Providian Nat. Bank v. McGowan

• Decision Date: 19 February 1999
• Citation: 687 N.Y.S.2d 858,179 Misc.2d 988
• Parties: , 1999 N.Y. Slip Op. 99,111 PROVIDIAN NATIONAL BANK, Plaintiff, v. John L. McGOWAN, Defendant.
• Court: New York City Court

Page 858

687 N.Y.S.2d 858

179 Misc.2d 988, 1999 N.Y. Slip Op. 99,111

PROVIDIAN NATIONAL BANK, Plaintiff, v. John L. McGOWAN, Defendant.

Civil Court, City of New York,

Kings County.

Feb. 19, 1999.

Forster & Garbus, Farmingdale, for plaintiff.

Andrew F. Capoccia, L.L.C., Albany (Michael Scaptura of counsel), for defendant.

BRUCE M. BALTER, J.

This opinion discusses (1) plaintiff's motion for summary judgment; (2) the frivolous nature of the defendant's opposition to the plaintiff's claim and to said motion; and (3) the appropriate monetary award of costs to the plaintiff and sanctions against the defendant's attorneys, Andrew F. Capoccia, L.L.C., and Michael Scaptura, Esq., an associate of that firm, for engaging in frivolous conduct before this Court.

FACTS AND PROCEDURAL BACKGROUND

On or about July, 1996 the defendant, John L. McGowan, entered into a loan agreement with the plaintiff, Providian National Bank, through its predecessor, First Deposit National Bank (hereinafter referred to as "Providian"). During September, 1997, the defendant borrowed $14,000.00 pursuant to the agreement. Since then, with the exception of a single $300.00 payment, the defendant has failed to make payments towards this debt.

Plaintiff commenced this action to recover the amount due under the agreement, $15,045.70 with interest from April 4, 1998 plus attorneys' fees in the amount of $3,009.14. Plaintiff's counsel made a routine motion for an summary judgment pursuant to CPLR Rule 3212. Defendant opposed the motion, not by challenging plaintiff's view of the facts, but by alleging that the plaintiff violated a number of statutes and general principals of law. Plaintiff submitted a reply affirmation alleging that the defendant's affirmative defenses and counterclaims are frivolous, and requesting that the Court levy sanctions against the plaintiff's attorneys.

After reviewing all the documents submitted with the motion, the Court decided that a sanction hearing was warranted. On November 16, 1998, notices were sent to both sides stating that the Court would consider awarding costs and imposing sanctions. The parties were given until December 30, 1998 to submit additional affidavits and memorandum of law, and a hearing was scheduled for January 19, 1999.

No additional papers were submitted to the Court. On the sanction hearing date, the defendant's attorneys, The Law Offices of Andrew F. Capoccia, LLC, were represented by Ona Erikes, Esq. Ms. Erikes stated that she was an associate with Mr. Capoccia's law firm, hired three months earlier to work in the firm's bankruptcy department located in Jericho, New York. She claimed to be unfamiliar with her firm's "debt reduction" practice, and that she had never been introduced to Michael Scaptura, Esq., the attorney who signed the defendant's opposition papers. Mr. Scaptura, Esq. works in the firm's Albany, New York office, approximately a four hour drive from Jericho, New York.

Mr. Scaptura apparently could not attend this Court's hearing because he was engaged in another proceeding. Ms. Erikes could not give the Court any details regarding Ms. Scaptura's scheduling conflict, and Mr. Scaptura did not submit an Affirmation of Actual Engagement to the Court.

All that Ms. Erikes came prepared to do was apologize for her employer's tactics and assure the Court that the firm would never engage in these practices again. Under the circumstances, within the limited scope of what her employer expected of her, Ms. Erikes did her job well. Nevertheless, her presence could not compensate for the firm's failure to send a more experienced partner or associate to make this appearance.

PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

The plaintiff has shown by the submission of affidavits and other documentary evidence a prima facie entitlement to summary judgment. Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718 (1980). The burden now shifts to the defendant to tender evidence that there is a triable issue of fact. GTF Marketing, Inc. v. Colonial Aluminum Sales, Inc. 66 N.Y.2d 965, 498 N.Y.S.2d 786, 489 N.E.2d 755 (1985); McCormack v. Graphic Machinery Services, Inc., 139 A.D.2d 631, 527 N.Y.S.2d 271 (2nd Dept., 1988). In considering the defendant's opposition, the Court is obligated to accept all statements made by the defendant as true. Creighton v. Milbauer, 191 A.D.2d 162, 594 N.Y.S.2d 185 (1st Dept., 1993).

Defendant does not raise any material issues of fact. He does not deny that he entered into an agreement with the plaintiff, nor does the he challenge the plaintiff's contention that he owes the plaintiff the amount claimed in the complaint. Instead he raises three affirmative defenses and two counterclaims.

Defendant's first affirmative defense states that the plaintiff's complaint fails to state a cause of action. Pleadings must be Defendant's second affirmative defense alleges that the agreement at issue is unenforceable because it is unconscionable and against public policy. The doctrine of unconscionability contains both procedural and substantive aspects, and whether a contract or clause is unconscionable is to be decided by a court against the background of the contract's commercial setting, purpose and effect. Sablosky v. Gordon Co., 73 N.Y.2d 133, 138, 538 N.Y.S.2d 513, 535 N.E.2d 643 (1989).

liberally construed, and a complaint will not be dismissed when a cause of action may be discerned. Gorman v. Gorman, 88 A.D.2d 677, 451 N.Y.S.2d 455 (3rd Dept., 1982). Plaintiff's complaint states the simplest of claims: breach of a loan agreement due to nonpayment. It is drafted so concisely that defendant makes no attempt to support this affirmative defense in his opposition to the motion. Furthermore, the Appellate Division, Second Department has held that the defense that a complaint does not state a cause of action cannot be interposed in an answer. The sufficiency of a complaint may only be tested by a motion to dismiss pursuant to CPLR 3211(a)(7). Guglielmo v. Roosevelt Hosp. Staff Housing, Co., Inc., 222 A.D.2d 403, 635 N.Y.S.2d 42 (2 Dept., 1995). Therefore, defendant's first affirmative defense is without merit.

A claim of procedural unconscionability is judged by whether the party seeking to enforce the contract used high pressure tactics or deceptive language, and whether there was inequality of bargaining power between the parties. Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 537 N.Y.S.2d 787, 534 N.E.2d 824 (1988). Whether or not the plaintiff used high pressure tactics to force the defendant into this agreement is not at issue. Neither party found it necessary to describe the setting in which the agreement was consummated. Defendant's affidavit also does not support a claim that the contract used deceptive language or that there was inequality of bargaining power. Defendant merely states that he did not understand certain terms of the contract. He does not explain why these terms are deceptive, and he offers the Court no explanation as to how the true meaning of these terms contributed to his default. Nor does the defendant argue that there was inequality of bargaining power between the parties. Unsolicited offers of credit are numerous in our society. It is unlikely that the defendant had no other choice but to enter into a credit agreement with the plaintiff.

The test for substantive unconscionability is whether one or more of the key terms of the contract is unreasonably favorable to one party. People v. Two Wheel Corp., 71 N.Y.2d 693, 699, 530 N.Y.S.2d 46, 525 N.E.2d 692 (1988). Although there is no general test for the unreasonableness of a contract, the Court of Appeals has stated that "[a]n unconscionable contract [is] one which 'is so grossly unreasonable or unconscionable in light of the mores and business practices of the time and place as to be unenforceable according to its literal terms.' " Gillman, 73 N.Y.2d at 10, 537 N.Y.S.2d 787, 534 N.E.2d 824, quoting Mandel v. Liebman, 303 N.Y. 88, 94, 100 N.E.2d 149. Measured by this standard, a simple loan with an interest rate not barred by the legislature, which the defendant breached by failing to make monthly payments without any explanation whatsoever, is not unreasonable as a matter of law. Accordingly, defendant's second affirmative defense is without merit.

Defendant's third affirmative defense claims that the plaintiff "failed to comply with the requirements set forth in the New York Personal Property Law, Article 10 Sections 402 and 413." Defendant's attorney does not state how the agreement failed to comply with this statute; he leaves that task to the defendant himself. Defendant states that to the "best of my recollection, I do not believe a representative of the plaintiff signed the agreement."

Personal Property Law §§ 402 and 413 apply to Retail Instalment Contracts. In contrast, in this case the agreement between the parties was a simple arrangement by which the plaintiff agreed to extend credit to the defendant in exchange for the defendant's repayment of the principal of the loan plus interest. No evidence has been submitted Even if these provisions of the Personal Property Law did apply, the defendant does not present a question of fact that the plaintiff violated the laws. Personal Property Law §§ 402 and 413 require that a financing agency send the retail buyer a fully executed copy of a credit agreement. Since the defendant was sent the agreement, and logic has it that the defendant must have received the agreement to comment on his inability to understand it, defendant's uncertainty about the presence on the agreement of a signature of a plaintiff's representative does not create a question of fact, and is irrelevant to this Court's consideration of this motion. Therefore, defendant's third affirmative defense is without merit.

that plaintiff sold goods or services to the defendant. Moreover, the agreement at issue does not even contemplate the issuance of...