This is a contract action brought in federal court on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332. At a scheduling conference held on January 11, 1984, the Court raised with counsel the issues of venue and jurisdiction. Discovery was opened for the limited purpose of addressing these concerns, and the parties were directed to file statements by March 19, 1984. After careful consideration of the pertinent case law, the Court concludes that it lacks subject matter jurisdiction over this action and accordingly the case must be dismissed.
The present suit is, in essence, an action between two limited partnerships organized under District of Columbia law. See 41 D.C. Code § 201 et seq. The named parties are the general partners of the two limited partnerships and as between the general partners there exists complete diversity. If the parties to the action are viewed as including the limited partners, however, complete diversity is lacking inasmuch as one limited partner of defendants' limited partnership is a citizen of Texas, as is plaintiff Conroy, and both limited partnerships have limited partners who are citizens of Virginia.
Although the question of whether the citizenship of limited partners "counts" in determining whether the Court has jurisdiction under 28 U.S.C. § 1332 is apparently one of first impression in this Circuit,
it has been addressed by other courts. The Second Circuit has concluded that only the citizenship of general partners should be considered because, under New York law, limited partners are not proper parties to an action by or against the partnership.
Colonial Realty Corp. v. Bache & Co., 358 F.2d 178, 183-84 (2d Cir.), cert. denied, 385 U.S. 817, 17 L. Ed. 2d 56, 87 S. Ct. 40 (1966).
This approach has been followed by a number of District Courts in other Circuits.
The Third Circuit, on the other hand, has reached the opposite result. In concluding that complete diversity can be destroyed by the citizenship of the limited partners, the Third Circuit relied on the "traditional" rule that in determining the citizenship of partnerships and unincorporated associations the court looks to the citizenship of that organization's members. Carlsberg Resources Corporation v. Cambria Savings and Loan Ass'n, 554 F.2d 1254, 1258 (3d Cir. 1977). Reasoning also that "state statutes concerning the capacity to sue [do not] operate to liberalize access to the federal courts under diversity jurisdiction," the Court rejected the approach of Colonial Realty, 554 F.2d at 1261.
This approach likewise has been followed by District Courts in other Circuits.
The Court has carefully considered the arguments presented by the Second and Third Circuits and by the lower courts that have followed them. While each side has its merits, the Court has concluded that the arguments presented by those courts adopting the view of the Third Circuit are the more persuasive. See particularly Carlsberg Resources Corp., 554 F.2d at 1257-62, and Hereth, 544 F. Supp. at 112-17. Inasmuch as these arguments have been adequately explicated in the cases cited, little would be gained by repeating them here and the Court does not do so.
Because there is not complete diversity of citizenship between the members of the limited partnerships on either side of this case, the court lacks subject matter jurisdiction and the case must therefore be dismissed. An appropriate Order is filed herewith.
Upon consideration of defendants' statement concerning venue, personal jurisdiction and subject matter jurisdiction, plaintiff's response thereto, and it appearing to the Court for the reasons stated in the Court's accompanying Memorandum that it lacks subject matter jurisdiction over this case, it is hereby
ORDERED that the case is dismissed.