The United States Department of the Interior prevailed in a prior lawsuit with Mideast Systems, Ltd. and China Civil Construction (MS/CCC) (defendants), which were represented by the Law Offices of Jerris Leonard, P.C. (Leonard) (plaintiff). After MS/CCC failed to pay their legal fees, Leonard filed a fee action against them in federal district court. MS/CCC never appeared in the lawsuit, and default judgment was eventually entered against them. Almost a year later, MS/CCC filed a malpractice action against Leonard in a New York state court, based on settlement advice given by Leonard in the government litigation. Leonard responded by seeking a declaration in federal court that MS/CCC were barred from pursuing their malpractice claim, because it was a compulsory counterclaim that they had failed to raise in Leonard’s earlier fee action.