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Carden v. Arkoma Assocs. - 494 U.S. 185, 110 S. Ct. 1015 (1990)

Rule:

Diversity jurisdiction in a suit by or against an artificial entity depends on the citizenship of all the members, the several persons composing such association, each of its members.

Facts:

Respondent Arkoma Associates ("Arkoma"), a limited partnership organized under the laws of Arizona, brought suit on a contract dispute in the United States District Court for the Eastern District of Louisiana against petitioners C. Tom Carden and Leonard L. Limes, two Louisiana citizens. Arkoma relied on diversity of citizenship for federal jurisdiction. Carden and Limes filed a motion to dismiss on the ground that one of Arkoma's limited partners was a Louisiana citizen. The district court denied the motion. Thereafter Magee Drilling Company intervened in the suit and, together with Carden and Limes, filed counterclaims 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 in the instant action) appealed, and the court of appeals affirmed. 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. Petitioners were granted a writ of certiorari. 

Issue:

Was there a complete diversity of citizenship between Arkoma and the original defendants, Carden and Limes?   

Answer:

No.

Conclusion:

The Supreme Court of the United States reversed the appellate court's judgment and remanded the matter for further proceedings. The Court ruled that for purposes of federal diversity jurisdiction under 28 U.S.C.S. § 1332(a), a limited partnership could not be considered, in its own right, a "citizen" of the state under whose laws it was created. Furthermore, the Court averred that a court may not determine the citizenship of a limited partnership solely by reference to the citizenship of its general partners, without regard to the citizenship of its limited partners. For these reasons, the Court determined that the district court erred in finding complete diversity; therefore, it lacked jurisdiction over the Arkoma's suit against Carden and Limes.

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