Counterclaim

From LegalLanding

Counterclaims are treated in FRCP Rule 13.

A compulsory counterclaim is any claim that the pleader has against the opposing party that arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim. Notice pleading allows joinder of claims because of a desire for efficiency. The idea is that if the claims all arise from the same set of facts, it is best to take care of them all as a package.

The compulsory counterclaim can be a separate document from the answer, but it must be filed at the same time. Doing so is important for two reasons. First, if a compulsory counterclaim is not claimed, then it is waived. Second, federal courts have limited jurisdiction and might not normally have jurisdiction over the subject matter of a counterclaim, but a rule of supplemental jurisdiction applies to them. If the facts of the claim and counterclaim are so related as to form the same transaction or occurrence, then there is no need to establish federal subject matter jurisdiction; the counterclaim will be heard.

If a counterclaim is not compulsory, then it is permissive and the rule of supplemental jurisdiction does not apply. Jurisdiction must be shown on its own. What is a compulsory counterclaim, then? Courts will ask three questions to test whether the counterclaim arises out of the same transaction or occurrence as the original claim. First, are the issues of fact and law largely the same? This is sometimes called the “primary right/primary wrong” or “same right/same wrong” test. If the legal theories of the claim and counterclaim are the same, then the same facts will be used to prove them, and they are part of the same package. This test was used extensively at common law and carried over into code pleading. However, this test is the most difficult to pass and it does not get used much today by the federal courts or state courts that use the federal rules.

The second test asks, do the claims rely on the same evidence? Courts go back and forth on how much of the evidence has to be the same. The evidence does not have to be identical, but there should be significant overlap. Third, is there a logical relationship between the claims? This is the easiest test to satisfy; one need show a strong link, whether causal or logical, between the claim and the counterclaim.