These appeals arise from the offshore injury and subsequent onshore death of a seaman. Federal litigation in this case began when the seaman's widow brought two damage actions in district court; one suit was filed against the decedent's maritime employer and another claim was lodged against the manufacturer of allegedly defective shipboard equipment. Each of these "maritime" defendants in turn brought third-party claims for contribution and indemnity against a Louisiana physician whose alleged onshore medical malpractice was said to have ultimately caused the seaman's death.

The widow's claims against the shipowner and manufacturer were settled prior to trial; however the district court continued to exercise jurisdiction over the third-party claims. Upon a motion for summary judgment, the trial court dismissed these actions on their merits, finding as a matter of Louisiana state law that the physician could not be liable to the third-party plaintiffs. The shipowner and manufacturer then brought this appeal, arguing that the trial court erred in its application of Louisiana state law.

We conclude that the district court acted beyond the proper scope of its limited subject matter jurisdiction in adjudicating these third-party claims. Therefore, we do not reach the merits of this state-law controversy. Instead, we vacate the judgments entered below and remand these third-party actions with instructions that they be dismissed without prejudice for want of subject matter jurisdiction.

On August 25, 1977, Ronald S. Joiner was injured while working aboard the New Era, an offshore drilling vessel owned and operated by the Diamond M Drilling Company ("Diamond M"). The seaman was hurt while attempting to clean a shipboard mud tank manufactured by the Halliburton Company ("Halliburton").

After the accident, the injured seaman was hospitalized and placed under the care and treatment of a private physician, Dr. C. Babson Fresh. Unfortunately, the patient's condition steadily deteriorated and on August 31, 1977, Ronald Joiner died.

On November 15, 1977, Joiner's widow1 brought suit against the Diamond M Drilling Company, alleging that her husband's injury and subsequent death had been caused by the shipowner's negligence and by the unseaworthiness of the vessel it owned and operated. Diamond M in turn filed a third-party complaint against C. Babson Fresh, the doctor whose alleged onshore malpractice was said to have ultimately caused Joiner's death.

On June 22, 1979, Mrs. Joiner amended her complaint, adding Halliburton, the mud tank manufacturer, as a defendant. Then, on August 24, 1979, Mrs. Joiner settled her claim against both Diamond M and Halliburton.2 Together, the two defendants paid $300,000 to Joiner's estate in exchange for a voluntary dismissal of the plaintiff's claims.

Unfortunately, the pretrial settlement failed to bring this litigation to an end. Diamond M's third-party action against Dr. Fresh remained before the court and Halliburton would soon file its own third-party claim against the physician.3 Dr. Fresh responded to these third-party claims with a motion to dismiss. The district court took up the motion and granted summary judgment on the merits in favor of the third-party defendant.4 Third-party plaintiffs Diamond M and Halliburton then brought this appeal.

II. SUBJECT MATTER JURISDICTION OVER THE THIRD-PARTY CLAIMS

Although these third-party claims were adjudicated "on-their-merits," the trial court failed to indicate the basis upon which it presumed to exercise subject matter jurisdiction. Thus, the task falls to this Court to determine whether these third-party claims properly come within the scope of the federal courts' limited jurisdiction.

The parties have suggested that there may be three possible bases for the exercise of federal subject matter jurisdiction over these third-party claims; admiralty, diversity, or ancillarity. We will consider each of these possible jurisdictional bases in turn.

A. Admiralty Jurisdiction Over the Third-Party Claims:

An action for breach of a maritime contract is cognizable under the federal courts' admiralty jurisdiction.5 In an effort to bring their claims within the ambit of federal admiralty jurisdiction, the appellants argue that their third-party actions against Dr. Fresh concern an alleged breach of a maritime contract and are therefore cognizable in federal court. Appellants suggest that a physician's treatment of an injured seaman creates an implied maritime contract between doctor and shipowner and that the physician's alleged malpractice constitutes a breach of that implied contract. Thus, appellants argue that their claims against Dr. Fresh can be seen as actions for breach of an implied warranty for workmanlike performance and therefore contend that their third-party complaints set forth "general maritime law" claims under the doctrine of maritime indemnity described in Ryan Stevedoring Company Inc. v. Pan Atlantic Steamship Corporation, 350 U.S. 124, 132, 76 S. Ct. 232, 236, 100 L. Ed. 133 (1956).

We find that the appellants' Ryan indemnity argument is foreclosed by our decision in Penn Tanker v. United States, 409 F.2d 514, 517-518 (5th Cir. 1969). In Penn Tanker, supra a third-party plaintiff shipowner sought to recover Ryan indemnity from a hospital which had negligently treated an injured seaman. This court unequivocally rejected the shipowner's Ryan indemnity argument, stating:

(T)here can be no implied warranty running from the (hospital) to the shipowner ... We are unwilling to accept (the) tenuous argument that the relationship of ... hospitals and shipowners, concerning treatment of seaman, is comparable to those relationships which have been held to justify the application of Ryan.

Penn Tanker Company v. United States, supra, 517-518.

We adhere to our decision in Penn Tanker, supra. A private land-locked physician who treats a patient who happens to have been injured at sea, does not thereby enter into an implied maritime contract. We can find absolutely no support for the proposition that an ordinary, private, onshore physician who treats an injured sailor has thereby submitted himself to the rules of maritime commerce. Rather, it has been consistently held that it is state law which controls in cases such as this. See, e.g., United States Lines, Inc. v. U. S., 470 F.2d 487, 491 (5th Cir. 1972) (hospital located in Texas, Texas state law applied to shipowner's third-party claim against hospital); Penn Tanker v. United States, 409 F.2d 514, 519 at n.9 (5th Cir. 1969) (hospital located in Georgia, Georgia state law applied to shipowner's third-party claim against hospital);6 McCann v. Falgout Boat Co., 44 F.R.D. 34 (S.D.Tex.1968) (shipowner's third-party claim against doctor arises under state law); Accord, Wood v. Standard Products Co., Inc., 456 F. Supp. 1098, 1103 (E.D.Va.1978) (injured seaman's claim against onshore doctor does not arise under federal maritime law, but is a state-law claim pendent to an admiralty action).

These third-party claims against Dr. Fresh cannot be fairly characterized as being actions for breach of maritime contract, independently cognizable under the federal courts' admiralty jurisdiction. As the district court recognized, these are state law claims. If they are to be cognizable in federal court, it can only be under a theory of either diversity or ancillary jurisdiction.

Diamond M's third-party complaint against Dr. Fresh included the following jurisdictional allegations:

"P 2: ... Diamond M is a foreign corporation authorized to do and doing business in the State of Louisiana ...

P 3: ... Jurisdiction is based on General Maritime Law, diversity of citizenship and ancillary jurisdiction ..."

On appeal, Diamond M has taken the position that these allegations were sufficient to confer federal diversity jurisdiction over their third-party claim. We cannot agree.

For the purposes of diversity jurisdiction, a corporation is deemed to be a citizen of both the state in which it is incorporated and of the state where its principal place of business is located. 28 U.S.C. § 1332(c); R. G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 654 (2nd Cir. 1979); Canton v. Angelina Casualty Company, 279 F.2d 553, 554 (5th Cir. 1960). In order to adequately establish diversity jurisdiction, a complaint must set forth with specificity a corporate party's state of incorporation and its principal place of business. Where the plaintiff fails to state the place of incorporation or the principal place of business of a corporate party, the pleadings are inadequate to establish diversity. Walsh v. International Precious Metals Corp., 510 F. Supp. 867, 873 (D.Ut.1981); Strout Realty v. Country 22 Real Estate Corp., 493 F. Supp. 997, 1000 (W.D.Mo.1980); Holman v. Carpenter Technology Corp., 484 F. Supp. 406, 407-8 (E.D.Pa.1980).

We can find nothing in the pleadings to indicate where Diamond M is incorporated or where it makes its principal place of business. Thus, we must reject Diamond M's contention that these pleadings were sufficient to establish diversity.

Halliburton failed to make any jurisdictional allegations in its third-party complaint against Louisiana's Dr. Fresh. There was no allegation that Halliburton and Fresh were citizens of different states, nor can we find the requisite allegation that the amount in controversy exceeded $10,000. In fact, Halliburton has expressly denied that its citizenship was diverse with respect to a citizen of Louisiana.7 Thus, this record clearly precludes a finding that Halliburton's claim against Dr. Fresh can be heard under the federal courts' diversity jurisdiction.

Even if these third-party actions are simply seen as state-law claims; and even if diversity does not provide a basis for the exercise of subject matter jurisdiction over these state-law claims; the appellants have suggested that their actions against Dr. Fresh are cognizable in federal court insofar as they are ancillary to the main admiralty claims first brought by Mrs. Joiner. This argument raises two important questions: First, is the doctrine of ancillary jurisdiction applicable in the context of admiralty impleader? Second, should the federal court have retained its jurisdiction over the ancillary state-law claims when the main federal actions had been settled prior to trial? We will address each of these questions in turn.

1. Ancillary Jurisdiction Over Third Party Claims Appended to Admiralty Actions

"The law is far from settled (as to) whether ancillary jurisdiction can apply to an impleader in maritime suits." Gauthier v. Crosby Marine Service, Inc., 87 F.R.D. 353, 355 (E.D.La.1980). Our district courts have divided over this question,8 and until now, this court has not been presented with a case which clearly presented the issue.9

In two early district court opinions it was held that an admiralty defendant could not implead a third party unless it could be shown that there was an independent basis for the exercise of subject matter jurisdiction over the third-party claim.10 However, those early decisions have been consistently criticised and rejected by both the courts11 and commentators.12

We believe that the considerations of judicial economy which provide the principal justification for the exercise of ancillary jurisdiction in civil cases apply with equal force in the context of admiralty impleader.13 Now that the rules of admiralty and civil procedure have been merged, we see no statutory or constitutional impediment to the exercise of ancillary jurisdiction over state law claims appended to admiralty actions. Certainly the great weight of recent authority supports this view. See, e.g., Leather's Best v. Mormaclynx, supra, 810 at n.12; Gauthier v. Crosby Marine Service, Inc., supra at 355; Morse Electro Products Corp. v. S. S. Great Peace, supra at 483; Fawcett v. Pacific Far East Lines, supra at 521. Therefore, we hold that a third-party claim lacking independent grounds of jurisdiction may be appended to an admiralty action and is cognizable in federal court under the doctrine of ancillary jurisdiction so long as the ancillary claim arises out of the same core of operative facts as the main admiralty action.

2. Ancillary Jurisdiction When the Principal Claim Has Been Settled Prior to Trial:

We hold that the doctrine of ancillary jurisdiction is applicable in the contexts of both civil and admiralty impleader. However, this finding does not end our jurisdictional inquiry. In this case we must determine whether the district court erred in continuing to exercise jurisdiction over the ancillary state-law claims when the main federal actions had been settled prior to trial.14

Generally, when the primary federal claim has been settled or dismissed before trial, the district court should dismiss any lingering ancillary state law claims. See, United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966) ("(I)f the federal claims are dismissed before trial, the state claims should be dismissed as well.").15 However, we recognize that "there will be instances in which retention of the third-party claim, even after the settlement of the main claim, may be appropriate." C. Wright & A. Miller, 6 Federal Practice & Procedure § 1444 at 53 (1982 supp.). Thus, our task is to determine whether this case presents one of those special instances where retention of lingering ancillary state-law claims can be justified.

In United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966), the Supreme Court held that federal courts have the power to adjudicate state-law claims appended to federal actions.16 However, the Gibbs Court specifically stated that when the main federal claim is dismissed prior to trial, an appended state claim "should be dismissed as well." Id. 383 U.S. 726, 86 S. Ct. 1139.17

While Gibbs suggests that dismissal of appended state law claims is mandatory whenever the main federal claim is dropped prior to trial, in practice district courts have been allowed a measure of discretion in determining whether to retain their ancillary jurisdiction over appended state claims.18 However, this discretion is not unlimited.19 To hold otherwise would be to insulate even the most improvident exercise of ancillary jurisdiction from any meaningful appellate review.

Gibbs and its progeny have enumerated several factors which must be considered whenever a federal court is asked to press against the outer limits of its jurisdiction and to adjudicate pendent or ancillary claims. Gibbs reminds us that judicial efficiency and economy is the raison d'etre of ancillary jurisdiction. If the interests of judicial economy are no longer advanced by the retention of ancillary claims, the state-law actions ought to be dismissed.20

Gibbs also tells us that federal courts must be ever mindful of the states' interest in the integrity and autonomous development of their own jurisprudence. "Needless decisions of state law should be avoided ... as a matter of comity,"21 and "(f)ederal courts should not be overeager to hold on to the determination of issues that might be more appropriately left to settlement in state court."22 Thus, Gibbs teaches that federal courts must refrain from unnecessary poaching upon a sovereign state's jurisprudential turf.

Where the main federal action has been settled prior to trial, considerations of judicial efficiency and economy can no longer justify the continued exercise of federal jurisdiction over ancillary state-law claims; and considerations of comity and federalism militate in favor of dismissal. However, we recognize that a federal court may retain and adjudicate ancillary state-law claims after a pretrial settlement of the main federal action if a dismissal would unduly prejudice the parties. For example, if the applicable statute of limitations has run during the pendency of the state claim in federal court, a dismissal might deprive the parties of any forum. In such a case, a federal court would be justified in retaining jurisdiction over the ancillary state-law claims.23 Similarly, if litigation over the ancillary claims has proceeded apace and the parties have already prepared their case in reliance upon the availability of a federal forum, dismissal might not be required.24 However, "... when no extensive proceedings on the ancillary claim have begun in federal court, the trial court should dismiss the ancillary claims." Putnam v. Williams, 652 F.2d 497, 502 (5th Cir. 1981).25

Applying the "Gibbs" considerations to the facts of this case, we conclude that the district court erred in retaining and adjudicating the third-party actions against Dr. Fresh.26 The principal admiralty action in this case was settled prior to trial. Without this admiralty claim serving as a jurisdictional anchor, the third-party actions became "Flying Dutchmen" adrift in jurisdictional limbo.

None of the factors which have been held to justify retention of ancillary state-law claims were present in this case. No efficiency or economy was achieved by retaining the ancillary claims, for once the primary admiralty actions were settled, there was no longer a need to consolidate related cases. The parties would not have been unduly prejudiced by a dismissal, for as of August 24, 1979-the date of the pretrial settlement-little if any activity had occurred with respect to the third-party claims. Finally, we note that no applicable statute of limitations had run while the actions were pending in federal court.27

We should also emphasize that the decision to retain jurisdiction over the ancillary claims in this case seems particularly improvident insofar as adjudication of these actions required the district court to address an array of especially complex and unsettled questions of Louisiana state law.28 This constituted a wholely unnecessary incursion into the province of a coordinate judicial system.

We find that these third-party claims were state-law actions and that they were not cognizable under either federal admiralty or diversity jurisdiction. Moreover, we conclude that while the district court may initially have been empowered to adjudicate these claims insofar as they were ancillary to a main federal action, it erred in retaining jurisdiction over these state-law claims after a pretrial settlement of the main federal actions.

Federal courts are empowered to adjudicate ancillary state-law claims which arise from the same core of operative facts as a pending federal claim. However, if the federal claim is dismissed prior to trial, there is a strong presumption in favor of dismissing any lingering ancillary state-law claims. While we are sensitive to the role of trial economy in our jurisprudence, we also remain devoted adherents to the principle of parsimony in the exercise of federal jurisdiction. Thus, we stand ready to interdict the improvident exercise of ancillary jurisdiction, especially in cases such as this where the unnecessary and unjustified adjudication of state-law claims involved the federal court in a complex and unsettled quadrant of Louisiana state law, excommunicating the state courts from their rightful place in our jurisprudential panoply.

Where the interests of judicial efficiency and economy will no longer be served by the continued exercise of ancillary jurisdiction; where proceedings of substance have not yet occurred; and where the adjudication of ancillary claims will require a federal court to decide novel and complex questions of state law; lingering ancillary claims should be dismissed. Therefore we conclude that the trial court erred in retaining and adjudicating these third-party claims.

Because the district court acted beyond the proper scope of its limited subject matter jurisdiction, its opinion and order are of no effect.29 Accordingly, we must VACATE the judgments entered below and REMAND these third-party claims with instructions that they be dismissed without prejudice for want of subject matter jurisdiction.