Opinion ID: 728913
Heading Depth: 2
Heading Rank: 3

Heading: Is Daidone a Member of the Joint Venture Under New Jersey Law?

Text: 14 In New Jersey a joint venture is treated exactly like a partnership. See N.J.Stat.Ann. § 42:1-6(1) (West 1993) ([a] partnership is an association of two or more persons to carry on as co-owners a business for profit); id. § 42:1-7(4) ([t]he receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business except in certain enumerated situations not relevant here); Grober v. Kahn, 219 A.2d 601, 607, 47 N.J. 135, 147 (1966) (In a general way [a joint venture] is a business venture more limited in its objective than a partnership.); see also In re Arbitration between Tehran-Berkeley Civil and Environmental Engineers and Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 243 (2d Cir.1989) (interpreting the partnership law of New York, which like New Jersey has adopted the Uniform Partnership Act, and stating that the legal consequences of a joint venture are equivalent to those of a partnership). Therefore, we turn to New Jersey partnership law to determine whether Daidone was a member of the joint venture at the time of suit. 15 In New Jersey, [t]he dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. N.J.Stat.Ann. § 42:1-29 (West 1993). Because of the assignment of Daidone's interest in the joint venture, Daidone has quite clearly ceased to be associated with the carrying on of the joint venture and the joint venture has been dissolved. 16 However, [o]n dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed. Id. § 42:1-30. The New Jersey Supreme Court has stated that dissolution operates only with respect to future transactions; as to everything past the partnership continues until all pre-existing matters are terminated. Scaglione v. St. Paul-Mercury Indemnity Co., 145 A.2d 297, 304, 28 N.J. 88, 102 (1958) (emphasis added and internal quotation marks omitted); see also Wilzig v. Sisselman, 442 A.2d 1021, 1024, 182 N.J.Super. 519, 525 (1982) ([D]issolution affects future transactions, but as to all past transactions the partnership continues until they are concluded.); United Counties Trust Co. v. Podvey, 389 A.2d 515, 518, 160 N.J.Super. 244, 249 (1978) ([T]he dissolution of a partnership operates only with respect to future transactions, and the partnership therefore continues as to all present existing matters until they are terminated.). Therefore, even though the Schiavone-Daidone partnership/joint venture has been dissolved, it will continue to exist with respect to all pre-existing matters until they have been wound up. 17 Because the partnership continues until its affairs have been wound up, we conclude that individuals who are partners at the time of dissolution remain partners with respect to pre-existing matters until they have been wound up. See N.J.Stat.Ann. § 42:1-30 (West 1993); Scaglione, 145 A.2d at 304, 28 N.J. at 102. This conclusion, that a partner at the time of dissolution remains a partner with respect to pre-existing matters until the partnership's affairs have been wound up, is bolstered by the numerous provisions of New Jersey's partnership statute that discuss the legal rights and liabilities of partners after the partnership has been dissolved. See, e.g., N.J.Stat.Ann. § 42:1-33 (West 1993) ([e]ffect of dissolution on authority of partners); id. § 42:1-34 ([r]ight of partner to contribution from copartners after dissolution); id. § 42:1-35 ([a]fter dissolution a partner can bind the partnership except in certain situations); id. § 42:1-36 ([e]ffect of dissolution on partner's existing liability); id. § 42:1-37 (partners ... [have] the right to wind up the partnership affairs). 18 Because, under New Jersey law, a joint venture is treated like a partnership, if the assignment caused only a dissolution of the joint venture but not a winding up, the joint venture will continue to exist with Daidone as a member, and diversity jurisdiction will not exist. See Murphy v. Gutfreund, 624 F.Supp. 444, 449 (S.D.N.Y.1985) (for diversity purposes, partnerships in dissolution are treated the same as active partnerships). The critical question is, therefore, has there been a winding up of the joint venture. 19 Unfortunately, New Jersey's partnership statute does not define winding up. However, the New Jersey Supreme Court has stated that a partnership continues until all pre-existing matters are terminated and that the winding-up process includes ... the bringing of legal actions. Scaglione, 145 A.2d at 304, 28 N.J. at 102. 20 Here, there is no question that all pre-existing matters relating to the joint venture have not been terminated and that the joint venture is still winding up. The very purpose of this suit, brought in the name of the joint venture, is to collect a debt allegedly owed the joint venture for work performed by the joint venture. Therefore, this suit actually seeks to terminate a pre-existing matter and is in fact a part of the winding-up process. Because the joint venture is still winding up, it continues to exist as to pre-existing matters and Daidone remains a member as to those matters. 21 Because Daidone is a member of the joint venture, Daidone's New York citizenship is attributed to the joint venture and diversity of citizenship does not exist in the joint venture's suit against the City of New York. 2