A "logical relationship" exists when the counterclaim arises from the same "aggregate of operative facts" in that the same operative facts serve as the basis of both claims or the aggregate core of facts upon which the claim rests activates additional legal rights, otherwise dormant, in the defendant.
Plaintiff debtor executed a note in favor of defendant creditor. No payments were made on the note. Plaintiff commenced a civil action against defendant under the Truth in Lending Act for failure to make disclosures required by the act. Defendant counterclaimed on the note for the unpaid balance. Based on defendant's failure to disclose a limitation on an after-acquired security interest, the trial court held the disclosure inadequate and awarded plaintiff the statutory penalty and attorney's fees. The trial court found for defendant on the counterclaim. On appeal, plaintiff challenged the consideration of the state counterclaim in federal court. The court affirmed the judgment as to the validity of the counterclaim.
Are the issues of fact and law raised by the claim and counterclaim largely the same?
Applying the logical relationship test literally to the counterclaim in this case clearly suggests its compulsory character because a single aggregate of operative facts, the loan transaction, gave rise to both plaintiff's and defendant's claim. Because a tallying of the results from the district courts which have decided this question, however, shows that a greater number have found such a counterclaim merely permissive, the court subjected the relationship between the claims to further analysis in the lower courts.