Source: https://casetext.com/case/air-liquide-america
Timestamp: 2019-04-21 10:57:50+00:00

Document:
Air Liquide America, L.P. v. Process Service Corp.
Air Liquide America, L.P.v.Process Service Corp.
Before the Court is a Motion to Review and Reverse Magistrate Judge Knowles' Order (Rec. Doc. 17) filed by plaintiff Air Liquide America L.P. ("Air Liquide"). Having reviewed the pleadings, memoranda, and relevant law, the Court DENIES plaintiff's motion as meritless.
Plaintiff Air Liquide, a Delaware limited partnership with its principal place of business in Houston, Texas, filed the instant matter seeking declaratory judgment against defendant Process Service Corporation ("PSC"), a Louisiana corporation with its principal place of business in Baton Rouge, Louisiana. This suit, which arises out of the sale and purchase of carbide lime, was filed on December 23, 2002 in the Eastern District of Louisiana. The original Complaint (Rec. Doc. 1) seeks a declaration of rights and obligations of the parties under the agreement and, more particularly, judgment finding that PSC breached the agreement and that Air Liquide properly terminated it. Jurisdiction of the main claim is based on 28 U.S.C. § 1332 complete diversity.
PSC waived service of process on August 4, 2003, and filed an answer and counter-claim against Air Liquide, together with a Rule 13(h) third party counterclaim against Frank Whittington, an Air Liquide employee, on August 8, 2003. ( See Rec. Docs. 8 9). Five days later, PSC filed a Motion for Leave to Add Third Party Defendant in Counter-Claim (Rec. Doc. 10). Magistrate Judge Knowles granted that motion in an Order and Reasons signed September 30, 2003 (Rec. Doc. 15). On October 10, 2003, plaintiff Air Liquide filed the instant Motion to Review and Reverse Magistrate Judge Knowles' Order (Rec. Doc. 17), which this Court heard on December 10, 2003.
PSC's allegations against Whittington include that he personally made material misrepresentations to PSC during the negotiation process and actively engaged in conduct thereafter, which prevented PSC from meeting its obligations under the relevant purchase and sale agreement. The parties apparently dispute whether Whittington's alleged illicit acts occurred during the course and scope of his former employment with Air Liquide. Air Liquide does not, however, dispute that PSC's counterclaim is compulsory and would be deemed waived if not pled. Nonetheless, Air Liquide opposes the Rule 13(h) joinder of Whittington, citing 28 U.S.C. § 1367(b) as authority prohibiting such an action and arguing that the addition of Whittington as a counterclaim defendant pursuant to Rule 13(h) destroys complete diversity and Whittington is not amenable to joinder.
Pursuant to Federal Rule of Civil Procedure 72 and Local Rule 72(a), plaintiff Air Liquide requests that this Court review and reverse Magistrate Judge Knowles' Order and Reasons. Air Liquide contends that Magistrate Judge Knowles' decision to grant PSC's Motion for Leave to Amend was clearly erroneous and contrary to law under Federal Rule of Civil Procedure 19 and 2S U.S.C. § 1367(b). The Court disagrees and upholds Magistrate Judge Knowles' ruling. Plaintiff has not met its burden under Rule 72.
(4) whether there is any logical relationship between the claim and the counterclaim. An affirmative answer to any of the four questions indicates the claim is compulsory.
Id. at 483 n. 2 (citing Park Club, Inc. v. Resolution Trust Corp., 967 F.2d 1053, 1058 (5th Cir. 1992; Plant v. Blazer Fin. Servs., 598 F.2d 1357, 1360 (5th Cir. 1979). In the instant case, PSC's counterclaims against both Air Liquide and Whittington are, as Magistrate Judge Knowles observed, "inextricably intertwined with and related to the main claim." Whittington was employed by plaintiff and his alleged improper activities pertained to the purchase/sale agreement around which this entire litigation centers. Thus, PSC third party counterclaims clearly satisfy the Nautronix compulsory counterclaim standard.
As this Court has stated previously, "[i]t is well-settled that a compulsory counterclaim under Fed. Rule Civ. P. 13(a) is within the ancillary jurisdiction of a district court because it necessarily arises out of the same transaction or occurrence as the original claim." Transitional Hospitals Corp. of Louisiana v. DEL North American, Inc., 2002 WL 27767, *2 (E.D. La. 2002); see also Zurn Industries, Inc. v. Acton Construction Co., 847 F.2d 234, 236 (5th Cir. 1988); Revere Copper and Brass Inc. v. Aetna Casualty and Surety Co., 426 F.2d 709, 714 (5th Cir.1970); Wright, Miller Kane, Federal Practice and Procedure: § 1414 at 99. Rule 13(h) provides that "[p]ersons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20." Fed.R.Civ.Pro. 13(h). The addition of non-diverse third parties whose presence is required for the adjudication of the counterclaim does not oust the court of jurisdiction. Wright Miller, § 1414 at 108 (citing H.L. Peterson Co. v. Applewhite, 383 F.2d 430 (5th Cir. 1967)); see also Zurn Industries, 847 F.2d at 237.
28 U.S.C. § 1367(b) (emphasis added).
Whether the court has ancillary jurisdiction over the claim or the party depends on the type of claim or party. If the claim is a compulsory counterclaim, Fed.R.Civ.P. 13(a), a cross-claim, Fed.R.Civ.P. 13(g), or if the party is added pursuant to a counterclaim or cross-claim, Fed.R.Civ.P. 13(h), or impleaded, Fed.R.Civ.P. 14, the court has ancillary jurisdiction over the claim or party even in the absence of an independent basis for federal jurisdiction.
Zurn Industries, 847 F.2d at 237.
In the instant matter, the Court has original jurisdiction based on 28 U.S.C. § 1332 diversity over Air Liquide's claims against PSC. PSC's claims against Air Liquide, as well as defendant's claims against Whittington, arise out of the same case or controversy as Air Liquide's original suit against PSC. The mandatory supplemental jurisdiction exceptions of 28 U.S.C. § 1367 (b) do not apply to PSC's claims as Rule 13(h) is excluded from the rules listed prohibiting joinder without an independent basis of jurisdiction. Moreover, subsection (b) only deprives claims brought by plaintiffs of supplemental jurisdiction. Accordingly, this Court has jurisdiction to hear PSC's claims against Air Liquide and Whittington and the Magistrate Judge's grant of leave to amend was therefore proper.
(a) Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (I) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
Fed.R.Civ.Pro. 19(a). Plaintiff's brief highlights the portion of Rule 19(a) restricting joinder to parties "whose joinder will not deprive the court of jurisdiction" and argues that Whittington's joinder is not allowed pursuant to 28 U.S.C. § 1367. Having held, supra, that supplemental jurisdiction applies to PSC's counterclaims despite Whittington's non-diverse status, this Court further finds that joinder was proper.
For reasons discussed above, this Court holds that Magistrate Judge Knowles' Order and Reasons granting leave to amend comports with the applicable law. Plaintiff has failed to meet its burden in challenging the Magistrate Judge's ruling. Accordingly.
IT IS ORDERED that Magistrate Judge Knowles' Order and Reasons signed September 30, 2003 (Rec. Doc. 15), is hereby AFFIRMED and plaintiff Air Liquide's Motion to Review and Reverse Magistrate Judge Knowles' Order (Rec. Doc. 17) is hereby DENIED.

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