The plaintiff, a resident of State A, was visiting the home of the defendant, who resides in State B. As the plaintiff was leaving the house, she fell through a rotted plank in the front steps and broke her ankle. The plaintiff underwent several surgeries and extensive rehabilitation. She brought suit in federal district court, alleging that the defendant negligently maintained her premises and asking for relief in the amount of $150,000. The defendant filed a counterclaim alleging that the plaintiff owes her $5,000 as payment for web design work that the defendant completed for the plaintiff. If the plaintiff filed a motion to dismiss the defendant’s counterclaim for lack of jurisdiction, will the plaintiff succeed?
A. No, because the parties maintain complete diversity.
B. No, because the federal district court may exercise supplemental jurisdiction over counterclaims.
C. Yes, because the defendant’s counterclaim does not meet the amount-in-controversy requirement for diversity jurisdiction.
D. Yes, because the federal district court may only exercise supplemental jurisdiction when the action includes compulsory counterclaims.

Hi! The answer would be option C. Yes, because the defendant’s counterclaim does not meet the amount-in-controversy requirement for diversity jurisdiction.

Explanation:

A federal court may assert supplemental jurisdiction over a counterclaim that does not satisfy the jurisdictional amount when the counterclaim is compulsory. However, a permissive counterclaim does not qualify for supplemental jurisdiction and therefore must satisfy the jurisdictional amount and the rule of complete diversity. Here, the defendant's claim that the plaintiff owes her money does not arise out of the same transaction and occurrence as the plaintiff's injuries. Therefore, the defendant's counterclaim is permissive and must meet the amount-in-controversy requirement for diversity jurisdiction. Answer choice A is incorrect. Although the parties must maintain complete diversity, a permissive counterclaim must also meet the amount-in-controversy requirement. Answer choice B is incorrect. Although the federal district court may exercise supplemental jurisdiction over counterclaims, a permissive counterclaim needs to meet the requirements for federal subject-matter jurisdiction (either diversity or federal question). Answer choice D is incorrect. While it is true that the defendant's counterclaim is not compulsory, it would be possible for the federal court to assert diversity jurisdiction had the defendant met the amount-in-controversy requirement. Therefore, D is not the best answer choice.

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