R. J. Williams Co. v. Fort Belknap Housing Authority

92 F.R.D. 17, 32 Fed. R. Serv. 2d 1397, 1981 U.S. Dist. LEXIS 15593
District Court, D. Montana·Decided September 29, 1981·No. No. CV-80-104-GF·Published·Cited by 2 cases

Opinion

MEMORANDUM AND ORDER

HATFIELD, District Judge.

This action was spawned by a contractual dispute between the Fort Belknap Housing Authority [hereinafter “Housing Authority”] and Richard J. Williams, individually, R. J. Williams Company, and Fireman’s Fund Insurance Company. In October 1976, the Housing Authority contracted with Williams Brothers Building Contractors for the construction of 50 mutual help, single family houses on the Fort Belknap Indian Reservation pursuant to Montana Project 10-10. The contract documents provided that Williams Brothers Building Contractors would execute a performance bond to the Housing Authority in the sum of $1,888,256. The bond was thereafter executed and delivered to the Housing Authority, with Richard J. Williams signing in his individual capacity for Williams Brothers Building Contractors and Fireman’s Fund Insurance Company signing as surety.

Toward the completion of the project, in March 1980, warranty disputes arose between the parties. As a consequence of these disputes, an attorney for the Housing Authority applied to the Fort Belknap Tribal Court for an order to attach approximately $60,000 worth of property owned by Richard J. Williams and R. J. Williams Company and located upon the Fort Belknap Indian Reservation. The Tribal Court ordered the property attached. The plaintiffs, who were the defendants in the Tribal Court action, moved with supporting briefs to quash the order of attachment and to dismiss the underlying complaint.

Prior to the Tribal Court ruling upon the motion to dismiss and motion to quash writ of attachment, Richard J. Williams, individually, R. J. Williams Company, and Fireman’s Fund Insurance Company filed in this court their complaint and application for preliminary injunction against the Housing Authority and Fort Belknap Tribal Court for the alleged wrongful attachment of their property in the Tribal Court proceedings.

Subsequent to the filing of a motion to dismiss for lack of personal and subject matter jurisdiction by the Housing Authority and the Tribal Court, and after hearings on jurisdiction, this court held, by its findings of fact and conclusions of law dated March 2, 1981, that it has both federal question jurisdiction, 28 U.S.C. § 1331, and diversity jurisdiction, 28 U.S.C. § 1332, over the Housing Authority, but lacked jurisdiction over the Tribal Court. The Housing Authority now seeks leave of court to file its amended answer and counterclaim against the plaintiffs-and to add Williams Brothers Building Contractors as a party to this action. The counterclaim alleges the failure of the plaintiffs and Williams Brothers Building Contractors to fully comply with the contract documents or see that they were complied with in completing various “punchlist” and warranty items for Montana Project 10-10.1

Plaintiffs oppose the counterclaim on the grounds that it is not compulsory under Rule 13(a), Federal Rules of Civil Procedure, and is therefore not within the ancillary jurisdiction of this court. Plaintiffs further contend that Williams Brothers Building Contractors is a non-necessary party to the suit whose joinder would oust this court of its diversity jurisdiction.2

The Housing Authority counters by arguing that the counterclaim is compulsory and [20]*20within the court’s ancillary jurisdiction, and that the court may therefore join Williams Brothers Building Contractors as a party to this suit pursuant to Rule 13(h), Fed.R. Civ.P. The Housing Authority asserts that the counterclaim against the plaintiffs and Williams Brothers Building Contractors for failure to complete Montana Project 10-10 as proscribed is logically related to the attachment of plaintiffs’ property in the Tribal Court. The Housing Authority argues that Williams Brothers Building Contractors is a partnership of which Richard J. Williams is a member, and that both Richard J. Williams, individually, and R. J. Williams Company acknowledged, via correspondence, their responsibility for the completion of the punchlist for Montana Project 10-10. Because Montana Project 10-10 was not completed as Richard J. Williams and R. J. Williams Company had acknowledged, their property was subsequently attached by order of the Tribal Court.

This court is desirous of avoiding a multitude of lawsuits upon claims which appear to be related. Therefore, the court finds that the counterclaim filed by the Housing Authority is compulsory and ancillary to the plaintiffs’ claim, and that Williams Brothers Building Contractors is a party needed for a just adjudication of the pending lawsuit.

DISCUSSION

A. Compulsory Nature of the Counterclaim

Rule 13(a), Fed.R.Civ.P., states in relevant part:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

A compulsory counterclaim under Rule 13(a) is one which arises out of the same transaction or occurrence that is the subject of the opposing party’s claim. The phrase “transaction or occurrence” has been broadly interpreted to only require a logical relationship between the two claims. See Baker v. Gold Seal Liquors, 417 U.S. 467,469 fn. 1, 94 S.Ct. 2504, 2506, fn. 1, 41 L.Ed.2d 243 (1974), citing Moore v. New York Cotton Exchange, 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750 (1926). Accord, United States for the Use and Benefit of D’Agostino Excavators, Inc., v. Heyward-Robinson Co., 430 F.2d 1077 (2nd Cir. 1970); H. L. Peterson Co. v. Applewhite, 383 F.2d 430 (5th Cir. 1967); Union Paving Co. v. Downer Corp., 276 F.2d 468 (9th Cir. 1960); United Artists Corp. v. Masterpiece Productions, Inc., 221 F.2d 213 (2nd Cir. 1955).

When the counterclaim is compulsory, it falls within the ancillary jurisdiction of the court and does not require an independent basis of federal subject matter jurisdiction. Baker v. Gold Seal Liquors, supra, 417 U.S. at 469, fn. 1, 94 S.Ct. at 2506 fn. 1; United States for the Use and Benefit of D’Agostino Excavators, Inc. v. Heyward-Robinson Co., supra. The primary purpose of ancillary jurisdiction is to promote judicial economy by allowing the adjudication of related claims in a single action. As the Third Circuit stated in the leading case of Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631 (3rd Cir. 1961):

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R. J. Williams Co. v. Fort Belknap Housing Authority, 92 F.R.D. 17, 32 Fed. R. Serv. 2d 1397, 1981 U.S. Dist. LEXIS 15593 (D. Mont. 1981).

92 F.R.D. 17 (R. J. Williams Co. v. Fort Belknap Housing Authority) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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