District Court (Cal.) Permits Counter-Claim on the Debt Against FDCPA Plaintiff

In Concha v. Debt Recovery Res., No. CV 22-2842 PA (MARx), 2022 U.S. Dist. LEXIS 201558, at *6-8 (C.D. Cal. Nov. 2, 2022), Judge Anderson exercised jurisdiction over a counter-claim on the debt against an FDCPA Plaintiff because the FDCPA claim was related to the debt itself.

A number of district courts in the Ninth Circuit have found that actions to collect on debts are not compulsory counterclaims in FDCPA actions. See, e.g., Marlin v. Chase Cardmember Servs., No. 1:09cv0192 AWI DLB, 2009 U.S. Dist. LEXIS 45189, 2009 WL 1405196, at * 3 (E.D. Cal. May 19, 2009) (“[M]ost, if not all of the district courts within the Ninth Circuit … have determined that [a counterclaim to collect on a debt in an FDCPA action] is permissive” (collecting cases).); Martin v. Law Offices of John F. Edwards, 262 F.R.D. 534, 537 (S.D. Cal. 2009) (noting that “the majority of courts in the Ninth Circuit” have found that collection counterclaims in FDCPA actions are permissive (collecting cases)); Sparrow v. Mazda Am. Credit, 385 F. Supp. 2d 1063, 1069 (E.D. Cal. 2005) (holding that a counterclaim to collect on a debt in an FDCPA action was not compulsory because “[w]hether a plaintiff in an unfair debt collection practices action actually has outstanding debt is irrelevant to the merits of that claim”). Permissive counterclaims include “any claim that is not compulsory” Fed. R. Civ. P. 13(b). Here, at a minimum, Lumsden’s Counterclaims are permissive.  Permissive counterclaims require an independent basis for subject matter jurisdiction. See Otsuka v. Polo Ralph Lauren Corp., 2008 U.S. Dist. LEXIS 41002, 2008 WL 2037621, at *3 (N.D. Cal. May 12, 2008) (citing Iglesias v. Mut. Life Ins. Co., 156 F.3d 237, 241 (1st Cir. 1998)). Where there is no independent basis for jurisdiction over a permissive counterclaim, the Court may still exercise supplemental jurisdiction over the counterclaim where the counterclaims “are so related to the claims in the action . . . that they form part of the same case or controversy” and “‘derive from a common nucleus of operative fact and are such that a plaintiff would ordinarily be expected to try them in one judicial proceeding.'” Id. (citing 28 U.S.C. § 1367(a) and quoting Kuba v. 1-A Agric. Ass’n, 387 F.3d 850, 855 (9th Cir. 2004)). “[A] majority of the cases within the Ninth Circuit have … determined that [a district court] has supplemental jurisdiction over the permissive counterclaim for the underlying debt” in an FDCPA action. Marlin, 2009 U.S. Dist. LEXIS 45189, 2009 WL 1405196, at *4; see, e.g., Koumarian v. Chase Bank USA, N.A., No. C-08-4033 MMC, 2008 U.S. Dist. LEXIS 101910, 2008 WL 5120053, at *3 (N.D. Cal. Dec. 3, 2008); Nalan v. Access Fin., Inc., No. 5:20-CV-02785-EJD, 2020 U.S. Dist. LEXIS 198836, 2020 WL 6270945, at *6 (N.D. Cal. Oct. 23, 2020); Buttz v. Mohsenin, No. 5:15-CV-01666-HRL, 2016 U.S. Dist. LEXIS 50499, 2016 WL 1462135, at *3 (N.D. Cal. Apr. 14, 2016). The same is true for Lumsden’s Counterclaims here. Plaintiffs’ claims and Lumsden’s Counterclaims clearly have something in common; that is, they both ultimately relate to Plaintiffs’ alleged debt and rental of Lumsden’s Rental Property. Moreover, in arguing that Lumsden’s Counterclaims are not part of the same case or controversy as Plaintiffs’ claims, Plaintiffs all but ignore their own claim under Cal. Civ. Code § 1950.5 for wrongful withholding of their security deposit—which relates to Plaintiffs’ occupancy of Lumsden’s Rental Property. Thus, Lumsden’s Counterclaims are sufficiently related to the common nucleus of operative facts underlying Plaintiffs’ claims that a plaintiff would ordinarily be expected to try them in one judicial proceeding. Extending supplemental jurisdiction over the Counterclaims also serves the interests of judicial economy and efficiency. See Koumarian, 2008 U.S. Dist. LEXIS 101910, 2008 WL 5120053, at *4. The Court therefore will exercise supplemental jurisdiction over Lumsden’s Counterclaims against Plaintiffs.