Amco Const. Co. v. Mississippi State Bldg. Commission, 79-1439

• Decision Date: 17 September 1979
• Docket Number: No. 79-1439,79-1439
• Citation: 602 F.2d 730
• Parties: AMCO CONSTRUCTION COMPANY, Plaintiff-Appellant, v. MISSISSIPPI STATE BUILDING COMMISSION, Defendant-Appellee. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 730

602 F.2d 730

AMCO CONSTRUCTION COMPANY, Plaintiff-Appellant, v. MISSISSIPPI STATE BUILDING COMMISSION, Defendant-Appellee.

No. 79-1439

Summary Calendar. ^*

United States Court of Appeals Fifth Circuit.

Sept. 17, 1979.

David L. Reynolds, Jackson, Miss., for plaintiff-appellant.

A. F. Summer, Atty. Gen. of Mississippi, Henry T. Wingate, H. L. B. Foote, Jackson, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before CLARK, GEE and HILL, Circuit Judges.

JAMES C. HILL, Circuit Judge:

Amco Construction Company, Inc. appeals the District Court's dismissal of its cross claim for lack of jurisdiction. We affirm because we are convinced that the District Court was correct to conclude that this cross claim bore an insufficient relationship with the original claim to warrant application of the doctrine of ancillary jurisdiction.

The genesis of this complex litigation was in two contracts entered into between the Mississippi State Building Commission ("Commission") and Amco Construction Company, Inc. ("Amco"). The contracts called for the installation of utilities, paving and other construction work at a state park. As part of securing the contracts, Amco furnished a performance and payment bond with the Commission as obligee and the Houston General Insurance Company ("Houston General") as surety. Amco also entered subcontract agreements with Stiglet, Inc. ("Stiglet"), Holcomb Asphalt Company, Inc., and American Tennis Courts, Inc. to perform specific portions of the project. When Amco abandoned the contract work in October of 1975, Houston General, as surety, undertook to effect completion of the project and called upon the subcontractors to complete their work. However, the Commission contended that the work performed under the aegis of Houston General did not conform to plans and specifications. The Commission then undertook to complete the project utilizing the services of other contractors. The park facilities were open in January of 1976.

The original complaint in this action was filed by Stiglet, a Mississippi Corporation, against Houston General, a Texas Corporation, in the Circuit Court of Jackson County, Mississippi in December of 1977. The cause was removed to the United States District Court for the Southern District of Mississippi. Stiglet claimed payment under the performance and payment bond for labor and materials furnished Amco relative to Amco's contract with the Commission. Jurisdiction was premised upon diversity of citizenship. Holcomb Asphalt Company, Inc. intervened and filed an action against Houston General also claiming nonpayment arising out of the same contract. Houston General, in turn, filed third party claims against the project engineer and the Commission, and against Amco and others, alleging an entitlement to substantial indemnification as a result of monies expended in its efforts at completing Amco's contract with the Commission and further alleging an entitlement to various sums for part performance of the construction contract abandoned by Amco. Amco, in turn, filed a cross claim against the Commission and the project engineer. Amco alleged that the plans and specifications furnished by the Commission were defective; that the Commission, upon proper notice, failed to issue a change order, as Amco alleged was required by the contract, for unanticipated and unforeseen conditions encountered during construction on the project; that the Commission breached an implied warranty not to hinder or interfere with the performance of Amco under the contract. As a result of these alleged breaches of contract, Amco claimed that it suffered substantial financial losses and eventually became insolvent. Amco claimed one million dollars in damages. The Commission denied that it had breached its contract with Amco and further denied that Amco was entitled to any recovery whatsoever from the Commission. Additionally, the Commission claimed liquidated damages and additional completion costs for work not performed by Amco or its surety, Houston General, which Amco denied. No diversity of citizenship existed between Amco and the Commission. All the above parties have been dismissed either with or without prejudice, except the cross-plaintiff Amco and cross-defendant Commission. Therefore, the sole claim remaining in the matter is the cross claim of Amco against the Commission.

The jurisdictional statute involved here, 28 U.S.C.A. § 1332(a)(1), confers upon federal courts jurisdiction over "civil actions where the amount in controversy exceeds the sum or value of $10,000 . . . and is between . . . citizens of different states." It has long and consistently been held that diversity of citizenship must be complete. Strawbridge v. Curtis, 7 U.S. (3 Cranch.) 267, 2 L.Ed. 435 (1806). By virtue of its cross claim against the Commission, Amco occupies the status of cross-plaintiff; Amco and its cross-defendant, the Commission, are not diverse, since both are citizens of Mississippi. Hence, the doctrine of ancillary jurisdiction is the only possible basis for federal jurisdiction over Amco's cross claim. We agree with the District Court's conclusion that there was no ancillary jurisdiction here.

The cross claim between Amco and the Commission was filed pursuant to Fed.R.Civ.P. 13(g) which authorizes the pleading of "any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter . . . of the original action . . . ." Although Rule 13(g) permits appendage of cross claims to original actions, the mere filing of a claim denominated as a cross claim does not purport to settle the issue whether the claim is actually ancillary. Such a consequence would be untenable inasmuch as the Federal Rules of Civil Procedure do not create or withdraw federal jurisdiction. Fed.R.Civ.P. 82; Owen Equipment and Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 2401, 57 L.Ed.2d 274 (1978); Childress v. Cook, 245 F.2d 798,...