United States District Court, D. New Jersey
December 29, 2005.
MOOSE MOUNTAIN MARKETING, INC., Plaintiff,
ALPHA INTERNATIONAL, INC., Defendant.
The opinion of the court was delivered by: WILLIAM BASSLER, District Judge
Alpha International, Inc. ("Alpha"), a toy manufacturer and
distributor, acquired the assets of a now-defunct toy company,
Empire of Carolina, Inc. ("Empire"). Alpha sued Moose Mountain
Marketing, Inc. ("Moose Mt."), also a toy manufacturer, in the
United States District Court for the Southern District of New York ("New York case") on March 21, 2002 for, among other things,
copyright infringement of an Empire toy line. In the New York
case, which is currently ongoing, Alpha alleges that Moose Mt.
and another party intentionally copied the line of toys that
Alpha later purchased from Empire's asset sale.
Moose Mt., defendant to the New York case, filed this lawsuit
alleging (1) that Alpha committed a prima facie tort*fn1
against Moose Mt. by "illegally obtaining the choses in action
against Moose Mountain, when Alpha knew in fact that it did not
actually acquire these choses in action from Empire," and (2)
that Alpha violated New York's anti-champerty law*fn2 "when
it illegally acquired the purported choses in action against Moose
Mountain from Empire." (Complaint at ¶¶ 25, 30.) Alpha now moves
for the Court to dismiss Moose Mt.'s claims on the basis of
Fed.R.Civ.P. 13(a), arguing that the claims should have been
presented in the now-pending New York case as compulsory
The Court has jurisdiction over this matter pursuant to
28 U.S.C. § 1332. Venue is proper under 28 U.S.C. § 1391.
For the reasons set forth below, Defendant's motion to dismiss
"By definition, a compulsory counterclaim is closely related to
the opposing party's claim, since both arise out of the same
circumstances; therefore it is in the interest of judicial
convenience to have the claim and counterclaim adjudicated
together." WRIGHT, MILLER & KANE, 6 Federal Practice and
Procedure, § 1409, at 47 (2ed. 1990). Generally, courts broadly
construe what constitutes a "transaction or occurrence." Id. at
50. The effect of the rule on compulsory counterclaims is a
preclusion to instituting a later independent action on the
unasserted counterclaim. Id. § 1417, at 131. Should a court
discover that an action before it is pending in another federal
suit, "it will stay its own proceedings or dismiss the claim with
leave to plead it in the prior action." Id. § 1418, 143-44;
see also Transamerica Occidental Life Ins. Co. v. Aviation Office of Am., et al.,
292 F.3d 384, 389 (3d Cir. 2002) (affirming Judge Bissell's decision
to dismiss pursuant to Rule 13(a) noting the underlying policy of
that Rule is judicial economy and holding that there need not be
precise identity of issues and facts between the claim and the
counterclaim; rather, the relevant inquiry is whether the
counterclaim "bears a logical relationship to an opposing party's
The Third Circuit has held that "the operative question in
determining whether a claim is a compulsory counterclaim is
whether it bears a `logical relationship' to the opposing party's
claim." In re Kaiser Group Int'l Inc., 399 F.3d 558, 567 (3d
Cir. 2005); Transamerica, 292 F.3d at 389. The complaints and
answers demonstrate that Moose Mt. is essentially requesting the
Court to determine that Alpha "illegally" purchased, or purchased
with the intent to harm, the causes of action previously
available to Empire and, in Moose Mt.'s own words, "are now the
subject of the New York action." (Plaintiff's Opposition Br. at
5.) As the subject of that litigation, Moose Mt.'s claims
naturally arose from Alpha's suit in New York. Under this
situation, it is difficult to imagine another legal action
bearing a closer relationship to that of its sister-lawsuit.
Moose Mt.'s argument that it is entitled to bring these claims
because it did not possess them at the time it answered Alpha in the New York case is meritless. The docket-report for
the Southern District of New York reflects that Alpha filed a
Second Amended Complaint on August 23, 2004. Moose Mt. filed a
Second Amended Answer on September 20, 2004. Moose Mt. filed its
Complaint in the District Court of New Jersey on August 8, 2003.
Clearly, Moose Mt. "possessed" these claims by the time it filed
its Second Amended Answer in New York and it could have
incorporated them into its Amended Answer as counterclaims.
Furthermore, Moose Mt. has the option to make a motion in the New
York District Court to admit its counterclaims against Alpha.
"Rule 13(e) provides that a party, with the court's permission,
may add by supplemental pleading any counterclaim that either
matured or was acquired after the service of his pleading."
WRIGHT, § 1428, at 206.
Moose Mt. also contends that "there would only be a bar to
their assertion in this action if the New York action were
complete." (Plaintiff's Opposition Br. at 35.) Agreeing with
Moose Mt.'s argument, however, would undermine the principles of
Rule 13(a). Indeed, the Third Circuit has emphasized that
judicial economy is the underlying purpose of Rule 13(a). See
Transamerica, 292 F.3d at 389-90, 391, 393. It is particularly
noteworthy that in Transamerica the Third Circuit affirmed the
dismissal of a suit on the basis of Rule 13(a) while the action
was pending in another jurisdiction. Id. at 388. II. Conclusion
For the reasons set forth in this Opinion, Defendant's motion
to dismiss is granted.
An appropriate Order follows.
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