The opinion of the court was delivered by: Hon. Hugh B. Scott
Order and Report & Recommendation
Before the Court are: the plaintiff's motion to dismiss the counterclaim (Docket No. 5), the defendant's motion to dismiss the complaint (Docket No. 9), and plaintiff's motion to compel discovery (Docket No. 15).
The plaintiffs, John and Carol Elder (referred to collectively as the "Elders"), brought this action against David J. Gold, P.C. ("Gold") alleging violations of the Fair Debt Collection Practices Act (15 U.S.C. §1692 et seq.). The plaintiffs acknowledge that they defaulted on a debt owing from the purchase of a campground membership from Niagara Lazy Lakes Camping Resort, Inc. ("Lazy Lakes"). (Docket No. 1 at ¶ 17). The purchase agreement stipulated that venue was proper in any county in which the agreement was signed. (Docket No. 1 at ¶ 14). The plaintiffs assert that they signed the purchase agreement in Niagara County and that Lazy Lakes is located in Niagara County (and does not do business in any other county) (Docket No. 1 at ¶¶ 12, 15). The Elders allege that on December 11, 2007, Gold filed a lawsuit against the plaintiffs in the Civil Court of the City of New York asserting that the purchase agreement was signed in the County of New York. (Docket No. 21). The plaintiffs assert that they hired counsel to file an answer in that state court action, and that in their answer, they alerted the defendant to the fact that the defendant had falsely represented that Lazy Lakes address was 116 John Street, New York, New York 10038. The defendants eventually filed a motion for summary judgment in the New York City Civil Court action, again allegedly misrepresenting that Lazy Lakes' address was at 116 John Street in New York, New York. (Docket No. 1 at ¶ 25). However, the plaintiffs defaulted with respect to such motion.*fn1 The plaintiffs assert that Gold violated 15 U.S.C. §§1692e, 1692e(2)A), 1692e(5), 1692e(10) and 1692f by falsely representing that Lazy Lakes' address was 116 John Street, New York, New York 10038; that the transaction between the Elders and Lazy Lakes took place in New York County; and by presenting an altered copy of the parties' contract to the Court in the state court proceeding. (Docket No. 1 at ¶ 30). Further, the plaintiffs contend that Gold violated 15 U.S.C. §1692i(a) by suing them in a county other than the county that plaintiffs signed their contract with Lazy Lakes or where the plaintiffs reside. (Docket No. 1 at ¶ 31).
The defendant filed an answer including several affirmative defenses and two counterclaims. In the first counterclaim, the defendant asserts that the plaintiffs instituted this action as a means of harassment in retaliation for defendant's attempts to collect the underlying debt (Docket No. 4 at ¶ 80). Gold also asserts a claim asserting that this action was commenced "as a means of harassment and intimidation" and that he "may have lost a client and lost substantial income." (Docket No. 4 at ¶ 82). The defendant repeated these counterclaims in an Amended Answer and Counterclaims dated December 5, 2008 (Docket No. 8, ¶¶ 81-84) and in a Second Amended Answer and Counterclaims dated December 8, 2008 (Docket No. 10, ¶¶ 81-84).
Motion to Dismiss Counterclaims
The plaintiff has moved to strike and/or dismiss the defendant's two counterclaims. The plaintiff notes that 15 U.S.C. §1692k(a)(3) allows a defendant to recover costs and attorneys fees from a plaintiff if the action was brought in bad faith and for the purpose of harassment, but asserts that such a claim is properly brought by motion at the end of a case and that such a claim is not a proper basis for a counterclaim. See Hardin v. Folger, 704 F.Supp. 355 (W.D.N.Y. 1988)(Defendants in action brought under Fair Debt Collection Practices Act could not seek award of attorney's fees based on claim that action was filed in bad faith by filing counterclaim, but rather were required to file motion for attorneys' fees if court determined that action was brought in bad faith). The defendant does not dispute the plaintiff's argument, and states that he "has no objection to having its first counterclaim treated merely as an affirmative defense for attorneys' fees if that will make plaintiffs happy." (Docket No. 9 at ¶ 60).
The plaintiff also seeks to dismiss the second counterclaim on the grounds that the defendant's claim for damages is too vague and speculative, and that there is no nexus between the filing of this lawsuit and defendant's fear of losing clients. The defendant has agreed to withdraw the second counterclaim. (Docket No. 9 at ¶¶ 62).*fn2
In light of the above, it is recommended that the two counterclaims asserted by the defendant in this case be dismissed.
Motion to Dismiss the Complaint
The defendant asserts that Lazy Lakes utilizes a collection agency in the State of Alabama ("Bayside") to collect past due membership fees, and that when unsuccessful, Bayside forwards claims (with Lazy Lakes' approval) to the defendant to commence litigation. (Docket No. 9 at ¶ 3). The defendant contends that Lazy Lakes' claim against the plaintiff was forwarded to the defendant on October 22, 2007, and that on that same date, the defendant sent a written demand for payment to the plaintiffs. (Docket No. 9 at ¶ 5). Gold states that the plaintiff did not respond to the written demand, and that "based upon information supplied by defendant's client", Gold commenced litigation against the plaintiffs in the Civil Court of the City of New York. (Docket No. 9 at ¶ 6). The defendant asserts that counsel for the plaintiffs' in the instant case, filed a verified answer on behalf of the plaintiffs in the New York City Civil Court action. The defendant contends that although the plaintiffs asserted an affirmative defense alleging improper venue, the plaintiff did not raise the affirmative defense of a lack of in personam jurisdiction. (Docket No. 9 at ¶¶ 7-9). The plaintiffs took no further action in the New York City Civil Court action and failed to respond to a motion for summary judgment filed in that case. (Docket No. 9 at ¶¶ 10-13). A judgment was entered against the plaintiffs in the amount of $7,814.40. (Docket No. 9 at ¶ 14). The plaintiffs did not contest the judgment in the New York City Civil Court. (Docket No. 9 at ¶ 15-16).
Gold contends that he did nothing wrong in his prosecution of the claim against the plaintiffs and submits that if he had received a call from plaintiffs' counsel after the filing of their answer containing a venue objection that he would have investigated their claims. (Docket No. 9 at ¶ 18). Gold states that his office "is located in a large office building in downtown Manhattan" and that "inadvertently ... the wrong sample copy of a breach of contract pleading was pulled up on the computer and amended to assert the claims against the plaintiff." (Docket No. 9 at ¶ 24). The defendant asserts that New York State Consumer Credit Transaction Act allows for an action to be maintained in either the county where the plaintiff or the defendant resides, or in the county in which the transaction took place, and thus, "based upon the information inadvertently not corrected on the face of the pleadings, on its face, [Lazy Lakes'] action was proper in the Civil Court." (Docket No. 9 at ¶ 24).
The plaintiff asserts that its principal claim in this case is that the defendant violated 15 U.S.C. §1692i(a) when he sued the plaintiffs in the New York City Civil Court. (Docket No. 13 at page 2). Section 1692i(a) provides:
Any debt collector who brings any legal action on a debt against any consumer shall--(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity--
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the action.
The plaintiffs also assert that Gold violated §1692e by presenting the New York City Civil Court with an altered copy of the parties' contract. (Docket No. 1 at ¶ 30). In support of this claim, the plaintiffs point to the fact that in connection with the state court motion for summary judgment, Gold "provided a copy of the entire contract entered into between the parties, but cut off the provision of the contract that provided that venue was proper in the county in ...