Should My Business File a Counterclaim?

First question: is it compulsory?

Before weighing strategy, check whether the law has already decided. Under Texas Rule of Civil Procedure 97(a), a pleading must state as a counterclaim any claim within the court's jurisdiction, not the subject of a pending action, that the pleader has against an opposing party at the time of filing, if it arises out of the transaction or occurrence that is the subject of the opposing party's claim and does not require the presence of third parties over whom the court cannot acquire jurisdiction. A compulsory counterclaim that is not pleaded is lost: res judicata bars it in any later suit.

In business disputes the test is usually satisfied. If a customer sues for defective goods, your claim for the unpaid invoice on the same order arises from the same transaction. If a former partner sues for distributions, your claim that she breached the partnership agreement in the same period is compulsory. If a contractor sues for the balance of a project, the owner's claim for defective work on that project is compulsory. A claim on an unrelated contract, or for events in a different year, is permissive under Rule 97(b) and may be brought now or later.

Two refinements matter. Rule 97(d) allows a claim that matured or was acquired after the answer to be added by amended pleading. Rule 97(g) provides that a tort claim may not be set off against a contract demand, or the reverse, unless the two arise out of or are connected with the same transaction. The compulsory counterclaim question should be answered before the answer is filed, within the window described in what happens when you are served.

If it is a choice: what to weigh

Does it add value or just noise?

A counterclaim is worth filing when it is a real claim that would be worth pursuing on its own, or when it directly offsets the plaintiff's damages. A thin counterclaim filed to look tough rarely changes a plaintiff's view of the case and can draw a Rule 91a motion and a fee award. Judges and opposing counsel read a weak counterclaim as a tell.

What does it do to discovery and cost?

A counterclaim widens the case. Every element of your claim becomes a subject of discovery, including your own records and witnesses. If the plaintiff pleaded an expedited action under Rule 169 for money damages of $250,000 or less, a counterclaim above that amount or for non-monetary relief takes the case off the expedited track and into Level 2 discovery, with more depositions and a longer road to trial. Rule 47 requires the counterclaimant to plead its own damages range. Whether that trade is worth it is a budget question, addressed in how much a business lawsuit costs in Dallas.

Does it carry fees?

Texas follows the American rule, so a defendant who merely defeats a contract claim generally recovers no fees. A defendant who wins a counterclaim on a written or oral contract and recovers damages can seek fees under Chapter 38 of the Civil Practice and Remedies Code, and many commercial contracts have a prevailing-party fee clause that works in both directions. A counterclaim can therefore convert a pure defense cost into a potential recovery. Who pays attorney's fees in Texas explains the exceptions.

Does it put your conduct on trial?

Pleading a claim invites scrutiny of your own performance. A counterclaim for the plaintiff's breach of a supply contract opens your quality records; a counterclaim for a partner's breach of duty opens your management of the company. If the facts favor you, that is an advantage. If they are mixed, a counterclaim can hand the plaintiff a narrative it did not have.

Settlement dynamics

A credible counterclaim changes the plaintiff's downside: it is no longer deciding between winning and walking away, but between winning and paying. That tends to move settlement numbers. An overreaching counterclaim does the opposite, hardening positions and lengthening the case. The useful question is whether the counterclaim is one you would be content to try.

Procedure

• A counterclaim is pleaded in the answer or in a separate pleading filed with it, and may be amended under Rule 63 as the case develops, subject to the court's scheduling order.
• Under Rule 97(c) a counterclaim may seek more than, or different relief from, what the plaintiff seeks; it is not limited to an offset.
• A counterclaim arising from the same transaction needs no separate venue basis (Civil Practice and Remedies Code § 15.062), and the plaintiff cannot escape it by nonsuiting its own claim: Rule 97(h) and Rule 162 allow judgment on a counterclaim even when the plaintiff's claims are dismissed.
• The plaintiff must answer the counterclaim, and a counterclaim can be the subject of a Rule 91a motion or summary judgment like any claim.
• In federal court, Fed. R. Civ. P. 13 draws the same compulsory and permissive line, and a counterclaim can affect diversity jurisdiction and removal analysis.

Alternatives to a counterclaim

A defense is not a claim. Offset, failure of consideration, prior material breach and payment are affirmative defenses under Rule 94 that reduce or defeat the plaintiff's recovery without asserting a claim of your own, and they do not expand discovery as much. A permissive claim can also be filed as a separate suit later, where its own venue, timing and jury may suit you better. And some claims against the plaintiff belong to a different party, for example a related entity, and must be analyzed on their own. The right combination depends on the facts, which is why the counterclaim decision is made with counsel in the first weeks, not after discovery is under way.

Example

Suppose a Dallas sign fabricator is sued by a developer for failing to deliver monument signs for a retail center on time, with the developer claiming lost rent from delayed tenant openings. The fabricator believes the developer caused the delay by changing the design twice and still owes the final payment on the order. The unpaid balance arises from the same contract and is compulsory: it must be pleaded now. A separate dispute over signs for the developer's other project last year is permissive. The fabricator pleads the compulsory counterclaim for the balance, adds a Chapter 38 fee claim, and pleads prior material breach as a defense to the delay damages. It holds the other project's claim for a separate suit, keeping this case to one contract and one set of records.

The decision in one view

Tina Wysk represents Dallas businesses as defendants and counter-plaintiffs in contract disputes, partnership fights and construction cases, and decides the counterclaim question with the client before the answer is filed.