duty which CNB owed to Brandt in selling the stock. Although
the Settlement Agreement and the stock sale were separate in
time, they were both designed to achieve the same end; to
dispose of the stock and satisfy Brandt's obligations to CNB.
We conclude that Brandt's cross-claim and the interpleader
action both arose from the same transaction or occurrence
within the meaning of Rule 13(g), and that the cross-claim is
within the ancillary jurisdiction of this Court.
Moreover, this is a case in which the exercise of ancillary
jurisdiction is appropriate. Brandt's cross-claim has been in
the federal courts for four years. During this time the
cross-claim has been subject to repeated interpretation by
this Court and the Court of Appeals for the Seventh
Circuit.*fn3 It is surely in the interest of fairness to the
litigants that this Court retain jurisdiction of the
cross-claim. Although the Court might very well have declined
to exercise jurisdiction over the cross-claim if the issue had
been raised earlier in this litigation, it would be unfair to
refuse to do so at this late date after the expenditure of
considerable judicial time and resources.
Accordingly, CNB's motion to dismiss the cross-claim for
lack of subject matter jurisdiction is denied. The parties
shall complete discovery and file their pretrial order in
accordance with this Court's previous order. It is so ordered.
ON MOTION TO RECONSIDER
This matter is presently before the Court on cross-claim
defendant Central National Bank's ("CNB") motion to reconsider
this Court's Memorandum Opinion and Order of June 24, 1982. In
that opinion, we held that the Federal Interpleader Act,
28 U.S.C. § 1335, does not provide subject matter jurisdiction
over Count I of cross-claim plaintiff William A. Brandt's
("Brandt") cross-claim for breach of duty, but that the
cross-claim was within the ancillary jurisdiction of this
We did not hold, however, that Federal Rule of Civil
Procedure 13(g)[fn1a] confers jurisdiction over the
cross-claim independent of a statutory grant of jurisdiction.
Jurisdiction to hear a cross-claim under Rule 13(g) falls
within the ancillary jurisdiction of a court; the cross-claim
itself need not present independent grounds of federal
jurisdiction. McDonald v. Oliver, 642 F.2d 169, 172 (5th Cir.
1981); Dow Corning Corp. v. Schpak, 65 F.R.D. 71, 72 (N.D.Ill.
1974). Continental Illinois National Bank and Trust Co.
initiated this lawsuit by filing a statutory interpleader
action against CNB, Brandt and R.L. Burns Corp. Jurisdiction
was asserted pursuant to 28 U.S.C. § 1335, for two or more
adverse claimants were of diverse citizenship and the amount in
controversy exceeded $500. Our opinion of June 24, 1982, held
that Count I of the cross-claim arose out of the same
transaction or occurrence as was involved in the original
interpleader action. That original action was properly brought
pursuant to 28 U.S.C. § 1335. Thus, under Rule 13(g), the
cross-claim is within the ancillary jurisdiction of this Court
and should not be dismissed. "[A]ncillary jurisdiction will
sustain jurisdiction over a cross-claim pled as part of an
interpleader suit if the requirements of Federal Rule of Civil
Procedure 13(g) are met." Cherokee0. Insurance Co. v. Koenenn,
536 F.2d 585, 588 (5th Cir. 1976). The fact that Count II of
Brandt's cross-claim, as well as all other claims to the escrow
fund which was the
basis for this litigation, have been fully settled, does not
require a different result.[fn2a]
Therefore, for the above-stated reasons, CNB's motion for
reconsideration is denied. It is so ordered.