Civil Practice – Compulsory Counterclaim – Real Property – Mortgages

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We agree with our Court of Appeals that a mortgage foreclosure was not a compulsory counterclaim in the petitioner-property owners’ prior action against the respondent-bank for conversion, violation of the attorney preference statute, and violations of the South Carolina Unfair Trade Practices Act. Nevertheless, we abolish the “logical relationship” test on which the Court of Appeals relied.

Affirmed as modified and remanded for further proceedings.

Although this court adopted the logical relationship test in North Carolina Federal Savings & Loan Ass’n v. DAV Corp., 298 S.C. 514, 381 S.E.2d 903 (1989), we neither set forth factors to consider under the test nor explained whether the test expands or limits the scope of Rule 13(a), SCRCP. The test has since been cited and applied in a way that does not track Rule 13(a). In cases commenced on or after the effective date of this opinion, the question of whether a counterclaim is compulsory is governed by the plain language of Rule 13(a).

Rule 13(a) plainly provides that a counterclaim is compulsory “if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.” Judges and lawyers are well-equipped to determine whether a claim is compulsory under the plain language of this rule.

Deutsche Bank National Trust Co. v. Estate of Houck (Lawyers Weekly No. 010-044-23, 3 pp.) (George James, J.) Appealed from Lexington County (James Spence, Master-in-Equity) Andrew Sims Radeker for petitioners; Jonathan Edward Schulz and George Benjamin Milam for respondent. South Carolina Supreme Court