A state appeals court in Washington has affirmed an attorney’s fee award for the plaintiff in a debt collection case, agreeing with the lower court that counterclaims brought by the defendant, a collection operation, were frivolous.
The background: The case originated from allegations that the defendant, a licensed debt collection agency, attempted to collect an amount of interest exceeding what was permitted by a previous judgment. Represented by his legal counsel, the plaintiff filed a lawsuit asserting that the defendant’s actions violated state and federal laws governing collection practices, including Washington’s Consumer Protection Act (CPA).
- In response, the defendant filed counterclaims against the plaintiff’s legal representation. These claims alleged that the plaintiff’s attorneys lacked the authority to file the lawsuit, asserting violations of the CPA and the Credit Repair Organizations Act (CROA).
- The defendant argued that the plaintiff’s legal counsel operated as a “credit repair organization” and had not complied with regulatory requirements, rendering their actions unauthorized.
- The trial court dismissed the defendant’s counterclaims, determining that they lacked any factual or legal merit. It also found that the counterclaims were filed in bad faith and for purposes of harassment, rather than legitimate legal redress. Consequently, the court awarded attorney fees and costs to the plaintiff.
The ruling: The appellate court affirmed the lower court’s decision, agreeing with the trial court’s analysis. The key findings included:
- The plaintiff had explicitly authorized his legal counsel to file the lawsuit, as evidenced by a signed legal services agreement and supporting declarations.
- The defendant’s assertion that the plaintiff’s legal counsel was acting as a “credit repair organization” was unfounded, as there was no evidence to suggest that the counsel engaged in activities regulated by the CROA.
- The CPA claims against the plaintiff’s counsel were similarly dismissed because the provision of legal services in litigation does not constitute “trade or commerce” under the CPA.
- The appeals court did deny a request from the plaintiff to have his appellate attorney’s fees covered by the defendant.
