Reporter’s Notes (2008): Rule 13(j) (“Transferred, Appealed and Removed Actions”) has been deleted. It had been included in the original version of the Mass. R. Civ. P. because the Massachusetts Rules of Civil Procedure, when first promulgated, did not apply in the District Court.

Reporter’s Notes to July 1996 Amendment: Rule 13(a) has been amended to add references to “judicial district” to take into account the applicability of the Rules to the District Court and Boston Municipal Court. It should be noted that Rule 13(j), which did not appear in the District Court version of the Rules, appears in the merged set of Rules.

Reporter’s Notes (1973): Rule 13 regulates claims of relief by defendants against plaintiffs (counterclaims) and as between parties on the same side of the versus (cross-claims). Rule 13 changes prior practice.

Under prior practice, by statute, G.L. c. 232, §§ 1-11, if a defendant had a liquidated or readily calculable claim in contract, he could seek set off. The respective claims of the plaintiff and the defendant need not have arisen out of the same transaction; but they must have been mutual. Thus if a plaintiff sued two defendants on, say, a note, the claim sought to be set off must have been due from the plaintiff to both defendants, G.L. c. 232, § 3. Set off would not lie for a tort claim, Lane v. Volunteer Cooperative Bank, 307 Mass. 508, 511, 30 N.E.2d 821, 823 (1940); Pitts v. Holmes, 10 Cush. 92, 94 (1852). Affirmative relief was available.

At common-law, a defendant could seek recoupment, provided: (1) his claim arose out of the same contract or transaction as that sued on; and (2) he was content merely to cancel out plaintiff’s claim, without obtaining any affirmative relief, Wright v. Graustein, 248 Mass. 205, 210, 142 N.E. 797, 799 (1924).

In equity, a defendant could plead a counterclaim. If the defendant’s claim arose out of the subject matter of the suit, and could itself support an independent suit in equity, the counterclaim was compulsory. The counterclaim was, however, only permissive if the defendant’s claim: (1) arose out of the same transaction, but was legal in nature; or (2) arose out of a different transaction, but was equitable in nature. A counterclaim had the same effect as a cross-bill in equity; it enabled the court in appropriate circumstances to grant affirmative relief.

Cross-claims, that is, claims against one or more co-parties, could be brought either: (a) in a separate action, consolidated for trial; or (b) (if the case was in equity) by way of so-called counterclaim under S.J.C. Rule 2:13 or Super. Ct. Rule 32, whose strictures have just been discussed.

Rule 13(a) greatly simplifies pre-existing procedure. Basically, with exceptions discussed below, it requires a defendant or third-party defendant (hereinafter jointly referred to as “defendant”) to assert against the plaintiff or third-party plaintiff (hereinafter “plaintiff”) any claim which the defendant may have against the plaintiff provided the claim arises out of the factual nexus of the plaintiff’s claim. The requirement is mandatory if the counterclaim arises out of the transaction or occurrence which is the subject of the plaintiff’s claim; the defendant must assert it, or forever lose it. Such a counterclaim is denominated “compulsory” precisely because failure seasonably to raise it permanently forfeits it. This feature sharply differs from prior Massachusetts practice, at least with regard to set-off. Prior law permitted the defendant to withhold pleading a set-off without risk of waiver, see Hunt v. Brown, 146 Mass. 253, 255, 15 N.E. 587, 590 (1888). With respect, however, to a compulsory counterclaim under Super. Ct. Rule 32 (and presumably also under S.J.C. Rule 2:13), it appears that a failure to plead invites loss of right, see Buckley v. John, 314 Mass. 719, 721, 51 N.E.2d 317, 319 (1943).

Classification of a counterclaim as compulsory or permissive depends in turn upon a definition of “transaction or occurrence.” The word “transaction,” in the present context, has been defined thus: “‘[A] transaction is where both causes of action proceed from the same wrong.'” Potier v. A. W. Perry, Inc., 286 Mass. 602, 608, 190 N.E. 822, 824- 825 (1934). As the court there suggested, the governing rule “should be construed in a sense to effectuate the settlement in one proceeding of controversies so closely connected as appropriately to be combined in one trial in order to prevent duplication of testimony, to avoid unnecessary expense to the parties and to the public, and to expedite the adjudication of suits.” Interpreting the old Federal Equity Rule 30, the United States Supreme Court expressed a similar view: “‘Transaction’ is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship.” Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S.Ct. 367, 371, 70 L.Ed. 750 (1926). Approximately the same meaning should be assigned to the phrase “transaction or occurrence,” as it appears in Rule 13(a). “The use of the word ‘occurrence’ in the rule in connection with the word ‘transaction’ can serve no other purpose than to make clear the meaning of the word ‘transaction.’ . . . The word ‘transaction’ commonly indicates an act of transacting or conducting business but in the rule under consideration it is not restricted to such sense. It is broad enough to include an occurrence. . . . The words ‘transaction’ and ‘occurrence’ probably mean, whatever may be done by one person which affects another’s rights and out of which a cause of action may arise. . . . A familiar test may be applied by inquiring whether the same evidence will support or refute the opposing claims.” Williams v. Robinson, 1 F.R.D. 211, 213 (D.D.C. 1940 ).

Even though a given counterclaim arises out of the transaction or occurrence that underlies the plaintiff’s claim, it may still avoid being labeled compulsory, provided one of the following conditions obtains:

(a) The court lacks power to confer the relief sought.

(b) The defendant does not have the claim at the time he serves his answer. Any later-blooming claims may be asserted by way of appropriate amendment, either under Rule 13(e) or Rule 15(a).

(c) To award relief upon the counterclaim, the court would require the presence of parties over whom it cannot acquire jurisdiction.

(d) The counterclaim is already the subject of an action by the present defendant against the present plaintiff. Rule 12(b)(9) and Rule 42(a) (consolidation) will permit the court to take any appropriate steps to prevent improper duplication of effort.

(e) The plaintiff commenced his action by process which did not subject the defendant to an unlimited judgment. Assume, for example, that the action was begun by trustee process against a non-resident’s bank account. If the defendant appears merely to defend the dollar amount trusteed, without raising any counterclaim, it does not seem fair to require him-on pain of permanent preclusion-to assert a counterclaim which he might otherwise have chosen to commence in a different forum. Of course, if the defendant voluntarily chooses to raise any counterclaim, there seems no reason why he should not be required, as a matter of sensible judicial economy, to raise all counterclaims, which would normally be labeled “compulsory.”

(f) If part or all the pleader’s claim is based upon property damage arising out of a collision, personal injury, including actions for consequential damages, or death. This exception is primarily directed at actions arising out of automobile accidents.

The application of the compulsory counterclaim rule to automobile accidents, where the defendant is usually represented by an attorney for the insurance company, presents several difficulties. These difficulties are set out in the following excerpt from 1 Field, McKusick & Wroth, Maine Civil Practice, pp. 263-264 (1970):

“The objective of Rule 13(a) as originally promulgated was to avoid the possibility of two trials on the same facts and the further possibility of the defendant’s inadvertent loss of his own claim by reason of the adverse determination in the first trial of facts essential to that claim. Desirable though that objective may be conceded to be, the rule did not work satisfactorily in motor vehicle actions in which, as is usually the case, the defendant carried liability insurance.

“Under the terms of its policy, the insurer controls the defense of such actions. Counsel for the insurer properly felt obligated to notify the assured of the compulsory counterclaim rule, with the likely result that the assured would request him to handle the counterclaim. If counsel acceded to the request, it caused resentment on the part of the ‘plaintiff bar’ that a member of the ‘defendant bar’ had preempted law business which he would not have had under the prior practice where an independent action was required. This resentment was particularly serious in the mind of the attorney who by reason of former representation of the assured in other matters looked upon him as a regular client. Moreover, when the same lawyer was charged with protecting both the interests of the insurance company in defending a claim and the interests of the assured in asserting a claim, problems of conflict of interest would naturally arise. On the other hand, if the insurer’s counsel told the assured that he must retain his own lawyer for the prosecution of the counterclaim, the assured found it hard to understand why two lawyers were necessary to do the work of one. The layman’s reaction was likely to be adverse both to the insurer’s attorney and the legal profession generally.

“Criticism of the rule was statewide and came both from lawyers who habitually represented plaintiffs and those who habitually represented insurance companies. After several months of experience with the rule, the Supreme Judicial Court concluded that there was sufficient merit to this criticism to warrant the elimination of the compulsory counterclaim requirement in these cases. Since the complaints evoked by the rule involved motor vehicle cases, the Court limited the amendment to this type of case.”

Massachusetts Rule 13(a) does not limit the application of the exception to the compulsory counterclaim to motor vehicle accidents for two reasons:

(1) In actions for property damage the same reasons which warrant the exception in cases of motor vehicle accidents are present in cases involving other types of collisions (e.g., a collision of motorboats). Thus the language “property damage arising out of a collision” appears appropriate.

(2) Most personal injury cases involve actions against owners or possessors of property for injury resulting from a defective condition of the premises, or actions arising out of collisions. Representation by an attorney for an insurance company is just as likely in the former type of case as in the latter. While it is obvious that the former type of case would rarely lend itself to the use of the counterclaim, if a counterclaim does exist, it should not, for the same reasons present in the collision cases, be compulsory.

Rule 13(b) tracks Federal Rule 13(b), but omits the final clause, thus making clear that the defendant may at his option assert as a counterclaim any claim whatsoever, even though some other portion of Rule 13 might give the defendant the option of omitting it.

Rule 13(c) changes prior Massachusetts practice which, as previously indicated, permitted affirmative recovery only in set-off, not in recoupment. It will also allow the defendant who raises a legal counterclaim against an equitable claim by the plaintiff to retain his jury right on the counterclaim. This too will change prior law, Gulesian v. Newton Trust Co., 302 Mass. 369, 371, 19 N.E.2d 312, 313-314 (1939).

Rule 13(d) reemphasizes that the Rules do not purport to change substantive rights, in this case against the Commonwealth, its political subdivisions, or any of their officers and agencies.

Rule 13(e) echoes the general assumption of the Rules that issues between the parties should be resolved in as few lawsuits as possible. In Massachusetts, a claim acquired after commencement of the action was not available in set-off. See Jump v. Leon, 192 Mass. 511, 513, 78 N.E. 532 (1906). Rule 13(e) changes this practice. A late-arising counterclaim may be added at any time by leave of court. Presumably, if at the time the counterclaim is acquired, a reply has not yet been served to the original counterclaim, the defendant may add the new counterclaim by way of amendment under Rule 15(a).

If the defendant owned the counterclaim at the time of serving his original answer, but omitted it excusably, Rule 13 allows the court to permit an amendment; this is similar to prior Massachusetts practice, Scullin v. Cities Service Oil Co. , 304 Mass. 75, 22 N.E.2d 666 (1939). Hall v. Rosenfield , 177 Mass. 397, 59 N.E. 68 (1901). Under appropriate circumstances, a Rule 15(a) amendment may also be allowed.

For applicable periods of limitation, see G.L. c. 260, § 36 (as amended).

Up to this point, Rule 13 has dealt with claims back against the plaintiff by the defendant. Rule 13(g) regulates claims between co-parties, that is, parties on the same side of the versus. Previously, defendants in equity suits could cross-claim (the Massachusetts Rules used the word “counterclaim”) under the same conditions regulating a counterclaim against the plaintiff. Rule 13(g) somewhat narrows this practice. It permits a cross-claim under only two sets of circumstances: (1) the cross-claim arises out of the transaction or occurrence underlying the original action or a counterclaim; or (2) the cross-claim relates to property which is the subject matter of the original action.

This Rule does not purport to prescribe machinery for resolving in one litigation all the disputes between all the parties. To begin with, it is entirely permissive. Failure to assert a cross-claim will never forfeit the right to commence an independent action. Further, the rule allows only those cross-claims fairly closely associated with the principal dispute.

Rule 13(g) permits assertion against a co-party of what is in effect a third-party complaint under Rule 14. The chief difference is that under Rule 13(g), both co-parties are, by definition, potentially liable to the opposing party; under Rule 14, the third-party defendant will not even be potentially liable to the plaintiff unless the plaintiff chooses specially to assert such a claim directly against the third-party defendant.

Rule 13(h) makes effective as to counterclaims and cross-claims the provisions of Rule 19 and 20. These deal respectively with the joinder of necessary parties, and the joinder of additional parties. The practice is reasonably familiar in Massachusetts. For the manner of serving such parties, see Rule 4(f).

Rule 13(i) authorizes the court to order separate trials (Rule 42 ) and to enter separate judgment on a cross-claim or a counterclaim (Rule 54(b) ). Rule 13(i), like earlier Massachusetts practice, Bordonaro v. Vandenkerckhaven, 322 Mass. 278, 281, 76 N.E.2d 755, 757 (1948), permits the court to give judgment on a counterclaim or cross-claim even though the plaintiff’s claim may have been dismissed.

Since the rules are not applicable to the district courts, Rule 13(j) provides for cases transferred, appealed or removed to the Superior Court. Rule 13(j) provides for a twenty-day period from the transfer, removal or appeal during which the defendant must (if Rule 13(a) is applicable) or may (if Rule 13(b) is applicable) amend the answer so as to assert any counterclaims. This twenty-day period applies only to asserting a counterclaim; the time for reply to a counterclaim would be governed by Rule 12(a). Rule 13(j) also sets a similar 20-day time limit for assertion of cross- claims (i.e., claims between parties on the same side of the versus). The requirements of Rule 13(j) do not apply to any case which was tried in a district court before removal or appeal.