## Facts

- A three-truck collision in Texas involved: (1) a truck driven by William C. Fancher and owned by Petro-Fina Company of Texas, (2) a truck driven by Ray Scott, and (3) a truck driven by E. F. Short, who died in the accident.
- Fancher (Texas citizen) was seriously injured; Scott (Oklahoma citizen) suffered minor injuries; Short (Oklahoma citizen) died.
- Short’s estate first filed a wrongful-death action in Oklahoma state court against Fancher, Petro-Fina, and Scott.
- Fancher and Petro-Fina then filed a negligence action in federal court in Texas against Scott and Short’s estate, invoking diversity jurisdiction; complete diversity existed at filing (Texas plaintiffs vs. Oklahoma defendants).
- In the federal action, Scott asserted counterclaims against Fancher and Petro-Fina.
- Short’s estate asserted counterclaims against Fancher and Petro-Fina and a cross-claim against Scott; all claims arose from the same collision.
- A jury verdict was entered against Scott, and Scott appealed solely on subject-matter jurisdiction grounds.

## Issues

1. Whether a federal court with original diversity jurisdiction over the main negligence action may exercise ancillary jurisdiction over a cross-claim between codefendants arising from the same accident without an independent jurisdictional basis.
2. Whether party realignment was required such that complete diversity would be destroyed.
3. Whether the characterization of a counterclaim as compulsory or permissive affects jurisdiction where the counterclaim arises from the same transaction or occurrence as the main action.

## Decision

- The Fifth Circuit affirmed the district court’s judgment.
- The district court had original diversity jurisdiction over the action as filed because plaintiffs were Texas citizens and defendants were Oklahoma citizens.
- The court could adjudicate the counterclaims and the cross-claim under ancillary jurisdiction because they arose from the same collision and were part of a single controversy.
- Realignment was not warranted because the parties’ interests were not identical; plausible negligence theories created genuine adversity among the drivers and the estate.
- The compulsory/permissive label for the estate’s counterclaim did not defeat jurisdiction because the claim was sufficiently connected to the core accident-based dispute to fall within ancillary jurisdiction.

## Legal Principles

- Diversity jurisdiction is assessed based on the parties’ citizenship at the time the complaint is filed; complete diversity at filing supports jurisdiction under 28 U.S.C. § 1332.
- When original diversity jurisdiction exists over the primary claim, a federal court may exercise ancillary jurisdiction over related counterclaims and cross-claims arising from the same transaction or occurrence, even if those related claims would not independently satisfy jurisdictional requirements.
- Realignment for jurisdictional purposes depends on the parties’ actual interests in the primary dispute; where parties may be adverse under plausible liability theories, realignment is improper.
- In an accident-based unitary controversy, related counterclaims and cross-claims may be resolved together in federal court without requiring separate jurisdictional grounds for each claim.

## Conclusion

The Fifth Circuit held that the federal court properly retained diversity jurisdiction over the case as filed and could resolve all accident-related counterclaims and cross-claims under ancillary jurisdiction, rejecting realignment arguments that would have eliminated complete diversity.


Scott v. Fancher, 369 F.2d 842 (5th Cir. 1966)