District Court (Pa.) Declines to Hear State-Court Counter-Claim Filed in Response to TCPA Claim

In Watkins v. Synchrony Bank, 2015 WL 5178134, at *3-4 (M.D.Pa.,2015), Judge Brann declined hear a counter-claim filed in response to a TCPA claim.

Applying the “logical relationship” test to the instant counterclaim, this Court finds that Defendant’s breach of contract claim is not logically related to Plaintiff’s federal TCPA claim. This conclusion is reached based on an analysis of case law within the Third Circuit concerning the relationship between similar consumer protection acts and breach of contract claims, and case law concerning the relationship between TCPA and breach of contract claims. Specifically, the Court notes that district courts within the Third Circuit have generally found that breach of contract counterclaims are not compulsory when brought in response to Fair Debt Collection Practices Act (“FDCPA”) claims. See, e.g., Kimmel v. Cavalry Portfolio Services, LLC, 747 F.Supp.2d 427, 432 (E.D.Pa.2010) (Buckwalter, J.) (finding that a breach of contract counterclaim made in response to an FDCPA is not compulsory); Orloff v. Syndicated Office Systems, 2003 U.S. Dist. LEXIS 15466 (E.D.Pa.2003) (Surrick, J.) (holding that the defendant’s breach of contract counterclaim was not compulsory because the factual and legal issues raised are different from those raised by the FDCPA); Ayres v. National Credit Management Corp., 1991 U.S. Dist. LEXIS 5629 (E.D.Pa.1991) (Gawthrop, J.) (“No such [logical] relationship exists between plaintiff’s FDCPA claim and defendant’s claim on the debt.”). The Court finds these cases highly persuasive toward the ultimate conclusion that Defendant’s instant counterclaim is not compulsory.  *4 In Ayres, for example, Judge Gawthrop found no logical relationship between the FDCPA claim and the breach of contract counterclaim because “a cause of action on the debt arises of events different from the cause of action for abuse in collecting.” Ayres, 1991 U.S. Dist. LEXIS 5629 at *4. The Ayres court reached this conclusion by finding that the breach of contract claim centers on evidence regarding the existence and failure to perform under a contract, while the FDCPA centers on evidence regarding “improprieties and transgressions” used in the collection of the debt. Id. The Court finds a similar lack of “logical relationship” between a TCPA claim and breach of contract counterclaim. The Court specifically notes that a breach of contract counterclaim centers on evidence regarding the existence and failure to perform under a contract, while Plaintiff’s TCPA claim centers on evidence concerning the abuse of an automated telephoning dialing system. Because adjudication of each claim would necessarily involve the introduction of separate evidence, the Court impliedly notes that a “substantial duplication” of effort would not arise from trying these two claims in separate forums. In Defendant’s brief in opposition to Plaintiff’s Motion to Dismiss, it cites Miller v. 3G Collect, LLC for the proposition that a breach of contract counterclaim is compulsory when brought in response to a TCPA claim. In Miller, Judge Buckwalter found that, although court decisions concerning the disposition of counterclaims made in response to FDCPA “appear to dictate the appropriate outcome in this matter,” the provision within the TCPA allowing for automated telephone calls subsequent to prior consent is a key distinction with the FDCPA which ultimately makes the breach of contract counterclaim compulsory. Miller v. 3G Collect, LLC, 302 F.R.D. 333, 337 (E.D.Pa.2014) (Buckwalter, J.). While this finding would appear persuasive, the Court finds a key distinction between Miller and the instant case. In Miller, the defendant’s breach of contract counterclaim was based on the contract formed from a collect call to which the plaintiff expressly consented through a series of automated prompts. Id. at 334. The Miller court notes that, if the defendant proves in its breach of contract counterclaim that the plaintiff consented to the collect call, it would effectively defend against Plaintiff’s TCPA claim which relies on a lack of such consent. Id. at 338–39. Therefore, because proof of an element key to the defendant’s counterclaim would serve as a defense against the plaintiff’s TCPA claim, the Miller court found a “logical relationship” between the two legal claims. It subsequently denied dismissal in the interests of judicial economy. The case at hand does not present a similar overlap of legal issues. Specifically, the instant breach of contract counterclaim does not involve a contract formed as a result of the telephone calls at issue in the underlying TCPA claim. Rather, the counterclaim alleges the breach of a contract formed prior to the automated telephone calls here. In this regard, Defendants’ counterclaim resembles those at issue in the Kimmel, Orloff, and Ayres cases. Therefore, because the Court finds these cases highly persuasive, it adopts their reasoning and finds that Defendant’s counterclaim is not compulsory.