McFadden v. Logan
Order granting 10 MOTION to Dismiss Counterclaim filed by Amanda Dawn McFadden. Dynamic's counterclaim is dismissed. The renewed Motions to Dismiss (Docs. 22 & 23 are denied as moot. Signed by Chief Judge William H. Steele on 2/19/2013. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
AMANDA DAWN MCFADDEN,
) CIVIL ACTION 12-0680-WS-B
GARY LOGAN, etc., et al.,
This matter is before the Court on the plaintiff’s motion to dismiss counterclaim.
(Doc. 10). The defendants1 have filed a response and the plaintiff a reply, (Docs. 12, 15),
and the motion is ripe for resolution.
The plaintiff brought this action under the Fair Debt Collection Practices Act (“the
Act”), alleging that the defendants violated the Act in the course of attempting to collect
an alleged debt, which is not further identified. (Doc. 2). In its counterclaim, (Doc. 19 at
6-9), Dynamic Values Corp. (“Dynamic”) alleges that the underlying debt was originally
The number and identity of the defendants is not yet clear. The style of the complaint
reads, “Gary Logan, a/k/a, d/b/a Dynamic Values Corp., Defendant(s).” (Doc. 2 at 1). Although
Dynamic Values Corp. (“Dynamic”) uses a corporate identifier, the complaint alleges that
Dynamic is “an illusory corporation.” (Id. at 3). Nevertheless, the complaint also alleges that
Dynamic is a “business entity,” (id. at 1), and Logan is alleged to be “an officer, director,
managing agent, or general agent” of this business entity. (Id. at 2). Moreover, the complaint
demands judgment against “the defendants,” in the plural. (Id. at 5). The plaintiff now asserts
that Dynamic “is a sham and simply a d/b/a of Mr. Logan,” (Doc. 15 at 1), but his complaint
paints a more complicated picture. On the other side, the answer is filed by Logan only, but the
counterclaim is filed by Dynamic only (a difficult trick if Dynamic is not a defendant). The
Court expects the parties in due course to reach agreement as to the identity of the party or
parties, or at least be able to articulate clearly their positions on this issue and the evidence
supporting them. For present purposes, the Court will assume that both Logan and Dynamic are
owed by the plaintiff to one Mr. Pignatello, who sued to recover an engagement ring he
presented the plaintiff, which she later sold. Pignatello received a $14,000 judgment in
Virginia state court, then assigned the judgment to Dynamic. The counterclaim is
brought to domesticate the Virginia judgment such that it would operate as an offset to
any judgment in favor of the plaintiff.
The plaintiff’s primary argument is that the Court lacks jurisdiction over the
counterclaim. (Doc. 10 at 2-5). “The burden for establishing federal subject matter
jurisdiction rests with the party bringing the claim.” Sweet Pea Marine, Ltd .v. APJ
Marine, Inc., 411 F.3d 1242, 1247 (11th Cir. 2005). Dynamic thus bears that burden as to
Because the amount in controversy lies far below $75,000, and because no federal
question is presented, the Court has no original jurisdiction over the counterclaim.
Dynamic’s single argument is that its counterclaim is compulsory, such that no
independent jurisdictional basis is required. (Doc. 12 at 3-4).
To be compulsory, Dynamic’s counterclaim must “aris[e] out of the same
transaction or occurrence that is the subject matter of the opposing party’s claim.” Fed.
R. Civ. P. 13(a)(1)(A). The Eleventh Circuit utilizes the “logical relationship” test for
determining whether Rule 13(a) is triggered. Republic Health Corp. v. Lifemark
Hospitals, Inc., 755 F.2d 1453, 1455 (11th Cir. 1985). “Under this test, there is a logical
relationship when the same operative facts serve as the basis of both claims or the
aggregate core of facts upon which the claim rests activates additional legal rights,
otherwise dormant, in the defendant.” Id. Dynamic recognizes this as the governing test.
(Doc. 12 at 3).
Dynamic’s counterclaim fails this test. The operative facts supporting the
plaintiff’s claim under the Act are that the defendants sent her a letter threatening to
communicate false information to credit reporting agencies; threatening to take legal
action when no such action was intended; and threatening criminal conduct. (Doc. 2 at 32
4). The operative fact supporting the counterclaim is that Dynamic has a foreign
judgment it wishes to domesticate. The operative facts are not the same; they are not
even close. Nor do the facts upon which the federal claim rests activate some otherwise
dormant right to domesticate a judgment.
Dynamic notes that both its letter and its counterclaim are efforts to enforce the
same judgment. (Doc. 12 at 3-4). The existence of a judgment, however, is irrelevant to
the plaintiff’s claim under the Act. Dynamic argues that its counterclaim is in the nature
of recoupment, but it admits that recoupment is a “subset of compulsory counterclaims”
and thus subject to the same “logical relationship” test. (Id.). Finally, Dynamic suggests
that “logical relationship” should be redefined to encompass whatever “justice, judicial
economy, common sense and logic demand,” (id. at 4), but the Court must use the
definition announced by the Eleventh Circuit.
The plaintiff in her brief acknowledged that some courts have held that at least
some permissive counterclaims may lie within a court’s supplemental jurisdiction under
Section 1367(a). (Doc. 10 at 3-5).2 Dynamic, however, declined to assert that
jurisdiction over its counterclaim could be sustained on this basis, and the Court will not
address such an argument sua sponte on Dynamic’s behalf.3
For the reasons set forth above, the plaintiff’s motion to dismiss counterclaim is
granted. Dynamic’s counterclaim is dismissed.4
DONE and ORDERED this 19th day of February, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
The Court has recently addressed this issue. See Shepherd v. Kelley, 2013 WL 105284
at *1-2 (S.D. Ala. 2013).
The Court has and expresses no opinion whether such an argument would have fared
better than the argument Dynamic did raise.
The plaintiff’s renewed motions to dismiss, (Docs. 22-23), are denied as moot.
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