Demand for payment failed, and now you want to “go legal” with your debt collection claim. Regardless of whether you proceed with mediation, arbitration, or litigation, your collection attorney will need to choose the appropriate legal theories or causes of action to include in your New York debt collection case.
The facts of your underlying claim will determine the causes of action you and your attorney decide to pursue.
What Is a Cause of Action?
If you’ve ever looked at a summons and complaint filed with any of the New York courts, you will see that the complaint is a collection of different “causes of action.” The causes of action set forth the facts of your case that support your legal right or legal theory to collect the monies owed to you.
When it comes to debt collection, the legal theories are determined by the facts and industries involved. Your attorney will draft the complaint to contain the required language for each cause of action. This allows the court clerk to enter a judgment on default, assuming the creditor’s documents are in order. The goal is to word your complaint in a way that avoids the necessity of a court order, which could further delay the entry of judgment six months to a year.
Real-Life Applications of Legal Theories and Causes of Action
It’s helpful to illustrate how the facts contribute to the legal theories or causes of action you will choose for your legal debt collection claim. Here are examples that demonstrate how using alternative legal theories can help win your debt collection case. Rather than focusing on one cause of action, it is our suggestion to include (or plead) as many as fit the fact pattern.
Remediation Service – Emergency Situation
A creditor is called in to perform emergency services such as water mitigation, smoke, fire, or mold remediation. The client receives authorization to perform the services. The customer has insurance, and the creditor agrees to accept payment by the carrier. However, in some instances, the insurance does not pay or the insurance pays, but the insured party pockets the check.
Breach of Contract
Breach of contract is a common cause of action in legal debt collection. You will need to use the facts to show that a valid contract existed and that the customer requested the creditor to render the services. If the creditor performed the services, then the debtor breached the contract by failing to pay.
Account Stated
A creditor can win on the fact that they sent an invoice or statement to the customer demanding payment for the work performed, and the customer failed to object. Account stated is a legal theory that can win your case.
Unjust Enrichment
Unjust enrichment is another popular cause of action in debt collection. It can be used whether or not there is a written contract. The claim is that the customer was enriched by the creditor’s action in rendering the services. By not paying for the services, it unjustly enriches the customer who benefitted from the services but failed to pay.
Another example of unjust enrichment is when an insurance company pays the insured directly for the creditor’s work, and the customer fails to pay the funds to the creditor. Here, the customer has been enriched not only by the work performed but also by the insurance payment.
A skilled debt collection attorney will know the appropriate legal theories or causes of action to include in your New York debt collection case.
Looking for an attorney to handle your debt collection case? Contact Frank, Frank, Goldstein and Nager by email or call +1 (212) 686-0100. We have the experience that pays.
