Freeport-McMoRan v. K N Energy,
498 U.S. 426 (1991)

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U.S. Supreme Court

Freeport-McMoRan v. K N Energy, 498 U.S. 426 (1991)

Freeport-McMoRan, Inc. v. K N Energy, Inc.

No. 90-655

Decided Feb. 19, 1991

498 U.S. 426


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.

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