Steve Hillis, husband; DIANE HILLIS, wife v. BARBARA L. HEINEMAN, No. 09-17040wife/Trustee of the Year 2002 Revocable Trust Dated…

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 STEVE HILLIS, husband; DIANE
HILLIS, wife,
Plaintiffs-Appellants,
v.
BARBARA L. HEINEMAN, No. 09-17040wife/Trustee of the Year 2002
Revocable Trust Dated August 16, D.C. No.
2002; RONALD E. HEINEMAN, 2:09-cv-00073-DGC
husband; GREGORY BARTKO; OPINION
PERSONS 1-10,
Defendants-Appellees,
v.
JOHN RAYMOND FOX,
Third-party-defendant. 
Appeal from the United States District Court
for the District of Arizona
David G. Campbell, District Judge, Presiding
Submitted November 5, 2010*
San Francisco, California
Filed November 19, 2010
Before: Ronald M. Gould, Sandra S. Ikuta, Circuit Judges,
and Edward R. Korman, Senior District Judge.**
*The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
**The Honorable Edward R. Korman, Senior United States District
Judge for the Eastern District of New York, sitting by designation.
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Opinion by Judge Gould
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COUNSEL
Harry N. Stone, The Stone Law Firm, Phoenix, Arizona, for
plaintiffs-appellants Steve Hillis and Diane Hillis.
Gregory Bartko, Law Office of Gregory Bartko, LLC,
Atlanta, Georgia, for defendants-appellees Ronald Heineman
and Barbara Heineman; Barbara Heineman, Trustee of the
Year 2002 Revocable Trust Dated August 16, 2002; and
Gregory Bartko.
OPINION
GOULD, Circuit Judge:
We must decide whether a defendant who files a counter-
claim or a third-party complaint waives the asserted defense
of improper venue under Federal Rule of Civil Procedure
12(b)(3). We hold that filing a counterclaim or a third-party
complaint does not waive the defense of improper venue.
I
In 2006, Steve and Diane Hillis were solicited by John Fox,
who had been retained by Resolve Staffing to sell securities.
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Fox persuaded Steve Hillis to pay $135,000 and sign a Sub-
scription Agreement in return for 90,000 shares of Resolve
Staffing common stock. In 2007, Hillis and Resolve Staffing
executed a Warrant Amendment and Exchange Agreement.
The Warrant Amendment entitled the Hillises to buy another
90,000 shares of stock at a lower price than the first batch.
These agreements each had a forum selection clause: the Sub-
scription Agreement required venue in “the courts of the State
of Ohio” and the Warrant Amendment required venue in the
“State or Federal Courts serving the State of Ohio.”
In 2008, Resolve Staffing went out of business because of
the involuntary foreclosure and sale of its assets by its pri-
mary lender. The Hillises lost their entire investment. They
sued Resolve Staffing in Arizona state court and won a
default judgment, which they could not collect because
Resolve Staffing had no assets. In 2009, the Hillises sued
again, this time a diversity suit in federal court in the District
of Arizona against Resolve Staffing’s former president and
C.E.O., Ronald Heineman, his wife, Barbara Heineman, and
Resolve Staffing’s former securities counsel, Gregory Bartko
(“Defendants”). Defendants filed answers that specifically
included a defense of improper venue premised on the forum
selection clauses. Defendants also filed counterclaims with
their answers, and the Heinemans filed separately a third-
party complaint against John Fox. The district court dismissed
the complaint for improper venue based on the forum selec-
tion clauses.
II
On appeal, the Hillises contend that by filing counterclaims
and a third-party complaint, Defendants waived any improper
venue defense and that Bartko waived his improper venue
defense by failing to assert it in his first motion to dismiss.
[1] Although we are not aware of Ninth Circuit precedent
squarely addressing this precise issue, district courts have
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held that filing a counterclaim does not waive a defense of
improper venue. See, e.g., Happy Mfg. Co. v. S. Air &
Hydraulics, Inc., 572 F. Supp. 891, 893 (N.D. Tex. 1982)
(“[T]here [is] nothing in Rules 12(h) or 12(b) which suggests
that a venue defense is waived by filing a counterclaim. . . .
Moreover, the policies behind Rule 12(b) strongly support the
conclusion that a defendant does not waive a venue defense
by simultaneously filing a counterclaim.”); Rogen v. Memry
Corp., 886 F. Supp. 393, 396 (S.D.N.Y. 1995) (“[T]he fact
that [Defendant] filed a counterclaim and participated in dis-
covery does not render its objections to venue abandoned.”).
[2] Also, the language of Federal Rule of Civil Procedure
12 does not support the Hillises’ theory of waiver. Rule 12(b)
states:
(b) How to Present Defenses. Every defense to a
claim for relief in any pleading must be asserted in
the responsive pleading if one is required. But a
party may assert the following defenses by motion:
(1) lack of subject-matter jurisdiction;
(2) lack of personal jurisdiction;
(3) improper venue;
* * *
A motion asserting any of these defenses must be
made before pleading if a responsive pleading is
allowed. If a pleading sets out a claim for relief that
does not require a responsive pleading, an opposing
party may assert at trial any defense to that claim.
No defense or objection is waived by joining it with
one or more other defenses or objections in a respon-
sive pleading or in a motion.
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Fed. R. Civ. P. 12(b). Rule 12(h)(1) specifically discusses
waiver of 12(b) defenses:
(h) Waiving and Preserving Certain Defenses.
(1) When Some Are Waived. A party waives any
defense listed in Rule 12(b)(2)-(5) by:
(A) omitting it from a motion in the circum-
stances described in Rule 12(g)(2); or
(B) failing to either:
(i) make it by motion under this rule; or
(ii) include it in a responsive pleading or
in an amendment allowed by Rule
15(a)(1) as a matter of course.
Fed. R. Civ. P. 12(h)(1). Rule 12(h)(1) refers to Rule 12(g)(2),
which states that, subject to two exceptions, “a party that
makes a motion under this rule must not make another motion
under this rule raising a defense or objection that was avail-
able to the party but omitted from its earlier motion.” Fed. R.
Civ. P. 12(g)(2).
[3] The Hillises, without citing any authority, contend that,
under these rules, Defendants waived any 12(b)(3) defense of
improper venue by filing counterclaims and a third-party
complaint. But there is nothing in the language of these rules
to support such a position. Only the most compelling of rea-
sons will persuade us to imply an exception where the statu-
tory text does not supply one. See United States ex rel. Lujan
v. Hughes Aircraft Co., 243 F.3d 1181, 1187 (9th Cir. 2001)
(quoting United States v. Rutherford, 442 U.S. 544, 551-52
(1979)). This same principle of statutory construction applies
to interpreting the Federal Rules of Civil Procedure. See
United States v. Fort, 472 F.3d 1106, 1123-24 (9th Cir. 2007).
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No such reason has been offered here, so we decline to add
the Hillises’ desired gloss to the plain text of Rule 12. To the
contrary, the literal language of Rule 12 fits much better with
a decision that asserting a counterclaim does not waive a
defense of improper venue.
We reached a similar conclusion when considering a
related question: whether the filing of a counterclaim waives
the defense of lack of personal jurisdiction, which is available
under Rule 12(b)(2). In Gates Learjet Corp. v. Jensen, we
held that “the filing of a permissive counterclaim does not
constitute a waiver of a personal jurisdiction defense asserted
in the same pleading. Rule 12(b) of the Federal Rules of Civil
Procedure implicitly authorizes a defendant to join a jurisdic-
tional defense with a counterclaim without waiving this
defense.” 743 F.2d 1325, 1330 n.1 (9th Cir. 1984). We
explained:
The rule permits a defendant to raise jurisdictional
defenses by motion or by answer. If we were to find
a waiver when a defendant files a permissive coun-
terclaim in the same pleading in which he asserts
jurisdictional defenses, the purposes behind Rule
12(b)—to avoid the delay caused by successive
motions and pleadings and to reverse the prior prac-
tice of asserting jurisdictional defenses by “special
appearances”—would be thwarted. Moreover, courts
have noted that when the rule makers wanted to
attach “waiver” consequences in certain situations,
they did so explicitly.
Id. (citations omitted). There is some disagreement between
the circuits, but our approach in Gates Learjet Corp. is consis-
tent with “the prevailing view,” as recognized by the Fifth
Circuit. Bayou Steel Corp. v. M/V Amstelvoorn, 809 F.2d
1147, 1149 (5th Cir. 1987) (“[T]he filing of a counterclaim,
cross-claim, or third-party demand does not operate as a
waiver of an objection to jurisdiction, whether that objection
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is raised by motion or answer, provided that the objection is
not otherwise waived in the course of the litigation.”).
[4] We discern no principled distinction between the rule
that we set forth in Gates Learjet Corp., and the rule that we
adopt here. We hold that the filing of a counterclaim, permis-
sive or otherwise, does not constitute a waiver of a defense of
improper venue asserted in an answer. We further hold that
the filing of a third-party complaint does not waive a defense
of improper venue asserted in an answer.
Our decision that assertion of a counterclaim or third-party
claim does not waive the defense of improper venue is in
accord with the consistent views of the leading federal proce-
dure treatises. See 5C Charles Alan Wright & Arthur R. Mil-
ler, Federal Practice and Procedure § 1397 (3d ed. 2004)
(“The trend in more recent cases is to hold that no Rule 12(b)
defense is waived by the assertion of a counterclaim, whether
permissive or compulsory. . . . The same result has been
reached by several courts with regard to the effect of interpos-
ing cross-claims and third-party claims. This approach seems
sound.”); 3 James Wm. Moore et al., Moore’s Federal Prac-
tice § 13.111 (Matthew Bender 3d ed. 2010) (“It is increas-
ingly held that a defendant does not waive jurisdictional
defenses by asserting a compulsory counterclaim. Some
courts find that jurisdictional defenses are not waived by fil-
ing permissive counterclaims or crossclaims.”)
We follow this well-traveled path in holding that the mere
assertion of a counterclaim will not waive a defense of
improper venue that was explicitly asserted in an answer filed
contemporaneously with the counterclaim. This conclusion is
also consistent with the important and constructive principle
of our adversary system that parties may argue alternative
positions without waiver. See Fed. R. Civ. P. 8(d)(2)-(3) (“A
party may set out 2 or more statements of a claim or defense
alternatively or hypothetically. . . . A party may state as many
separate claims or defenses as it has, regardless of consisten-
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cy.”); see also Wright & Miller, supra, § 1397 (“Moreover,
this practice of allowing a defendant in effect to plead alterna-
tively a counterclaim and one or more threshold defenses con-
serves judicial resources, for if one of the defenses proves
successful, the parties need not litigate a claim that the defen-
dant presumably has no interest in asserting independently.”).
We endorse the general rule that the assertion of alternative
defenses in an answer, or the assertion of claims in a counter-
claim or a third-party claim, will not waive a defense that has
been asserted previously or contemporaneously in an answer.1
III
The Hillises further contend that the Subscription Agree-
ment is illegal under Arizona law, that it is voidable at Steve
Hillis’s option, that Steve Hillis in fact voided it by filing a
complaint in the district court, and that the forum selection
clause within the Agreement undermines the public policy of
Arizona. These arguments are raised for the first time on
appeal, and because they were never argued before the district
court, we deem them waived. Conn. Gen. Life Ins. Co. v. New
Images of Beverly Hills, 321 F.3d 878, 882 (9th Cir. 2003).
AFFIRMED.
1Even if Bartko waived his improper venue defense by failing to raise
it in his first motion to dismiss, see Fed. R. Civ. P. 12(g)(2), (h)(1)(A), the
district court dismissed the action against Bartko on the alternative ground
that the complaint failed to state a claim upon which relief could be
granted under Rule 12(b)(6). Because the Hillises do not challenge the
alternative ground on appeal, they have waived it, Dennis v. BEH-1, LLC,
520 F.3d 1066, 1069 n.1 (9th Cir 2008), and we affirm the dismissal of
the claims against Bartko on that basis.
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