If you are served with a civil lawsuit, you have critical decisions to make. You need a strategy for serving an Answer to the Complaint. Another critical decision is whether to bring a “Counterclaim” against the Plaintiff.
A Counterclaim is a lawsuit that a Defendant brings against a Plaintiff within the same case. Sometimes, the Defendant must bring the Counterclaim at that time or will lose it forever. Other Counterclaims can be brought in the same case, but could also be brought in a separate or later case. Counterclaims are a central part of civil litigation, so it is important for parties to understand them.
This article discusses 10 basic things that people should know about Counterclaims in Minnesota.
1. A Counterclaim is a Civil Lawsuit Against the Plaintiff.
A Counterclaim (a/k/a, a “countersuit”) is a civil legal claim brought by a Defendant against a Plaintiff in the same case. The Defendant can generally bring any legal claim he or she may have against the Plaintiff. A Counterclaim proceeds like any normal lawsuit, has the same burdens of proof, and is generally governed by the same set of rules, statutes, and precedents.
Example: Parties to a contract have a dispute. Person A (the Plaintiff) sues Person B (the Defendant) for breach of contract. Person B believes that Person A was first to breach the contract. Therefore, Person B denies the Plaintiff's allegations in an “Answer”, but also brings a Counterclaim against Person A for breaching of contract. The Plaintiff's claim and the Defendant's Counterclaim will proceed and be decided in the same case.
2. A Counterclaim Must Generally be Brought Within the Time to Answer the Plaintiff's Complaint.
Generally, the Defendant must serve the Counterclaim on the Plaintiff within the time to answer the Complaint. The deadline for serving an answer is typically 21 days under the Minnesota Rules of Civil Procedure for normal civil claims.
Therefore, the Defendant must act diligently. While he or she might ask the Plaintiff or the court for an extension, the Defendant should assume that the answer (and any Counterclaim) must be served within 21 days. It is recommended that the Defendant consult with an attorney as soon as possible after being served. The party or attorney will need to do some basic investigation of claims and draft a professional response. While Minn. R. Civ. P. 15.01 allows a party to amend pleadings “freely given when justice so requires”, there is no guarantee that a change will be allowed. The party should prepare the best possible response from the outset.
In some circumstances, the Defendant might not have a Counterclaim that is “ripe”. The basis for a Counterclaim might not occur until later in the lawsuit. In such a situation, Minn. R. Civ. P. 13.05 says that “[a] claim which either matured or was acquired by the pleader after serving a pleading may, by leave of court, be presented as a Counterclaim by supplemental pleading.” While this may be available, a cautious Defendant often tries to bring the Counterclaim at the time an Answer is served to avoid losing such a claim.
In limited situations, the Defendant's failure to serve a Counterclaim could be excused by the Court to allow a Counterclaim to later be served. Minn. R. Civ. P. 13.06 says:
When a pleader fails to set up a Counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may, by leave of court, set up the Counterclaim by amendment.
The Defendant should not expect relief from this rule but should consider using it if there are no other options in the circumstances.
3. A Counterclaim is Not a Substitute for an Answer.
It is important to understand that the Counterclaim is not a substitute for serving an Answer. A Defendant generally needs to serve an Answer regardless of whether he or she brings a Counterclaim. If the Defendant wants to bring Counterclaims, the Defendant generally includes the Answer and Counterclaims in the same document.
Remember that the Answer and the Counterclaims are two separate things.
- An “Answer” is the Defendant's response to the Plaintiff's allegations and legal claims. The Answer admits or denies the allegations in the Plaintiff's Complaint.
- A "Counterclaim" has the Defendant's allegations and legal claims against the Plaintiff.
Therefore, the Answer is not a substitute for the Counterclaim. Both should be served if the Defendant wishes to bring any Counterclaims.
4. A Defendant Must Include Supporting Facts and Allegations in the Counterclaim.
The Defendant's Counterclaim must include facts that support each element of the legal claims being brought. This may require some thought, research, and investigation by the Defendant (or the attorney).
Minnesota generally requires that “[a] pleading which sets forth a claim for relief . . . shall contain a short and plain statement of the claim showing that the pleader is entitled to relief.” Minn. R. Civ. P. 8.01.
A pleading, including a Counterclaim, does not require the party to write a book or require every insignificant detail to be listed. However, the pleading must have enough details to support all “elements” of each legal claim. For example, a negligence claim generally requires the Plaintiff to prove duty, breach, causation, and harm. The allegations in the pleading must support each of these elements. While a pleading is somewhat of a summary, it still must include significant details that support the claims.
Counterclaims are commonly between 3-10 pages in length. Simple cases might be shorter, while complex cases may be significantly longer. It depends on how many legal claims the Defendant is bringing and how much detail is needed to support those claims.
A Defendant should remember that the Counterclaim, like any claim, must be brought in good faith, and it must not be frivolous or brought solely for delay or improper purpose. See Minn. R. Civ. P. 11.02. While it may be tempting to “throw something against the wall to see what sticks”, a Defendant must carefully assess whether there is a viable Counterclaim to bring against a Plaintiff. A Defendant could put himself or herself in a worse position by bringing a frivolous Counterclaim.
Note: People that represent themselves often make mistakes and fatal flaws when doing their own Counterclaims. It may be important to speak to an attorney. An attorney may even be required to sign the Counterclaim if the party is a corporation, LLC, or partnership in district court.
5. A Defendant has the Burden of Proof on Counterclaims.
While a Plaintiff has the burden of proof on his or her claims in the Complaint, the Defendant has the burden of proof on any Counterclaims.
This means that the Defendant must be prepared to develop the Counterclaims and present supporting evidence to the Court. Many traditional civil claim require a party must prove the claim by a “preponderance of the evidence”. In other words, that party's evidence must make the claim “more likely true than not true”. However, be aware that there are different standards for different types of civil cases, so it is important to understand your burden when you start the case.
In general, the party defending a claim has no burden of proof. For example, the Plaintiff has no burden of proof when defending against a Defendant's Counterclaim – the burden of proof is on the Defendant. But note that a party relying on “Affirmative Defenses” may have a burden of proof. Affirmative defenses are those which would be a defense to the claim even if the Plaintiff showed all elements of a legal claim. Affirmative Defenses are listed in Minn. R. Civ. P. 8.03, but that list is not a full list. For example, the Statute of Limitations is an Affirmative Defense that defeats a claim regardless if that party can prove the elements of the claim. The point is that the Defendant might have a burden of proof on certain Affirmative Defenses raised in the Answer, but also the burden of proof on any Counterclaims. This can be confusing, but it is important to understand.
Generally, there will be one trial for the Plaintiff's claims and the Defendant's Counterclaims. At trial, the Plaintiff generally presents his or her case first. This is called the Plaintiff's “case-in-chief”. The Defendant then presents evidence on any Counterclaims in his or her “case-in-chief”. If there are other parties, those parties will be allowed to present, and there may also be rebuttal from the Plaintiff.
In some circumstances, the court can order separate trials for the claims and for the Counterclaims. Minn. R. Civ. P. 42.02 says:
The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of one or any number of claims, cross-claims, Counterclaims, or third-party claims, or of any separate issues.
The takeaway is that the Defendant must be prepared to prove Counterclaims by presenting specific evidence to the court.
6. A Defendant Must Bring “Compulsory” Counterclaims Against the Plaintiff in the Same Case.
A Defendant can bring any Counterclaims he or she wants to raise against the Plaintiff in the same case. However, some Counterclaims are required to be brought in the same case. These are called “compulsory” Counterclaims, and they are different than “permissive” Counterclaims (which are discussed in the next section).
What is a “compulsory Counterclaim”? Minn. R. Civ. P. 13.01 says that a Counterclaim must be brought in the same case:
[I]f it arises out of the transaction that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, except that such a claim need not be so stated if, at the time the action was commenced, the claim was the subject of another pending action.
What does it mean to “arise out of the same transaction”? Usually, it means the claims are logically related. “The most widely accepted test of this is whether the Counterclaim is logically related to the claim being asserted by the opposing party.” Fox Chemical Co. v. Amsoil, Inc., 445 F. Supp. 1355, 1361 (D. Minn. 1978). Claims are logically related if the same aggregate of operative facts serve as the basis of both claims. Id. In other words, the same basic facts relate to the Plaintiff's claim and the Defendant's Counterclaim.
The Rule also mentions the issue of “third parties”. If the Counterclaim would require the Defendant to join a person over which the court has no jurisdiction (i.e., resides outside Minnesota), then the Defendant is not required to bring that Counterclaim in the case. The Defendant can bring such a claim in a separate or later case, and in a separate court if necessary.
Here are two examples that show the difference between a “compulsory” and “permissive” Counterclaims:
- Example 1: There is a contract dispute where the Plaintiff sues Defendant for breach of contract. If the Defendant wants to sue the Plaintiff under the same contract, the Counterclaim arises from the same transaction. This is a compulsory Counterclaim that the Defendant must bring in the same case.
- Example 2: Plaintiff sues a Defendant for breach of contract, alleging that the Defendant failed to mow his yard in Shakopee, MN. Assume that the Defendant wants to sue the Plaintiff for negligently running over her mailbox in Prior Lake, MN. The mowing and mailbox issues are unrelated and occurred in different locations, so the negligence claim did not “arise out of the same transaction”. The negligence claim is not a “compulsory” Counterclaim, but instead a “permissive” Counterclaim. The Defendant does not have to bring the negligence claim in the same case, but could choose to do so for purposes of efficiency.
In these examples, it is easy to see whether the Counterclaims as compulsory or permissive. In reality, it can be difficult to tell if the Counterclaim arises out of the same facts. In these situations, a careful Defendant would likely assume the Counterclaim to be compulsory and bring it in the same case.
7. A Defendant Can Choose to Bring any “Permissive” Counterclaims Against the Plaintiff in the Same Case or in a Separate or Later Case.
A Defendant has the choice of whether to bring “permissive” Counterclaims against the Plaintiff in the same case. If the Defendant chooses not to bring them in the same case, the Defendant can try to sue the Plaintiff in a separate case or a later case.
A “permissive” Counterclaim is the opposite of a “compulsory” Counterclaim. Minn. R. Civ. P. 13.02 says:
A pleading may state as a Counterclaim any claim against an opposing party not arising out of the transaction that is the subject matter of the opposing party's claim.
Simply put, a “permissive” Counterclaim does not arise out of the same transaction and is not logically related to the basic facts in the Plaintiff's claim. Example 2 above is a “permissive” Counterclaim.
The Defendant can be strategic about whether to bring a permissive Counterclaim in the same case. This assumes that the Counterclaim is already “ripe” (there are already facts to support it). If so, the Defendant could bring it in the same case for purposes of efficiency. Instead of going through the time and cost of two separate lawsuits, it can be more efficient for all claims to be handled in the same case. The Counterclaim may also provide some practical “push back” against the Plaintiff's claim, resulting in a better overall outcome for the Defendant.
Most Defendants choose to bring Counterclaims against the Plaintiff in the same case. But other factors might persuade a Defendant to file a separate case. Sometimes, a Defendant brings a separate Counterclaim because it can be brought in a more favorable venue in Minnesota (or even in another state). Also, a Defendant's Counterclaim might involve other parties that could complicate the existing case. Other situations might involve a claim that may technically be “ripe”, but waiting additional time might result in more favorable facts.
Note: Courts can sometimes join cases that are directly related upon motion by one or both of the parties. This can be hard to do, but may be possible for a Plaintiff or other party that wants all claims to be handled in one case. This is more likely if having separate trials would prejudice a party.
8. A Plaintiff Must be Aware that the Defendant Could Bring a Counterclaim.
By suing a Defendant, a Plaintiff is going on the offensive. But a Plaintiff must understand that he or she could be sued by the Defendant in response to the Complaint. This can be an unwelcome surprise for a Plaintiff that is not aware of the possibility of Counterclaims.
Nobody likes to be sued. If a Plaintiff cannot handle the stress or rigors of being sued, or if the Counterclaim greatly exceeds the Complaint, the Plaintiff may want to reconsider bringing a lawsuit in the first place.
A Plaintiff should consider whether Counterclaims will be brought in response to the Complaint. It is unlikely that the Plaintiff, through strategic drafting of the Complaint, can avoid a Counterclaim. In other words, the Plaintiff has little control over whether the Defendant will bring any Counterclaims.
Suing someone can “stir the pot” and trigger a Counterclaim that might not otherwise be brought by a Defendant. If that Counterclaim is larger or more harmful than the Plaintiff's own claims, and may not be brought unless the Plaintiff sues, the Plaintiff has a difficult choice to make. See Minn. R. Civ. P. 13.03 (a Counterclaim “may claim relief exceeding in amount or different in kind from that sought in the pleading of the opposing party.”).
The takeaway is that the Plaintiff should be prepared to defend Counterclaims at the outset of the case.
9. A Counterclaim is Generally Easier to Serve Than a Complaint.
People often wonder how to serve a response to a lawsuit or how to bring a counterclaim. Because the Plaintiff has already started a lawsuit, the Defendant can usually serve the Counterclaims in a more informal fashion than the Complaint.
A Plaintiff generally must serve a Complaint formally on the Defendant. This typically means personal service where a process server hands documents directly to the Defendant. See Minn. R. Civ. P. 4.03. There are some exceptions, but the general rule is that a Plaintiff must serve the Complaint personally. If not, a court could dismiss the case.
Generally, the Defendant does not have to personally serve the Counterclaims personally on the Plaintiff or the Plaintiff's attorney. Instead, the rules suggest that for pleadings and documents after the original complaint, lesser means may be used. Minn. R. Civ. P. 5.02 generally allows service by delivery or mail to the Plaintiff or attorney. There may be other options (i.e., fax or court e-service) in certain situations. It is important to serve this correctly, so the party should get familiar with the procedural rules or speak to an attorney.
Note: If the Defendant is bringing new parties into the case, those parties generally need to be served formally through personal service.
Regardless of how the Answer and Counterclaims is served, the Defendant must ensure that it complies with the rules and is done in a timely manner.
10. A Plaintiff Must Serve a “Reply” to the Counterclaims Within 21 days After Service.
A common mistake by the Plaintiff is failing to serve a response to the Defendant's Counterclaims. This can be a fatal mistake and result in a default judgment in favor of the Defendant on the Counterclaims.
With a Counterclaim, the Defendant is basically starting a lawsuit against the Plaintiff. The Plaintiff must respond to the Counterclaims to avoid a default judgment. Minn. R. Civ. P. 12.01 says:
The Plaintiff shall serve a reply to a Counterclaim in the answer within 21 days after service of the answer or, if a reply is ordered by the court, within 21 days after service of the order, unless the order otherwise directs.
The rules call this written response a “Reply”, but it is basically an “Answer” like what a Defendant usually serves in response to Complaint. The same basic rules for responsive pleading apply to a Reply. This means that the Plaintiff's Reply must admit or deny the allegations in the Counterclaim, and must raise any affirmative defenses. Some defenses can also be raised by motion under Minn. R. Civ. P. 12.
The bottom line is that the Plaintiff must promptly respond to the Counterclaims with a Reply to preserve his or her ability to contest them.
Counterclaims are a central part of civil litigation. When there is a dispute between parties over a contract or other matter, both parties may have legal claims in the case.
The Plaintiff must be prepared to defend a Counterclaim when he or she starts the case, and must formally respond to any Counterclaims. Likewise, the Defendant must be aware that he or she must bring certain Counterclaims in the case or lose them.
Counterclaims are a frequent source of confusion and mistake by self-represented parties. It may be necessary to speak with an attorney about the requirements and strategy for a Counterclaim.
If you need legal advice or representation on a contract dispute, Contact Us for a free consultation. With offices in Shakopee (Scott County) and Litchfield (Meeker County), we serve clients throughout the Twin Cities and Greater Minnesota.