Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

900 3RD AVE. ASSOCIATES v. FINKIELSTAIN

March 12, 1991

900 3RD AVENUE ASSOCIATES, INDIVIDUALLY AND ON BEHALF OF PROGRESS PARTNERS, PLAINTIFF,
v.
JACOBO FINKIELSTAIN, GUSTAVO ANDREW DEUTSCH, REMO ENTELMAN, EVEN INTERNATIONAL CORP., BRISSAGO, S.A., MAJOLA ANSTALT, LA ROTONDA/B.A. ARG., PROGRESS CORPORATION, N.V., PROGRESS PROPERTIES, INC., J.R.A. REALTY CORPORATION, P-C 900 THIRD ASSOCIATES, MICORA, N.V., THE FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER OF CENTRAL NATIONAL BANK OF NEW YORK, JEROME P. CORTELLESI, ALBERT SCHWARTZ, THE ALMI GROUP, AND JOHN DOES AND JANE DOES, DEFENDANTS.



The opinion of the court was delivered by: Leisure, District Judge:

ORDER AND OPINION

This is a diversity action involving numerous claims arising from the alleged mismanagement of a partnership, as well as a claim against the Federal Deposit Insurance Corporation, as receiver of a former tenant, for non-payment of rent. Defendants Jacobo Finkielstain, Gustavo Andrew Deutsch, Progress Corporation, N.V., Progress Properties, Inc., J.R.A. Realty Corporation, P-C 900 Third Associates, Albert Schwartz and The Almi Group L.P. (collectively, the "Moving Defendants"), have moved, inter alia, pursuant to Fed.R. Civ.P. 12(b)(1), to dismiss this action for lack of subject matter jurisdiction.

BACKGROUND

By agreement dated September 1, 1981, defendants Progress Properties, Inc. ("PPI"), and J.R.A. Realty Corporation ("JRA"), formed Progress Partners, a general partnership, to own and manage the real property located at 900 Third Avenue, in New York City. In August 1984, plaintiff 900 3rd Avenue Associates ("Associates") was admitted as a partner in Progress Partners, and a partnership agreement was entered into. A portion of the interest in Progress Partners held by PPI and JRA was subsequently transferred to P-C 900 Third Associates ("P-C"). PPI, JRA and P-C together hold 51% of Progress Partners, while Associates holds the remaining 49%. In 1985, a 36-story office building was substantially completed on the site.

Under a management agreement with Progress Partners, PPI was appointed manager of the property. It is alleged that while PPI was manager, defendant Jacobo Finkielstain, and other individual defendants acting in concert with him through the corporate defendants, appropriated monies from Progress Partners and breached their fiduciary obligations to Associates. The present action was filed in July 1989. In addition to the twelve claims that arise from these alleged activities of Finkielstain and his associates, the complaint asserts one claim against the Federal Deposit Insurance Corporation ("FDIC"), in its capacity as receiver of the Central National Bank of New York ("CNB"),*fn1 arising from CNB's non-payment of rent for space CNB occupied in the building at 900 Third Avenue. The Moving Defendants thereafter brought the instant motion. The Court, by memorandum order dated November 15, 1990, requested supplemental briefing from the parties with respect to whether this Court has diversity jurisdiction over this action following the Supreme Court's decision in Carden v. Arkoma Associates, 494 U.S. 152, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990).

Discussion

Diversity Jurisdiction

It is a basic legal tenet that diversity must be complete between the parties. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806). The general rule for establishing the citizenship of an unincorporated association, such as a partnership, for purposes of determining diversity, is that such an association is deemed to be a citizen of every state of which a member is a citizen. Navarro Savings Association v. Lee, 446 U.S. 458, 461, 100 S.Ct. 1779, 1782, 64 L.Ed.2d 425 (1980); Rhulen Agency Inc. v. Alabama Insurance Guaranty Association, 896 F.2d 674, 677 (2d Cir. 1990). In Carden, supra, 110 S.Ct. 1015, the Supreme Court resolved a split among the Circuits, holding that in diversity cases involving partnerships, citizenship analysis must consider not merely the citizenship of general partners, but that of limited partners as well.

Plaintiff Associates is a general partnership. The general partners in Associates are Carlyle Real Estate Limited Partnership XIV and Carlyle Real Estate Limited Partnership XV (the "Carlyle Partnerships"), each of which, in turn, is a limited partnership. The general partner of both of the Carlyle Partnerships is JMB Realty Corporation ("JMB"). The Carlyle Partnerships also have, between the two of them, approximately 91,000 limited partners.

Because Associates is a partnership, its citizenship must thus be determined by looking to the citizenship of all of its partners. Carden, supra, 110 S.Ct. 1015. Associates's partners are the Carlyle Partnerships. The issue then becomes one of determining the citizenship of the Carlyle Partnerships. Under similar circumstances, the Fifth Circuit held that "[s]ince one of the partners [of plaintiff partnership] is also a partnership, the trial court correctly inquired into the citizenship of the partners of [the secondary partnership in determining whether complete diversity existed]." Village Fair Shopping Center Co. v. Sam Broadhead Trust, 588 F.2d 431, 433 n. 1 (5th Cir. 1979). The Third Circuit has engaged in a similar analysis, requesting, sua sponte, additional information regarding the citizenship of a defendant partnership's partners that were, in turn, partnerships themselves. Knop v. McMahan, 872 F.2d 1132, 1137-38 (3rd Cir. 1989). See also General Masonry Construction Co. v. Village One Associates Limited Partnership, 1989 WL 80331, 1989 U.S.Dist. LEXIS 8206 (E.D.Pa. July 17, 1989) and S.W. Kooperman, Inc. v. Village One Associates Limited Partnership, 1989 WL 71299, 1989 U.S.Dist. LEXIS 6969 (E.D.Pa. June 22, 1989) (both cases dismissing the complaint therein for lack of complete diversity, where plaintiff corporation shared citizenship with a limited partner of a partnership that was a general partner of defendant partnership).

Defendants are citizens of New York, New Jersey, Florida, and several foreign countries. Accordingly, Associates must demonstrate that none of the 91,000 limited partners of the Carlyle Partnerships is a citizen of any of those states, or of a foreign country. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936) (party seeking exercise of jurisdiction bears burden of showing such jurisdiction exists); Horvitz v. Oconefsky, 683 F. Supp. 959, 963 (S.D.N.Y.), aff'd without op., 868 F.2d 1267 (2d Cir. 1988). Associates has not done so, and, indeed, appears in its supplemental brief to concede that this Court does not have diversity jurisdiction over this action. See Supplemental Memorandum of Law in Opposition to Certain Defendants' Motion to Dismiss at 2. Accordingly, jurisdiction over this action cannot be bottomed on diversity of the parties herein.

Recharacterization as a Class Action

Associates argues that despite the lack of diversity jurisdiction in this action, the Court can retain jurisdiction by recharacterizing this action as a class action, in which JMB, the general partner of the Carlyle Partnerships, is denominated the class representative. Under this scenario, the class would consist of the partners of Associates (i.e., the Carlyle Partnerships), as well as the general and limited partners of the Carlyle Partnerships. Because "complete diversity is required only between the named plaintiff and the named defendants in a federal class action," In re "Agent Orange" Product Liability Litigation, 818 F.2d 145, 162 (2d Cir. 1987), cert. denied, 484 U.S. 1004, 108 S.Ct. 695, 98 L.Ed.2d 647 (1988), Associates argues that its proffered scheme permits the Court to exercise diversity jurisdiction over this action.*fn2

In support of this proposal to restructure the present litigation, Associates cites the Second Circuit's decision in Curley v. Brignoli, Curley & Roberts Associates, 915 F.2d 81 (2nd Cir. 1990). Curley involved a dispute between a group of limited partners and the general partner of that limited partnership. The limited partners claimed that the general partner had looted the partnership, and brought a derivative action based on diversity against the limited partnership, the general partner, and the controlling shareholder of the general partner. The case proceeded to trial, and the plaintiffs were awarded damages. While ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.