Horton v. Calvary Portfolio Services, LLC
301 F.R.D. 547
S.D. Cal.2014Background
- Plaintiff Corey Horton filed a putative class action under the TCPA alleging Calvary Portfolio Services placed debt-collection calls to him about a vehicle loan purchased from Navy Federal Credit Union.
- Calvary purchased Horton’s debt from Navy Federal and answered the complaint; a scheduling order was in place.
- Calvary moved for leave to file an amended answer that adds a breach-of-contract counterclaim against Horton.
- Horton opposed, arguing the counterclaim is untimely (futile/bad faith) and that the court lacks jurisdiction over the counterclaim.
- The court took the motion under submission and evaluated Rule 15(a) standards and Rule 13/§1367 jurisdictional principles.
- The court granted Calvary leave to amend, concluding the counterclaim is neither clearly futile nor outside the court’s supplemental jurisdiction; deadlines for filing and response were set.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether leave to amend should be denied as futile/bad faith | Horton: counterclaim is untimely, so amendment is futile and motion in bad faith | Calvary: factual tolling issues render timeliness unclear; amendment not futile | Court: Denied futility/bad-faith objection; facts do not clearly show untimeliness, so amendment allowed |
| Whether the counterclaim is compulsory or permissive | Horton: counterclaim not logically related; thus permissive and no jurisdiction | Calvary: facts of account opening, breach, and collection calls overlap; claim is compulsory | Court: Counterclaim is compulsory under the Ninth Circuit logical-relationship test; jurisdiction proper |
| Whether the court should exercise supplemental jurisdiction over the counterclaim | Horton: no independent jurisdiction and no logical connection | Calvary: common nucleus of operative facts supports supplemental jurisdiction | Court: Exercised jurisdiction because counterclaim arises from the same transaction/occurrence |
| Whether amendment should be denied for prejudice/undue delay | Horton: did not persuasively argue prejudice or undue delay | Calvary: timely sought leave after scheduling order; no prejudice shown | Court: No prejudice or undue delay shown; favor granting leave per Rule 15(a) |
Key Cases Cited
- Howey v. United States, 481 F.2d 1187 (9th Cir. 1973) (courts should heed Rule 15(a)’s instruction to grant leave to amend freely)
- Foman v. Davis, 371 U.S. 178 (1962) (factors for denying leave to amend: prejudice, delay, bad faith, futility)
- DCD Programs, Ltd. v. Leighton, 833 F.2d 183 (9th Cir. 1987) (strong federal policy favors deciding cases on the merits; delay alone is insufficient to deny amendment)
- Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246 (9th Cir. 1987) (logical-relationship test for compulsory counterclaims)
- Baker v. Gold Seal Liquors, 417 U.S. 467 (1974) (federal courts traditionally exercise supplemental jurisdiction over compulsory counterclaims)