I recently faced this procedural quandary: Plaintiff (that’s us) filed a complaint. Defendant responded by filing an answer and counterclaim. After receiving court leave, and before responding to the counterclaim, we amended the complaint. Defendant answered the amended complaint and filed affirmative defenses but did not replead its counterclaim.
Defendant later threatened to default us if we didn’t answer its prior counterclaim. I argued that the earlier counterclaim was extinguished by the amended complaint since the defendant didn’t file a counterclaim to it. The defendant thought otherwise. Ultimately, to avoid spending time and money on a collateral issue, I answered the counterclaim – even though I don’t think I had to.
My research revealed a definite split of authority on the issue. Some courts hold that an amended pleading supersedes not only the original complaint (that’s obvious) but also an earlier counterclaim to the superseded complaint. Others take the opposite tack and find that a counterclaim is separate from the answer and that even where a complaint is withdrawn and amended, the prior counterclaim still remains and must be answered.
Mathews v. Ohio Public Employees Retirement System, 2014 WL 4748472 reflects a court weighing the facts of a given case in deciding whether a defendant must replead its counterclaim or can stand on the one it previously filed.
The plaintiffs sued alleging their disability retirement benefits were wrongly denied. The pension fund defendant filed an answer and counterclaim to recover overpaid benefits. The plaintiff later filed an Amended Complaint to which the defendant answered but did not re-assert a counterclaim. Plaintiff moved for judgment on the pleadings based on the absence of a counterclaim with defendant’s answer to the amended pleading. The defendant then moved for leave to file a counterclaim to the Amended Complaint. Plaintiff opposed the motion.
Siding with the defendant, the Ohio Federal court looked to the interplay between Federal Rules 13 and 15 and noted that “courts are divided” on whether a party must replead a counterclaim in response to an amended complaint.
Federal Rule 13 requires a pleading to state compulsory counterclaims and allows it to allege permissive counterclaims.
Federal Rule 15(a)(3) provides that, “[u]nless the court orders otherwise, any required response to an amended pleading must be made within the time remaining to respond to the original pleading or within 14 days after service of the amended pleading, whichever is later.”
Some courts interpret this to mean that a defendant must replead a counterclaim in response to an amended complaint or it abandons or waives the right to pursue the counterclaim* while others do not require a defendant to replead a counterclaim with its response to an amended complaint.**
Still, a third line of cases decides the question on a case-by-case basis: it considers whether plaintiff received notice of the counterclaim, whether the defendant pursued the counterclaim and whether plaintiff will suffer unfair prejudice if the prior counterclaim proceeds.
The Court ultimately followed the latter case authorities; it weighed the equities to decide whether the defendant abandoned its counterclaim. In allowing the defendant to file a counterclaim to the plaintiff’s Amended Complaint, the Court noted that Plaintiff had been on notice for several months that defendant intended to pursue its counterclaim and even replied to the counterclaim.
The Court also cited Plaintiff’s failure to establish prejudice if the Defendant was allowed to file a counterclaim. The Court rejected plaintiff’s judicial economy argument by noting that discovery was already closed when plaintiff moved for judgment on the pleadings and the proposed amended answer and counterclaim injected no new facts to the previously filed counterclaim.
Afterwords: When a complaint is amended it is treated as abandoned. However, if a defendant filed a counterclaim along with its answer to the abandoned complaint, there is case authority (not just in Ohio but in other states, too) for the proposition that the counterclaim is not extinguished and the plaintiff still must answer it.
Mathews and cases like it demonstrate that the safe procedural play is for a defendant to replead its counterclaim with its answer to an amended pleading. Otherwise, the defendant may have to defend against a claim that it waived its counterclaim by not refiling it in response to the amended pleading.
* Gen. Mills, Inc. v. Kraft Foods Global, Inc., 487 F.3d 1368, 1376–77 (Fed.Cir.2007); Bremer Bank, Nat’l Ass’n, 2009 U.S. Dist. LEXIS 21055, at *40–41, 2009 WL 702009 Nat’l Mut. Cas. Ins. Co. v. Snider, 996 F.Supp.2d 1173, 1180 n. 8 (M.D.Ala.2014)
** Performance Sales & Mktg. LLC v. Lowe’s Cos., No. 5:07–cv–00140, 2013 U.S. Dist. LEXIS 117835, at *9 n. 2, 2013 WL 4494687 (W.D.N.C. Aug. 20, 2013); Ground Zero Museum Workshop v. Wilson, 813 F.Supp.2d 678, 705–06 (D.Md. Aug.24, 2011)
*** Davis v. Beard, 2014 U.S. Dist. LEXIS 30461, at *12–13, 2014 WL 916947 (E.D.Mo. Mar. 10, 2014) Hitachi Med. Sys. Am., Inc. v. Horizon Med. Grp., 2008 WL 5723531 (N.D.Ohio 2008) ; AVKO Educ. Research Found. v. Morrow, 2013 U.S. Dist. LEXIS 49463, at *30, 2013 WL 1395824 (E.D.Mich. Apr. 5, 2013); Cairo Marine Serv. v. Homeland Ins. Co., No. 4:09CV1492, 2010 U.S. Dist. LEXIS 117365, at *3–4, 2010 WL 4614693 (E.D.Mo. Nov. 4, 2010)