Joe, a resident of New Jersey, wants to open a restaurant. He asks Kay, his frie

Question

Joe, a resident of New Jersey, wants to open a restaurant. He asks Kay, his friend, an experienced attorney and a New Yorker, for her business and legal advice in exchange for a 20 percent ownership interest in the restaurant. Kay helps Joe negotiate a lease for the restaurant premises and advises Joe to organize the business as a limited liability company (LLC). Joe forms Cafe Ole, LLC, and with Kay's help, obtains financing. Then the night before the restaurant opens, Joe tells Kay that he is "cutting her out of the deal." The restaurant proves to be a success. Kay wants to file a suite in a federal district court against Joe and the LLC. Can a federal court exercise jurisdiction over the parties based on diversity of citizenship? Explain.

Explanation / Answer

Yes fedral court can exercise jurisdiction over the parties based on diversity of citizenship.

In the United States law, diversity jurisdiction is a form of jurisdiction in civil procedure where the United States district court in the federal judiciary has the power to hear a civil case where such diversity in citizenship applies that is the parties to the case are from different states.

In Article III, § 2 of the United States Constitution gives power to Congress allow federal courts to cases that are of the nature of diverse citizenship through legislation authorizing such jurisdiction

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