Curley v. Brignoli, Curley & Roberts Associates

915 F.2d 81, 1990 WL 136774
CourtCourt of Appeals for the Second Circuit
DecidedSeptember 20, 1990
DocketNos. 1129, 1130, Dockets 89-7979, 89-9247
StatusPublished
Cited by71 cases

This text of 915 F.2d 81 (Curley v. Brignoli, Curley & Roberts Associates) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Curley v. Brignoli, Curley & Roberts Associates, 915 F.2d 81, 1990 WL 136774 (2d Cir. 1990).

Opinion

MAHONEY, Circuit Judge:

This appeal is taken from a judgment of the United States District Court for the Southern District of New York, Milton Pollack, Judge, ordering dissolution of a limited partnership, the removal of its general partner, and awarding damages occasioned by the misappropriation of an asset of the partnership.

During the pendency of this appeal, the Supreme Court determined, in Carden v. Arkoma Associates, — U.S. -, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990), that in a federal action to which a limited partnership is a party, the citizenship of limited partners must be taken into account to determine whether there is diversity of citizenship among the parties. We recharac-terize plaintiff’s lawsuit as a class, rather than a derivative, action, and dismiss the limited partnership as a party defendant on the authority of Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989), and Fed.R. Civ.P. 21. We then confirm the existence of subject matter jurisdiction, affirm on the merits for the reasons stated in the opinion of the district court, and remand.

BACKGROUND

A. The Parties.

Brignoli, Curley & Roberts Associates (“BCR”) is a Delaware limited partnership with its principal place of business in New York. The sole general partner of BCR is defendant Brignoli & Curley, Inc. (“BCI”), a Delaware corporation whose principal place of business is also in New York. On December 14, 1987, defendant Richard Brignoli (“Brignoli”) became chief executive officer of BCI and assumed control of the day-to-day business operations of BCR. Brignoli’s citizenship was disputed below; plaintiffs claim that he is a citizen of New York, while defendants attribute Connecticut citizenship to him.1 Brignoli, as trustee, owns 50.1% of BCI’s stock, and the remainder is owned by plaintiff John J. Curley (“Curley”).

The limited partners of BCR include Cur-ley and plaintiff James Karanfilian (“Kar-anfilian”), both citizens of New Jersey, former plaintiff Duane Roberts (“Roberts”),2 a citizen of Connecticut, and Brignoli Models, Inc. (“BMI”), a Delaware corporation of which Brignoli is the chairman and chief executive officer. Brignoli owns a majori[83]*83ty of BMI’s stock. Curley, Karanfilian, and Roberts collectively own approximately thirty-six percent of the equity of BCR, and BMI owns approximately fifty-four percent. The balance of the equity of BCR is owned by other limited partners of BCR.

B. The Proceedings Below.

Curley, Karanfilian, and Roberts commenced this action on July 29, 1988, invoking diversity of citizenship as the basis of federal subject matter jurisdiction. They alleged various breaches of fiduciary duty by BCI as the general partner of BCR and by Brignoli as the person in control of BCI, and sought: (1) removal of BCI as general partner of BCR or, in the alternative, the dissolution of BCR; (2) judgment against Brignoli and BCI in favor of BCR for damages in compensation for breaches of fiduciary duty by Brignoli and BCI; and (8) an accounting as to BCR. BCR, BCI, and Brignoli were named as defendants.

Following a bench trial, the district court found that BCI and Brignoli had indeed engaged in improper self-dealing. Among the findings were that BCI and Brignoli wrongfully refused plaintiffs access to BCR’s books and records, and that Brignoli misappropriated a $175,000 certificate of deposit from BCR, pledging it to secure a loan to BMI. Pursuant to its opinion dated August 4, 1989, 746 F.Supp. 1208, and judgments entered thereon, the district court granted, inter alia, the following relief: (1) removal of BCI as general partner of BCR; (2) prohibition of BMI from voting its interest in BCR in a subsequent vote by the limited partners (pursuant to the partnership agreement) on whether to replace BCI with a new general partner or to dissolve BCR; (3) after a vote in favor of dissolution, entry of judgment ordering dissolution of BCR under the direction of the law firm Battle Fowler as receiver and liquidating trustee; and (4) entry of judgment against Brignoli and in favor of BCR for the damages occasioned by Brignoli’s misappropriation of BCR’s certificate of deposit.

This appeal followed.3

DISCUSSION

A. The Diversity Problem.

The merits of this appeal need not detain us. The district court’s thorough opinion convincingly resolves the questions of fiduciary duty and self-dealing tendered by the parties, and there is no need for an appellate rehash of those fact-specific issues.

A significant question of subject matter jurisdiction (indeed, the only question addressed in the oral argument of this appeal), however, is posed by a decision of the Supreme Court, Carden v. Arkoma Associates, — U.S. -, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990), which was rendered on February 27, 1990, during the pendency of this appeal. Carden answered in the affirmative “[t]he question ... whether, in a suit brought by a limited partnership, the citizenship of the limited partners must be taken into account to determine diversity of citizenship among the parties.” 110 S.Ct. at 1016. The opinion subsequently specified that “diversity jurisdiction in a suit by or against [a limited partnership] depends on the citizenship of ‘all the members’.... ” Id. at 1021 (emphasis added) (quoting Chapman v. Barney, 129 U.S. 677, 682, 9 S.Ct. 426, 428, 32 L.Ed. 800 (1889)).

Since we must decide this appeal on the basis of the law existing at the time of our decision, see Griffith v. Kentucky, 479 U.S. 314, 322, 107 S.Ct. 708, 717, 93 L.Ed.2d 649 (1987); Hegger v. Green, 646 F.2d 22, 26 (2d Cir.1981), and since subject matter jurisdiction is an unwaivable sine qua non for the exercise of federal judicial power, see Carden, 110 S.Ct. at 1021 (quoting Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453, 20 S.Ct. 690, 691, 44 L.Ed. 842 (1900) (quoting Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382, 4 [84]*84S.Ct. 510, 511, 28 L.Ed. 462 (1884))); Colonial Realty Corp. v. Bache & Co., 358 F.2d 178, 183 (2d Cir.), cert. denied, 385 U.S. 817, 87 S.Ct. 40, 17 L.Ed.2d 56 (1966); Fed.R.Civ.P. 12(h), we must give careful attention to the jurisdictional question posed by Carden.

That question arises against the background of the complete-diversity rule first articulated in Strawbridge v. Curtis, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806), which establishes that in order to invoke diversity jurisdiction under 28 U.S.C.

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