Opinion
CASE NO. 2:08-cv-832-MEF.
May 5, 2009
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
This action is presently before the Court on Plaintiff Supreme Manufacturing Company, Inc.'s ("Plaintiff") Motion to Strike Defendants' Amendment Adding Counterclaim (Doc. #19) filed on March 3, 2009. Plaintiff seeks to strike the Counterclaim filed by Defendants U.S. Beverage, Grady Dowling Kittrell, and Thomas Going Clark, III (collectively "Defendants") on February 25, 2009. (Doc. #18). After careful review of the submissions made by the parties, the Court finds that the Plaintiff's Motion to Strike is due to be DENIED.
II. JURISDICTION AND VENUE
Jurisdiction over Plaintiff's claims is proper under 28 U.S.C. §§ 1332 (diversity). The parties do not contest personal jurisdiction or venue, and the Court finds adequate allegations in support of both personal jurisdiction and venue.
III. PROCEDURAL BACKGROUND
Plaintiff's Complaint (Doc. #1) filed on October 15, 2008, seeks $349,669.26 in compensatory damages for breach of contract. Plaintiff also seeks attorney's fees, interests, and costs against Defendants. Plaintiff allege Defendants failed to pay for juice products that Plaintiff delivered. On November 6, 2008, Defendants filed an Answer. (Doc. # 7). Defendants' Answer did not include any counterclaims but included several affirmative defenses, including lack of consideration, lack of performance, non-conforming goods, and accord and satisfaction. Several months later, Defendants filed a Counterclaim on February 25, 2009. (Doc. #18). The Counterclaim includes nine counts and alleges that Plaintiff engaged in false labeling and false advertising in violation of the Lanham Act, breached their contract with Defendants, and breached several express and implied warranties under the Uniform Commercial Code ("U.C.C."). Defendants' Counterclaim also alleges fraud, negligent misrepresentation, and unjust enrichment. Plaintiff filed a Motion to Strike Defendants' Counterclaim (Doc. #19) on March 3, 2009. There, Plaintiff argues that Defendants' counterclaims are compulsory counterclaims and should be barred under Fed.R.Civ.P. 13(a) because they were not raised in Defendants' Answer. Defendants' responded in a Brief in Opposition to the Plaintiff's Motion to Strike Defendants' Counterclaim filed on March 16, 2009. (Doc. #22). In their response, Defendants argue that their counterclaims are permissive or that, in the alternative, the Court should deny Plaintiff's Motion to Strike according to equitable principles. According to the Court's Uniform Schedule Order of December 17, 2008 (Doc. #13), the trial in this case is set for November 9, 2009, in Montgomery, Alabama, and the deadline for amending pleadings is February 25, 2009.IV. DISCUSSION
A. Rule 13(a) Compulsory Counterclaims
Fed.R.Civ.P. 13 ("Rule 13") divides counterclaims into two categories: compulsory and permissive. A counterclaim is either compulsory or permissive according to its relationship to the opposing party's claim. Id. Rule 13(a) defines a compulsory counterclaim as any claim that "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." Id. A permissive counterclaim has its roots in a separate transaction or occurrence and is governed by Rule 13(b). 6 Wright, Miller, Kane, Federal Practice and Procedure § 1409 (2d ed. 1990). When a party fails to plead a compulsory counterclaim, it is precluded from asserting that claim in future litigation. Nippon Credit Bank, Ltd. v. Matthews, 291 F.3d 738, 755 (11th Cir. 2002) (stating that compulsory counterclaims which are not brought are "thereafter barred") (citing Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469 n. 1 (1974)).
However, for a claim to qualify as a compulsory counterclaim under Rule 13(a), it must be a claim which the pleader has against an opposing party "at the time of serving the pleading." Fed.R.Civ.P. 13(a). A counterclaim that is acquired by the defendant after he has answered the complaint is not compulsory, even if it arises out of the same transaction as does the plaintiff's claim. Steinberg v. St. Paul Mercury Ins. Co., 108 F.R.D. 355, 358 (S.D. Ga. 1985); see also Dillard v. Sec. Pac. Brokers, Inc., 835 F.2d 607, 608 (5th Cir. 1988) (finding that a counterclaim acquired by a defendant after the defendant has answered is not considered compulsory, even if it arises out of the same transaction as the plaintiff's claim); 3 Moore's Federal Practice § 13.14 (3d ed. 1997) (stating that "the timing if a counterclaim and its classification as compulsory do not become vital until a second action is brought"); but cf. Crown Life. Ins. Co. v. Am. Nat'l Bank Trust Co., 35 F.3d 296, 300 (7th Cir. 1994) (barring a compulsory counterclaim in the same action where defendant failed to counterclaim in the answer but attempted to file a claim three months after summary judgment had been granted in favor of plaintiff).
Here, Plaintiff's Complaint alleges breach of contract. Defendants filed an Answer that did not include any counterclaims. Several months later, but before the deadline for amending pleadings had expired, Defendants filed a Counterclaim. Defendants' Counterclaim alleges Plaintiff breached its contract with Defendants, breached several express and implied warranties under U.C.C., acted fraudulently, and negligently misrepresented its delivered goods. Defendants' Counterclaim also includes claims of unjust enrichment and false labeling and false advertising in violation of the Lanham Act. Defendants argue that its counterclaims do not arise out of the transaction or occurrence that is the subject matter of Plaintiff's claims because they include federal claims, such as Lanham Act violations. The Court disagrees that Defendants' claims do not arise from the same transaction or occurrence as Plaintiff's claim, but the Court agrees that Defendants' counterclaims are not compulsory counterclaims.
Defendants' counterclaims do not qualify as a compulsory counterclaims under Rule 13(a) because Defendants' discerned its counterclaims during discovery. See Doc. #22, pg. 4, 6. Defendants did not acquire its counterclaims until after it answered Plaintiff's Complaint. Accordingly, Defendants' counterclaims are not compulsory and are not barred in this lawsuit.
B. Rule 13(f) Amending Pleadings
In the alternative, under Fed.R.Civ.P. 13(f), courts may allow a party to amend a pleading to add a compulsory counterclaim if the counterclaim was omitted "through oversight, inadvertence, or excusable neglect, or when justice so requires." Id. In this Circuit, "Rule 13(f) does not give a party the privilege of totally neglecting its case and ignoring time limitations imposed by the Federal Rules of Civil Procedure." Rohner, Gehrig Co. v. Capital City Bank, 655 F.2d 571, 576 (5th Cir. Unit B Sept. 1981) (affirming district court decision that Rule 13(f) motion for leave to add an omitted counterclaim was inexcusably untimely because the court found (1) the opposing party would be prejudiced; (2) the trial court would have to undergo additional strain on its docket; and (3) defendant's reason for the delay was simply that he overlooked the possibility of the counterclaim); see also Imperial Enter., Inc. v. Fireman's Fund Ins. Co., 535 F.2d 287 (5th Cir. 1976) (finding that the district court did not abuse its discretion in denying the motion to amend with respect to a counterclaim where the defendant was aware of the facts underlying its alleged counterclaim for almost a year before it made its motion). However, the purpose behind Rule 13(a) is to prevent multiplicity of lawsuits. "The requirement that counterclaims arising out of the same transaction or occurrence as the opposing party's claim `shall' be stated in the pleadings was designed to prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters." S. Constr. Co., Inc. v. Pickard, 371 U.S. 57, 60 (1962).
In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir. Nov. 3, 1981) ( en banc), the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions handed down prior to the close of business on September 30, 1981.
Plaintiff filed its Complaint on October 15, 2008, alleging that Defendants breached their contract with Plaintiff by failing to pay for juice products. On November 6, 2008, Defendants filed an Answer. Defendants' Answer did not include any counterclaims but did include several affirmative defenses, including lack of consideration, lack of performance, non-conforming goods, and accord and satisfaction. On February 25, 2009, four months after Plaintiff's Complaint and before this Court's deadline for amending pleadings, Defendants filed its Counterclaim. In Plaintiff's Motion to Strike Defendants' Counterclaim filed on March 3, 2009, Plaintiff argues that Defendants' omitted counterclaims, if permitted, would "overly complicate this simple breach of contract case" and "delay the trial." Doc. #19, ¶ 9. Defendants contend that it put Plaintiff on notice of its intentions to file a counterclaim in its Answer, which contains several affirmative defenses, and its Report of Rule 26(f). The Court does not find that Defendants have delayed the interest of justice by filing its counterclaims. Further, the Court finds that the Plaintiff has not been prejudiced by the minimal delay of notice. Accordingly, even if Defendants' counterclaims were compulsory, the Court would permit Defendants to amend its pleading under Rule 13(f) to prevent multiplicity of lawsuits and promote judicial efficiency.
V. CONCLUSION
For the foregoing reasons, the Plaintiff's Motion to Strike Defendant's Counterclaim (Doc. #19) is DENIED.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00. CIVIL APPEALS JURISDICTION CHECKLIST1. Appealable Orders : Appeals from final orders pursuant to 28 U.S.C. § 1291: 28 U.S.C. § 158Pitney Bowes, Inc. v. Mestre 701 F.2d 1365 1368 28 U.S.C. § 636 In cases involving multiple parties or multiple claims, 54Williams v. Bishop 732 F.2d 885 885-86 Budinich v. Becton Dickinson Co. 486 U.S. 196 201 108 S.Ct. 1717 1721-22 100 L.Ed.2d 178LaChance v. Duffy's Draft House, Inc. 146 F.3d 832 837 Appeals pursuant to 28 U.S.C. § 1292(a): Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: 28 U.S.C. § 1292 Appeals pursuant to judicially created exceptions to the finality rule: Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541 546 93 L.Ed. 1528Atlantic Fed. Sav. Loan Ass'n v. Blythe Eastman Paine Webber, Inc. 890 F.2d 371 376 Gillespie v. United States Steel Corp. 379 U.S. 148 157 85 S.Ct. 308 312 13 L.Ed.2d 199 2. Time for Filing Rinaldo v. Corbett 256 F.3d 1276 1278 4 Fed.R.App.P. 4(a)(1): 3 THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Fed.R.App.P. 4(a)(3): Fed.R.App.P. 4(a)(4): Fed.R.App.P. 4(a)(5) and 4(a)(6): Fed.R.App.P. 4(c): 28 U.S.C. § 1746 3. Format of the notice of appeal : See also 3pro se 4. Effect of a notice of appeal : 4
Courts of Appeals have jurisdiction conferred and strictly limited by statute: (a) Only final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under , generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." , , (11th Cir. 1983). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. (c). (b) a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. (b). , , (11th Cir. 1984). A judg ment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. , , , , , (1988); , , (11th Cir. 1998). (c) Appeals are permitted from orders "granting, continuing, modifying, refusing or dissolving injunctions or refusing to dissolve or modify injunctions . . ." and from "[i]nterlocutory decrees . . . determining the rights and liabilities of parties to admiralty cases in which appeals from final decrees are allowed." Interlocutory appeals from orders denying temporary restraining orders are not permitted. (d) The certification specified in (b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable. (e) Limited exceptions are discussed in cases including, but not limited to: , , , 69S.Ct. 1221, 1225-26, (1949); , , (11th Cir. 1989); , , , , , (1964). Rev.: 4/04 : The timely filing of a notice of appeal is mandatory and jurisdictional. , , (11th Cir. 2001). In civil cases, Fed.R.App.P. (a) and (c) set the following time limits: (a) A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. must be filed in the district court within 30 days after the entry of the order or judgment appealed from. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. Special filing provisions for inmates are discussed below. (b) "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later." (c) If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion. (d) Under certain limited circumstances, the district court may extend the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time may be extended if the district court finds upon motion that a party did not timely receive notice of the entry of the judgment or order, and that no party would be prejudiced by an extension. (e) If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid. Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. Fed.R.App.P. (c). A notice of appeal must be signed by the appellant. A district court loses jurisdiction (authority) to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. (a)(4).