The Law of Counterclaims - Articles

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Posted by: Donald Paine on Aug 19, 2011

Journal Issue Date: Jun 2011

Journal Name: June 2011 - Vol. 47, No. 6

Counterclaims are governed by Tennessee Rule of Civil Procedure 13. Let’s look first at permissive counterclaims under Rule 13.02, because these cause no problems. Essentially the defendant is permitted to include in an answer claims against the plaintiff that do not arise out of a transaction or occurrence in the plaintiff’s complaint.

Compulsory counterclaims, in contrast, occupy legal malpractice territory. These are governed by Rule 13.01 and caselaw. The rule tells defendants that they “shall” include in an answer claims against plaintiffs that arise out of the transactions or occurrences pleaded in complaints. Tort claims are excluded from the mandate.

What if the plaintiff files on the expiration eve of a statute of limitations? Tenn. Code Ann. §28-1-114(a) saves the day: “A counterclaim … is not barred by the applicable statute of limitations … if it was not barred at the time the claims asserted in the complaint were interposed.”

What is the sanction for not pleading a compulsory counterclaim in the answer? The rule doesn’t say. But caselaw we’ll examine momentarily does say that “shall” means shall.

Can the plaintiff’s lawyer take a nonsuit after the defendant pleads a compulsory counterclaim? Yes, but only if that lawyer wants to endure a legal malpractice trial. Think about it this way. Once a compulsory counterclaim comes to life on the defense side, the complaint on the plaintiff’s side becomes “compulsory.”

Here is the promised caselaw. A Tennessee Supreme Court opinion by Justice Brock is the best example and constitutes controlling precedent. Read Walker v. Duracell U.S.A., 717 S.W.2d 579 (1986). Nellie Walker was hurt at work in the Bradley County Duracell plant. Her employer filed in Circuit Court for a determination of the degree of permanent partial disability attributable to Nellie’s left wrist injury. Nellie answered and counterclaimed that she suffered injuries to both of her hands, wrists, and arms “and thus to the body as a whole.” She nonsuited the (compulsory) counterclaim the day before trial. On trial day the judge determined partial disability as 40 percent to the left hand.

The next day Nellie filed in Bradley County Chancery “seeking worker’s compensation benefits for alleged injuries to her neck and right arm.” Too bad, Nellie! You should have included your neck in the counterclaim. And you should not have taken a nonsuit. “We construe Rule 13.01 to mean that all claims which either party had against the other under the worker’s compensation laws of Tennessee were required to be asserted in the Circuit Court action or be barred.”

Opinions from the Tennessee Court of Appeals are Quelette v. Whittemore, 627 S.W.2d 681 (1981); Clements v. Austin, 673 S.W.2d 867 (1983); and Ingram v. Phillips, 684 S.W.2d 954 (1984).


NOTE: State v. Hill, discussed in the May Paine on Procedure column, “Inevitable Discovery Doctrine: The Trial of Joe Hill,” is now reported at 333 S.W.3d 106.


Don Paine Donald F. Paine is a past president of the Tennessee Bar Association and is of counsel to the Knoxville firm of Paine, Tarwater, and Bickers LLP. He lectures for the Tennessee Law Institute, BAR/BRI Bar Review, and the Tennessee Judicial Conference.