Opinion ID: 544298
Heading Depth: 4
Heading Rank: 1

Heading: the same transaction test

Text: 14 This court has developed a logical relationship test to determine whether the transaction or occurrence is the same for purposes of Rule 13(a). 15 Courts generally have agreed that the words 'transaction or occurrence' should be interpreted liberally in order to further the general policies of the federal rules and carry out the philosophy of Rule 13(a).... As a word of flexible meaning, 'transaction' may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship. ... [A] counterclaim that has its roots in a separate transaction or occurrence is permissive and is governed by Rule 13(b). 16 Gilldorn Sav. Ass'n v. Commerce Sav. Ass'n, 804 F.2d 390, 396 (7th Cir.1986) (quoting Warshawsky & Co., 552 F.2d at 1261) (emphasis supplied by this court); see also Valencia v. Anderson Bros. Ford, 617 F.2d 1278, 1291 (7th Cir.1980), rev'd on other grounds, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981). 4 Despite this liberal construction, we have stressed that our inquiry cannot be a  ' wooden application of the common transaction label. '  Gilldorn Sav. Ass'n, 804 F.2d at 397 (quoting Valencia, 617 F.2d at 1291) (quoting Ball v. Connecticut Bank & Trust Co., 404 F.Supp. 1, 4 (D.Conn.1975)). Rather, we must examine carefully the factual allegations underlying each claim to determine if the logical relationship test is met. For example, in Gilldorn Savings Association, this court decided that, even in light of this liberal construction, the transactions in that case were not sufficiently close to require that the second suit be barred as a compulsory counterclaim. Id. In that case, the first suit related to the 1983 sale of a mortgage company by Commerce to Gilldorn. The second suit related to a 1984 agreement that Commerce exchange a five million dollar subordinated debenture for five million dollars in Gilldorn preferred stock. Commerce alleged that it exchanged its debenture solely on the promise by Gilldorn that Gilldorn would not sue Commerce on a claim associated with the 1983 sale. Id. at 396. This court decided that the 1984 stock exchange was totally unrelated to the 1983 stock purchase, id., despite acknowledging that Commerce's claims technically are related to Gilldorn's in the sense that Commerce's claims may not have accrued until Gilldorn filed the Illinois action. Id. at 397. We concluded that the relationship was insufficient to satisfy Rule 13(a) because the two claims were based on different theories and would raise different legal and factual issues. Id. Similarly, in Valencia, we determined that a counterclaim for the debt due under the contract in a Truth and Lending Act suit was not compulsory and thus did not establish ancillary jurisdiction. The court concluded that the connection between the claims was so insignificant that compulsory adjudication of both claims in a single lawsuit will secure few, if any, of the advantages envisioned in Rule 13(a). 617 F.2d at 1291. 17 In short, there is no formalistic test to determine whether suits are logically related. A court should consider the totality of the claims, including the nature of the claims, the legal basis for recovery, the law involved, and the respective factual backgrounds. 5 5] 18