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Ginwright v. Exeter Finance Corp.

United States District Court, D. Maryland

October 6, 2016




         On February 26, 2016, Plaintiff Billy Ginwright filed this action against Defendant Exeter Finance Corporation ("Exeter") for violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 (2012), and the Maryland Telephone Consumer Protection Act ("MTCPA"), Md. Code Ann., Com. Law §§ 14-3201 to -3202 (West 2013). On May 11, 2016, Exeter filed its Amended Answer and Counterclaim, alleging that Ginwright breached the contract that led Exeter to seek to collect a debt by telephone. Pending before the Court is Ginwright's Motion to Dismiss Exeter's Counterclaim. For the following reasons, the Motion is granted.


         In May 2013, Ginwright entered into a contract with BW Auto Outlet of Hanover, Maryland to finance the purchase of a vehicle. Within the contract, BW Auto Outlet assigned all of its rights under the contract to Exeter. In his Complaint, Ginwright alleges that in seeking to collect a debt under the contract, Exeter called Ginwright's cellular phone "hundreds of times" by means of an automatic dialing system. Compl. ¶¶ 22-23. Ginwright maintains that Exeter made the calls for non-emergency purposes and without his prior express consent. He also asserts that he repeatedly told Exeter to cease calling him, to no avail. Rather, Exeter representatives told him that they would not stop calling his cellular phone, and that the calls would continue through the automatic dialing system. As a result, with rare exceptions, Ginwright received three to seven calls from Exeter every day between December 4 and December 17, 2014; March 5 and April 29, 2015; and May 10 and June 5, 2015.

         In its Counterclaim, Exeter alleges that Ginwright breached the original contract when he failed to make car payments, requiring Exeter to repossess the vehicle. Exeter contends that, following the sale of the vehicle and the application of the sale proceeds to the full amount owed, Ginwright owed a remainder of$23, 782.17 under the contract as of May 3, 2016.


         Ginwright is seeking dismissal of the counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Ginwright asserts that Exeter has failed to assert any independent basis for jurisdiction over the counterclaim and that this Court may not exercise supplemental jurisdiction over the counterclaim because it is a permissive counterclaim. Exeter counters that, since the enactment of 28 U.S.C.§ 1367, a court may exercise supplemental jurisdiction over a permissive counterclaim, and that, in any event, its counterclaim is compulsory.

         I. Legal Standard

         It is the burden of the party asserting jurisdiction to show that subject matter jurisdiction exists. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). Rule 12(b)(1) allows a party to move for dismissal when it believes that the claimant has failed to make that showing. Fed.R.Civ.P. 12(b)(1). When a plaintiff asserts that the facts alleged in a counterclaim are not sufficient to establish subject matter jurisdiction, the allegations in the counterclaim are assumed to be true under the same standard as in a Rule 12(b)(6) motion, and "the motion must be denied if the [counterclaim] alleges sufficient facts to invoke subject matter jurisdiction." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009).

         II. Supplemental Jurisdiction

         In asserting its counterclaim, Exeter does not allege that the Court has federal question jurisdiction, see 28 U.S.C. § 1331 (2012), or diversity jurisdiction, see 28 U.S.C. § 1332. Rather, Exeter asserts that jurisdiction is proper under the supplemental jurisdiction statute, 28 U.S.C. § 1367. In determining whether a court has supplemental jurisdiction over a counterclaim, the United States Court of Appeals for the Fourth Circuit has traditionally distinguished between compulsory counterclaims, which must be stated by a defendant in its answer, and permissive counterclaims, which need not be. Fed.R.Civ.P. 13. The Fourth Circuit has held that, absent an independent basis of jurisdiction, a federal court has supplemental jurisdiction over a compulsory counterclaim but not a permissive counterclaim. Painter v. Harvey, 863 F.2d 329, 331 (4th Cir. 1988); Whigham v. Beneficial Finance Co., 599 F.2d 1322 (4th Cir. 1979) ("A federal court has ancillary jurisdiction over compulsory counterclaims, but it cannot entertain permissive counterclaims unless they independently satisfy federal jurisdictional requirements.").

         Exeter argues that the Fourth Circuit rule has been superseded by the 1990 enactment of the supplemental jurisdiction statute, which provides that "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 already within the court's jurisdiction "that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). Exeter contends that the "all other claims" language encompasses counterclaims and that the "same case or controversy" language encompasses at least certain types of permissive counterclaims.

         Several courts of appeals have agreed with this view and have interpreted § 1367 to permit the exercise of supplemental jurisdiction over "at least some permissive counterclaims." Global NAPs, Inc. v. Verizon New England, Inc., 603 F.3d 71, 76, 87 (1st Cir. 2010) ("[Section] 1367 abolishes the conceptual framework underpinning the old compulsory-permissive counterclaim distinction."); accord Jones v. Ford Motor Credit Co., 358 F.3d 205, 233 (2d Cir. 2004); Channell v. Citicorp Nat'l Servs., Inc., 89 F.3d 379, 385 (7th Cir. 1996). Within the Fourth Circuit, however, district courts have continued to follow the binding precedent of Painter and limit supplemental jurisdiction to compulsory counterclaims. See, e.g., Williams v. Long, 558 F.Supp.2d 601, 603 & n.1 (D. Md. 2008); Harrison v. Grass, 304 F.Supp.2d 710, 712-13 (D. Md. 2004); see also Sigala v. ABR of VA, Inc., No. GJH-15-1779, 2016 WL 1643759, at *2 (D. Md. Apr. 21, 2016); Mann v. Fredericktown Assocs., No. WDQ-14-297,, 2015 WL 4878661, at *3 (D. Md. Aug. 13, 205)) (citing Painter v. Harvey, 863 F.2d 329, 331 (4th Cir. 1988)); Moore v. Koch, No. WMN-15-620, 2015 WL 4485465, at *3 (D. Md. July 21, 2015) (reaffirming the Fourth Circuit rule even though "appellate courts in several other circuits have held that supplemental jurisdiction under § 1367 may extend to permissive counterclaims in some circumstances"); Ramirez v. Amazing Home Contractors, Inc., No. JKB-14-2168, 2014 WL 6845555, at *5 (D. Md. Nov. 25, 2014) ("[F]ederal courts may not exercise supplemental jurisdiction over permissive counterclaims. This remains the law in the Fourth Circuit."); O'Fay v. Sessoms & Rogers, P.A., No. 5:08-CV-615-D, 2010 WL 9478988, at *5-6 (E.D. N.C. Feb. 9, 2010) (finding that the court lacked supplemental jurisdiction over the defendants' permissive debt collection counterclaim in a Fair Debt Collection Practices Act action "absent further clarification from the Fourth Circuit").

         In Williams, the court offered a rationale for the continuing applicability of the Fourth Circuit rule based on the premise that § 1367 did not materially alter the jurisdictional landscape applicable to this issue. The United States Supreme Court has stated that § 1367 "codified" existing common law doctrines of pendent and ancillary jurisdiction "under a common heading" of supplemental jurisdiction. City of Chicago v. Int'l Coll. of Surgeons,522 U.S. 156, 165 (1997). The pre-§ 1367 doctrine of pendent jurisdiction provided federal jurisdiction over claims that "derive from a common nucleus of operative fact" such that "the entire action before the court comprises but one constitutional 'case.'" Id. at 164-65 (quoting United Mine Workers v. Gibbs,383 U.S. 715, 725 (1966)). In International College of Surgeons, when the Court applied the "common nucleus of operative fact" test to conclude that there was supplemental jurisdiction under the "same case or controversy" requirement of § 1367, it effectively equated the two tests. See Id. at 165. In Williams, the court concluded that because the "common nucleus of operative fact" standard remains applicable after § 1367, the Fourth Circuit rule of providing supplemental jurisdiction over compulsory counterclaims only, which was premised on that pre-§ 1367 standard, remains intact. Williams, 558 F.Supp.2d at 603 n. l (citing City of Chicago v. Int'l Coll. of Surgeons,522 U.S. 156, 165 (1997)). Where the Fourth Circuit has not addressed whether ยง 1367 altered ...

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