## Facts

- Guaranteed Systems, Inc., a North Carolina corporation, sued American National Can Company, a Delaware corporation, for nonpayment for construction work at a facility in Forest Park, Georgia.
- American National Can removed the action to federal court based solely on diversity jurisdiction under 28 U.S.C. § 1332(a).
- American National Can filed a counterclaim alleging, among other things, negligent performance by Guaranteed Systems.
- Guaranteed Systems, as third-party plaintiff, impleaded R.K. Elite-HydroVac Services, Inc. under Federal Rule of Civil Procedure 14(b), seeking indemnity and contribution for any liability to American National Can on the counterclaim.
- HydroVac was not diverse from Guaranteed Systems (both were North Carolina citizens).
- HydroVac moved to dismiss the third-party complaint for lack of supplemental jurisdiction, relying on 28 U.S.C. § 1367(b).

## Issues

1. In an action in federal court solely on diversity jurisdiction, does 28 U.S.C. § 1367(b) bar supplemental jurisdiction over an indemnity and contribution claim brought by the original plaintiff under Rule 14(b) against a nondiverse third-party defendant?
2. For § 1367(b) purposes, is the party that initiated the lawsuit a “plaintiff” even when it impleads a third party in response to a defendant’s counterclaim?

## Decision

- The court granted HydroVac’s motion to dismiss the third-party complaint for lack of subject-matter jurisdiction.
- Although the third-party claims arose from the same case or controversy as the counterclaim and original dispute under § 1367(a), § 1367(b) withdrew supplemental jurisdiction in this diversity-only action.
- The court treated Guaranteed Systems as a “plaintiff” within the meaning of § 1367(b) because it initiated the lawsuit, and its Rule 14(b) impleader was a claim by a plaintiff against a person made a party under Rule 14.
- Because HydroVac was nondiverse from Guaranteed Systems, exercising jurisdiction over the third-party claim would be inconsistent with § 1332’s complete-diversity requirement.
- The dismissal applied only to the third-party action; the primary claims and counterclaim remained in federal court.

## Legal Principles

- Section 1367(a) authorizes supplemental jurisdiction over related claims forming part of the same Article III case or controversy, but § 1367(b) limits that grant when original jurisdiction rests solely on diversity.
- In diversity-only cases, § 1367(b) bars supplemental jurisdiction over claims by plaintiffs against persons made parties under Rules 14, 19, 20, or 24 when jurisdiction would be inconsistent with § 1332.
- For § 1367(b), “plaintiff” refers to the party that commenced the action, even if that party later asserts a third-party claim in response to a counterclaim.
- Relatedness and case-management efficiency do not permit a federal court to exercise supplemental jurisdiction where Congress has withdrawn it by statute.

## Conclusion

The court dismissed the original plaintiff’s Rule 14(b) indemnity and contribution claim against a nondiverse third-party defendant because, in a diversity-only action, § 1367(b) bars supplemental jurisdiction over such plaintiff-initiated impleader claims when they would defeat complete diversity under § 1332.


Guaranteed Sys., Inc. v. Am. Nat’l Can Co., 842 F. Supp. 855 (M.D.N.C. 1994)