## Facts

- The City of Memphis contracted with Southern Builders, Inc. to construct a new city hall, backed by a performance bond from Continental Casualty Company.
- Southern subcontracted with Alexander Marble and Tile Company to install marble on the project.
- Alexander contracted with LASA, an Italian marble supplier, to furnish the marble required for Alexander’s work.
- LASA sued Alexander, Southern, Continental, and the City to recover an unpaid balance for marble and related performance, invoking federal diversity jurisdiction.
- Alexander counterclaimed against LASA for alleged breach, including late shipments, damaged or substandard marble, and pricing disputes.
- Southern and Continental counterclaimed against LASA, alleging LASA failed to ship in accordance with contractual requirements and seeking damages.
- Alexander asserted cross-claims against Southern, Continental, and the City concerning responsibility and amounts allegedly due under the subcontract and project-related losses.
- Southern asserted a cross-claim against Alexander seeking unliquidated damages for delay, faulty materials/workmanship, and failure to meet specifications.
- Alexander filed a third-party complaint against the project architects (A. L. Aydelott and his firm), alleging they induced breach of the subcontract, caused Alexander’s removal from the job, and injured its business reputation (including claims for punitive damages under Tennessee law).
- The district court recharacterized certain pleadings and dismissed the cross-claims and the architect-related complaint on rule-based and jurisdictional grounds.

## Issues

1. Whether the cross-claims between co-defendants satisfied Rule 13(g) by arising out of the same “transaction or occurrence” as the original action.
2. Whether additional parties could be joined to the cross-claims under Rule 13(h) (through Rules 19 and 20) without an independent jurisdictional basis.
3. Whether the architect-related claims, styled as a third-party complaint, were sufficiently related to the main controversy to be heard in the same action.
4. Whether ancillary jurisdiction permitted adjudication of these related claims in a diversity case despite lack of separate subject-matter jurisdiction for each added claim or party.

## Decision

- The Sixth Circuit reversed the district court’s dismissal of Alexander’s cross-claims, Southern’s cross-claim, and the architect-related complaint.
- The court held the claims were part of a single construction-project controversy and met Rule 13(g)’s “transaction or occurrence” standard.
- The court held that ancillary jurisdiction extended to these related claims and supported joinder of additional parties under Rule 13(h) when Rules 19 or 20 were satisfied.
- The case was remanded with the dismissed claims reinstated for further proceedings.

## Legal Principles

- Rule 13(g) is construed broadly; a cross-claim may be permitted when it is logically related to, and centered on the same aggregate of operative facts as, the original action.
- In complex, interrelated disputes arising from a single project, multiple contracts and alleged breaches may be treated as one series of transactions or occurrences for Rule 13(g) purposes.
- Ancillary jurisdiction (a predecessor concept to modern supplemental jurisdiction) permits a federal court to hear related cross-claims and third-party-type claims that form part of the same case, even if those claims lack an independent jurisdictional basis.
- Rule 13(h) permits joinder of additional parties to cross-claims in accordance with Rules 19 and 20; when the cross-claim arises from the same core events, the added parties need not independently satisfy diversity or another separate jurisdictional grant.
- Federal joinder rules favor resolving interdependent disputes in one action to reduce duplicative litigation and inconsistent outcomes.

## Conclusion

The Sixth Circuit required the federal court to proceed with the interconnected cross-claims and architect-related claims because they arose from the same construction-project transactions as the original dispute and fell within ancillary jurisdiction under the Federal Rules’ joinder framework.


LASA Per L’Industria Del Marmo Società Per Azioni v. Alexander, 414 F.2d 143 (6th Cir. 1969)