874 F.2d 226 (5th Cir. 1988), 87-3624, Arkoma Associates v. Carden

Docket Nº:87-3624, 87-3917.
Citation:874 F.2d 226
Party Name:ARKOMA ASSOCIATES, Plaintiff-Counter Defendant-Appellee, v. C. Tom CARDEN and Leonard L. Limes, Defendants-Appellants. MAGEE DRILLING COMPANY, INC., Intervenor-Counter Plaintiff-Appellant, v. David HEPBURN, et al., Third Party Defendants-Appellees. ARKOMA ASSOCIATES, Plaintiff Appellee Cross-Appellant, v. C. Tom CARDEN and Leonard L. Limes, Defenda
Case Date:December 07, 1988
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 226

874 F.2d 226 (5th Cir. 1988)

ARKOMA ASSOCIATES, Plaintiff-Counter Defendant-Appellee,

v.

C. Tom CARDEN and Leonard L. Limes, Defendants-Appellants.

MAGEE DRILLING COMPANY, INC., Intervenor-Counter Plaintiff-Appellant,

v.

David HEPBURN, et al., Third Party Defendants-Appellees.

ARKOMA ASSOCIATES, Plaintiff Appellee Cross-Appellant,

v.

C. Tom CARDEN and Leonard L. Limes, Defendants-Appellants

Cross-Appellee,

and

Magee Drilling Company, Intervenor-Appellant Cross-Appellee.

Nos. 87-3624, 87-3917.

United States Court of Appeals, Fifth Circuit

December 7, 1988

Page 227

Richard K. Ingolia, Kenneth J. Berke, Berke & Ingolia, New Orleans, La., for Carden, Limes & Magee, etc.

Mitchell J. Hoffman, Lowe, Stein, Hoffman & Allweiss, New Orleans, La., for Arkoma Assoc. et al.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before POLITZ and JOHNSON, Circuit Judges, and BOYLE, [*] District Judge.

POLITZ, Circuit Judge:

In these consolidated appeals Magee Drilling Company (MDC), C. Tom Carden, and Leonard L. Limes challenge the judgments in favor of Arkoma Associates, a partnership, rendered July 27, 1987 and September 17, 1987. Finding no reversible error, we affirm.

Background

This litigation arises out of Arkoma's lease of two drilling rigs to MDC, a Texas corporation. MDC maintains that it was interested in buying or leasing two rigs capable of drilling to 7,500 feet. Discussions ensued between representatives of Arkoma and MDC. Arkoma avers that it made no representations as to drilling capacity and it gave MDC ample opportunity to inspect the rigs. MDC contends that Arkoma represented that the rigs were capable of drilling to 7,500 feet and that the principal rig components consisted of new or rebuilt parts.

Page 228

On June 27, 1984 the parties executed a lease agreement which expressly declared that no warranties were given. Don Magee, president of MDC and an experienced oil and gas operative, signed the lease and initialed each page of an attached rig inventory list. Carden and Limes, also experienced oil men, joined Magee in personally guaranteeing the drilling company's obligations under the lease.

MDC employees inspected the rig equipment and supervised its transportation from Oklahoma to Texas. Upon arrival, damaged and missing parts and the wrong drill pipe were discovered, and the parties amended the lease to give MDC a credit of $45,000 and other concessions.

MDC used the rigs for over five months and drilled 19 wells. MDC contends that the rigs were defective and incapable of drilling to 7,500 feet, and that Arkoma knew of these defects. Arkoma counters that there is no evidence that the rigs could not drill to 7,500 feet because of defective equipment, that no unusual problems were encountered, and that MDC made no complaints until December 1984 when it tried to repudiate the lease.

On December 28, 1984 MDC notified Arkoma that it could no longer honor its obligations to its creditors. An attempt at compromise was unsuccessful and the following month MDC tendered the rigs to Arkoma. Arkoma accepted physical possession to protect its rigs from damage; however, it reserved its rights under the lease. MDC failed to make the February 1985 payment and Arkoma gave notice of default and accelerated the lease payments. Suit was then filed against Carden and Limes as MDC's guarantors. 1

Carden and Limes, both Louisiana citizens, moved to dismiss for lack of diversity jurisdiction, contending that one of the partners of Arkoma was also a Louisiana citizen. The district court denied that motion but certified the jurisdictional question. We declined to accept the interlocutory appeal. Carden and Limes counterclaimed and MDC intervened, claiming violations of the Texas Deceptive Trade Practices Act.

Following a bench trial the court awarded Arkoma judgment in the amount of $467,806.25 plus interest and attorney's fees. The counterclaim and intervention were rejected. Carden, Limes, and MDC appeal.

Analysis

  1. Jurisdiction

    The threshold issue raised on appeal is whether Arkoma properly invoked diversity jurisdiction. As found by the trial court and uncontested on appeal, two of Arkoma's general partners are citizens of Arizona and the other two are citizens of Oklahoma. One partner--claimed by Arkoma to be a limited partner--is a citizen of Louisiana, as are Carden and Limes.

    The citizenship of a general partnership is determined by the citizenship of all the partners. If Arkoma is a general partnership, complete diversity of citizenship between the parties-plaintiff and parties-defendant does not exist. On the other hand, if Arkoma is a limited partnership, the citizenship of the partnership is determined by the citizenship of the general partners only; the citizenship of limited partners is irrelevant. In the latter instance, the requirements of diversity jurisdiction are met. See Navarro Savings Association v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980); Mesa Operating Limited Partnership v. Louisiana Intrastate Gas Corp., 797 F.2d 238 (5th Cir.1986).

    The district court found that Arkoma, organized under the laws of Arizona, was a limited partnership under the laws of that state. The...

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