Ball v. Connecticut Bank and Trust Company

• Decision Date: 11 November 1975
• Docket Number: Civ. A. No. N-74-177.
• Citation: 404 F. Supp. 1
• Court: U.S. District Court — District of Connecticut
• Parties: Robert Bruce BALL, Plaintiff, v. CONNECTICUT BANK AND TRUST COMPANY, Defendant.

404 F. Supp. 1

Robert Bruce BALL, Plaintiff, v. CONNECTICUT BANK AND TRUST COMPANY, Defendant.

Civ. A. No. N-74-177.

United States District Court, D. Connecticut.

November 11, 1975.

David M. Lesser and William H. Clendenen, Jr., New Haven, Conn., for plaintiff.

Robert K. Ciulla and Joseph C. Lee, New Haven, Conn., for defendant.

RULING ON MOTIONS TO DISMISS

NEWMAN, District Judge.

The following ruling adopts the proposed ruling of Magistrate Arthur H. Latimer:

In this civil action grounded in an open-end credit arrangement between the parties, plaintiff's complaint alleges in separate counts defendant's failure to provide truth in lending disclosures, cf. 15 U.S.C. § 1640, and its imposition of a finance charge exceeding that permitted by state law, cf. Conn.Gen.Stat. § 42-133c; defendant has counterclaimed for the balance assertedly due on plaintiff's account, and the reply in turn charges — inter alia — violation of § 42-133c as an affirmative defense. With no independent ground of federal subject matter jurisdiction for the wholly state law claims set forth in the complaint's second count and the counterclaim, defendant has moved to dismiss the former and plaintiff the latter. The common question presented is whether the necessary or appropriate consequence of plaintiff's choice of forum under 15 U.S.C. § 1640(e) for the truth in lending claim is this Court's involvement with an attendant debtor-creditor dispute of no federal significance.

Separately examined, the complaint raises a familiar issue of pendent jurisdiction. The federal court is empowered to hear a state law claim without independent jurisdictional basis but appended to a substantial federal claim if both "derive from a common nucleus of operative fact" and are such that joint resolution would ordinarily be expected, United Mineworkers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed. 2d 218 (1966). Assuming these conditions met, the power's exercise remains discretionary, however, id. at 726, 86 S.Ct. 1130, cf. Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 809 (2 Cir. 1971), and this Court's experience with an ever-increasing number of truth in lending suits has impelled the considered view that merely pendent state law claims should not be routinely allowed in such cases lest state law questions disproportionately burden the docket, Solevo v. Aldens, Inc., 395 F.Supp. 861, 863-864 (D.Conn.1975). Plaintiffs may gain the presumed benefit of conclusive adjudication in a single forum by advancing truth in lending claims together with state law claims in the state court as of right, cf. 15 U.S.C. § 1640(e), certainly a reasonable course when it is recalled that in Connecticut even the question of federal liability will often turn on application of state truth in lending disclosure requirements, see Ives v. W. T. Grant Co., 522 F.2d 749, pp. 752-754 (2 Cir. 1975), cf. 12 C.F.R. § 226.12(c)(2). Although the federal forum may be at least equally appropriate for pursuit of federal truth in lending remedies, cf. Ives v. W. T. Grant Co., supra, at p. 756, Congress could not have intended a concomitant, wholesale federal review of those ordinary state law debtor-creditor controversies lacking jurisdictional foundation in 28 U.S.C. § 1332, see Solevo v. Aldens, Inc., supra at 864. The two court systems are simply not functional equivalents; encumbering federal truth in lending litigation with pendent state issues as of course would seem unwarranted imposition upon this Court, cf. United Mineworkers of America v. Gibbs, supra at 726-727, and in those commonly encountered instances of novel state law questions would ignore fundamental considerations of comity and fairness strongly counselling authoritative state court determination, id. at 726, see, e. g., Solevo v. Aldens, Inc., supra at 864-866. There are no "special circumstances" id. at 864, warranting retention of the complaint's pendent count here.

If defendant's counterclaim for debt collection stands, however, the basic state law dispute is necessarily at issue in this Court. Indeed, the action's current scope might not be materially altered in that event by dismissal of the complaint's pendent Count II, for limiting that pleading to the federal claim would neither affect plaintiff's reliance on state law as an affirmative defense to the counterclaim, nor abridge his right to raise a counterclaim in the reply, see 3 Moore's Federal Practice ¶ 13.08 at 13-181 (2d Ed. 1974); if plaintiff was actually under a duty to set forth the substance of Count II by reply counterclaim, cf. Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1202 (2 Cir. 1970), prior omission of that initially duplicative claim would surely appear excusable, cf. Rule 13(f), Fed.R.Civ.P.

The question of ancillary jurisdiction over defendant's state law counterclaim does not neatly correspond to the balancing process involved in assuming or declining to take jurisdiction of the pendent claim. If the debt counterclaim is thought to arise "out of the transaction or occurrence that is the subject matter of the opposing party's claim", Rule 13(a), Fed.R.Civ.P., it is compulsory and therefore entertained even without independent jurisdictional basis, see, e. g., United States for the use and benefit of D'Agostino Excavators, Inc. v. Heyward-Robinson Co., 430 F.2d 1077, 1081 (2 Cir. 1970), cert. denied, 400 U.S. 1021 (1971), 91 S.Ct. 582, 27 L.Ed. 2d 632, to effectuate Rule 13(a)'s design "to prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters", Southern Construction Co. v. Pickard, 371 U.S. 57, 60, 83 S.Ct. 108, 110, 9 L.Ed.2d 31 (1962). The compulsory counterclaim definition itself has long "been broadly interpreted to require not an absolute identity of factual backgrounds for the two claims but only a logical relationship between them", United Artists Corp. v. Masterpiece Productions, Inc., 221 F.2d 213, 216 (2 Cir. 1955), cf. also Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, n. 1 at 469, 94 S.Ct. 2504, 41 L.Ed.2d 243 (1974), Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S.Ct. 367, 70 L.Ed. 750 (1926); mindful of the generous scope given Rule 13(a), see Waltham Industries Corp. v. Thompson, 53 F.R.D. 93, 95 (D.Conn.1971), before arriving at the firm policy stance on pendent matters announced in Solevo this Court had indicated agreement with the parties' joint assumption in one truth in lending suit that the complaint and debt counterclaim did both stem from a single underlying "transaction or occurrence", see Pitts v. First New Haven National Bank, Civil No. 15,943 (D.Conn. Feb. 14, 1975), cf. also ...