United States District Court, W.D. New York
DECISION AND ORDER
FRANK P. GERACI, JR., United States District Court Chief
Enhanced Acquisitions, LLC (“Enhanced”), Northern
Resolution Group, LLC (“NRG”), Delray Capital,
LLC (“Delray”), Douglas MacKinnon, and Mark Gray
bring these counterclaims pursuant to the Equal Access to
Justice Act (“EAJA”), 28 U.S.C. § 2412
(2012), against Plaintiffs Consumer Financial Protection
Bureau (“CFPB”) and the People of the State of
New York (“the State”). See ECF Nos. 13,
18. Defendants claim that, pursuant to the EAJA, they are
entitled to their fees and expenses incurred.
filed their Complaint on November 2, 2016. ECF No. 1. On
February 27, 2017, Defendants Enhanced, NRG, and MacKinnon
filed their Answer, which includes the counterclaim at
issue. ECF No. 13. Defendants Delray and Gray
filed their Answer with a near-identical counterclaim on
March 29, 2017. See ECF No. 18. The CFPB answered
the two counterclaims on March 20, 2017 (ECF No. 17) and
April 21, 2017 (ECF No. 22), respectively, and the State
answered on March 9, 2017 (ECF No. 16) and April 10, 2017
(ECF No. 21), respectively. On June 8, 2017, the CFPB and
State filed their Joint Motion for Judgment on the Pleadings
as to Defendants' Counterclaims under Federal Rule of
Civil Procedure 12(c). ECF No. 27. For the reasons that
follow, Plaintiffs' Motion is GRANTED.
allege that Defendants created and operated “a massive,
illegal debt-collection scheme” in violation of
“the Consumer Financial Protection Act of 2010 (CFPA),
12 U.S.C. §§ 5531(a), 5536(a), the Fair Debt
Collection Practices Act (FDCPA), 15 U.S.C. §§
1692-1692p, N.Y. Executive Law 63(12), and N.Y. General
Business Law §§ 349 and 601.” ECF No. 1, at
1- 2. In both of the Answers, Defendants maintain that
“Plaintiffs' investigation, allegation and
prosecution in this matter are not justified and, upon
information and belief, were made in violation of 28 U.S.C.
§ 2412.” ECF No. 13, at 14; ECF No. 18, at 14.
Accordingly, each Answer includes a counterclaim for
Defendants' “fees, costs, and other further
relief.” See ECF No. 13, at 14; ECF No. 18, at
standard of review for a Rule 12(c) motion for judgment on
the pleadings is the same as that governing a Rule 12(b)(6)
motion to dismiss for failure to state a claim.
E.g., Cleveland v. Caplaw Enters., 448 F.3d
518, 521 (2d Cir. 2006). To be sufficient, a pleading
“does not require ‘detailed factual allegations,
' but it demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2002) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). In that vein, “[a] pleading that offers
‘labels and conclusions' or ‘a formulaic
recitation of the elements of a cause of action will not
do.' ” Id. (quoting Twombly, 550
U.S. at 555). Rather, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.' ”
Id. (quoting Twombly, 550 U.S. at 570).
That measure of plausibility requires “more than a
sheer possibility that a defendant has acted
unlawfully”-the pleaded facts must permit a
“reasonable inference” of liability for the
alleged misconduct. Id.; see also Faber v.
Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011)
(instructing that “all reasonable inferences” are
to be taken in the plaintiff's favor). Beyond the
complaint, a court ruling on a 12(c) motion also considers
“the answer, any written documents attached to [the
complaint or answer], and any matter of which the court can
take judicial notice for the factual background of the
case.” E.g., L-7 Designs, Inc. v. Old
Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011) (quoting
Roberts v. Babkiewicz, 582 F.3d 418, 419 (2d Cir.
2009) (per curiam)).
(d)(1)(A) of the EAJA provides that, subject to any statutory
a court shall award to a prevailing party other than the
United States fees and other expenses, in addition to any
costs awarded pursuant to subsection (a), incurred by that
party in any civil action (other than cases sounding in tort)
. . . brought by or against the United States in any court
having jurisdiction of that action, unless the court finds
that the position of the United States was substantially
justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A). The Second Circuit has
instructed that, with respect to the EAJA, a
“prevailing party” is one that has
“achieve[d] some material alteration of the legal
relationship of the parties, [and] the change must also be
judicially sanctioned.” Ma v. Chertoff, 547
F.3d 342, 344 (2d Cir. 2008) (quoting Roberson v.
Guiliani, 346 F.3d 75, 79 (2d Cir. 2003)) (adopting the
definition of “prevailing party” articulated in
Buckhannon Bd. & Care Home, Inc. v. W.Va.
Dep't of Health and Human Res., 532 U.S.
598 (2001), for fee requests under the EAJA).
counterclaims must be dismissed as procedurally improper.
Defendants cannot be construed as “prevailing
parties” entitled to fees because they have not
achieved the requisite alteration in legal relationship with
Plaintiffs. To the contrary, Defendants packaged their
premature fee requests as counterclaims in their respective
Answers to Plaintiffs' Complaint. Tellingly, the EAJA
instructs that the proper vehicle for a fee request is an
application showing eligibility after a party has
prevailed-not as a counterclaim within an answer.