International Trading Corporation v Hitec Corporation [1989] FMSC 25; 4 FSM Intrm. 1 (Truk 1989) (11 January 1989)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as International Trading Corp. v. Hitec Corp.[1989] FMSC 25; , 4 FSM Intrm. 1 (Truk 1989)

[1989] FMSC 25; [4 FSM Intrm. 1]

INTERNATIONAL TRADING CORPORATION,
Plaintiff,

v.

HITEC AND TOC JOINT VENTURE,
HITEC CORPORATION and TANG
OVERSEAS CORPORATION,
Defendants.

FSM CIVIL ACTION NO. 1988-1025

OPINION

Before Richard H. Benson
Associate Justice
January 11, 1989

APPEARANCES:

For the Plaintiff:
Mr. Thomas Sterling
Klemm, Blair, Sterling & Johnson
Suite 1008 Pacific News Building
238 O'Hara Street
Agana, Guam 96910

For the Defendants:
Mr. Barrie Michelsen
Ramp & Michelsen
Attorneys at Law
Pohnpei, FSM 96941

* * * *

HEADNOTE

Jurisdiction - Diversity; Partnership
A joint venture, without the powers to sue or be sued in the name of the association and without limited liability of the individual members of the association, is not a citizen of Truk State for diversity purposes even though its principal place of business is in Truk State. International Trading Corp. v. Hitec Corp., [1989] FMSC 25; 4 FSM Intrm. 1, 2-3 (Truk 1989).

* * * *

COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

[4 FSM Intrm. 2]

This matter came before the Court on December 16, 1988, on the motion of the defendants for an order dismissing the action on the ground of lack of jurisdiction.

After considering the written and oral arguments of the parties, the motion was granted. This memorandum briefly sets out the reasons.

Hitec Corporation, Tang Overseas Corporation, and International Trading Corporation are corporations organized and existing under laws other than those of the Federated States of Micronesia. None are citizens of the FSM or of any state of the FSM.

Because of the subject matter of this case (a contract dispute), this court can only exercise jurisdiction if the parties are diverse, that is, if the dispute is "between a state and a citizen of another state, between citizens of different states, and between a state or a citizen thereof, and a foreign state, citizen, or subject." FSM Const. art. XI, § 6(b).

In support of this court's jurisdiction the plaintiff contends that since the joint venture of the two defendant corporations was formed for the purpose of constructing the Truk Airport Terminal and since it has its principal office in Truk, the joint venture should be considered a citizen of Truk.

The general rule in the United States is that the citizenship of the members of a partnership or joint venture is examined to determine whether diversity of citizenship exists. The rule has been questioned in some cases in which the association has significant aspects which make it more akin to corporations than an association of individuals. Examples of aspects which the courts have found significant are the power to sue and to be sued in the name of the association, and the limited liability of the individual members of the association. Only cases from the United States were cited to me. I have been unable to find cases from other jurisdictions on this point.

Such factors do not exist in this joint venture. It does not appear that the joint venture has been registered under the regulations governing partnerships.

I am not authorized to hold that the joint venture is a citizen of Truk for diversity purposes. There is no statutory or decisional authority in the FSM which would permit a joint venture to be considered as a citizen of the state where its principal place of business is located.

The requisite diversity as required by the constitutional grant of jurisdiction does not exist. The motion to dismiss was therefore granted, and the case was dismissed.

So ordered the 11th day of January, 1989.