Written by Brian Clarry, Esq.
Edited by Bill Pfund, Esq.
Perhaps it is my bias as a civil defense attorney, but in many of the motor vehicle accident cases I handle, after reviewing the facts and speaking with the insured, I’m almost offended that the plaintiff brought a lawsuit in the first place. And regularly the insured defendant is incensed that they are being sued at all, especially if fault is questionable or the plaintiff did not appear injured at the scene.
Consider the case of a car crash with a murky fact set in which liability is a toss-up, or even one in which negligence of the plaintiff is slightly more likely. While plaintiff may indeed have suffered property damage and personal injury, often the insured defendant also sustained property damage and in some cases even their own personal injury, however minor. In that case, the insured defendant has as much of a right to sue and recover from plaintiff.
The counterclaim is the ideal tool to respond offensively when sued, but it is underutilized in the insurance defense industry. What’s striking is the breadth of Virginia Supreme Court Rule 3:9, which provides:
A defendant may, at that defendant’s option, plead as a counterclaim any cause of action that the defendant has against the plaintiff or all plaintiffs jointly, whether or not it grows out of any transaction mentioned in the complaint, whether or not it is for liquidated damages, whether it is in tort or contract, and whether or not the amount demanded in the counterclaim is greater than the amount demanded in the complaint.
Granted, there must be a good faith basis to bring the counterclaim under Va. Code § 8.01-271.1. Yet, a defendant’s property damage combined with a reasonable contention that the accident was caused in part by the plaintiff should suffice.
In addition to assuaging the insured defendant’s irritation at being sued, the counterclaim offers a host of litigation advantages.
First, depending on the underlying factual scenario, it can put the defendant on more equal footing in the general posture of the case. This provides defendant far more leverage in pretrial settlement negotiations. With respect to the plaintiff’s attorney, it suggests that the underlying facts of the incident may not be as favorable as his or her client is letting on. As to the plaintiff personally, they must now face the potential for a personal judgment against them, or an increased insurance rate post-settlement, as well as the likelihood of having to deal with two separate attorneys—the counsel they retained to prosecute their claim as well as the defense counsel assigned by their insurer. Again, annoyance cannot be the impetus for this strategy, but there is no rule against it being a side effect.
Aside from the counterclaim’s increased bargaining power in settlement talks pretrial, it arguably offers similar advantages during trial. Perhaps too simplistic, but the posture of the case to a judge or jury when the defendant has brought their own claim against the plaintiff is likely viewed more favorably for the defendant. Moreover, to the extent the perception is real that judges tend to favor plaintiffs, bringing a counterclaim establishes the defendant as a claimant in their own right, perhaps alleviating that perceived bias to an extent.
But perhaps the greatest benefit of the counterclaim strategy is the blunting effect it has on plaintiffs’ most potent tool: the nonsuit. We have previously explained the basic precepts of the nonsuit. See https://www.kpmlaw.com/anything-can-defendant-plaintiff-wants-take-voluntary-nonsuit. Essentially a nonsuit is a mulligan available to plaintiff’s counsel at any time before a ruling. The unpredictability in terms of timing of this weapon often results increased defense costs, sometimes substantial costs—as many aspects of the prior suit will need to be repeated in the second suit.
However, if there is a counterclaim pending, plaintiff cannot nonsuit her case.
Virginia Code § 8.01-380(D) provides:
A party shall not be allowed to nonsuit a cause of action, without the consent of the adverse party who has filed a counterclaim, cross claim or third-party claim which arises out of the same transaction or occurrence as the claim of the party desiring to nonsuit unless the counterclaim, cross claim or third-party claim can remain pending for independent adjudication by the court.
This essentially muzzles plaintiff’s most potent litigation weapon. And even if the counterclaim could be separately adjudicated according to the last sentence of the statute, which would allow plaintiff to nonsuit her case, there remains another tool for the counterclaiming defendant: nonsuit their own counterclaim. (Virginia courts have acknowledged a counter-claimant defendant’s ability to nonsuit their counterclaim. See, e.g., Khanna v. Dominion Bank of Northern Virginia, N.A., 237 Va. 242, 245 (1989)).
If plaintiff chooses to refile their case within their statutorily-allowed six month period, defendant can then reinstitute their counterclaim and the parties are back at square one—but still on equal footing—without an automatic right to another nonsuit.
Many of these advantages also apply to crossclaims against co-defendants as well as third party claims against non-parties. Moreover, the scope of the advantages of this strategy could span beyond motor vehicle/trucking accidents to many other areas including contract breach, indemnification disputes, construction defect cases, and even premises liability actions.
There are some caveats to be mindful of when bringing a counterclaim. The attorney must make arrangements with insured defendant (the counter-plaintiff) regarding fees and costs associated with the counterclaim, which should be borne by the insured counter-plaintiff versus the insurance carrier. Counterclaims might also impede an insurance carrier’s desire to settle cases for nuisance value if the counter-plaintiff is unwilling to dismiss a counterclaim as part of settlement. Counterclaims may also result in another attorney being brought into the case on behalf of a plaintiff with his own insurance coverage, when he becomes a counter-defendant.
The point is that defense counsel, in conjunction with their claims professional, should be thinking offensively from the outset in their resolution strategy so as to maximize their leverage in settlement negotiations as well as their advantages in litigation.
 Procedurally, Rule 3:9 requires a counterclaim to be filed within 21 days after service of the summons and complaint upon the defendant asserting the counterclaim. However, if the defendant’s initial responsive pleading within the 21-day period is a demurrer, plea in bar, motion to dismiss, or motion for a bill of particulars, the counterclaiming defendant does not need to file the counterclaim until 21 days after the demurrer, etc., has been fully determined and ruled on via a judge’s order.
 NB. The “Collateral Source” rule in Virginia applies to property damage in addition to personal injury, allowing recovery even if insurance has previously covered the loss. The carrier, then would be subrogated to any amount recovered by the insured.