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Carden v. Arkoma Assocs.

Supreme Court of the United States

November 7, 1989, Argued ; February 27, 1990, Decided

No. 88-1476

Opinion

 [*186]   [***162]   [**1016]  JUSTICE SCALIA delivered the opinion of the Court.

 The question presented in this case is whether, in a suit brought by a limited partnership, the citizenship of the limited partners must be taken into account to determine diversity of citizenship among the parties.

Respondent Arkoma Associates (Arkoma), a limited partnership organized under the laws of Arizona, brought  [****4]  suit on a contract dispute in the United States District Court for the Eastern District of Louisiana, relying upon diversity of citizenship for federal jurisdiction. The defendants, C. Tom Carden and Leonard L. Limes, citizens of Louisiana, moved to dismiss, contending that one of Arkoma's limited partners was also a citizen of Louisiana.  The District Court denied the motion but certified the question for interlocutory appeal, which the Fifth Circuit declined. Thereafter Magee Drilling Company intervened in the suit and, together with the original defendants, counterclaimed against Arkoma under Texas law. Following a bench trial, the District Court awarded Arkoma a money judgment plus interest and attorney's fees; it dismissed Carden and Limes' counterclaim as well as Magee's intervention and counterclaim.  Carden, Limes, and Magee (petitioners here) appealed, and the Fifth Circuit affirmed.  [*187]  874 F.2d 226  [**1017]  (1988). With respect to petitioners' jurisdictional challenge, the Court of Appeals found complete diversity, reasoning that Arkoma's citizenship should be determined by reference to the citizenship of the general, but not the limited, partners. We granted [****5]  certiorari. 490 U.S. 1045 (1989).

] Article III of the Constitution provides, in pertinent part, that "the judicial Power shall extend to . . . Controversies . . . between Citizens of different States." Congress first authorized the federal courts to exercise diversity jurisdiction in the Judiciary Act of 1789, ch. 20, § 11, 1 Stat. 78.  In its current form, ] the diversity statute provides that "the district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds . . . $ 50,000 . . ., and is between . . . citizens of different States . . . ." 28 U.S.C. § 1332(a).  [***163]  Since its enactment, we have interpreted the diversity statute to require "complete diversity" of citizenship. See Strawbridge v. Curtiss, 3 Cranch 267 (1806). The District Court erred in finding complete diversity in this case unless (1) a limited partnership may be considered in its own right a "citizen" of the State that created it, or (2) a federal court must look to the citizenship of only its general, but not its limited, partners to determine whether there is complete diversity of citizenship. We consider these questions in  [****6]  turn.

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494 U.S. 185 *; 110 S. Ct. 1015 **; 108 L. Ed. 2d 157 ***; 1990 U.S. LEXIS 1172 ****; 58 U.S.L.W. 4243; 16 Fed. R. Serv. 3d (Callaghan) 756

C. T. CARDEN, ET AL., PETITIONERS v. ARKOMA ASSOCIATES

Prior History:  [****1]  ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.

Disposition:  874 F.2d 226, reversed and remanded.

CORE TERMS

citizenship, diversity jurisdiction, limited partnership, purposes, real party, diversity, limited partner, partnership, parties, shareholders, counted, entity, joint stock company, federal court, sociedad, artificial entity, trust beneficiary, general partner, juridical, cases, business association, district court, associations, diversity of citizenship, civil law, unincorporated association, unincorporated business, possessing

Civil Procedure, Jurisdiction, Jurisdictional Sources, General Overview, Constitutional Law, The Judiciary, Congressional Limits, Diversity Jurisdiction, Citizenship, Business Entities, Diversity Jurisdiction, Amount in Controversy, Determination, Subject Matter Jurisdiction, Jurisdiction Over Actions, Business & Corporate Law, Corporate Formation, Place of Incorporation, Principal Office