Opposing Parties

Opposing Parties

Rule 13(a)(1)(A) measures a defendant’s claim against “the transaction or occurrence that is the subject matter of the opposing party’s claim,” so the duty to counterclaim exists only between litigants who have asserted claims against one another.¹ The plainest case shows the pattern. Morisot sues Renoir over a paint job, and Renoir holds a claim against Morisot that arises from the performance of that same job. The Rule does not merely allow Renoir to plead it; his pleading “must” state it as a counterclaim.²

Reported cases look much the same. Blanton sued King for running a red light and striking her car. King’s insurer supplied King’s lawyer, the parties settled, and Blanton dismissed her claims with prejudice, without King ever having filed a counterclaim.³ If King held a claim of her own from that collision, Blanton was the opposing party against whom Rule 13(a) required her to plead it, and the later sections on failing to plead ask what her silence could cost.

Two-party cases make the opposing party easy to find; multiparty cases do not, because the roster of a lawsuit seldom stays fixed. Rule 13(h) provides that Rules 19 and 20 govern the addition of a person as a party to a counterclaim or crossclaim.⁴ The devices that make multiparty cases possible descend from equity procedure, which, unlike the common law, did not confine litigation to the fewest possible issues, and procedural reform carried them forward so that complex cases could be resolved in a single action.⁵ Each new claim or party revives the same question: who has become an opposing party, and in what capacity?

The answer matters because the duty carries a penalty. A compulsory counterclaim left unpleaded is generally barred later, and most courts call the bar res judicata.⁶ Courts also assume that a plaintiff knows, when filing, of any counterclaim arising from the same transaction, which is one reason the majority view holds that filing suit tolls the limitations period on a compulsory counterclaim.⁷ The three subsections below take up who qualifies as an opposing party, how that status moves through crossclaims, impleader, and counterclaims to counterclaims, and why a claim against a coparty stays optional.

The Opposing-Party Requirement

A counterclaim may be asserted only against “an opposing party,” and the Rule’s principal goal explains the limit: the Rule exists to permit the resolution of all controversies between the parties in a single suit.⁸ A counterclaim aimed at someone who is not an opposing party, or at the same person in a different role, reaches past that goal. Two questions follow. In what capacity must the other side appear, and which unusual participants count as opposing parties at all?

Capacity means the legal role in which a person sues or is sued: individually, as a trustee, as an executor. The generally prevailing, though not uniform, view is that a defendant may not counterclaim against a plaintiff who sued in one capacity by invoking another, and the traditional view is that a defendant sued in one capacity may counterclaim only in that capacity.⁹ Banco Nacional de Cuba v. Chase Manhattan Bank applies the view. Chase sought to counterclaim as trustee, but Banco Nacional had not sued Chase in that capacity and had asserted no claim against the trust, its assets, or its beneficiaries. The court therefore saw Banco Nacional as “not a party opposing Chase as Trustee.”¹⁰

The court added a practical reason. The counterclaims sought more than Banco Nacional’s claim was worth and could operate only as a setoff, so the suit would not extinguish them if proved, and they could be asserted in other litigation. Allowing them would therefore neither resolve all controversies between the parties nor reduce the chance of multiple suits.¹¹

Courts do not apply the capacity line mechanically. Some have looked past the stated capacities to the real parties in interest, allowing a counterclaim where closely similar interests were involved and dismissing it where a clearly different person who was not a party was the real party in interest.¹² The line is firmest when one claim runs for or against a party in a representative capacity and the proposed counterclaim involves that same party individually; there the counterclaim is not allowed,¹³ although some courts, unwilling to indulge what they regard as a fiction, have permitted or compelled the counterclaim as the case might be.¹⁴

Status as an opposing party follows function more than formal standing. Even a person who is not a party of record has been found to be an opposing party,¹⁵ and courts define opposing parties as those who oppose each other on a pleaded claim by one against the other.¹⁶ That definition decides the harder cases.

Interpleader applies the definition to a stakeholder. The Federal Rules, their joinder provisions included, apply in interpleader as in any other civil action, so once the stakeholder joins the claimants, a claimant may counterclaim against the stakeholder as an opposing party.¹⁷ In New York Life Insurance Co. v. Deshotel, Smith’s delictual (tort) action against New York Life was barred because it was a compulsory counterclaim that she failed to plead in the interpleader proceeding.¹⁸ The result is not uniform, because courts divide on whether a counterclaim lies against a disinterested stakeholder named as plaintiff in an interpleader action.¹⁹

Class actions pose the reverse problem: may a defendant counterclaim against absent class members who are not named plaintiffs? Courts divide.²⁰ The authority is thin. In National Super Spuds, Inc. v. New York Mercantile Exchange, the court noted the paucity of authority and described the ruling in Donson Stores, which held that absent class members are not parties for purposes of Rule 13 because no reported decision had held otherwise. The Donson court also saw no prejudice from its ruling, because it meant to try liability first and to take up damages and counterclaims later, class member by class member.²¹ A defendant planning such a counterclaim should treat the point as unsettled.

Taking part in a proceeding does not by itself make someone an opposing party; a pleaded claim against the pleader does. Tilzer v. Davis, Bethune & Jones, L.L.C. applied that idea under a state counterpart to Rule 13(a): lawyers who had moved to enforce a fee lien in their clients’ earlier case, but had not sued the clients, were not opposing parties to them, and the clients’ later malpractice claim could proceed.

Counterclaims in Multiparty Suits

A litigant becomes an opposing party by asserting a claim against the pleader, and in a multiparty case that can happen to a party in any position on the caption. Rule 13 reaches any defending party, not just an original defendant, once another party has claimed against it,²⁴ and the compulsory rule forces parties who are already adversaries to litigate all claims arising from the same set of facts in one action.²⁵ Crossclaims and impleader create new adversaries in the middle of a case. In each configuration below, ask whether the new claim has made someone an opposing party and, if so, which transaction now sets the benchmark for that person’s related claims.

A crossclaim makes its target an opposing party. A crossclaim is a claim by one party against a coparty, someone on the same side of the “v.” as the claimant. In a standard illustration, Volt sues Wright and Ellsworth for injuries suffered in an accident. Until Wright asserts a crossclaim against Ellsworth, the two are not opposing parties. Once she does, they are, and Ellsworth must assert as a compulsory counterclaim any claim she has against Wright for her injuries in the collision, while she may, but need not, add unrelated claims under Rule 13(b).²⁶

Impleader works the same way. A defendant who impleads a nonparty, becoming the third-party plaintiff, asserts that the new party, the third-party defendant, “is or may be liable” to it for all or part of the plaintiff’s claim. When Ali sues Bellefonds and Bellefonds impleads Le Pere to recover part of any judgment Ali wins, the impleader is proper if state law authorizes contribution among joint tortfeasors.²⁷ The claim runs between Bellefonds and Le Pere, so they are opposing parties, and Rule 14(a)(2)(B) states the consequence: the third-party defendant “must assert any counterclaim against the third-party plaintiff under Rule 13(a),” may assert any counterclaim under Rule 13(b), and may assert any crossclaim against another third-party defendant under Rule 13(g).²⁸

The original plaintiff stands differently. Impleader asserts only the third-party defendant’s obligation to cover the defendant’s liability to the plaintiff; it does not assert any liability the third-party defendant might owe the plaintiff directly.²⁹ The impleader therefore pleads no claim between the plaintiff and the third-party defendant, and they are not yet opposing parties. The status changes when one claims against the other. If the third-party defendant claims against the plaintiff, the plaintiff becomes a defending party who must assert any counterclaim arising out of the same incident.³⁰ Evra Corp. v. Swiss Bank Corp. shows the point: Continental Bank, a third-party defendant, filed a complaint against the original plaintiff, Hyman-Michaels, arising out of the same transaction as the original suit, and Hyman-Michaels’s counterclaim against Continental, being compulsory, needed no independent federal jurisdictional basis.³¹

Courts do not treat the plaintiff’s own reach toward an impleaded party the same way. One court weighing such a claim noted that a plaintiff selects the forum and has not been involuntarily brought to it, that a plaintiff could not have joined a nondiverse defendant at the outset, and that collusion between a plaintiff and an overly cooperative defendant who impleads just the right third party is at least conceivable.³² Those worries concern jurisdiction, which a later section takes up.

A plaintiff can also become a defending party without any third party in the case. When a defendant counterclaims, the plaintiff’s “counter-counterclaim” is compulsory if it relates to the same subject matter as the defendant’s counterclaim, whatever the original complaint concerned.³³ A plaintiff who sues over a car accident and meets a counterclaim for breach of an unrelated contract must therefore plead, as a compulsory counterclaim, any claim it has relating to that same contract. The plaintiff does so in its response to the counterclaim, a pleading under Rules 7(a)(3) and 12(a)(1)(B) that is seemingly subject to Rule 13 like any other.³⁴

Rule 13(h) lets a defending party add people to a counterclaim or crossclaim under Rules 19 and 20.³⁵ A defendant sued over an auto accident who believes the plaintiff and X conspired to ruin the defendant’s business may counterclaim against the plaintiff on that unrelated claim, which is permissive, and may bring X in as a new party to the counterclaim.³⁶ For the added party, courts usually apply the transaction-or-occurrence requirement by asking whether the claim involving the party to be joined has a logical relationship to the rest of the case; joinder may be permitted when enough factual overlap makes it efficient to litigate together.³⁷

A counterclaim or crossclaim added mid-case can raise timing problems, but delay alone does not decide them. One court declined to strike a counterclaim and crossclaim filed without the leave of court it did not condone omitting, reasoning that mere delay is not a reason to deny leave to file a supplemental pleading and that answering the counterclaim would lengthen the trial somewhat without requiring a continuance or new discovery.³⁸

The second step does the real work, because the original caption fixes no one’s role. A defendant impleaded by a codefendant, a plaintiff answering a counterclaim, and a coparty served with a crossclaim have each become defending parties by the time the question arises. The analysis must run pleading by pleading, since each new claim can create a new opposing party and a new transaction against which related claims are measured.

Crossclaims Are Never Compulsory

Rule 13(g) grants permission where Rule 13(a)(1) issues a command. A pleading “may” state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action, and the claim may also relate to property involved in that action.⁴⁰ The coparty requirement and the relatedness requirement each do work. Courts define a coparty as any party who is not yet an opposing party to the other, which fits the provision’s purpose of allowing, but not compelling, nonadverse parties to introduce an adverse claim and so avoid multiple suits.⁴¹ Relatedness separates crossclaims from permissive counterclaims: an unrelated claim against an opposing party may be asserted as a permissive counterclaim, but only claims related to the subject matter of the original action, or to property involved in it, are appropriate as crossclaims.⁴²

The typical crossclaim passes the loss from one defendant to another. If two tortfeasors are jointly liable, one may crossclaim against the other for contribution, provided state law gives a substantive right to that relief. The Rule reaches a codefendant who “is or may be liable to the crossclaimant for all or part” of the plaintiff’s claim, and “may be” means the claim can be contingent, with the judgment shaped accordingly. A secondarily liable defendant may crossclaim against the primarily liable one for indemnity.⁴³

However closely a crossclaim relates to the existing action, it is never compulsory.⁴⁴ The Rule makes joinder optional, leaving a defendant free to sue a codefendant separately, even though joinder promotes efficiency and consistency because the same underlying facts will be litigated on the main claim and on the crossclaim.⁴⁵ Crossclaims also fall within the court’s supplemental jurisdiction and need no independent jurisdictional grounds.⁴⁶

The later suit survives because no sanction enforces the option. The bar on omitted compulsory counterclaims is an extension of the doctrine of former adjudication, and most courts describe it as res judicata, though some rely on waiver or estoppel.⁴⁷ Even for counterclaims the bar is not automatic across court systems: a federal court must give a state court judgment the effect the rendering state would give it, 28 U.S.C. § 1738, so a counterclaim dropped in state court is not forfeited in every court merely because it was compulsory there.⁴⁸

Ordinary claim preclusion does not supply the same bar for crossclaims. It requires, among other conditions, a prior judgment “on the merits,” a phrase that is more a legal conclusion than a useful heuristic,⁴⁹ and it asks whether the later claim is the same claim as the one first adjudicated. A defendant’s claim against a codefendant is not the same claim as the plaintiff’s claim against that defendant, so the plaintiff’s suit does not bar a later crossclaim.⁵⁰ The rulemakers chose to make crossclaims permissive, and if res judicata barred omitted crossclaims, they would be compulsory in effect.⁵¹

The optional status of the crossclaim does not carry over to what the crossclaim sets in motion. A crossclaim ends the coparties’ status as not yet opposing, so the target becomes an opposing party, and Rule 13(a) then requires the target to plead, as a compulsory counterclaim, any related claim it has against the crossclaimant.⁵² The crossclaimant’s decision to file is free, and the target’s duty to answer arises only because of that decision.

Coplaintiffs present the mirror image. A plaintiff may not assert a crossclaim against its fellow plaintiff, although the result presumably differs once a counterclaim runs against both, because they could then crossclaim about the subject matter of that counterclaim.⁵³ Danner v. Anskis illustrates the limit: coplaintiffs from one accident who crossclaimed against each other could not do so.