United States District Court, D. Minnesota
Michael A. Bondi, Plaintiff,
Great Southern Bank, Experian Information Solutions, Inc., and Evans & Green LLP, Defendants.
MEMORANDUM AND ORDER
A. Magnuson United States District Court Judge
matter is before the Court on Plaintiff Michael Bondi's
Motion to Dismiss Defendant Great Southern Bank's
Counterclaim. For the following reasons, the Motion is
facts of this matter are more fully set forth in the
Court's Order on Defendant's Motion to Dismiss.
(Docket No. 41.) Briefly, Plaintiff Michael Bondi defaulted
on his home mortgage in 2012. Defendant Great Southern Bank
(“GSB”) eventually agreed that Bondi would pay
the bank a quarter of the outstanding debt to settle the
debt, and the parties executed a settlement agreement to that
effect. Bondi made the payments to the bank's attorneys
and the attorneys sent Bondi a letter in August 2015 saying
that the debt had been paid off. (Am. Compl. Ex. 2.)
contacted credit agencies in January 2016 to ask why they
were still reporting that he had an outstanding balance with
GSB. (Id. ¶ 38.) The credit agencies in turn
contacted GSB, which reported that Bondi had a balance of
more than $54, 000 and that he had not made a payment since
January 1, 2012. (Id. ¶ 42.)
Amended Complaint contends that GSB violated the Fair Credit
Reporting Act (“FCRA”), 16 U.S.C. §
1681s-2(b), by failing to conduct a reasonable investigation
and failing to update or remove the inaccurate information
from Bondi's credit report.
brought a breach-of-contract counterclaim against Bondi,
contending that Bondi's payments to the attorneys
breached the parties' settlement agreement. (Countercl.
(Docket No. 44) ¶¶ 27-34.) Specifically, GSB
alleges that the agreement discharging Bondi's debt
required Bondi to make payments payable to GSB and send those
payments to GSB's lawyers, Defendant Evans & Green.
(Id. ¶ 28.) Bondi, however, made his checks
payable to Evans & Green and sent them to the law
firm.GSB contends that it has suffered damages
as a result of the breach, in the form of the attorney's
fees it has expended in defending the instant lawsuit.
(Id. ¶ 33.) In the alternative, GSB seeks
rescission of the settlement agreement. (Id. ¶
contends that GSB's Counterclaim must be dismissed
because it is not a compulsory counterclaim and the Court
should decline to exercise supplemental jurisdiction over it.
Counterclaim is a compulsory counterclaim. Rule 13(a)
provides that a party “shall state as a counterclaim
any claim . . . [that] arises out of the same transaction or
occurrence that is the subject matter of the opposing
party's claim.” Fed.R.Civ.P. 13(a). GSB's
Counterclaim arises out of the same occurrence as Bondi's
FCRA claim, namely Bondi's payments toward his settlement
with GSB and the reasons GSB might not have had a record of
those payments when it reported information to credit
even if the Counterclaim is not a compulsory counterclaim, it
satisfies the requirements for supplemental jurisdiction.
“[T]he district courts shall have supplemental
jurisdiction over all other claims that are so related to
claims in the action . . . that they form part of the same
case or controversy . . . .” 28 U.S.C. § 1367(a).
The Counterclaim forms part of the same case or controversy,
because it shares a “common nucleus of operative
fact” with Bondi's claims. Hunt v. Up North
Plastics, Inc., 980 F.Supp. 1042, 1045 (D. Minn. 1997)
(Tunheim, J.). Indeed, supplemental jurisdiction is
appropriate if there is some “discernible
overlap” between the claims. Id. Given that
GSB's main defense is that it did not know about at least
one of Bondi's payments because he made the payment
payable to the law firm rather than GSB, there is more than
some discernible overlap between the Counterclaim and
argues that allowing counterclaims such as this will have a
chilling effect on FCRA litigation. This argument is
overstated and unpersuasive. This is not a case where a debt
collector seeks to raise permissive counterclaims for the
underlying debt, creating a powerful disincentive for a
consumer bringing a Fair Debt Collection Practices Act claim.
E.g., Graf v. Pinnacle Asset Grp., LLC, No.
14cv1822, 2015 WL 632180, at *7-8 (D. Minn. Feb. 12, 2015)
(Nelson, J., adopting Report and Recommendation of Rau,
M.J.). GSB's Counterclaim is directly tied to the facts
alleged and is, as a practical matter, inseparable from the
claims and defenses at issue.
Counterclaim is appropriately brought as either a compulsory
counterclaim or under the Court's supplemental
jurisdiction. Accordingly, IT IS HEREBY ORDERED that