A "transaction" may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship. The words "transaction or occurrence" are given a broad and liberal interpretation in order to avoid a multiplicity of suits.
The supplier filed a complaint against a contractor, subcontractor, architect, and surety, for payment of marble used in a building. The prime contractor counterclaimed and the architect and others filed cross-claims against the supplier. The lower court dismissed the counterclaims and cross-claims for want of ancillary jurisdiction under Fed. R. Civ. P. 13(g-h). The contractor, subcontractor, architect, and surety appealed the case to the United States Court of Appeals for the Sixth Circuit.
Was the dismissal of the counterclaims and cross-claims proper?
The court held that the lower court erred when it dismissed the cross-claims and counterclaims for want of ancillary jurisdiction under Fed. R. Civ. P. 13(g-h). The court held that the pleadings showed a logical relationship between the cross-claims and the transaction or occurrence that was the subject matter of the complaint and the two pending counterclaims. The contracts all related to the same project and to problems that arose from the marble used in the building. The question presented by the various pleadings was who was responsible for the marble problems. The court held that the same or closely related factual and legal issues were involved and some of the same evidence was required for the resolution of all the claims. The court held the lower court had the option to order separate trials on one or more of the counterclaims, cross-claims or issues pursuant to Fed. R. Civ. P. 42(b), if the issues got confusing. The case was remanded.