Defense from the dark arts - fighting off countersuits in Washington State Courts
- Peter Schneider
- Jan 2
- 10 min read
Updated: Mar 5
Scam businesses have a couple of typical characteristics. They are highly profitable because they have little in the way of true expenses. They are run by scumbags willing to do anything to make money, including knowingly ripping people off. And when they get sued, they hire lawyers like themselves. Lawyers who are willing to file frivolous counterclaims and counterclaims in bad faith to protect the scam by trying to get the plaintiff to go away. When these lawyers see how their client is making their money, they don't think "I don't want any part of that", they think, "How I can get some of that immoral cash for myself".
This post talks about some laws and strategies to defeat frivolous counterclaims and counterclaims brought in bad faith in the courts of Washington. Frivolous counterclaims and counterclaims brought in bad faith can come in many shapes and sizes so I can't address them all, but I'll address some I've seen. Some defendants will even try to drag the plaintiff's lawyer into a counterclaim.
Fraud counterclaims
The typical fraud counterclaim is grounded in an accusation that the plaintiff did something wrong to get an unfair advantage. Telemarketers will reflexively claim that the fake opt in is from the plaintiff asking for the calls.
Estrada v. Aragon Advert., Civil Action 4:23-cv-3407, (S.D. Tex. Dec. 10, 2024)
Often TCPA plaintiffs have to play along to find out the identify of the Seller the Telemarketer is calling for. Sellers don't like that and can claim the playing along is fraud.
Defendants may claim the TCPA plaintiffs very lawsuit is a fraud, and counterclaim for that.
Betz v. Glob. Telesourcing, Civil Action 21-cv-1320 (BAH), 11 (D.D.C. Dec. 10, 2021)
Abuse of process counterclaims
Defendants may claim that the plaintiff's lawsuit is an abuse process.
Cruz v. Don Pancho Market, LLC, 171 F. Supp. 3d 657, 659 (W.D. Mich. 2016).
CPA counterclaims
Defendants may come at the plaintiff or plaintiff's attorney's claiming that the lawsuit or activities taken to prosecute the lawsuit violate a consumer protection statute.
Jeckle v. Crotty, 120 Wn. App. 374, 377 (Wash. Ct. App. 2004)
RICO counterclaims
A defendant may claim they are a victim of a conspiracy to defraud them. Jacovetti Law, P.C. v. Shelton, Case No. 2:20-cv-00163-JDW, (E.D. Pa. Sep. 1, 2020). Mr. Shelton had to fight that for about a year before a court finally ruled:
At best, they have alleged that James Everett Shelton has turned enforcement of the Telephone Consumer Protection Act into a business and that he takes pecuniary considerations into account when he decides who to sue. Nothing about that constitutes a RICO violation.
The most famous case I know was Navient got tired of a plaintiff's attorney's repeated lawsuits so filed a lawsuit against Jeffrey Lohman and 17 other defendants - a mix of lawyers, law firms, and debt-relief businesses. Navient took it to a jury trial and won, then lost on a judgement not withstanding the verdict, and the case is on appeal.
Debt counterclaims
If the underlying lawsuit is for a debt, the defendant may sue for the debt.
Gonzalez v. Chase Bank U.S.A., 3:18-cv-00431-CAB-AGS, 2 (S.D. Cal. Jun. 1, 2018).
Henry v. JP Morgan Chase, 2025 WL 91179 (N.D. Cal. Jan 14, 2025)
What to do about them?
Attacking a counterclaim is similar to going to do to the plaintiff's claims - understand the elements of and attack each one. In attacking them I want to focus on elements they could never prove and they knew it, or should have known it. A lawsuit is frivolous when it cannot be supported by any rational argument on the law or facts." Skimming v. Boxer, 119 Wn. App. 748, 756 (Wash. Ct. App. 2004). An action becomes frivolous when the result appears obvious, or the arguments are wholly without merit. Galen v. Los Angeles, 477 F.3d 652, 666 (9th Cir. 2007).
While an attorney is not required to fully substantiate or develop all vital facts before filing, [w]hat is required of lawyers, however, is that they inform themselves about the facts of their clients' cases and the applicable law and determine that they can make good faith arguments in support of their clients' positions. In re Girardi, 611 F.3d 1027, 1036 (9th Cir. 2010). A party can be sanctioned if it continued to litigate. Christiansburg Garment Co. v. Equal Emp't Opportunity Comm'n, 434 U.S. 412, 422 (1978)
Fraud elements
The elements of fraud in Washington law are:
(1) a representation of existing fact,
(2) its materiality,
(3) its falsity,
(4) the speaker's knowledge of its falsity,
(5) the speaker's intent that it be acted upon by the person to whom it is made,
(6) ignorance of its falsity on the part of the person to whom the representation is addressed,
(7) the latter's reliance on the truth of the representation,
(8) the right to rely upon it, and
(9) consequent damage.
See Elcon Constr., Inc. v. E. Wash. Univ., 174 Wash. 2d 157, 166 (Wash. 2012)
Abuse of process elements
An abuse of process claim involves two elements:
(1) the existence of an ulterior purpose-to accomplish an object not within the proper scope of the process-and
(2) an act in the use of legal process not proper in the regular prosecution of the proceedings.'"
See Mason v. Mason, No. 51642-0-II, (Wash. Ct. App. Oct. 19, 2021). "Process," as used in this context, refers to "'all the acts of a court from the beginning to the end of its proceedings in a given cause.'" Id. at 346 (internal quotation marks omitted) (quoting State v. Duffey, 97 Wn.App. 33, 40-41, 981 P.2d 1 (1999)).
A claim for abuse of process requires a showing that legal process was appropriated for an extrinsic end beyond the natural scope of the suit, "'and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion.'" Batten, 28 Wn.App. at 746 (quoting William L. Prosser, Handbook of the Law of Torts § 121 at 856 (4th ed. 1971)). Accordingly, initiation of a legal proceeding that is baseless and vexatious does not alone amount to abuse of process. Saldivar v. Momah, 145 Wn.App. 365, 389, 186 P.3d 1117 (2008). Instead, "'[t]he gist of the tort is not commencing an action or causing process to issue without justification, but misusing, or misapplying process justified in itself for an end other than that which it was designed to accomplish.'" Batten, 28 Wn.App. at 745-46 (quoting William L. Prosser, supra, § 121 at 856 (4th ed. 1971)).
CPA elements
We hold that to prevail in a private CPA action and therefore be entitled to attorney fees, a plaintiff must establish five distinct elements:
(1) unfair or deceptive act or practice;
(2) occurring in trade or commerce;
(3) public interest impact;
(4) injury to plaintiff in his or her business or property;
(5) causation.
Hangman Ridge v. Safeco Title, 105 Wn. 2d 778, 779 (Wash. 1986). The courts frown on defendants using the CPA to come at plaintiff's counsel with a counterclaim. Lahrichi v. Curran, No. 65144-7-I, 3 (Wash. Ct. App. Oct. 31, 2011)
RICO elements
To recover under § 1962(c), a plaintiff must prove
(1) conduct,
(2) of an enterprise,
(3) through a pattern,
(4) of racketeering activity (known as "predicate acts"),
(5) causing injury to the plaintiff's "business or property" by the conduct constituting the violation.
Living Designs, Inc. v. E.I. Dupont De Nemours and Co., 431 F.3d 353, 354 (9th Cir. 2005)
Debt
Debt lawsuits are a little different. In a federal lawsuit the plaintiff can ask the court to decline to exercise jurisdiction over the state level debt claims. Its been done many times to mixed results. I have seen plaintiffs first pay the alleged obligation, then file suit to recover the damages plus what other claims the plaintiff has. Or, just pay off the debt before filing suit on TCPA/FDCPA claims. This heads off a debt countersuit.
An example where it worked: Ensz v. Chase Bank , No. 18-cv-2065-CJW-MAR, 2 (N.D. Iowa Jan. 7, 2019).
An example where it didn't. Walker v. Westlake Fin. Servs., No. 19 C 6921, (N.D. Ill. Jun. 17, 2020).
A short circuit - Washington State's anti-SLAPP statute
Washington State has an anti-SLAPP statute entitled the Uniform Public Expression Protection Act (UPEPA), RCW 4.105. It is essentially an expedited summary judgment motion” Jha v. Khan, 520 P.3d 470, 483 (Wash. Ct. App. 2022). “UPEPA provides for early adjudication of baseless claims aimed at preventing an individual from exercising the constitutional right of free speech” Dimension Townhouses, LLC v. Leganieds, LLC, No. 84969-7-I, 8 (Wash. Ct. App. Jan. 22, 2024)
Section 4.105.060 provides the standards for ruling on a special motion to dismiss. In ruling on a motion under RCW 4.105.020, the court shall dismiss with prejudice a cause of action, or part of a cause of action, if:
(a) The moving party establishes under RCW 4.105.010(2) that this chapter applies;
(b) The responding party fails to establish under RCW 4.105.010(3) that this chapter does not apply; and
(c) Either:
(i) The responding party fails to establish a prima facie case as to each essential element of the cause of action; or
(ii) The moving party establishes that:
(A) The responding party failed to state a cause of action upon which relief can be granted; or
(B) There is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the cause of action or part of the cause of action.
"In ruling on a motion under § 4.105.020, the court shall consider the pleadings, the motion, any reply or response to the motion, and any evidence that could be considered in ruling on a motion for summary judgment under superior court civil rule 56. § 4.105.050." See TorchStar Corp v. Hyatech Inc., 2:22-CV-00110-SAB, 4 (E.D. Wash. Jan. 9, 2023)
You won - the tools to come back at them
If and when you win, and if you can show the counterclaim was frivolous, the law provides tools to come back at the defendant.
In any civil action, the court having jurisdiction may, upon written findings by the judge that the action, counterclaim, cross-claim, third party claim, or defense was frivolous and advanced without reasonable cause, require the nonprevailing party to pay the prevailing party the reasonable expenses, including fees of attorneys, incurred in opposing such action, counterclaim, cross-claim, third party claim, or defense. This determination shall be made upon motion by the prevailing party after a voluntary or involuntary order of dismissal, order on summary judgment, final judgment after trial, or other final order terminating the action as to the prevailing party. The judge shall consider all evidence presented at the time of the motion to determine whether the position of the nonprevailing party was frivolous and advanced without reasonable cause. In no event may such motion be filed more than thirty days after entry of the order.
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
A 2024 Ninth Circuit case Caputo v. Tungsten Heavy Powder, Inc., 96 F.4th 1111, 1155 (9th Cir. 2024) sets the standard for awarding sanctions under §1927.
. . . it is plainly clear that "a finding that the attorneys recklessly raised a frivolous argument which resulted in the multiplication of the proceedings" justifies § 1927 sanctions . . . Bad faith is present when an attorney knowingly or recklessly raises a frivolous argument . . . We have characterized frivolous arguments for the purposes of § 1927 sanctions as ones that are "baseless and made without reasonable and competent inquiry" or made up of "legal or factual contentions so weak as to constitute objective evidence of improper purpose." . . . an argument is patently lacking in any basis in either law or fact, it can be fairly characterized as "frivolous" for the purpose of a § 1927 sanction award . . . As Hagans himself acknowledged, as an attorney for THP, it was his responsibility to ensure the veracity of the arguments he was approving on the company's behalf.
Recklessly raising a frivolous argument or meritorious claim for a harassing purpose opens the door to §1927 sanctions. Hilliard v. Twin Falls Cnty. Sheriff's Office, 1:18-cv-00550-CWD, 5 (D. Idaho Mar. 29, 2024).
The Court's inherent power
The §1927 threshold is lower than the Court’s inherent power requirements:
The Court may utilize its inherent authority to assess attorney fees when a party has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Id. at 766 (internal marks and citation omitted). Unlike Section 1927 sanctions, inherent power sanctions require more than just mere recklessness. See, e.g., Fink, 239 F.3d at 993-94. However, recklessness “combined with an additional factor such as frivolousness, harassment, or an improper purpose” allows a court to exercise its inherent sanctioning power. Hilliard v. Twin Falls Cnty. Sheriff's Office, 1:18-cv-00550-CWD, 7 (D. Idaho Mar. 29, 2024). The Court’s inherent powers and §1927 also apply to tactics once a lawsuit has begun. In re Keegan Management, Securities Litigation, 78 F.3d 431, 435 (9th Cir. 1996).
Rule 11
In my opinion a plaintiff is going to fine rule 11 I mostly useless in getting rid of a frivolous counterclaim or mopping up after it's gone. Judges hate granting sanctions under rule 11 and the rule must be strictly followed.
Counsel for Judge Hille failed to file a separate Rule 11 motion or to comply with the 'safe harbor' provisions. SeeFed.R.Civ.P. 11(c)(1)(A). The district court therefore abused its discretion when it awarded attorney's fees and costs in favor of Judge Hille. See Holgate v. Baldwin, 425 F.3d 671, 678 (9th Cir.2005) ("We must reverse the award of sanctions when the challenging party failed to comply with the safe harbor provisions, even when the underlying filing is frivolous.") Corrigan v. Dale, 162 F. App'x 784, 785 (9th Cir. 2006)
However rule 11 is often a favorite tool of judges who are already aggrieved at a party and want to get at the party sua sponte.
Would you like a free case review? Do you have a question or a telemarketing, debt collection, or bankruptcy case that would make a great blog article? We might even review your pro-se complaint or motion in a blog post. Email peter@nwdebtresolution.com and/or nathen@nwdebtresolution.com and we may answer it for everyone!
Are telemarketers harassing you in Washington, Oregon, or Montana? My Washington State TCPA plaintiff law practice can help, just give us a call at 206-800-6000 or email peter@nwdebtresolution.com.
The thoughts, opinions and musings of this blog are those of Peter Schneider, a consumer advocate and Washington State plaintiff's TCPA attorney at Northwest Debt Resolution, LLC. They are just that, his thoughts, opinions and musings and should be treated as such. They are not legal advice. If you are looking to file a lawsuit for TCPA violations and unwanted calls please contact me for a consultation.
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