The opinion of the court was delivered by: Roszkowski, District Judge.
Before the court is the motion of Continental Illinois National
Bank and Trust Company of Chicago ("Continental"), third party
defendant, to dismiss the counterclaim filed by plaintiff,
Hyman-Michaels against Continental and, upon that dismissal, to
withdraw the counterclaim filed by Continental against
Hyman-Michaels. For the reasons herein stated, this court denies
The principal question facing this court is whether the Supreme
Court's decision in Owen Equipment & Erection Co. v. Kroger,
437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) applies to the
instant case so as to deprive this court of jurisdiction over the
third party defendant, Continental.
As might be expected, Continental contends that Owen requires
that this court dismiss the third party defendant while
Hyman-Michaels, plaintiff, contends that Owen does not mandate
This court's jurisdiction over both the main action and the
third party action is invoked pursuant to diversity jurisdiction.
28 U.S.C. § 1332(a)(1).
Continental's present motion to dismiss is founded on its
contention that because plaintiff, Hyman-Michaels, and
third-party defendant, Continental, are both citizens of Illinois
for purposes of diversity jurisdiction, the complete diversity
requirement is not met and, therefore, under Owens this court
lacks jurisdiction over the third-party defendant.
The instant case is not, on its facts, identical to Owen v.
Kroger. Consequently, this court is required to decide whether
Owen is meant to extend to the circumstances in this case.
In Owen, plaintiff, an Iowa citizen brought suit in federal
court against defendant, the Omaha Public Power District (OPPD),
a Nebraska corporation under diversity jurisdiction. Thereafter,
defendant, OPPD, filed a third party complaint pursuant to
Fed.R.Civ.P. 14(a) against Owen Equipment and Erection Company
(Owen), a Nebraska corporation with its principal place of
business in Iowa. Subsequently, plaintiff Kroger filed an amended
complaint naming Owen as an additional defendant.
It was the filing of this amended complaint, in which the Iowa
plaintiff brought in as a co-defendant, a corporation with its
principal place of business in Iowa, which was found to defeat
the complete diversity requirement of 28 U.S.C. § 1332(a)(1). The
Court in Owen held that, where complete diversity was lacking
between all the plaintiffs and all the defendants and no other
independent basis for federal jurisdiction existed, the doctrine
of ancillary jurisdiction did not vest the federal court with
jurisdiction. To hold otherwise, reasoned the Court, would defeat
the statutory requirement of complete diversity.
Thus it is clear that the respondent could not
originally have brought suit in federal court naming
Owen and OPPD as codefendants, since citizens of Iowa
would have been on both sides of the litigation. Yet
the identical lawsuit resulted when she amended her
complaint. Complete diversity was destroyed just as
surely as if she had sued Owen initially. In either
situation, in the plain language of the statute, the
"matter in controversy" could not be "between . . .
citizens of different states."
It is a fundamental precept that federal courts are
courts of limited jurisdiction. The limits upon
federal jurisdiction, whether imposed by the
Constitution or by Congress, must be neither
disregarded nor evaded. Yet . . . a plaintiff could
defeat the statutory requirement of complete
diversity by the simple expedient of suing only those
defendants who were of diverse citizenship and
waiting for them to implead nondiverse defendants.
In the present case, the plaintiff, Hyman-Michaels, an Illinois
corporation brought suit in federal court against defendant Swiss
Bank, a Switzerland corporation, under diversity jurisdiction.
Thereafter, Swiss Bank filed a third-party complaint pursuant to
Fed.R.Civ.P. 14(a) ...