states terms additional to, or different from, those in the offer, a contract has been formed in which "the additional terms are to be construed as proposals for additions to the contract." According to this subsection, "between merchants such terms become part of the contract unless . . . they materially alter it . . . ." § 2-207(2). "If [the additional terms] are such as materially to alter the original bargain, they will not be included unless expressly agreed to by the other party." § 2-207, U.C.C. Comment 5. Since Pharmex's offer can be construed to include the right to sue for consequential damages, the Court must determine whether Wheaton's form which purports to limit that right materially alters the contract.
Although § 2-207, U.C.C. Comment 5 indicates that certain, reasonable limitation of remedy provisions do not materially alter a contract, there is support for the proposition that such a provision does constitute a per se material alteration. See, Air Products & Chemical, Inc., supra; cf. Mead Corp. v. McNally-Pittsburg Mfg. Corp., 654 F.2d 1197 (6th Cir. 1981) (Court concluded that a clause in the acceptance which allowed the offeree to sue for consequential damages materially altered offeror's clause precluding such an action.) However, since each case involves a different set of circumstances, this Court has adopted the view that the question of whether a limitation of remedies clause materially alters a contract is a disputed issue of material fact which must be resolved at trial. Medical Devel. Corp. v. Industrial Molding Corp., 479 F.2d 345, 348 (10th Cir. 1973); Pevar Co. v. Evans Products Co., 524 F. Supp. 546, 550-51 (D. Del. 1981); Ebasco Services Inc. v. Pennsylvania Power and Light Co., 402 F. Supp. 421, 441-43 (E.D. Pa. 1975); cf. Dorton v. Collins & Aikman Corp., 453 F.2d 1161, 1169 n.8 (6th Cir. 1972) (Court employs the same analysis regarding an arbitration clause). "The materiality of a change is to be judged in large part by the expectations of the parties involved in the transaction. That is a determination uniquely within the province of a fact finder and one we are incapable of making on a motion for summary judgment." Ebasco, 402 F. Supp. at 442-43.
For the foregoing reasons, plaintiff's motion for partial summary judgment must be denied.
POLY-SEAL'S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
This Court's jurisdiction over the action brought by Pharmex against Poly-Seal is allegedly based on diversity of citizenship. It has now been established that no diversity exists between Pharmex and Poly-Seal. Consequently, Poly-Seal has moved to dismiss Pharmex's complaint.
Pharmex does not dispute the fact that both plaintiff and defendant are Delaware corporations. It urges, however, that this Court should exercise its ancillary jurisdiction over the action and deny Poly-Seal's motion to dismiss. For reasons of judicial economy, we have determined that this is a proper case to utilize ancillary jurisdiction.
Ancillary jurisdiction, according to one commentator, is "an ill-defined, judicially developed concept based on the premise that a district court acquires jurisdiction over a case or controversy in its entirety and, as an incident to the disposition of a dispute that is properly before it, may exercise jurisdiction to decide other matters raised by the case over which it would not have jurisdiction were they independently presented." 6 Wright and Miller, Federal Practice and Procedure, § 1444 p. 219 (1971). The major purpose of this device is to promote judicial economy by allowing the adjudication of related claims in a single action. Id. at § 1414 p. 73.
The ancillary jurisdiction doctrine has even been used to circumvent the diversity requirement in certain situations. Sheppard v. Atlantic States Gas Co., 167 F.2d 841, 845 (3d Cir. 1948). For example, persons brought into an action as parties to a compulsory counterclaim will come under the court's ancillary subject matter jurisdiction and the fact the presence of the additional party would destroy diversity does not oust the court of its jurisdiction. Markus v. Dillinger, 191 F. Supp. 732, 735 (E.D. Pa. 1961). This result is based on the theory that the diversity which supports the original action also supports the counterclaim against the non-diverse party. Id.
Pharmex argues that if it had added Poly-Seal as an additional defendant in its compulsory counterclaim against Wheaton, the Court's ancillary jurisdiction would have been invoked despite the fact that there was no diversity of citizenship between Pharmex and Poly-Seal. Pharmex further contends that its separate action against Poly-Seal is the equivalent of adding Poly-Seal as a defendant on the counterclaim and that this Court should, therefore, exercise ancillary jurisdiction over the suit.
Fed. R. Civ. P. 13(a) describes a compulsory counterclaim as "any claim which at the time of serving, the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction."
If there is a "logical relationship" between the counterclaim and the main action, the counterclaim may be considered to have arisen out of the same "transaction or occurrence," as the one upon which the initial complaint was based and, therefore, may be deemed to be a compulsory counterclaim under Rule 13(a). Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 70 L. Ed. 750, 46 S. Ct. 367 (1926); Baker v. Gold Seal Liquors, 417 U.S. 467, 469, 41 L. Ed. 2d 243, 94 S. Ct. 2504 n.1 (1973); Great Lakes Rubber Corporation v. Herbert Cooper Co., 286 F.2d 631, 634 (3d Cir. 1961).
[A] counterclaim is logically related to the opposing party's claim where separate trials on each of their respective claims would involve a substantial duplication of effort and time by the parties and the courts. Where multiple claims involve many of the same factual issues, or the same factual and legal issues, or where they are offshoots of the same basic controversy between the parties, fairness and considerations of convenience and economy require that the counterclaimant be permitted to maintain his cause of action.
Great Lakes Rubber Corporation, 286 F.2d at 634.
Pharmex's counterclaim against Wheaton and Wheaton's initial complaint against Pharmex are based on numerous sales of glass bottles by Wheaton to Pharmex during the period ending in approximately June 1979. The claim which Pharmex has asserted against Poly-Seal involves a different set of transactions in which Poly-Seal sold to Pharmex caps and liners for the glass bottles during the time period from 1976 to 1978. Although Pharmex's complaint against Poly-Seal relates to different transactions than its counterclaim against Wheaton, the claims are "logically related."
The adjudication of both claims will be accomplished by the single determination of whether Wheaton or Poly-Seal is individually or jointly liable for Pharmex's alleged loss. Separate trials on each of these claims would involve a substantial duplication of effort by the parties and the courts and raise the possibility of inconsistent verdicts. In the interest of better judicial housekeeping, this Court shall exercise its ancillary jurisdiction.
We note that, procedurally, this matter is unusual in that rather than adding Poly-Seal as an additional defendant on the counterclaim, Pharmex instituted a separate suit. In principle, we agree that Pharmex's separate action is the equivalent of adding Poly-Seal as an additional defendant on the counterclaim. However, to insure that we are not extending our jurisdiction beyond its legal bounds, see, Seyler v. Steuben Motors, Inc., 462 F.2d 181 (3d Cir. 1972) (per curiam), our decision on this motion is predicated on the amendment of Pharmex's counterclaim to include its claim against Poly-Seal
and withdrawal of Pharmex's separate action.
In summary, Wheaton's motion for partial summary judgment shall be denied and Poly-Seal's motion to dismiss shall be denied. The Court shall prepare an appropriate order to be filed with this opinion.
These consolidated actions having come before the Court on the motion of plaintiff, Wheaton Glass Company (Wheaton), for partial summary judgment pursuant to Fed. R. Civ. P. 56 and on the motion of defendant, Poly-Seal Corporation (Poly-Seal), to dismiss the complaint brought against it for lack of subject matter jurisdiction to Fed. R. Civ. P. 12(b); and
For the reasons set forth in the Court's opinion filed this day;
It is on this 15th day of October, 1982 hereby ORDERED that:
1. The motion of Wheaton for partial summary judgment is denied;
2. The motion of Poly-Seal to dismiss the complaint is denied, provided that Pharmex, Inc. (Pharmex) amends its counterclaim against Wheaton to include its claim against Poly-Seal and withdraws its separate action now pending against Poly-Seal;
3. Pharmex is granted leave to amend its counterclaim as outlined above.