In a diversity action filed in the Federal District Court,
petitioners McMoRan Oil and Gas Company (McMoRan) and
Freeport-McMoRan Inc., both Delaware corporations, alleged that
respondent K N Energy, Inc., a Kansas corporation with its
principal place of business in Colorado, had failed to pay the
parties' contract price for natural gas. After suit was filed,
McMoRan transferred its interest in the contract to FMP Operating
Company (FMPO), a limited partnership. whose partners included
citizens of Kansas and Colorado. The District Court permitted
petitioners to add FMPO as a plaintiff and ruled in petitioners'
favor. The Court of Appeals reversed and directed that the suit be
dismissed for want of jurisdiction, holding that, under
Carden
v. Arkoma Associates, 494 U. S. 185, the
addition of FMPO destroyed diversity jurisdiction.
Held: Diversity jurisdiction, once established, is not
defeated by the addition of a nondiverse party to the action.
Carden considered whether limited partners' citizenship
must be taken into account in determining whether diversity
jurisdiction exists in an action brought by a limited partnership,
but suggested nothing to change the well-established rule that, if
jurisdiction exists at the time an action is codmmenced, it may not
be divested by subsequent events,
see, e.g., 22 U.
S. Torrance, 9 Wheat. 537. The opinions of both the
District Court and the Court of Appeals establish that the parties
were diverse at the time the action arose and at the time the
proceedings commenced. This Court's decision in
Owen Equipment
& Erection Co. v. Kroger, 437 U.
S. 365 -- that a District Court's ancillary jurisdiction
did not extend to the entertaining of a claim by an original
plaintiff in a diversity action against a nondiverse third-party
defendant impleaded by the original defendant -- also casts no
doubt on the principle that diversity jurisdiction is to be
assessed at the time a lawsuit is commenced.
Certiorari granted; 907 F.2d 1022, reversed.
PER CURIAM.
Petitioners seek review of a decision of the United States Court
of Appeals for the Tenth Circuit, holding that a Federal
Page 463 U. S. 427
District Court lacked jurisdiction to entertain their diversity
action because they added a nondiverse party after filing their
complaint. We grant certiorari and reverse the decision of the
Court of Appeals.
Petitioners, McMoRan Oil and Gas Company (McMoRan) and its
parent company, FreePort-McMoRan, Inc. (Freeport), sued respondent
K N Energy, Inc., (K N) for breach of contract in the United States
District Court for the District of Colorado. Petitioners claimed
that respondent had failed to pay the price for natural gas agreed
upon in their contract, and sought both declaratory relief to
establish the contract price and damages for past underpayments.
Petitioners based federal jurisdiction upon diversity of
citizenship. At all times up to and including the filing of the
complaint, Freeport and McMoRan were Delaware Corporations with
their principal places of business in Louisiana. K N was and is a
Kansas corporation with its principal place of business in
Colorado.
After suit was filed, petitioner McMoRan transferred its
interest in the contract with respondent to a limited partnership,
FMP Operating Company (FMPO), for business reasons unrelated to the
instant litigation. FMPO's limited partners included citizens of
Kansas and Colorado. Accordingly, before trial commenced,
petitioners sought leave to amend their complaint to substitute
FMPO as a plaintiff under Rule 25(c) of the Federal Rules of Civil
Procedure. The District Court permitted petitioners to add FMPO as
a party but did not remove McMoRan as a party. After a bench trial,
the District Court held in favor of petitioners, and respondent
appealed. The Court of Appeals reversed, and directed that the suit
be dismissed for want of jurisdiction. The court held that
"although complete diversity was present when the complaint was
filed," the addition of FMPO as a plaintiff destroyed jurisdiction.
907 F.2d 1022, 1024 (1990). The court based its holding upon our
decision in
Carden v. Arkoma Associates, 494 U.
S. 185 (1990). The
Page 463 U. S. 428
court explained that "
Carden establishes that [FMPO's]
addition as the real party in interest destroys the district
court's diversity jurisdiction." 907 F.2d at 1025.
Our decision last term in
Carden considered whether the
citizenship of limited partners must be taken into account in
determining whether diversity jurisdiction exists in an action
brought by a limited partnership. The original plaintiff in
Carden was the limited partnership; diversity
jurisdiction, then, depended upon whether complete diversity of
citizenship existed at the time the action was commenced. But
nothing in
Carden suggests any change in the well
established rule that diversity of citizenship is assessed at the
time the action is filed. We have consistently held that if
jurisdiction exists at the time an action is commenced, such
jurisdiction may not be divested by subsequent events.
Mollan v.
Torrance, 9 Wheat. 537;
Clarke v.
Mathewson, 12 Pet. 164,
37 U. S. 171
(1838);
Wichita Railroad & Light Co. v. Public Util. Comm'n
of Kansas, 260 U. S. 48,
260 U. S. 54
(1922) ("Jurisdiction once acquired . . . is not divested by a
subsequent change in the citizenship of the parties. Much less is
such jurisdiction defeated by the intervention, by leave of the
court, of a party whose presence is not essential to a decision of
the controversy between the original parties" (citations
omitted)).
The opinions of the District Court and the Court of Appeals
establish that the plaintiffs and defendants were diverse at the
time the breach-of-contract action arose and at the time that
federal proceedings commenced. The opinions also confirm that FMPO
was not an "indispensable" party at the time the complaint was
filed; in fact, it had no interest whatsoever in the outcome of the
litigation until sometime after suit was commenced. Our cases
require no more than this. Diversity jurisdiction, once
established, is not defeated by the addition of a nondiverse party
to the action. A contrary rule could well have the effect of
deterring normal business transactions during the pendency of what
might be lengthy litigation.
Page 463 U. S. 429
Such a rule is not in any way required to accomplish the
purposes of diversity jurisdiction.
Respondent relies on our decision in
Owen Equipment &
Erection Co. v. Kroger, 437 U. S. 365
(1978), to support the result reached by the Court of Appeals.
There we held that the ancillary jurisdiction of a District Court
did not extend to the entertaining of a claim by an original
plaintiff in a diversity action against a nondiverse third-party
defendant impleaded by the original defendant pursuant to Federal
Rules of Civil Procedure 14(a). It casts no doubt on the principle
established by the cases previously cited that diversity
jurisdiction is to be assessed at the time the lawsuit is
commenced.
The motion of American Mining Congress for leave to file a brief
as
amicus curiae is granted. The petition for a writ of
certiorari is granted, and the judgment of the Court of Appeals
is
Reversed.
Justice SOUTER took no part in the consideration or decision of
this motion and case.
