Barnard DO v. Knox/Winamac Community Health Centers

Filing 48

OPINION AND ORDER granting 42 Motion for Partial Summary Judgment on Counts II and III of the defendants counterclaim. Signed by Judge Robert L Miller, Jr on 4/7/2015. (rmc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
HAROLD A. BARNARD, D.O.,
Plaintiff/Counter-Defendant
v.
KNOX/WINAMAC COMMUNITY
HEALTH CENTERS, INC.,
Defendant/Counter-Claimant

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CAUSE NO. 3:13-CV-387 RLM

OPINION AND ORDER
Plaintiff/counter-defendant Dr. Harold Barnard moved for partial summary
judgment on Counts II and III of the defendant’s Counterclaim. The court took the
matter under advisement after hearing argument on April 1. For the following
reasons, the court grants the motion [Doc. No. 42].
Dr. Barnard brought a breach of contract and conversion action against
Knox/Winamac Community Health Centers after Knox/Winamac defaulted on a
2009 Asset Purchase Agreement relating to the sale of Dr. Barnard’s medical
practice and equipment. The complaint alleges that Knox/Winamac failed to make
a final installment payment that was due on March 1, 2010 and wrongfully
converted Dr. Barnard’s office equipment when it failed to obtain an appraisal and
pay the full value for that equipment.

Knox/Winamac Community Health Centers filed a counterclaim on July 30,
2013, asserting claims for breach of contract (Count I), defamation (Count II), and
tortious interference with a business relationship (Count III). [Doc. No. 11].
Dr. Barnard seeks summary judgment on Counts II and III of the
counterclaim, arguing that they’re barred by Indiana’s two-year statute of
limitations, IND. CODE § 34-11-2-4, and that Knox/Winamac hasn’t presented any
evidence that the statements and publications made by him were untruthful or
that he engaged in any illegal activity or lacked justification for his actions. The
court finds the first ground dispositive, and so limits its discussion to that
argument.
As always on summary judgment motions, judgment is proper only if there
is no genuine issue of material fact and the movant is entitled to judgment as a
matter of law. Garofalo v. Village of Hazel Crest, 754 F.3d 428, 430 (7th Cir.
2014).
Dr. Barnard contends that the claims in Counts II and III accrued in
November 2009, when he published the allegedly defamatory statements; that
Knox/Winamac waited more than three and a half years to file its counterclaims
for defamation and tortious interference; and that the two-year statute of
limitations in IND. CODE § 34-11-2-4 bars those claims.
Knox/Winamac doesn’t dispute Dr. Barnard’s assertion that the action
accrued in late 2009, but argues that Counts II and III are actually “recoupment”

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claims that arise out of the same transaction or occurrence as the plaintiff’s
claims, not affirmative claims, and as such aren’t barred by the statute of
limitations. Citing Reiter v. Cooper, 507 U.S. 258, 264 (1993) (recoupment claims
arise out of same transaction and generally aren’t barred by a statute of
limitations); Chauffers, Teamsters Warehousemen & Helpers Local Union No. 135
v. Jefferson Trucking Co., Inc., 473 F.Supp. 1255, 1258 (S.D. Ind. 1979) (“a
counterclaim arising out of the transaction or occurrence on which the action is
founded may be asserted despite the bar of a statute of limitations if it is asserted
for purposes of recoupment”); In re Health Mgmt Ltd. Partnership, 336 B.R. 392,
395-96 (Bkrtcy. C.D. Ill. 2005) (“Under the doctrine of recoupment, a defendant
can meet a plaintiff’s claim with a countervailing claim that arose out of the same
transaction as the Plaintiff’s claim or cause of action, for the purpose of abatement
or reduction of such claim,” but “the claims must arise from a single contract or
transaction” and “there must be some type of ‘overpayment’ whether accidentally
made or contractually made.”). To the extent the prayers for relief in Counts II and
III might suggest otherwise, Knox/Winamac asserts that the court should treat its
counterclaims as affirmative defenses under Fed. R. Civ. P. 8(c)(2) and limit
damages accordingly.
That Knox/Winamac’s recoupment argument surprised Dr. Barnard is
understandable. Knox/Winamac raised the argument for the first time at the
hearing on plaintiff’s motion. The prayer for relief in Counts II and III

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unequivocally states that, “Knox prays for judgment in its favor and against
Barnard, compensatory damages as a result of Barnard’s tortious conduct,
punitive damages, costs of this action, attorney’s fees, and all other just and
proper relief in the premises.” [Doc. No. 11 at pp. 11 and 12]. The affirmative
nature of the relief sought and the claims asserted lies uneasily with
Knox/Winamac’s assertion that they were merely affirmative defenses, mistakenly
designated as counterclaims.
Still, the counterclaims could have been treated as affirmative defenses even
after trial through an amendment to conform the pleadings to the evidence
introduced at trial, even without a motion to amend. See Fed. R. Civ. P. 15(b)(2).
No rule or reason prevents a court from taking the same approach at the
summary judgment stage.
Recoupment is a defense applicable in situations where the same
transaction or contract gives rise to the claims asserted in an original
compliant and a subsequent counterclaim. It involves the right of the
defendant to have the plaintiff’s monetary claim reduced by virtue of
a claim by the defendant against the plaintiff arising out of the same
contract.
Northern Trust Co. v. Peters, 69 F.3d 123, 135 (7th Cir. 1995).
Unlike the breach of contract claim asserted in Count I of the Answer and
Counterclaim, the defamation and tortious interference claims asserted in Counts
II and III don’t arise out of the same transaction or occurrence as Dr. Barnard’s
claims. Dr. Barnard’s claims are founded on a breach of the 2009 Asset Purchase
Agreement; Counts II and III of the counterclaim aren’t. Those counts of the
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counterclaim seek (at best) recoupment for losses Knox/Winamac suffered as a
result of Dr. Barnard’s actions after the practice was sold. They are separate and
distinct affirmative claims for relief, fall outside the recoupment doctrine, and so
are time-barred under IND. CODE § 34-11-2-4. See Chauffers, Teamsters
Warehousemen & Helpers Local Union No. 135 v. Jefferson Trucking Co., Inc.,
473 F.Supp. at 1258-59 (finding that defenses raised by the defendant weren’t
asserted for purposes of recoupment, but rather were requests for affirmative relief
and as such were barred by the statute of limitations).
Accordingly, the plaintiff’s motion for partial summary judgment on Counts
II and III of the defendant’s counterclaim [Doc. No. 42] is GRANTED.
SO ORDERED.
ENTERED:

April 7, 2015
/s/ Robert L. Miller, Jr.
Judge
United States District Court

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