Plant v Blazer Financial services
598 F 2 d  1357 [1979]
Author:- Sam Biers

Joinder - Compulsory Counterclaim

Relevant Facts: Pl, Plant executed a note in favor of Df Blazer for $2520 to be paid monthly.  No payments were made.  Pl commenced the action b/c Df failed to make disclosures under the Truth in Lending Act, to wit : a limitation on an after acquired security interest.

Legal Issue(s): Whether an action on the underlying debt in default is a compulsory counterclaim that must be asserted in a suit by the debtor ?

Court’s Holding: Yes, it’s a compulsory counterclaim

Procedure: Pl filed claim, Df filed counter on unpaid balance; Tr Ct awarded Pl $1644; Ct of App Affirmed.

Law or Rule(s): A counterclaim is compulsory if it arises out of the same transaction or occurrence, that is the subject matter of Pl’s claim.

Court Rationale: Four Tests : 1) Are the issues of fact and law raised by the claim and counterclaim largely the same; 2) Would res judicata bar a subsequent suit on Df’s claim absent the compulsory counter claim rule; 3) Will substantially the same evidence support or refute Pl’s claim as well as Df’s counterclaim; 4) Is there any logical relation btwn the claim and the counter?

An affirmative answer to ANY of the four indicates the counterclaim is compulsory.  Revere Brass added “logical relationship’ as a requirement to the analysis.  L R must exist when the counter claim arises from the same aggregate of operative facts.  The same operative facts serve as a basis of both claims or the aggregate core of facts which the claim rests activates additional legal rights, otherwise dormant, in the Df.  The obvious interrelationships of the claims and rights of the parties, coupled w/ the common factual basis of the claims, demonstrates a logical relationship btwn the claim and the counterclaim under Revere Brass.

Plaintiff’s Argument: The Df’s counterclaim was permissive and not compulsory; Df’s action should have been pursued in state court and not Fed for lack of jurisdiction.

Defendant’s Argument: The counter claim arose out of the same transaction, the note for $2520, and therefor the counter claim was compulsory and subject to the Jurisdiction of the Fed ct.