Can a Defendant File a Counterclaim under the FDCPA

BY JAY WINSTON, WINSTON & WINSTON, P.C.

Recent Cases of Interest: Procedural

Can a defendant file a counterclaim under the FDCPA – Yes

Stoddard v. Nationwide Recovery Serv., 2003 U.S. Dist. LEXIS 21249 (U.S. Dist. , 2003)

The plaintiff, filed a class action complaint, alleging violations of the provisions of the FDCPA, 15 U.S.C. § 1692d(a) and §§ 1692e(10) and (11). The defendant collection agency filed a counterclaim, alleging that plaintiff had brought the claims in bad faith and for harassment. Plaintiff sought an award of attorneys’ fees and costs pursuant to 15 U.S.C. § 1692k(a)(3). The plaintiff moved to dismiss the counterclaim as premature.

The court held that the defendant was permitted to file a counterclaim15 U.S.C. § 1692k(a)(3). The stated that “although it might be better practice to raise a claim under § 1692k(a)(3) in a motion at the conclusion of the litigation, that procedure does not appear to be jurisdictionally required.” Also, the court held that, while the court will not address this until after trial, the counterclaim cannot be dismissed either.

This decision is important as it opens the doors for the defendant to conduct discovery on this issue. Thus, defendant can use the discovery process to establish damages for a frivolous claim. In addition, the defendant now has an additional tool to obtain evidence to support an award of Rule 11 sanctions, as well as damages under 15 U.S.C. § 1692k(a)(3).

The content of this column is not a substitute for consultation with counsel, nor is it intended for use as a specific response to a set of circumstances. Questions concerning the column may be addressed to Jay Winston at 212/532-2700