresent them in the complaint. Thus, it was an abuse of discretion for the PDJ to hold that Garcia violated Rule 11.

2. Garcia's Inquiry into the Facts

As described in section II of this opinion, Garcia extensively investigated the facts of this case. Either directly or through an investigator, Garcia reviewed the intake file, spoke several times with Trupp and the mother of the child, spoke with an administrator at the social security office, reviewed the current and previous child support orders, reviewed the records of Trupp's payments, and independently calculated Trupp's arrearages. In fact, the PDJ, in a written decision, found that Garcia

examined the contents of [Trupp's] file, obtained and reviewed substantial portions of the underlying paternity case, interviewed persons having relevant information, including Trupp, ... researched case law and read In re Marriage of Wright.

After completing this research and performing her own calculations with the investigator, Garcia concluded that Trupp was indeed behind in his child support payments. She also knew that Trupp's child was receiving monthly social security payments of approximately $580, and that Trupp believed that these payments would eventually cover his child support obligations. However, she also discovered that Trupp had taken no legal action to apply those payments to his child support obligations.

At the immediate suspension hearing, Trupp conceded all of these points. At the disciplinary - hearing, - however, Trupp changed his argument and claimed that there had been no arrearage since 1996. Given that Trupp himself had previously conceded arrearages in varying amounts, and no one involved could definitively determine when and by how much Trupp was behind, the fact that the parties disagreed on the arrearage does not reflect any lack of investigation on Garcia's part.

Hence, there is no indication that Garcia failed to investigate the facts in an objectively reasonable manner. We now turn to the question of whether Garcia properly investigated the law.

8. Garcia's Inquiry into the Law

Garcia also conducted a reasonable inquiry into the applicable law prior to filing the pleadings. She discovered the relevant case, In re Marriage of Wright, which deals specifically with the question of whether and when social security benefits paid to a child may be credited to a parent's child support obligations. 924 P.2d 1207. Wright interpreted section 14-10-115(16.5), 5 CRS. (1995), which stated that when a child receives social security benefits due to the retirement of a noncustodial parent, "the noncustodial parent's share of the total child support obligation ... shall be reduced in an amount equal to the amount of such benefits." Subsection 14-10-115(16.5) was modified on July 1, 1996, but the text relevant to this case was not altered. Ch. 180, see. 7, § 14-10-115(16.5), 1996 Colo. Sess. Laws 590, 598. In deciding whether this substitution of social security benefits for child support is automatic, or whether it required a court order, Wright concluded:

[In those cases in which a child support obligation has been ordered and the obligated parent becomes eligible for social security benefits, a motion to modify child support is required before the child support obligation of the parent may be reduced by the amount of social security benefits paid for the benefit of the child.

924 P.2d at 1209 (emphasis added). In other words, Wright says that a parent's child support obligation is not satisfied by social seeu-rity payments unless and until a court orders it. Wright also holds that according to seetion 14-10-115(16.5), "tlhe child support obligation of a noneustodial parent can only be reduced prospectively from the date the motion for modification of child support is filed" (emphasis added). Because this is a recent, uncontradicted court of appeals case interpreting a statute that is directly applicable to the facts in Trupp's case, Garcia properly relied upon it. Furthermore, Garcia's interpretation of this case was objectively reasonable.

Because we find that the PDJ had no basis for deciding that Garcia inadequately investigated the relevant facts or law, we must next determine whether Garcia properly represented the facts and law in the complaint.

4. Garcia's Representation of the Facts and Law

Whether an attorney committed an infraction under Rule 11 is a decision committed to the discretion of the trial court, and its ruling will not be disturbed on appeal absent an abuse of discretion. E-470 Pub. Highway Auth. v. Jagow, 30 P.3d 798, 805 (Colo.App.2001), affd on other grounds, 49 P.3d 1151 (Colo.2002). We apply the same standard to review the PDJ's decision and hold that the PDJ's finding that Garcia violated Rule 11 was an abuse of discretion.

In the relevant allegation, the amended complaint stated:

On January 4, 2001, in connection with paying his attorney registration fees for the years 2000 and 2001, pursuant to C.R.C.P. 227(2)(a), the respondent misrepresented to the clerk of the Supreme Court that although he was not in compliance with respect to any outstanding child support orders, he had taken measures to pay back child support. In fact, the respondent had not filed any motions or taken any steps to pay his child support arrear-ages. f

(emphasis added).

In his decision, the PDJ incorrectly wrote that both the complaint and amended complaint alleged that Trupp "knowingly and intentionally misrepresented" his child support situation (emphasis added). In fact, Garcia had removed the words "knowingly and intentionally" from the claim prior to filing the first amended complaint. Nonetheless, the PDJ found that the allegation that Trupp "knowingly and intentionally misrepresented" that he had "taken measures to pay back child support" "was not an accurate statement of the investigative facts available to [Garcia]."

The PDJ relied on Garcia's statement in her investigatory notes: "[Trupp] thinks this [social security money] will be applied to child support arrearages." Because of this notation, the PDJ found that Garcia knew that Trupp subjectively believed the social security payments would be applied to his child support obligations. Thus, the PDJ held that Garcia's allegation that Trupp "knowingly and intentionally misrepresented" having taken measures to pay back child support was not an accurate statement of the facts.

The PDJ held that Garcia's logic was "a legal conclusion not reflective of what Trupp had actually done." Including this "inaccuracy" in the complaint, the PDJ ultimately held, violated Rule 11. Moreover, the PDJ found that Garcia did not disclose to the Attorney Regulation Committee "any information regarding Trupp's state of mind in connection with the written words he added to his attorney registration forms" and therefore Garcia was not protected by the usual procedural safeguards in the attorney regulation system. We reject the PDJ's analysis.

Indeed, Trupp told Garcia that he believed that the social security payments, at some point, would be applied to child support ar-rearages. However, Trupp also admitted that at the time he filed his attorney registration forms he had not yet taken any steps to modify his child support order or to make the payments through the child support registry. As an attorney, Trupp is deemed to have knowledge of the applicable statutes and case law. This is especially true here because Trupp represented clients in domestic relations cases. At the time that Trupp swore that he had taken "measures" to pay his arrearage, he knew or should have known that under Wright he was not legally satisfying his child support obligations.

Under the facts and law known to her, it was not unreasonable for Garcia to allege that Trupp had made a misstatement when he said that he had taken "measures" to comply with his child support order. Thus, it was an abuse of discretion for the PDJ to hold that Garcia violated Rule 11. Because we base our decision on Garcia's own actions and knowledge, we need not examine whether the Attorney Regulation Committee's pre-filing review of the complaint further insulated Garcia from Rule 11 sanctions, as in most cases it would.

V. - Conclusion

We reverse the finding of the presiding disciplinary judge and hold that Garcia did not violate Rule 11. We remand this case to the PDJ with orders to deny Trupp's Rule 11 motion.

Justice BENDER and Justice KOURLIS do not participate.

      . Trupp filed the forms for both years on the same day in January 2001.

      . Although Trupp indicated that he was obligated to pay $350 per month, this was incorrect. The court order actually required that he pay $250 in child support and an additional $50 to make up for arrearages-a total monthly obligation of $300.

      . When we refer to the first and second claims against Trupp, we are referring to the claims in the amended complaint.

      . The first payment did not reach the child until January 2001, but this initial payment included six months worth of payments-August through January.

      . Ai neither the immediate suspension hearing, nor the disciplinary hearing did the PDJ make findings of fact regarding the amount of Trupp's child support arrearage. Thus, it is unclear when and by how much Trupp was behind in his payments. This confusion stems from Trupp's erratic payment record, at least two modifications of the original court order, and some payments that were meant to reimburse the mother for her attorney fees.
      Both at the immediate suspension hearing and at the attorney discipline trial, Trupp was able to discredit Garcia's calculations. Moreover, the mother, another lawyer, testified that she could not figure out whether Trupp was behind, and if so, by how much.

      . This lengthy delay in ruling on the motion is unfortunate. We direct the PDJ to decide such issues promptly in the future.