The opinion of the court was delivered by: QUACKENBUSH
MEMORANDUM OPINION RE: MOTION TO DISMISS THIRD PARTY COMPLAINT.
The Plaintiff, United States of America, has initiated the above entitled action as assignor of the SEATTLE-FIRST NATIONAL BANK, the payee on a Small Business Administration note. (See Paragraph XVI of the Complaint on file herein).
The action against Pacific American Marine Corporation is based upon the execution of a Promissory Note to SEATTLE-FIRST NATIONAL BANK on December 16, 1970. The Defendant, HELEN I. HENRY, a widow, is named as a party defendant, individually and as Executrix of the Estate of her late husband, Everett G. Henry, by reason of their execution of a gratuitous personal guaranty of the above indicated Promissory Note. In her Answer to the Complaint, the Defendant, HELEN I. HENRY, has affirmatively alleged as a defense to this action the alleged failure of the Plaintiff's assignor, the SEATTLE-FIRST NATIONAL BANK, to properly protect and pursue the collateral which was security for the principal loan to PIONEER LUMBER TREATING COMPANY, the corporation owned by MRS. HENRY'S son, Arthur S. Henry. The Plaintiff, United States of America, even though it is the assignee of the Note in question, contends that the affirmative defenses raised by HELEN I. HENRY, a widow, against the Government's assignor, the SEATTLE-FIRST NATIONAL BANK, are not valid as against the action brought by the United States of America. The Court has not been called upon to rule on this contention of the Government.
Based upon the foregoing position by the United States of America, the Defendant, HELEN I. HENRY, filed a Third Party Complaint under Rule 14 of the Federal Rules of Civil Procedure against the SEATTLE-FIRST NATIONAL BANK, the assignor of the Plaintiff, United States of America.
Said Third Party Complaint alleges as a factual basis therefore, the same matters set forth in HELEN I. HENRY'S Affirmative Defense to the Government's Complaint, to-wit: failure of the SEATTLE-FIRST NATIONAL BANK to properly protect and pursue the collateral which was the security for the loan in question.
The Court finds that Defendant HENRY'S Third Party Complaint against the SEATTLE-FIRST NATIONAL BANK raises issues of ancillary jurisdiction and third party practice under Rule 14 of the Rules of Civil Procedure for the United States District Courts rather than a question of pendent jurisdiction as referred to in the Magistrate's Report and Recommendation.
Pendent jurisdiction, while closely related, or a part of ancillary jurisdiction as a general concept, is to be distinguished from ancillary jurisdiction as applied to Rule 14. Pendent jurisdiction is generally applied in a case where a plaintiff seeks to join a state claim with a federal claim against the same defendant. It is recognized that a claim of pendent jurisdiction cannot be used by a plaintiff to join additional parties under the state claim. Libby McNeill and Libby v. City National Bank, 592 F.2d 504, 510 (CA9, 1979). Ancillary jurisdiction on the other hand, is the expanded principle which allows a defendant, pursuant to Rule 14 of the Federal Rules of Civil Procedure, to bring in additional parties whereby all claims arising out of the same transaction or occurrence may be resolved in a single action, thereby avoiding a multiplicity of suits. Impleader of a third party defendant under Rule 14 falls within ancillary jurisdiction. 13 Wright, Miller & Cooper's Federal Practice and Procedure § 3523 at 67, 71 (1975).
The distinction between pendent jurisdiction and ancillary jurisdiction is clearly set forth in Jacobs v. United States, 367 F. Supp. 1275 (Dist. of Arizona, 1973) where at page 1277, Judge Copple in discussing Wright and Miller, stated as follows:
" "The pendent jurisdiction concept applies only where the same parties are involved on the state and federal claims. It does not permit bringing in an additional party to respond to a state claim on the ground that that claim is closely related to the federal claim against an existing party.'
C. Wright Handbook of the Law of Federal Courts § 19, at 65 (2d ed. 1970). It is true that a doctrine of "pendent parties' has been suggested since United Mine Workers v. Gibbs, 383 U.S. 715, 722, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966). Note, UMW v. Gibbs and Pendent Jurisdiction, 81 Harv.L.Rev. 676, 662-64 (1968). But that view may confuse the semantic distinctions of the earlier cases. "Pendent jurisdiction is a specialized application of the ancillary jurisdiction concept . . . . Its application traditionally has been in situations in which plaintiff seeks to append a nonfederal claim to a substantial claim against the same defendant.' 7C. Wright & A. Miller, Federal Practice & Procedure § 1659, at 314 (1972) (emphasis added). Ancillary jurisdiction is the broader concept allowing a court to acquire control of an entire controversy both the claims and additional parties where it has no independent jurisdiction of one or more parties."
While recognizing that Federal Courts are courts of limited jurisdiction, the Ninth Circuit Court of Appeals has on several occasions ruled that ancillary claims may be properly disposed of by Federal Courts even though jurisdiction would not exist if the ancillary proceeding were brought as a separate independent action. The foregoing has been the rule in the Ninth Circuit since at least 1955. See Glens Falls Indemnity Co. v. United States ex rel. Westinghouse Electric Supply Co., 229 F.2d 370, 374 (9th Cir., 1955); United States v. United Pacific Insurance Co. v. Discount Company, Inc., 472 F.2d 792, 794 (9th Cir., 1973); Burke v. Hahn, 592 F.2d 542, 545 (9th Cir., 1979).
In Burke v. Hahn, supra, the Plaintiffs were labor union trustees who brought suit against the Defendant Hahn, for contributions allegedly owing by Hahn to the Plaintiffs as a result of work performed by a Hahn employee who was allegedly a member of the operating engineers' union for which the Plaintiffs were trustees. The Defendant Hahn alleged as an affirmative defense to said action that the employee in question was not a member of the operating engineers' union, but was in fact a member of the carpenters' union to which trusts the Defendant Hahn had made payments. The Defendant employer Hahn also filed a Third Party Complaint against the Trustees of the carpenters' trusts seeking recovery from these trustees should Hahn, the employer, be held obligated to pay funds to the engineers' trust. The Hahn factual situation is similar to that alleged by the Third Party Plaintiff in the instant action, HELEN I. HENRY, who, in her Third Party Complaint, alleges that if her affirmative defense to the Promissory Note claim is not legally tenable against the Plaintiff, United States of America, then she in turn is entitled to indemnity from the Third Party Defendant, SEATTLE-FIRST NATIONAL BANK, by reason of the alleged failure of the Bank to properly protect and pursue the collateral pledged as security for the loan.
At page 545 of Burke v. Hahn, 592 F.2d 542 (9th Cir., 1979), the Court stated as follows:
"We have stated that where, as here, jurisdiction over a third-party claim is in question, the proper inquiry is whether ancillary jurisdiction exists, that is, whether "the claims arise out of the subject matter of the original action and involve the same persons and issues . . . or if they (arise) out of the same "transaction or occurrence." " United States ex rel. Payne v. United Pac. Ins. Co., 472 F.2d 792, 794 (9th Cir.), cert. denied, 411 U.S. 982, 93 S. Ct. 2273, 36 L. Ed. 2d 958 (1973). Hahn's third-party complaint alleged that "if plaintiffs are entitled to any recovery as against the defendant, then defendant in turn is entitled to have recovery over and ...