Tilley v. Ally Financial, Inc.

Filing 27

ORDER Granting 17 Motion to Dismiss Defendant's Verified Counterclaim. Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
LINDA TILLEY,
Plaintiff,

Case No. 16-cv-14056
Hon. Matthew F. Leitman

v.
ALLY FINANCIAL, INC.,
Defendant.
_________________________________________________________________/
ORDER GRANTING MOTION TO DISMISS
DEFENDANT’S VERIFIED COUNTERCLAIM (ECF #17)

In this action, Plaintiff Linda Tilley alleges that Defendant Ally Financial, Inc.
violated the Telephone Consumer Protection Act, 47 U.S.C. § 227, et. seq. (the
“TCPA”), by using an automated telephone dialing system to place calls to her
cellular telephone without her consent. (See Compl., ECF #1.) The Court has
original federal question jurisdiction over Tilley’s claim under 28 U.S.C. § 1331.
Ally has asserted a state-law counterclaim against Tilley for breach of contract. (See
Ans., ECF #9.)

In that counterclaim, Ally alleges that Tilley breached her

contractual obligation to make payments owing under an automobile loan
agreement. (See id.) Tilley has moved to dismiss Ally’s counterclaim. (See ECF
#17.)

She argues that the Court lacks supplemental jurisdiction over the

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counterclaim, and, in the alternative, that if the Court may exercise supplemental
jurisdiction over the counterclaim, it should decline to do so. For the reasons
explained below, the Court GRANTS Tilley’s motion to dismiss. In so holding, this
Court joins the other federal courts that have rejected attempts by Ally to assert statelaw breach of contract counterclaims in TCPA actions.
This Court lacks original subject matter jurisdiction over Ally’s state-law
counterclaim. Thus, the Court has subject matter jurisdiction over that counterclaim
only if it falls within the grant of supplemental jurisdiction under 28 U.S.C. §1367(a)
(“Section 1367(a)”). It does not.
Section 1367(a) provides for supplemental jurisdiction over state-law claims
as follows:
Except as provided in subsections (b) and (c) or as expressly provided
otherwise by Federal statute, in any civil action of which the district
courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to
claims in the action within such original jurisdiction that they form part
of the same case or controversy under Article III of the United States
Constitution. Such supplemental jurisdiction shall include claims that
involve the joinder or intervention of additional parties.
28 U.S.C.A. § 1367(a) (emphasis added). “Claims form part of the same case or
controversy when they ‘derive from a common nucleus of operative facts.’” Blakely
v. United States, 276 F.3d 853, 861 (6th Cir. 2002) (quoting Ahearn v. Charter Twp.
Of Bloomfield, 100 F.3d 451, 454-55 (6th Cir. 1996)).

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Ally’s state-law breach of contract counterclaim and Tilley’s TCPA claim do
not derive from a common nucleus of operative facts. Tilley’s TCPA claim arises
out of the (alleged) facts that Ally used an automated device to call her repeatedly
without her consent. Ally’s counterclaim, in contrast, derives from the (alleged)
facts that Tilley failed to fulfill her payment obligations to Ally. The nuclei of facts
from which the respective claims arise are thus distinct, and, accordingly, this Court
lacks supplemental jurisdiction over Ally’s counterclaim.
Another district court in this Circuit reached the same conclusion in Ramsey
v. General Motors Financial Co., Inc., 2015 WL 6396000 (M.D. Tenn. Oct. 22,
2015). In that case, the court held that it lacked supplemental jurisdiction over a
state-law breach of contract counterclaim brought by defendant facing a TCPA
claim. See Ramsey, 2015 WL 6396000, at *1. The court in Ramsey explained:
Here, the Court finds that Defendant's Counter-complaint does not arise
from the same case or controversy as Plaintiff's TCPA claim. Although
Plaintiff's claim, from a broad perspective, arose from the underlying
debt upon which Defendant sues, a closer look reveals that the operative
facts from which Plaintiff's federal claim arose are separate and
different from the operative facts from which Defendant's state law
claim arose. The proof needed to establish Defendant's violation of the
TCPA (e.g., calls made, without express consent, with an automatic
telephone dialing system or an artificial or prerecorded voice) is
different from the proof needed to establish Plaintiff's breach of the
Contract (e.g., existence of a valid contract, default, damages).
Id. at *2.

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Similarly, the federal court in Riazi v. Ally Financial, Inc., 2017 WL 4260847
(E.D. Mo. Sept. 26, 2017), held that it lacked supplemental jurisdiction over a statelaw breach of contract counterclaim brought by Ally in a TCPA action. That court
said:
Riazi's claim under the TCPA is based on Ally's using an ATDS to call
and text her cell phone after she requested Ally cease doing so.
Although, as acknowledged by Riazi, it is “likely that the reason [Ally]
placed these calls to [Riazi's] cell phone was related to” the debt which
is the subject of Ally's counterclaim [ ], the Court finds that the
operative facts of Ally's breach of contract counterclaim are distinct and
separate from the operative facts necessary for Riazi's proving her
TCPA claim. In particular, the existence of a contract between Riazi
and Ally, Riazi's default under the contract, and the amount and nature
of Riazi's alleged debt are not relevant to Riazi's proving her TCPA
claim. Considering the necessary elements of a TCPA claim and the
necessary elements of a breach of contract claim, the Court finds that
the proof necessary to establish Riazi's TCPA claim and Ally's
counterclaim differ. This reasoning suggests that Riazi's TCPA claim
and Ally's breach of contract counterclaim are not derived from a
common nucleus of operative facts, and that, therefore, this Court does
not have supplemental jurisdiction over Ally's counterclaim.
Riazi, 2017 WL 4260847, at *5 (internal citations omitted); see also Vecchia v. Ally
Financial, Inc., 2018 WL 907045, at *1 (M.D. Fla. Feb. 15, 2018) (concluding that
the court lacked supplemental jurisdiction over state-law breach of contract claim
brought by Ally in a TCPA action because the TCPA claim and state-law
counterclaim did not derive from common nucleus of operative facts).1

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Ally directs the Court to the decision in Bates v. American Credit Acceptance, LLC,
2016 WL 5477429 (E.D. Mich. Sept. 29, 2016). In that case, another Judge of this
Court held that a state-law breach of contract counterclaim and a TCPA claim did
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The Court finds the reasoning in the above-quoted cases to be persuasive and
concludes, like the federal courts in those cases, that it lacks supplemental
jurisdiction over Ally’s state-law counterclaim. Accordingly, Tilley’s motion to
dismiss that counterclaim is GRANTED.
IT IS SO ORDERED.

s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE

Dated: March 29, 2018

arise out of a common nucleus of operative facts and thus that supplemental
jurisdiction did exist over the state-law counterclaim. See Bates, 2016 WL 5477429,
at *3. This Court respectfully disagrees with the holding in Bates and finds the
reasoning of the cases cited above to be more persuasive. In addition, while this
Court’s holding conflicts with the decision in Bates, it is consistent with the
published decision in Salei v. Boardwalk Regency Corp., 913 F. Supp. 993, 999
(E.D. Mich. 1996) (holding that state-law breach of contract counterclaim and claim
under Fair Credit Reporting Act did not arise out of common nucleus of operative
facts even though the state and federal claims were “causally related” in that “but
for the alleged breach of a settlement agreement that forms the basis of Plaintiff's
state claims, the alleged federal violation would not have occurred”).

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I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on March 29, 2018, by electronic means and/or
ordinary mail.
s/ Holly A. Monda
Case Manager
[phone]

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