Carden v. Arkoma Associates

Syllabus Respondent Arkoma Associates, a limited partnership organized under Arizona law, sued petitioners Carden and Limes on a contract dispute in the District Court, relying on diversity of citizenship for federal jurisdiction. Carden and Limes, Louisiana citizens, moved to dismiss on the ground that one of Arkoma's limited partners was also a Louisiana citizen. The court denied the motion, finding the requisite "complete diversity." After petitioner Magee Drilling Co. intervened and counterclaimed against Arkoma, the court awarded judgment to Arkoma. The Court of Appeals affirmed, finding, with respect to the jurisdictional challenge, that complete diversity existed because Arkoma's citizenship should be determined by reference to the citizenship of its general, but not its limited, partners.

Held: 1. Complete diversity is lacking with respect to Carden and Limes. Pp. 187-197. (a) A limited partnership is not in its own right a "citizen" of the State that created it within the meaning of the federal diversity statute. This Court has firmly resisted extending the well-established rule treating corporations as "citizens" to other artificial entities. Chapman v. Barney, 129 U.S. 677, 682, 9 S.Ct. 426, 427, 32 L.Ed. 800; Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 456, 457, 20 S.Ct. 690, 693, 693, 44 L.Ed. 842; Steelworkers v. R.H. Bouligny, Inc., 382 U.S. 145, 151, 86 S.Ct. 272, 275, 15 L.Ed.2d 217. Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903; Navarro Savings Assn. v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425, distinguished. Pp. 187-192. (b) A federal court must look to the citizenship of a partnership's limited, as well as its general, partners to determine whether there is complete diversity. That only the general partners have exclusive and complete control over the partnership's operations and the litigation is irrelevant. This Court's decisions have never held that an artificial entity can invoke diversity jurisdiction based on the citizenship of some but not all of its members. Bank of United States v. Deveaux, 5 Cranch 61, 90-91, 3 L.Ed. 38; Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 328-329, 14 L.Ed. 953; Navarro, supra, distinguished. Pp. 192-196. (c) Whether, and which, artificial entities other than corporations are entitled to be considered "citizens" for diversity purposes are complex questions best left to Congress to decide. Pp. 196-197. 2. The question whether complete diversity exists between Magee and Arkoma was not considered by the Court of Appeals, and this Court will not decide it in the first instance. P. 197. 874 F.2d 226 (CA5, 1988), reversed and remanded. SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, STEVENS, and KENNEDY, JJ., joined. O'CONNOR, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and BLACKMUN, JJ., joined, post, p. 198. Richard K. Ingolia, New Orleans, La., for petitioners. Mitchell J. Hoffman, New Orleans, La., for respondent. Justice SCALIA delivered the opinion of the Court.