## Facts

- A subcontractor, D’Agostino Excavators, Inc., performed excavation work for a prime contractor, The Heyward-Robinson Company, Inc., on two Connecticut projects.
- One project was a federal construction job for the United States Navy; the other was a private construction job for a non-federal owner.
- The parties executed two separate subcontracts, but administered them as a coordinated undertaking, including lump-sum progress payments covering both jobs.
- The subcontracts and performance were operationally linked through shared insurance coverage and cross-default/cross-termination arrangements.
- D’Agostino alleged Heyward failed to make required progress payments, constituting a material breach of both subcontracts.
- Heyward alleged D’Agostino allowed required insurance to lapse, justifying Heyward’s termination of both subcontracts on October 19, 1965.
- D’Agostino sued under the Miller Act to recover amounts allegedly due on the federal Navy job; Heyward and its surety opposed liability.
- Heyward asserted counterclaims seeking alleged overpayments and completion costs on both the Navy job and the private job; D’Agostino asserted a reply counterclaim seeking amounts allegedly due on the private job.
- The case was tried with both subcontracts treated together; the jury found Heyward breached both subcontracts before October 19, 1965.
- The district court allowed amendment of the pleadings to conform to the proof and entered judgment awarding recovery on both the federal and private job claims (the federal award including recovery on the bond).

## Issues

1. Whether the private-project counterclaims and reply counterclaim arose out of the same transaction or occurrence as the Miller Act claim, making them compulsory under Federal Rule of Civil Procedure 13(a) and within ancillary jurisdiction absent an independent jurisdictional basis.
2. Whether asserted trial errors (evidentiary rulings, jury instructions, amendment of pleadings, and denial of a jury poll) required reversal.

## Decision

- The Second Circuit affirmed the judgment.
- The court held the private-project claims were compulsory counterclaims because they were logically related to the Miller Act claim, supporting ancillary jurisdiction.
- The court rejected the asserted trial-management errors, finding no reversible error and concluding the verdict was supported by the evidence.

## Legal Principles

- A counterclaim is compulsory under Rule 13(a) if it bears a “logical relationship” to the opposing party’s claim; identical facts are not required.
- When a counterclaim is compulsory, the federal court may exercise ancillary jurisdiction over it even if the counterclaim lacks an independent basis for federal subject-matter jurisdiction.
- Interrelated contracts may satisfy Rule 13(a) where the parties’ dealings and alleged breaches form an integrated dispute (e.g., pooled payments, shared insurance, cross-default provisions, and mirrored breach theories).
- Evidentiary and instructional challenges generally do not warrant reversal absent prejudice, proper preservation, and a showing that substantial rights were affected.
- A trial court may permit amendment of pleadings to conform to the proof when doing so does not unfairly prejudice the opposing party.

## Conclusion

The court held that claims arising from a private subcontract were sufficiently connected to a Miller Act dispute to qualify as compulsory counterclaims under the “logical relationship” test, permitting resolution of all interdependent claims in a single federal action through ancillary jurisdiction, and it affirmed the trial result against challenges to the court’s trial rulings.


United States v. Heyward-Robinson Co., 430 F.2d 1077 (2d Cir. 1970)