OPINION OF THE COURT
GARTH, Circuit Judge.
This appeal initially presented a jurisdictional question arising out of an action brought by the plaintiff subcontractor (Fairview) against its general contractor (Monzo) and a Pennsylvania municipal authority (Robinson Township) for which the construction work in issue was being performed.
Fairview Park Excavating Co., Inc., the plaintiff/appellee, is an Ohio corporation which as a subcontractor provided labor and materials under certain construction contracts for Robinson Township. Al Monzo Construction Company, Inc., a defendant and the appellant in this Court, is a Pennsylvania corporation, which acted as general contractor to Robinson Township. Robinson Township Municipal Authority, the defendant/appellee, is a "citizen" of Pennsylvania. Maryland Casualty Co., a defendant/appellant, is a Maryland corporation which became a surety on Monzo's bond guaranteeing payment to subcontractors, laborers and materialmen.
Fairview completed its work as subcontractor but did not receive payment. Fairview then filed a diversity action in the United States District Court for the Western District of Pennsylvania — joining Monzo, Maryland Casualty and the Township as defendants.
The Township denied any liability to Fairview, claiming that Fairview was not in
Monzo and Maryland Casualty, replying together, denied liability, counterclaimed against Fairview,
On the first day of trial, however, the district court granted the Township's motion that Fairview's complaint against it be dismissed. The district court subsequently explained the basis for its dismissal of the Township as a defendant as follows:
With the Township no longer a "defendant" in Fairview's suit, its only remaining connection to the case was provided by Monzo's cross-claim. However, even this connection was short-lived. On the same date, March 16, 1976, the district court dismissed Monzo's cross-claim because of an absence of diversity between the two parties. In its Memorandum Opinion of June 1, 1976, the district court stated: "The various disputes between Monzo and Robinson were not properly before us and are, in fact, matters for state court jurisdiction, there being no diversity of citizenship between these parties."
At this juncture, only Fairview's claim against Monzo was left. After trial, judgment was entered for Fairview. Defendants Monzo and Maryland Casualty thereafter filed a "Motion for a New Trial." On June 2, 1976, the district court dismissed that motion, and the defendants filed a timely notice of appeal. See F.R.App.P. 4(a).
The primary complaint voiced by Monzo on this appeal is that the district court erred in dismissing its cross-claim against the Township on jurisdictional grounds. Monzo contends that, having once acquired jurisdiction over the Township as a defendant to its cross-claim, it could not be divested of jurisdiction by the Township's dismissal as a primary defendant to the plaintiff Fairview's claim if that dismissal was predicated (as it was) on nonjurisdictional grounds.
However, reliance on that proposition affords little comfort to the Township, for here the original claim was dismissed on nonjurisdictional rather than jurisdictional grounds. As indicated earlier, the district court judge properly held that under Pennsylvania law an absence of contractual privity between the plaintiff and the Township was fatal to Fairview's cause of action. City of Philadelphia v. National Surety Corp., 140 F.2d 805, 807 (3d Cir. 1944).
The basis for the distinction between jurisdictional and nonjurisdictional dismissals is readily apparent. If a federal court dismisses a plaintiff's claim for lack of subject matter jurisdiction, any cross-claims dependent upon ancillary jurisdiction must necessarily fall as well, because it is the plaintiff's claim — to which the cross-claim is ancillary — that provides the derivative source of jurisdiction for the cross-claim. Deviation from this rule would work an impermissible expansion of federal subject matter jurisdiction. Yet by the same token, once a district court judge has properly permitted a cross-claim under F.R.Civ.P. 13(g), as was the case here, the ancillary jurisdiction that results should not be defeated by a decision on the merits adverse to the plaintiff on the plaintiff's primary claim. As Judge Aldrich has stated:
Atlantic Corp. v. United States, 311 F.2d 907, 910 (1st Cir. 1963) (citations omitted); see Parris v. St. Johnsbury Trucking Co., 395 F.2d 543, 544 (2d Cir. 1968) (reviewing decision on cross-claim between co-citizen defendants although plaintiff's diversity claim had been settled during trial); Barker v. Louisiana & Arkansas Ry. Co., 57 F.R.D. 489, 491 (W.D.La.1972). The contrary rule, which the Township urges here, would operate to make subject matter jurisdiction over every ancillary cross-claim dependent upon that claim's being resolved prior to the plaintiff's primary action. (Otherwise a judgment on the merits adverse to the plaintiff would drain the cross-claim of jurisdiction in every instance, a completely indefensible result.) Given that cross-claims necessarily involve co-defendants, Danner v. Anskis, 256 F.2d 123, 124 (3d Cir. 1958), a rule which would restrict the duration of federal court jurisdiction over cross-claims to the pendency of plaintiff's primary claim would be untenable: in many cases, cross-claims need not be heard until plaintiff has obtained a judgment on the merits. To permit the raising of a threat of a dismissal for want of jurisdiction at that point would destroy cross-claims otherwise properly maintainable by virtue of ancillary jurisdiction.
Hence, as this Court previously held in Aetna Insurance Co. v. Newton, 398 F.2d 729, 734 (3d Cir. 1968):
The Frommeyer case cited in Aetna seems strikingly similar to the present one. The
As noted, Frommeyer's conclusion was adopted by this Court in Aetna Insurance Co. v. Newton, supra, and controls here.
Our conclusion that the district court should not have dismissed appellants' cross-claim would normally require a remand for the purpose of a trial on the merits of that claim.
We requested counsel to submit a certified copy of the state court judgment. The docket entries for Al Monzo Construction Co. v. The Municipal Authority of the Township of Robinson, GD 76-9359 (Allegheny Co.Ct.C.P. November 29, 1976), reveal that Monzo's complaint against the Township was filed April 30, 1976; that Monzo moved for summary judgment on October 5, 1976; and that summary judgment in favor of Monzo was granted on November 29, 1976, in the amount of $102,589.32 — precisely the amount claimed in appellants' counterclaim against the same party, Robinson Township.
In light of this disclosure, it would accomplish nothing to remand this case to the district court for that court's determination as to whether it should award what would necessarily amount to duplicative relief for
The district court's dismissal of appellants' cross-claim must therefore be affirmed, not because the cross-claim lacked an independent basis of federal subject matter jurisdiction, but because the cross-claim has become moot.
We have determined that the district court should not have dismissed appellants' cross-claim. However, we have also concluded that by reason of the state court events which have occurred since the district court's disposition of this issue, the case must be dismissed as moot.
The order of the district court dismissing Monzo's cross-claim will therefore be affirmed.
GIBBONS, Circuit Judge, dissenting from the judgment.
This appeal became moot by virtue of the final judgment of a state court involving the same cause of action. The only proper disposition is to dismiss it. While I do not disagree with the majority's indicating that Frommeyer v. L. & R. Construction Co., Inc., 139 F.Supp. 579, 585-86 (D.N.J.1956) is a correct statement of the law, I would not undertake to decide the question in a case which has become moot.
For other expressions of the rule set forth in our Aetna Insurance decision, see 3 J. Moore, note 7 supra, ¶ 13.36, at 928-29 ("In the compulsory counterclaim cases, . . . where the original bill was dismissed on the merits or the opposing party did not proceed to hearing on his bill jurisdiction over the counterclaim was sustained even though independent jurisdictional facts did not exist for its support. These same principles should apply to sustain jurisdiction over the cross-claim under similar circumstances, even though the cross-claim is permissive, since there is jurisdiction over the main action and the cross-claim is auxiliary or related to the main action"); 6 Wright & Miller, note 7 supra, § 1433, at 181 ("several courts have held that if the main action is terminated on nonjurisdictional grounds, then the court may continue to hear the cross-claim even though it does not satisfy the requirements for federal subject matter jurisdiction").
In addition, in light of the basis for our decision, and particularly because it is clearly evident from the district court's Memorandum Opinion of June 1, 1976 that the dismissal of the cross-claim was viewed as being mandated by law rather than as a discretionary disposition, we do not find it necessary to discuss any discretionary basis for the district court's dismissal of Monzo's cross-claim.