Limited Liability Partnerships. Mudge Rose Guthrie Alexander ...

[big1devin]

Limited Liability Partnerships. Mudge Rose Guthrie Alexander & Ferdon, a law firm, was organized as a general partnership but converted into a limited liability partnership (LLP). Mudge's principal place of business was New York, where it was organized, but some of its members were citizens of Maryland. The firm filed a suit in a federal district court to recover unpaid legal fees from Robert Pickett and other citizens of Maryland. The defendants filed a motion to dismiss on the ground that there was not complete diversity of citizenship, because some of the LLP members were Maryland citizens as well. Mudge argued that an LLP was like a corporation, and therefore the citizenship of the firm's members was irrelevant. How should the court rule? Explain.

Question 2

Agents have a fiduciary duty to their principals.
 a. True
  b. False
  Indicate whether the statement is true or false

[Ksh22]

Answer to Question 1

Limited liability partnerships
The court granted the motion and dismissed the suit. The court pointed out that the federal jurisdiction statute states only that a corporation is a citizen of the state in which it is in-corporated and in which it maintains its principal place of businessother forms of business entities are omitted. Partnershipsincludi ng limited partnershipsjoint ventures, joint stock companies, and voluntary associations, however, are regarded by the courts as citizens of every state of which any of their members are citizens. An LLP is not mentioned in the statute, and it is not a corporation. Therefore, an LLP must be grouped with the other forms. The court added other substantial bases for concluding that an LLP is not a corporation, and thus not a citizen and that it therefore must be treated for diversity purposes as a citizen of every state of which any of its members is a citizen. New York state law defined partnerships to include LLPs. LLPs are more like limited partnerships than corporations. The only other court to decide the issue ruled the same way.

Answer to Question 2

TRUE

[big1devin]

Excellent

[shewald78]

TYSM