The law in New York (indeed, in most states – it is so ubiquitous it is known as "the American rule") is that attorney's fees are not recoverable damages unless expressly authorized by a contractual agreement or by statute. (See, e.g. Green Harbour Homeowner's Ass'n, Inc. v. G.H. Dev. & Constr., Inc., 763 NYS2d 114 [NY App. Div 2003]).
Debt collectors and debt buyers attempting to collect on credit card agreements often include a claim for attorney's fees in their complaints against consumers. And in fact, most credit card agreements contain a provision allowing them to do so. If you are a consumer in a New York court, what do you do? Are you stuck? We don't think so.
Citing to Citibank (South Dakota), N.A. v Martin, 11 Misc 3d 219 [Civ Ct, New York County 2005], we argue that "a request for legal fees requires presentation of an agreement to pay such fees, tendered by an appropriate affidavit, and an attorney's affirmation detailing the fee arrangement, the legal services provided and the relevant factors bearing on the claim."
Martin further states, "A copy of the agreement to pay must be submitted to the court, for absent a copy of such an agreement, New York courts may not grant such an application." Id.
Additionally, New York's Retail Installment Sales Act limits the recovery of attorney's fees on credit card cases to an amount not exceeding "twenty per centum of the amount due and payable." Id., citing to NY Personal Property Law § 413[5].
Martin requires that the affirmation submitted by the attorney must be sufficient to prove to the court that the fees requested reflect actual legal services rather than the "contractual imposition of a penalty."
We find in many cases that the plaintiff cannot prove its contract claim (particularly if it is a debt buyer), either because it can produce no contract at all, or it cannot produce an admissible contract because it is unable to authenticate it as required by evidentiary rules. Without an admissible contract, we argue, plaintiff has no right to collect attorney's fees (or anything else, for that matter).
In the rare case where the plaintiff is able to present an admissible contract, they do not also submit the necessary affirmation and supporting documentation Martin requires to establish a right to recover attorney's fees.
-Sheril Stanford