Opinion ID: 6559
Heading Depth: 2
Heading Rank: 2

Heading: Indispensability of the Partnership

Text: 13 In this case, the partnership is even more than the real party in interest--it is an indispensable party without whom the lawsuit should not have gone forward. 10 14 In Whalen v. Carter, 11 we confronted the question whether a partnership was an indispensable party in a lawsuit brought by limited partners charging the managing partners of a partnership with fraud. We concluded that it was. We first noted the four factors identified in Fed.R.Civ.P. 19(b) as relevant to the determination whether a party is indispensable: 15 (1) to what extent a judgment rendered in the party's absence might be prejudicial to that party or others in the lawsuit; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the party's absence will be adequate; and (4) whether the plaintiff will have an adequate remedy if the party cannot be joined. 12 16 We concluded that, on balance, the test favored holding the partnership an indispensable party. We noted that the judgment would prejudice the partnership's rights and that shaping the relief provided inadequate protection to the partnership's interest. We consider the reasoning of Whalen sound and we follow it today in holding that Kona Hills was an indispensable party in Bankston's derivative lawsuit. 13 17 The Eighth Circuit reached a similar result in Buckley v. Control Data Corp., 14 a case we find persuasive. In Buckley, limited partners sued a general partner, alleging various derivative causes of action. The court ruled that the limited partnership, as the holder of the rights from which the limited partners' claims derived, was an indispensable party to the litigation. Although Buckley turned in part on the particularities of Minnesota partnership law, its reasoning is of sound general applicability and harmonious with the applicable Hawaii statutes in this case. 18 It is undisputed that the partnership itself was never named as a party in this case, either in state or federal court. That does not control our jurisdictional inquiry, however. The inquiry into the existence of complete diversity requires considering the citizenship even of absent indispensable parties. 15 The parties may not manufacture diversity jurisdiction by failing to join a non-diverse indispensable party. 19