Pace v. Timmermann's Ranch & Saddle Shop Inc.
795 F.3d 748
7th Cir.2015Background
- Timmermann’s sued Pace in 2011 for conversion, breach of fiduciary duty, fraud, and unjust enrichment, alleging embezzlement and theft of merchandise and money.
- Pace answered and asserted counterclaims in 2011; in 2013 Pace and Mr. Pace filed a separate action against Timmermann’s and four employees for false arrest and related claims.
- The district court consolidated for discovery but denied trial consolidation and later dismissed 2013 action as compulsory counterclaims that should have been raised in 2011.
- Pace argued the 2013 claims against individual defendants and Mr. Pace were not compulsory counterclaims and requested consolidation for trial.
- The district court found Pace’s abuse-of-process claim premised on an arrest before the 2011 action, thus not a mature counterclaim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Pace’s claims against the individual defendants compulsory counterclaims? | Pace contends Rule 13 does not compel joinder of others under Rule 20. | Timmermann’s argues all related claims should be compulsory counterclaims because of Rule 13(a) and joinder under Rule 20. | Not compulsory counterclaims; Rule 13 does not mandate joinder of nonparties under Rule 20. |
| Is Mr. Pace's loss of consortium claim a compulsory counterclaim? | Loss of consortium arises from the same dispute but against nonparties; not compulsory. | Should be joined as a compulsory counterclaim under related transactions. | Not a compulsory counterclaim. |
| Was Pace's abuse-of-process claim mature before the 2011 action, making it a compulsory counterclaim? | Abuse of process matured only when arrest occurred, not at time of 2011 pleading. | Abuse of process existed as a claim before 2011 based on concealed actions. | Abuse of process claim matured before 2011; it was properly barred as a compulsory counterclaim. |
| Do Rules 13 and 20 provide for compulsory joinder in this context, affecting consolidation decisions? | Jointing under Rule 20 is permissive, not mandatory; consolidation should be reconsidered. | joinder under Rule 13/20 supports barring 2013 action. | Rules 13 and 20 do not compel joinder; remand for further proceedings is required. |
Key Cases Cited
- Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102 (1968) (joinder, economy, and complete settlement interests)
- Burlington Northern R.R. Co. v. Strong, 907 F.2d 707 (7th Cir.1990) (existence of a compulsory counterclaim when matured)
- Temple v. Synthes Corp., 498 U.S. 5 (1989) (joinder considerations and permissive/mandatory joinder distinction)
- Intercon Research Assocs., Ltd. v. Dresser Indus., Inc., 696 F.2d 53 (7th Cir.1982) (Rule 20 independent of Rule 18; joinder of parties)
- Asset Allocation & Management Co. v. Western Employers Insurance Co., 892 F.2d 566 (7th Cir.1989) (counterclaims and joinder discussions; Rule 13(h))
- Martin v. Wilks, 490 U.S. 755 (1989) (federal rules on intervention and joinder)
- Transamerica Occidental Life Ins. Co. v. Aviation Office of Am., Inc., 292 F.3d 384 (3d Cir.2002) (opposing party concept and Rule 13/20 interpretation)