State of New York
Supreme Court : County of Monroe

- against -

Index No. 98/7474

ANDREW V. SIRACUSE, J.

Contrary to the picture given in television series like L.A. Law and The Practice, a good deal of most lawyers' day is occupied with routine paperwork. Some firms are more devoted to such activity than others, and while those that specialize in foreclosures and collections may be less than glamorous, they fulfill a necessary task when carrying out the often complex procedures our law imposes in order to protect the rights of debtors.

These procedures may often appear more intimidating to the debtor than helpful, and there are surely attorneys and corporate clients who make use of this impression. In addition, debtors are often in a highly vulnerable position; virtually all of them are less able to pay off the debt than their creditors are to write the debt off. Fearing bankruptcy or the money judgments that could bring it about, and loathe to make the sacrifices that might avert either, debtors have turned to firms like the defendants' here. Mr. Capoccia offers to negotiate reduced settlements with creditors without the stringencies of credit counseling or the long aftermath of consumer bankruptcy.

This court has received no fewer than seven cases in which Mr. Capoccia represents the defendant and in which the plaintiff is Citibank. All seven relate virtually identical facts, a defendant's default in meeting credit card obligations. All seven defendants interposed answers containing three affirmative defenses and two counterclaims. With minor variations in wording they are identical. The affirmative defenses are the alleged failure to state a cause of action, a claim that the credit card agreement is unconscionable, and a supposed failure to comply with Personal Property Law §§ 402 and 413. The two counterclaims are that Citibank violated the truth in lending act, 15 USC § 1601 et seq. and that the agreement is not in plain language and thus violated General Obligations Law § 5-702.

Citibank has moved to dismiss these defenses and counterclaims and to impose sanctions on the Capoccia firm for frivolous defenses. Its motions go beyond this, however. In attempting to bolster its sanctions argument, the bank has presented seven identical and identically voluminous sets of supporting papers, each a hodgepodge of earlier decisions by various courts, copies of pleadings by the Capoccia firm in other cases, and similar material, all intended - no doubt - to paint the Capoccia firm as engaging in a habitual course of unreasoned and unjustified obstructionism.

Not to be outdone, the defendants (or, more accurately, their law firm, whose conduct is the true bone of contention here) have responded with similarly repetitive and expansive papers, showing that the Capoccia firm has obtained settlements on behalf of many of its clients (the settlement documents are reproduced with the defendants' names struck out) and has at times prevailed in courts as well as been criticized therein. The firm requests sanctions against Citibank for bringing frivolous motions for sanctions.

Conspicuously absent from the papers is any consideration of the facts of the various actions that are supposedly before the court. Indeed, the credit card actions here are little more than a pretext. The bank has drafted its papers not to prosecute the cases against these debtors, but to show that the Capoccia firm does nothing more than raise bogus defenses and counterclaims in order to frustrate and stall legitimate collection efforts, with an eye to wearing out creditors and obtaining settlements founded more on weariness than anything else. The defendants' firm, for its part, is intent to show that banks and collection firms are heedless of the law and inveigle consumers into taking on obligations they can neither understand nor pay; once the fly is caught in their web these agents harass and persecute their innocent victims until they pay both principal and unconscionable interest.

There can be no other explanation for the size and character of the papers and for the bank's unjustifiable misuse of the Request for Judicial Intervention form. Attorneys filing an RJI are asked to note any related cases on a space on the reverse of the form, and with minor exceptions related cases are assigned to the same Justice. It was through this vehicle that these seven cases came to be heard together.

Cases are related to one another, however, because of specific common questions of fact. In the interests of judicial economy they are heard by the same court, so that one factual finding or legal ruling may dispose of more than one case. These cases, however, are not related. One credit card case may resemble another, as mortgage foreclosures generally do; but the resolution of the issues regarding Mr. DiNorma's debt will have no bearing on, say, the validity of the claim against Ms. Viggo or Ms. West.

The only common question these cases have is the conduct of the defendants' firm. Moreover, the bank has tried to put on trial not only that firm's conduct in these seven cases, but its entire manner of doing business. In short, by taking improper advantage of the related case system, which relies entirely on the probity and forthrightness of attorneys, and by overwhelming the court with written material unrelated to the genuine issues presented in the complaint and answer, the bank has attempted to transform a court of law into a grievance committee.

This is a role that the court is unwilling to undertake. The vast majority of the material submitted and the arguments made are unrelated to the cases at hand and to the issues cognizable by this court, and are frivolous in being objectively calculated to harass and punish the defendants' firm. Attorneys for Citibank are to pay $1000.00 to the Lawyers' Fund for Client Protection for this violation of section 130-1.1 of the Rules of the Chief Administrator.

The conduct of the Capoccia firm in cases not before this court is a matter for the Grievance Committee and the bar as a whole. Its conduct of these seven cases is properly before it, however, and this court's disapproval of the conduct of the bank's attorneys does not blind it to the nature of the Capoccia firm's behavior. The defenses and counterclaims are all without any merit whatsoever, most of them on their face and the rest because of their general and unsupported nature. For example, Personal Property Law Article 10, from which sections 402 and 413 come, deals with retail installment contracts and by its own language is inapplicable to credit cards. The third affirmative defense is thus without any foundation. So, too, is the second counterclaim, that the agreement violates GOL 5-702 because it is not written in plain language. The agreement has been supplied to the court, and is in plain enough language for anyone with a high-school education; but, more to the point, GOL 5-702 explicitly states that a violation is not a defense to an action on a debt (5-702[b][1]). The defendants also have an obligation to show how the agreement in each particular case was unconscionable and how the Truth in Lending Act was violated. For all the verbiage in the defendants' (functionally identical) memoranda of law about the need to address the specific facts in each case, the defendants - presumably the ones with actual knowledge of the facts - have come forward with nothing on these issues.

The defendant bears the burden of showing evidentiary support for counterclaims, and in this posture the failure to support these claims is fatal. Merely asserting defenses and claims does not require the plaintiff to disprove them.

Finally, the complaint very clearly states a cause of action.

There is no doubt that the defendants had no basis in law or in fact for the defenses and counterclaims raised in the answer. This conduct, too, is frivolous within the meaning of rule 130-1.1. The Capoccia firm, then, is also directed to pay $1000.00 to the Lawyers' Fund for Client Protection. In addition, because these proceedings were necessitated by the frivolous defenses and counterclaims raised by the Capoccia firm, it is directed to pay attorneys' fees of $350.00 per case, a total of $2450.00, to Solomon & Solomon.

The motions to dismiss the defenses and counterclaims in each of these cases are granted, and the plaintiff's counsel should prepare an order so stating and requiring the payments described above. All monies are due within 30 days of the signing of the order. This constitutes the decision of the court.

DATED: Rochester, New York

January 8, 1999

Andrew V. Siracuse, J.S.C.

Design © 1997 Michael Steinberg. No copyright subsists in the decision texts, which are government documents.

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