United States District Court, D. Maryland
ROGER L. COOK Plaintiff,
SCI MARYLAND FUNERAL SERVICES INC., ET AL., Defendants.
REPORT AND RECOMMENDATION
J. MARK COULSON, UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation addresses the Motion for Default Judgment filed by Defendant SCI Maryland Funeral Services, Inc. (“SCI”), against Plaintiff, Roger L. Cook. (ECF No. 26.) Mr. Cook, who proceeds pro se, filed a response on December 18, 2015. (ECF No. 28.) SCI filed a reply on January 4, 2015. (ECF No. 31.) On January 5, 2016, in accordance with 28 U.S.C. § 636 and Local Rules 301 and 302, Judge Quarles referred this case to me for a report and recommendation on SCI’s motion. (ECF No. 32). I find that a hearing is unnecessary. See Fed. R. Civ. P. 55(b)(2); Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that SCI’s Motion for Default Judgment be GRANTED IN PART and DENIED IN PART.
I. FACTUAL AND PROCEDURAL HISTORY
On December 3, 2014, Mr. Cook commenced this action against Defendants alleging employment discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. (ECF No. 1.) SCI then counterclaimed against Mr. Cook, alleging breach of contract and unjust enrichment. (ECF No. 9.) Specifically, SCI alleged that, at the close of his employment with SCI, Mr. Cook signed an “Independent Contractor/Consultative Agreement” (“the Agreement”), under which he “promised not to sue SCI and released it from all employment related claims.” (Countercl. ¶ 2.) SCI thus claimed that the Title VII claims brought by Mr. Cook constituted a breach of the Agreement, and it sought damages including the amount it paid to Mr. Cook under the Agreement. (Id. ¶¶ 31-33.) Additionally, SCI claimed that if the Agreement were deemed invalid for any reason, Mr. Cook’s retention of any payments made thereunder would constitute unjust enrichment. (Id. ¶¶ 34-36.) As of the date of the Counterclaim, SCI contended it had paid Mr. Cook $22, 106.91. (Id. ¶ 23.)
Thereafter, each party moved to dismiss the claims against it, and in a Memorandum Opinion dated July 28, 2015, the Court granted SCI’s motion to dismiss Mr. Cook’s Title VII claims and denied Mr. Cook’s motion to dismiss SCI’s breach of contract and unjust enrichment claims. (ECF No. 20.) With respect to Mr. Cook’s Title VII claims, the Court found that his allegations pertaining to his membership in a protected class and the differential treatment of those outside his class were insufficient to survive a motion to dismiss. The Court noted that although Mr. Cook had included those allegations in a supplemental filing, it was not permitted to consider that filing because he had not filed a motion to amend his complaint. Accordingly, the Court dismissed Mr. Cook’s discrimination claim without prejudice and granted him the opportunity to amend his complaint within 30 days. (ECF No. 21.) The Court also found that Mr. Cook’s retaliation claim did not contain sufficient allegations concerning his protected activities to survive a motion to dismiss, and it dismissed that claim with prejudice. Finally, with respect to SCI’s counterclaim, the Court found that the pleadings did not contain sufficient facts to allow it to consider Mr. Cook’s affirmative defenses concerning the validity of the Agreement, and that it was therefore inappropriate to dismiss SCI’s counterclaims at that juncture. The docketing entries for the Court’s July 28, 2015 Memorandum Opinion and Order reflect that on that same date, the Deputy Clerk mailed a copy of each to Mr. Cook.
Mr. Cook failed to file an amended complaint correcting the insufficiencies in his initial pleading. Thus, on November 5, 2015, the Court dismissed his claims with prejudice and directed him to submit an answer to SCI’s counterclaim within 14 days. (ECF No. 22.) The docketing entry for the Court’s November 5, 2015 Order reflects that on that same date, the Deputy Clerk mailed a copy of the order to Mr. Cook. However, Mr. Cook failed to file an answer, and upon SCI’s Motion for Entry of Default against Mr. Cook, the Clerk entered an order of Default against Mr. Cook on January 4, 2015. (ECF No. 30.) SCI filed its Motion for Default Judgment on December 18, 2015, seeking to recover from Mr. Cook the $22, 106.91 it paid Mr. Cook under the Agreement. (ECF No. 26.)
Concerned by a lack of documentary evidence supporting SCI’s claimed damages, I requested further clarification as to the actual sum paid to Mr. Cook. (ECF No. 33.) Upon review of SCI’s supplementation I am satisfied that $22, 106.91 accurately reflects the sum paid to Mr. Cook under the Agreement. (See ECF No. 34-1.)
II. LEGAL ANALYSIS
A. Subject Matter Jurisdiction
In preparing a report and recommendation on SCI’s motion, in addition to considering whether default judgment is appropriate, I “have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006); Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). In its counterclaim, SCI asserts that this Court “has original jurisdiction of these claims as compulsory counterclaims pursuant to 28 U.S.C. Sections 1332, 1441, and 1367(a), and Rule 13(a) of the Federal Rules of Civil Procedure, or in the alternative, as permissive counterclaims under Federal Rule of Civil Procedure 13(b).” (Countercl. ¶ 9.) First, this court does not have an independent source of jurisdiction over SCI’s counterclaims, as federal question jurisdiction is precluded by the fact that SCI’s counterclaims all sound in state law and diversity jurisdiction by the fact that the amount in controversy falls below the $75, 000.00 threshold. See 28 U.S.C. §§ 1331, 1332. Subject matter jurisdiction over SCI’s counterclaims thus rests on the Court’s authority to exercise supplemental jurisdiction under 28 U.S.C. § 1367, based on the counterclaims’ relation to the (now dismissed) claims brought by Mr. Cook under federal law. Long v. Welch & Rushe, Inc., 28 F.Supp.3d 446, 451 (“Because the court has neither federal question nor diversity jurisdiction over the counterclaims, 28 U.S.C. § 1367(a) provides the only possible basis for jurisdiction.”).
1. Counterclaim Type
Federal Rule of Civil Procedure 13 defines two types of counterclaims: compulsory and permissive. A compulsory counterclaim is, by definition, within the supplemental jurisdiction of the court. Long, 28 F.Supp.3d at 452 (citing Painter v. Harvey, 863 F.2d 329, 331 (4th Cir. 1988)). By contrast, as this court has recently noted, it remains the law within the Fourth Circuit that “federal courts may not exercise supplemental jurisdiction over permissive counterclaims.” Moore v. Koch, Civ. No. 15-620-WMN, 2015 WL 4485465, at *3 (D. Md. Jul. 21, 2015) (quoting Ramirez v. Amazing Home Contractors, Inc., Civ. No. 14-2168-JKB, 2014 WL 6845555, at *5 (D. Md. Nov. 25, 2014) (collecting cases)). Accordingly, to determine whether this Court may properly exercise jurisdiction over SCI’s counterclaims, I must first evaluate whether they are compulsory or permissive. Under Rule 13, a compulsory counterclaim “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Fed.R.Civ.P. 13 (a). The Fourth Circuit considers four inquiries when assessing whether a counterclaim is compulsory:
(1) Are the issues of fact and law raised in the claim and counterclaim largely the same? (2) Would res judicata bar a subsequent suit on the party’s counterclaim, absent the compulsory counterclaim rule? (3) Will substantially the same evidence support or refute the claim as well as the counterclaim? And (4) Is there any logical relationship between the claim and counterclaim? A court need not answer all these questions in the affirmative for the counterclaim to be compulsory. Rather, the tests are less a litmus, more a guideline.
Painter v. Harvey, 863 F.2d 329, 331 (4th Cir.1988) (citations omitted). The “underlying thread” of each of the four inquiries is “evidentiary similarity.” Although the first inquiry weighs toward finding SCI’s counterclaims permissive, and the second is inconclusive, due to the strong weight of the third and fourth ...