Southern Construction Co. v. Pickard
1962 U.S. LEXIS 2147, 371 U.S. 57, 9 L. Ed. 2d 31 (1962)
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Rule of Law:
Federal Rule of Civil Procedure 13(a), the compulsory counterclaim rule, does not bar a defendant from asserting a counterclaim in a second action when the plaintiff was statutorily required to split their claims into two separate lawsuits in different districts, and the counterclaim is common to both actions.
Facts:
- Southern Construction Company (Southern) was the prime contractor on federal rehabilitation projects in Fort Campbell, Tennessee, and Fort Benning, Georgia.
- Samuel J. Pickard was the plumbing and heating subcontractor for Southern on both projects.
- Atlas Supply Company (Atlas) was Pickard's primary supplier for materials on both projects.
- In December 1955, Pickard's employees left both the Tennessee and Georgia jobs before they were fully completed.
- Atlas claimed that Pickard owed it $34,520 for materials on the Tennessee project and $104,000 for materials on the Georgia project.
- In August 1956, Southern paid Atlas a lump sum of $35,000 in exchange for a complete release of Southern's liability on Pickard’s accounts for both projects.
- This $35,000 payment was not allocated between the Tennessee and Georgia projects.
Procedural Posture:
- In December 1956, Pickard sued Southern and its surety in the U.S. District Court for the Middle District of Georgia for money allegedly owed on both the Georgia and Tennessee projects.
- Southern filed an answer and a counterclaim in the Georgia action, which initially included the $35,000 payment it made to Atlas.
- Due to the Miller Act's venue requirement, Pickard filed a second, separate action in April 1957 in the U.S. District Court for the Middle District of Tennessee, related only to the Tennessee project.
- Pickard then amended his Georgia complaint to remove the Tennessee claim.
- In the Tennessee action, Southern asserted the payment as a counterclaim, seeking a credit against Pickard's claim.
- The U.S. District Court for the Middle District of Tennessee found for Southern, allowing the credit.
- Pickard, as appellant, appealed to the U.S. Court of Appeals for the Sixth Circuit.
- The Court of Appeals reversed the trial court's decision, holding that the counterclaim was compulsory in the Georgia action (where the first responsive pleading was filed) and was therefore barred in the Tennessee action.
- Southern, as petitioner, successfully petitioned the U.S. Supreme Court for a writ of certiorari.
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Issue:
Does Federal Rule of Civil Procedure 13(a) bar a defendant from asserting a counterclaim in a later-filed action when the plaintiff was statutorily required to split their claims into two separate lawsuits in different districts, and the counterclaim is common to both?
Opinions:
Majority - Per Curiam
No. Federal Rule of Civil Procedure 13(a) does not compel a counterclaim to be made in whichever of two suits the first responsive pleading is filed when the plaintiff was statutorily required to split the claims. The purpose of Rule 13(a) is to prevent a multiplicity of actions and to resolve all disputes from a common matter in a single lawsuit. This policy is primarily directed against a party who fails to assert a counterclaim and then institutes a second action based on that claim. Here, the plaintiff, Pickard, was compelled by the Miller Act's venue provision to split his claims into two separate actions in two different districts. The defendant, Southern, was then faced with the choice of where to assert its counterclaim, which was common to both suits. Asserting the counterclaim in the later Tennessee action did not involve the circuity of action that Rule 13(a) aims to prevent, as the fragmentation of the litigation was caused by the plaintiff's statutory obligation, not the defendant's procedural gamesmanship.
Analysis:
This decision carves out a practical exception to the otherwise strict compulsory counterclaim rule under Federal Rule of Civil Procedure 13(a). It prioritizes the policy behind the rule—preventing defendant-initiated duplicative litigation—over a rigid, mechanical application. The holding provides flexibility for defendants when a plaintiff is compelled by statute, such as a specific venue provision, to split their claims. This ensures that a defendant is not unfairly penalized by losing a valid counterclaim due to circumstances beyond their control, thereby promoting a more equitable and logical application of procedural rules.
