United States v. Heyward-Robinson

United States Court of Appeals for the Second Circuit
430 F.2d 1077 (1970)

ELI5:

Rule of Law:

Under Federal Rule of Civil Procedure 13(a), a counterclaim is compulsory and falls within the court's ancillary jurisdiction if it arises out of the same 'transaction or occurrence' as the main claim, which is determined by a broad 'logical relationship' test rather than an absolute identity of factual backgrounds.

Facts:

The Heyward-Robinson Company, Inc. (Heyward) held prime contracts for two separate construction projects: a federal government job at a Naval Submarine Base (the Navy job) and a non-federal job for Stelma, Inc. (the Stelma job).
D’Agostino Excavators, Inc. (D’Agostino) entered into two subcontracts with Heyward to perform excavation work on both the Navy and Stelma jobs.
The work on both subcontracts was of the same type and was carried on during substantially the same period.
Heyward made progress payments to D'Agostino on a lump sum basis for both jobs, as though for a single account, without allocating the funds between the two projects.
A single insurance policy obtained by D'Agostino covered its work on both jobs.
The subcontracts contained clauses allowing Heyward to terminate both contracts if D'Agostino breached either one, and to withhold payments on one job to cover damages on the other.
Heyward sent D'Agostino a single letter terminating both subcontracts simultaneously, citing alleged breaches (lapsed insurance and failure to properly man the projects) that pertained to both jobs.

Procedural Posture:

D’Agostino Excavators, Inc. sued The Heyward-Robinson Company, Inc. and its surety, Maryland Casualty Company, in the United States District Court for the District of Connecticut under the Miller Act for payments due on the Navy job.
Heyward filed an answer and counterclaims for overpayments and completion costs on both the Navy job and the non-federal Stelma job.
D’Agostino filed a reply denying liability and interposing its own counterclaim for monies due on the Stelma job.
A jury at the trial court found, in response to a special question, that Heyward had breached the subcontracts.
After D'Agostino amended its complaint to add a claim in quantum meruit, the jury determined that Heyward owed D'Agostino a net amount of $63,988.36 for both jobs.
The trial court entered judgment for D'Agostino.
The trial court denied motions by Heyward and Maryland for judgment notwithstanding the verdict and for a new trial.
Heyward (appellant) and Maryland (appellant) appealed the judgment to the United States Court of Appeals for the Second Circuit.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a federal court have ancillary jurisdiction over a counterclaim related to a non-federal contract when that counterclaim lacks an independent basis for federal jurisdiction, but is factually and logically intertwined with the plaintiff's original Miller Act claim concerning a federal contract?

Opinions:

Majority - Bryan, District Judge

Yes. A federal court has ancillary jurisdiction over a counterclaim lacking an independent jurisdictional basis if it is compulsory, and a counterclaim is compulsory if it bears a logical relationship to the primary claim. Here, the Stelma job counterclaims were compulsory because they were inextricably intertwined with the original Navy job claim. The court reasoned that the parties treated the two contracts as a single transaction, as evidenced by the unallocated lump-sum payments, the single insurance policy covering both jobs, the contractual cross-default provisions, and the simultaneous termination of both contracts for the same alleged reasons. To require separate litigation of these interwoven claims would lead to a multiplicity of suits, contrary to the purpose of Rule 13(a), which is to resolve all disputes arising out of common matters in a single lawsuit.

Concurring - Friendly, Circuit Judge

Yes, the court had jurisdiction, but not because the counterclaim was compulsory. The factual connections between the Navy and Stelma subcontracts were legally insignificant and did not arise from the same 'transaction or occurrence.' However, the court should still have jurisdiction because the conventional rule that permissive counterclaims require independent jurisdictional grounds is wrong and outdated. Citing the Supreme Court's reasoning in United Mine Workers v. Gibbs, Judge Friendly argued that for reasons of judicial economy and convenience, federal courts should be able to hear non-federal permissive counterclaims that are joined with a proper federal question claim. He would overrule prior circuit precedent to that effect, but since the majority reached the correct result, he concurred.

Analysis:

This decision significantly reinforces the broad 'logical relationship' test for determining what constitutes a compulsory counterclaim under FRCP 13(a). By focusing on the parties' course of dealing—such as commingling payments and treating separate contracts as a unified whole—the court expanded the scope of ancillary jurisdiction. The case serves as a precedent for finding a single 'transaction or occurrence' even where multiple contracts are involved, prioritizing judicial economy over a more formalistic separation of claims. Judge Friendly's concurrence is also significant, as it critiques the established doctrine on permissive counterclaims and advocates for a more expansive view of ancillary jurisdiction, foreshadowing future developments in federal civil procedure.

Gunnerbot

AI-powered case assistant

Loaded: United States v. Heyward-Robinson (1970)

Try: "What was the holding?" or "Explain the dissent"

Premium Feature