Facts
- Billy Ginwright financed a vehicle purchase through a retail installment contract that was later assigned to Exeter Finance Corporation.
- Ginwright alleged Exeter placed hundreds of calls to his cell phone using an automatic telephone dialing system to collect the debt without valid consent, asserting claims under the TCPA and Maryland analog.
- Exeter alleged Ginwright defaulted on the contract, repossessed the vehicle, and claimed a remaining deficiency balance.
- Exeter filed a state-law counterclaim for breach of contract based on Ginwright’s alleged nonpayment, contending the challenged calls were part of its collection efforts.
Issues
- Whether the court had supplemental jurisdiction under 28 U.S.C. § 1367(a) over Exeter’s state-law breach-of-contract counterclaim in an action where the complaint invoked federal-question jurisdiction under the TCPA and related state statute.
- Whether the counterclaim required an independent jurisdictional basis (such as diversity jurisdiction) to remain in federal court.
- Whether the court should decline supplemental jurisdiction under 28 U.S.C. § 1367(c).
Decision
- The court denied Ginwright’s Rule 12(b)(1) motion to dismiss the counterclaim for lack of subject-matter jurisdiction.
- The court held that Exeter’s breach-of-contract counterclaim fell within supplemental jurisdiction under § 1367(a) because it shared a common nucleus of operative fact with Ginwright’s TCPA and Maryland statutory claims.
- The court rejected the argument that the counterclaim needed an independent basis for federal jurisdiction once § 1367(a) was satisfied.
- The court found no statutory or discretionary basis under § 1367(c) to decline supplemental jurisdiction at that stage.
Legal Principles
- Under 28 U.S.C. § 1367(a), a federal court with original jurisdiction over at least one claim may hear additional claims that are so related that they form part of the same Article III case or controversy.
- Claims form the same case or controversy when they derive from a “common nucleus of operative fact” and would ordinarily be tried together.
- A state-law counterclaim does not need to independently satisfy federal-question or diversity jurisdiction if supplemental jurisdiction exists under § 1367(a).
- Supplemental jurisdiction may be declined under § 1367(c) only where statutory factors apply (e.g., novel state-law issues, state-law claims substantially predominate, or other exceptional circumstances).
Conclusion
The court retained a creditor’s breach-of-contract counterclaim in a TCPA debt-collection call suit because both sides’ claims arose from the same auto-financing relationship, the alleged default, and collection efforts, satisfying § 1367(a) supplemental jurisdiction and warranting denial of dismissal for lack of subject-matter jurisdiction.