In Bank Leumi U.S. v. Kloss, our Supreme Court has decided an important unresolved issue relating to compulsory counterclaims under the entire controversy doctrine. Responding to a certified question from the Third Circuit, Bank Leumi holds that a defendant who has successfully moved to dismiss under R. 4:6-2 for failure to state a claim may thereafter sue the unsuccessful plaintiff for a claim arising from the same set of operative facts. The decision makes it clear that a counterclaim otherwise compulsory under R. 4:7-1 and R. 4:30A need not be brought until a motion to dismiss is denied and an answer filed.
Bank Leumi arose from a conflict between two lenders to the same borrower, Munire Furniture Co. When it extended a line of credit to Munire, the bank required Kloss to sign a subordination agreement and a reaffirmation agreement giving it priority over his prior loan to Munire. Munire had fraudulently misrepresented its financial condition and went bankrupt. In the bankruptcy, Kloss filed a proof of claim showing that he had been receiving payment from Munire both on the subordinated loan and on a second loan that he had never disclosed to Bank Leumi.
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