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I'm sorry to hear about your situation. "Lack of authority" is a defense to a breach of contract action (in that when they sue you, you can say that the person that signed on behalf of you did not have any authority to do so). That being said, it is a defense, meaning that you could be sued and you would have to bring it up as a defense to the lawsuit.
As for where the lawsuit can be brought, that's something that is handled as part of "venue". In short, the contract (which I understand you did not sign or authorize) will have a "choice of venue" clause.
That clause means that the plaintiff will bring that breach of contract action in the court that is spelled out on the contract.
As for a counter claim, it's possible, particularly in light of the fact that it's small claims court (which is more equitable than normal court), but that would still be based on fraud or abuse of process (in which you would have to show bad faith either in procuring the contract or in the attempted collection of the contract, such that they knew or should have known that she did not have the authority to sign on the business' behalf).
Now it is generally understood that receptionists do not have signatory authority unless the principal clearly represents this, so it's possible that you could win a bad faith claim against the advertiser.
But in short, if they do sue you, you should absolutely answer the lawsuit, file a counterclaim for their actions and bad faith in getting your receptionist to sign this contract and trying to pursue you for it (when it would be clear that they should have known that the receptionist would not have that ability).
Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!
Thank you Scott for enlightening answer,
Do I have to file the counter claim in the same court?
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