United States District Court, D. Maryland
THEODORE D. CHUNG UNITED STATES DISTRICT JUDGE
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.
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.
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,
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.
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).
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
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.
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").
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 § 1367 altered ...