Defendants argue that this provision is not enforceable in a federal court, since the counterclaim is compulsory, and Fed. R. Civ. P. 13(a) requires a party to assert all compulsory counterclaims in this action, or waive them. In support of their argument that the clause is unenforceable, defendants cite Loader Leasing Corp. v. Kearns, 83 F.R.D. 202 (W.D.Pa. 1979). Loader Leasing also involved a contract provision which purportedly waived defendant's right to set-off any claims he might have against plaintiff. The court held that although the waiver provision would be enforceable in state court, it could not "unreasonably restrict the privilege of litigating an issue in a court of law . . . or unreasonably restrict the jurisdiction of a federal court," id., at 203. Those problems arose in Loader because, in part, defendant's counterclaim was compulsory under Rule 13(a); and "the failure to assert a compulsory counterclaim is a bar to a subsequent action in either a federal or state court." Id., at 203-04. The district court in Loader enforced the waiver provision as to the defendant's second counterclaim which was permissive, but refused to do so as to the first, compulsory counterclaim. See also Atlantic C Line R. Co. v. United States F. & Guaranty Co., 52 F. Supp. 177 (M.D.Ga. 1943).
In their briefs, the parties assume the applicability of New York law. New York law enforces waivers of the right to assert affirmative defenses, set-offs or counterclaims. See Bank of New York v. Cariello, 69 A.D.2d 805, 415 N.Y.S.2d 65 (2d Dept. 1979); FDIC v. Frank L. Marino Corp., 74 A.D.2d 620, 425 N.Y.S.2d 34 (2d Dept. 1980). Courts in this circuit, applying New York law, generally hold that contractual agreements not to assert defenses, set-offs or counterclaims in subsequent litigation do not contravene public policy and are enforceable. See Bankers Trust Co. v. Litton Systems, 599 F.2d 488, 490 (2d Cir. 1979); In re Gas Reclamation, Inc. Securities Litigation, 741 F. Supp. 1094, 1102 (S.D.N.Y. 1990); FDIC v. Borne, 599 F. Supp. 891, 894-95 (E.D.N.Y. 1984). The waiver will not be enforced so as to bar a viable set-off or counterclaim sounding in fraud, Marino, supra, but defendants at bar do not allege fraudulent conduct on the part of plaintiff.
Under New York law, all counterclaims are permissive. See N.Y. CPLR § 3019, (McKinney's 1991), and practice commentary at 205. This contrasts with federal practice, where a counterclaim may be compulsory under Rule 13(a) or permissive under Rule 13(b), depending on the circumstances.
The question of fairness posed by Loader Leasing Corp. v. Kearns, supra, arises because plaintiff chose to file its action in federal court. It is not fair to enforce the contractual waiver of defendants' counterclaim if that counterclaim is compulsory under Rule 13(a). Were it otherwise, a party to a contract containing such a waiver provision could, by choice of a federal over state forum, prevent its adversary's counterclaim from every being reached on the merits.
Accordingly, defendants' right to assert a counterclaim in this action turns on whether defendants' claim is permissive or compulsory under Rule 13. If the counterclaim is compulsory, the waiver clause is not enforceable since it would preclude defendants from ever raising the issue in this or any other court. If the counterclaim is permissive, however, the waiver clause is enforceable, and defendants would have to bring their claims in a separate action.
The test for determining whether a counterclaim is permissive or compulsory is set forth in McCaffrey v. Rex Motor Transp., Inc., 672 F.2d 246, 248 (1st Cir. 1982):
(1) Are the issues of fact and law raised by the claim and the counterclaim largely the same; (2) would res judicata bar a subsequent suit on defendants' claims absent a compulsory counterclaim; (3) will substantially the same evidence support or refute plaintiff's claim as well as defendants' counterclaims; and (4) is there any logical relationship between the claim and the counterclaim?