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Joint Venture Previous Partnership Defeats Diversity in Federal Court
Description When a contractual dispute arises between a joint venture/plaintiff and defendant, diversity of citizenship must exist between all partners of the joint venture and defendant at the time of contract, not filing, in order to invoke the jurisdiction of the federal court.
Topic Court Procedure
Key Words Jurisdiction, Diversity of Citizenship, Joint Venture
C A S E   S U M M A R Y
Facts Schiavone, a New Jersey company with its principal place of business in New Jersey, formed a joint venture (JV) in 1983 with Daidone Electric, a New York company, to do construction work for the City of New York, which they did. In 1992, Daidone transferred to Schiavone all of Daidone's JV interests. In 1994, Schiavone sued the City in federal court, claiming it still owed the JV some money for the work done.
Lower Court Decision Suit dismissed; no diversity jurisdiction. Schiavone appealed.
Court of Appeals Decision Affirmed. For purposes of asserting diversity of citizenship jurisdiction, the citizenship of a JV is the citizenship of each of its members. Although the JV no longer existed, for matters regarding past JV activities, all members of the JV are relevant. Since Daidone had been a member of the JV when the contract in question was performed, its New York citizenship makes the JV a New York citizen, as is the City. There is no diversity, the case does not belong in federal court.
Citation Schiavone Construction v. City of New York, 99 F.3d 546 (2nd Cir., 1996)

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