Syracuse, NY – A town of Clay man who was sued for a credit card debt has won the right to pursue his own lawsuit against the debt collector for suing him in the wrong court.
The U.S. Second Circuit Court of Appeals in New York last week reinstated the lawsuit that Jonathan Hess of Clay filed against Cohen & Slamowitz charging a violation of the federal Fair Debt Collection Practices Act.
Hess claimed the Nassau County debt collector violated the FDCPA by suing him in Syracuse City Court for a $1,520.68 credit card debt when he doesnâ€™t live in the city.
The initial lawsuit against Hess was filed in Syracuse City Court by Woodbury-based Cohen & Slamowitz on behalf of Midland Funding. Hess hired lawyer Anthony Pietrafesa, who challenged the lawsuit on jurisdictional grounds because none of the parties resided in Syracuse or a contiguous town as required by law.
Hess then sued the debt collector in federal court, claiming C&S violated the FDCPA by suing him in a judicial district where he did not reside.
U.S. District Judge Glenn Suddaby dismissed Hessâ€™ lawsuit in January, concluding the original debt collection lawsuit against Hess was properly filed within the county in which Hess resides. Suddaby also noted he could not conclude the filing of the original lawsuit in Syracuse was intended to be unfair, harassing or deceptive under the FDCPA.
But the federal appeals court concluded â€“ in the first time the issue has been raised at that level in this circuit â€“ that â€œjudicial districtâ€ meant the municipal court where the debtor actually lives or the state Supreme Court for the county of residence. That meant the original lawsuit against Hess could have been filed in Clay town court or the state Supreme Court located directly across the street from Syracuse City Court.
The Second Circuit did not rule that the original lawsuit filing actually violated the FDCPA, only that Hess could pursue his claim in federal court.
Pietrafesa said a handful of big collection agencies out of New York City and Long Island routinely file debt collection lawsuits in Upstate city courts because the filing fee is less in city court than in state Supreme Court and itâ€™s more convenient to handle those matters in city court than in the municipal court where the debtor actually lives.
It currently costs $130 to get a debt collection case before a city court judge but up to $350 to get before a state Supreme Court justice, Pietrafesa said. The vast majority of debt-collection lawsuits typically result in a default judgment, he added.
Pietrafesa said Hess could receive up to $1,000 for a violation of the FDCPA, plus reimbursement for the legal costs to challenge the case in City Court and to pursue the lawsuit in federal court.
Pietrafesa said he hopes the Second Circuit decision encourages the debt-collection agencies to file lawsuits in the proper courts and prompts court clerks to be more attentive to the addresses of the debtors before filing default judgments.
Syracuse lawyer Daniel Ryan, who represents C&S, conceded the Second Circuit decision may impose more of a burden on debt collectors. But it also can increase the costs to the debtors because the increased filing costs to pursue a case in state Supreme Court and the higher court costs that court can award to the winning party are likely to be passed right along to the debtor when the collection agency wins a judgment, he said.
Ryan said he did not anticipate any effort on his clientâ€™s behalf to appeal the Second Circuit decision to the U.S. Supreme Court. Instead, he said the company would focus on defending against Hessâ€™ lawsuit in federal court.
Ryan said he believes C&S has a number of viable defenses, including a claim that the original lawsuit filing in Syracuse was a simple error and not a violation of the FDCPA.