
USCA1 Opinion

	




          March 3, 1993                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 92-1921                  TABER PARTNERS, I, A NEW YORK GENERAL PARTNERSHIP,                                Plaintiff, Appellant,                                          v.                  MERIT BUILDERS, INC., A PUERTO RICO CORP., ET AL.,                                Defendants, Appellees.                                _____________________        No. 92-1922                  TABER PARTNERS, I, A NEW YORK GENERAL PARTNERSHIP,                                 Plaintiff, Appellee,                                          v.                      MERIT BUILDERS, INC., A PUERTO RICO CORP.,                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Jaime Pieras, Jr., U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                          Coffin, Senior Circuit Judge, and                                  ____________________                                Stahl, Circuit Judge.                                       _____________                                 ____________________            Harvey B. Nachman with whom Joan  Schlump Peters was on  brief for            _________________           ____________________        Merit Builders, Inc.  and Arch Stokes with  whom John R.  Hunt, Stokes                                  ___________            _____________  ______        and Murphy,  Ruben T. Nigaglioni and  Ledsma, Palou & Miranda  were on        __________   ___________________      _______________________        brief for Taber Partners I.            Jay A.  Garcia-Gregory with whom  Rafael R. Vizcarrondo,  Humberto            ______________________            _____________________   ________        Guzman-Rodriguez and Fiddler, Gonzalez &  Rodriguez were on brief  for        ________________     ______________________________        appellees.                                 ____________________                                    March 3, 1993                                 ____________________                      STAHL, Circuit  Judge.  This appeal  requires us to                             ______________            decide whether,  for  purposes of  diversity jurisdiction,  a            partnership's  business activities  should  be considered  in            determining the principal  place of business  of each of  its            corporate partners.  We hold that, in the absence of evidence            that  the partnership  and its  corporate partners  failed to            maintain   their   separate  identities,   the  partnership's            activities  ordinarily  should  not  be considered  for  this            purpose.                                          I.                                          I.                                          __                                  PROCEDURAL POSTURE                                  PROCEDURAL POSTURE                                  __________________                      Plaintiff Taber  Partners I  ("Taber"), a New  York            general  partnership whose  sole  partners are  two New  York            corporations, Lerfer  San Juan Corp. ("Lerfer"),  and Calumet            Corp.  ("Calumet"),  owns and  operates the  Ambassador Plaza            Hotel  &   Casino  ("Hotel")   in  San  Juan,   Puerto  Rico.            Defendants  Merit Builders,  Inc.,  and Merit  Builders, S.E.            (hereinafter  referred to collectively as "Merit") are Puerto            Rico-based construction  companies.  Beginning in March 1988,            Taber and  Merit  entered into  a  series of  consulting  and            construction contracts involving the renovation and expansion            of  the Hotel.    Disputes arose  during  the course  of  the            project, and  in February  1991, Taber commenced  a diversity            action against Merit in the United States District  Court for            the District of  Puerto Rico asserting, inter alia, breach of                                                    _____ ____                                         -2-                                          2            contract,  fraud,  and  negligence.    Merit  responded  with            several counterclaims  against  Taber and  filed  third-party            complaints  against  appellees  Victor  Torres  &  Associates            ("VTA"),   the   inspecting   architect,    and   Desarrollos            Metropolitanos,  Inc.  ("Desarrollos"),  one  of  the project            subcontractors.   Like  Merit, both  VTA and  Desarrollos are            citizens of Puerto Rico.                      On the eve of trial,  VTA and Desarrollos moved  to            dismiss, asserting that --  because Taber was also a  citizen            of Puerto Rico --  diversity of citizenship was lacking.   As            the  citizenship of Taber depends upon the citizenship of its            partners, Lerfer and Calumet, the district court first had to            determine Lerfer's and Calumet's  citizenship.  See Carden v.                                                            ___ ______            Arkoma Assocs., 494 U.S.  185, 195-96 (1990) (reaffirming the            ______________            "oft-repeated rule  that diversity jurisdiction in  a suit by            or against [a partnership] depends on the citizenship of `all            the  [partners]' . . .") (quoting Chapman v. Barney, 129 U.S.                                              _______    ______            677,  682   (1889)).    As   Lerfer  and  Calumet   are  both            incorporated in New York, the sole  issue before the district            court   was  the   principal  place   of  business   of  both            corporations.  See 28 U.S.C.    1332(c)(1) ("For the purposes                           ___            of  [diversity,] . . . a corporation  shall be deemed to be a            citizen  of any [s]tate by which it has been incorporated and                                                                      ___            of the [s]tate where it has its principal place of business")            (emphasis supplied).            The district court ultimately                                         -3-                                          3            agreed  with  VTA's   and  Desarrollos'  argument  that   the            principal  place of business  of both Lerfer  and Calumet was            Puerto  Rico.   Thus, on  July, 8,  1992, the  district court            granted  their  motion and  dismissed  the case  for  lack of            subject  matter  jurisdiction.    See  Taber  Partners  I  v.                                              ___  __________________            Insurance Co. of North  America, Inc., 798 F. Supp.  904, 912            _____________________________________            (D.P.R. 1992).                        In this appeal, Taber and Merit, adversaries below,            mount a  joint challenge to the district court's dismissal of            their case.   In so doing,  they argue that, in  light of the            undisputed evidence  that  Lerfer's and  Calumet's  corporate            activities  occurred almost  exclusively  in  New  York,  the            district court's  selection of  Puerto Rico as  the principal            place of business of  both corporations is clearly erroneous.            Before  addressing   appellants'  argument,  we   sketch  the            relevant facts.                                          II.                                         II.                                         ___                                  FACTUAL BACKGROUND                                  FACTUAL BACKGROUND                                  __________________                      In  December 1986,  Mr.  F. Eugene  Romano and  Ms.            Linda E.  Romano, citizens  of New York,  incorporated Lerfer            and  Calumet in  New York.   At  all relevant  times,1 Eugene                                            ____________________            1.  For  purposes of  diversity jurisdiction,  citizenship is            determined as of the  date of the initiation of  the lawsuit.            See, e.g., Freeport-McMoRan, Inc. v. K N Energy, Inc., 111 S.            ___  ____  ______________________    ________________            Ct. 858, 859  (1991); Media Duplication  Servs., Ltd. v.  HDG                                  _______________________________     ___            Software, Inc., 928 F.2d  1228, 1236 (1st Cir. 1991).   Thus,            ______________            we  recite relevant  facts as  they  existed on  February 15,            1991, the date Taber filed its complaint.                                            -4-                                          4            Romano owned all the outstanding shares  of Lerfer, and Linda            Romano  owned all the  outstanding shares of  Calumet.  Linda            Romano  and Mrs.  Jeanne  Romano served  as  the officers  of            Lerfer, while  Eugene Romano and Jeanne Romano  served as the            officers of Calumet.  The  same three individuals also served            as the directors of both corporations.                        Lerfer and Calumet are "Subchapter S" corporations,            a status entitling them to favorable tax treatment under both            federal  law, see  generally 26  U.S.C.    1361 et  seq., and                          ___  _________                    __  ____            state law.  See generally New York Tax Law   660(a) (McKinney                        ___ _________            1987).   See also Taber  Partners I,  798 F. Supp.  at 907-09                     ___ ____ _________________            (explaining the  legal and  practical underpinnings of  an "S            Corporation").   The  Certificates of  Incorporation of  both            companies contain  a broad  declaration of  corporate purpose            "to  engage  in  any  lawful  acts  or  activities for  which            corporations may be organized under the  Business Corporation            Law of the State of New York . . . ."                        The   headquarters  (and   sole  office)   of  both            corporations is located at 501 Main  Street, Utica, New York.            All  corporate  books  and  records  are  maintained  at  the            headquarters, and all accounting, auditing, and legal work is            handled for both corporations in the state of New York by New            York  accountants and attorneys.   Both corporations maintain            their  bank accounts in New York, and Lerfer also maintains a            working capital account  with an investment firm in New York.                                         -5-                                          5            Each files federal income tax returns from New York and state            income tax returns  in New  York.  Neither  files income  tax            returns in Puerto Rico.                      On   December   29,  1986,   shortly   after  their            incorporation, Lerfer  and Calumet entered into a partnership            agreement ("the Agreement") that formed Taber.  The Agreement            lists  New  York,  or "such  other  place  or  places as  the            [p]artners may determine[,]"  as Taber's  principal place  of            business.2    Under  the  Agreement, Lerfer  obtained  a  99%            ownership  interest  in  Taber,  and Calumet  obtained  a  1%            ownership  interest.  Lerfer  and Calumet agreed  to share in            Taber's net profits and losses under a formula which mirrored            their respective ownership interests.                      Article IV  of the Agreement states:   "The primary            and  specific purpose of [Taber] is  to acquire, own, operate            and  manage [the Hotel in Puerto Rico]."  Pursuant to section            7.01 of the Agreement, Lerfer and Calumet  delegated the day-            to-day  management of  Taber to  Eugene Romano,  as executive            director,  and  Linda Romano,  as  assistant  director.   All            responsibilities   not  enumerated   in  section   7.01  were            delegated  to  the  partnership  generally.    The  Agreement                                            ____________________            2.  While the Agreement was negotiated, drafted, and recorded            in New York,  it was  "protocolized" in Puerto  Rico for  the            purpose of recording the deed to the Hotel at the Registry of            Property  in San Juan.  The  protocol procedure was necessary            to establish  Taber's authority to own  property under Puerto            Rico law.  See P.R. Laws Ann. tit. 31,   4313 (1991).                       ___                                         -6-                                          6            specifically  granted  Taber the  authority,  inter  alia, to                                                          _____  ____            borrow money,  enter into  contracts, bring and  defend legal            actions,  and  "[d]o  any  and  all  other  acts  and  things            necessary or  proper  in  furtherance  of  the  [p]artnership            business."                      Since  their  incorporation  in  1986,  Lerfer  and            Calumet have  both described themselves on  their federal and            state tax returns as "holding compan[ies]."  Eugene and Linda            Romano testified in their depositions that each corporation's            sole  function  is  to  hold  or  administer  its  respective            interest in Taber.  To this  end, Lerfer and Calumet employ a            "control-group"  of  twelve  individuals  to  maintain  their            corporate  records   and  financial   accounts.     All  such            maintenance occurs  exclusively in New  York.  An  example of            the type  of New York-centered  activity in which  Lerfer and            Calumet  engage  is  their  management  of loan  transactions            designed to secure their ownership  interests in Taber.   For            instance, Eugene Romano has made substantial loans (totalling            approximately $8,000,000) to Lerfer, which, in turn, reloaned            these funds to Taber.  Each of these loans consisted of funds            that originated in New York  and were evidenced by promissory            notes prepared, executed, and delivered in New York.                          The  record reveals that  all policy  decisions for            Lerfer and  Calumet are made in  New York.   For example, the            decision  to invest  in  Taber was  made in  New  York.   The                                         -7-                                          7            election  of  corporate  officers  and   the  appointment  of            accountants occur  at the annual Board  of Directors meetings            held  in New  York.   Indeed, the  record contains  almost no            evidence of  corporate activity on the part  of either Lerfer            or Calumet taking place outside of New York.3                      Despite  these  uncontroverted facts,  the district            court concluded that  the principal place of business of both            Lerfer  and Calumet was Puerto Rico.   In so doing, the court            rejected appellants'  characterization of Lerfer  and Calumet            as "passive"  holding companies  and found that  their raison                                                                   ______            d'etre included the operation of the Hotel:            ______                      Only a[n] unrealistically narrow  view of                      the orientation of  the corporations  and                      their  partnership  could  yield  such  a                      conclusion.  The corporations were formed                      to act  as owners  of the [Hotel].   They                      devote  almost  all  of  their  corporate                      activity  to  administer their  assets in                      the    partnership.       They   actively                      authorized the formation of Taber and the                      obtaining  of a  bond  to  assist in  the                      financing of  the  projects.   They  have                      loaned  substantial  amounts of  money to                      Taber.     And   the  directors   of  the                      partnership, Mr. and Ms. Romano,  are the                      directors  of  the  corporations.   Under                      these  circumstances,  the  Court  cannot                      accept   the   characterization  of   the                      corporations'   interests  in   Taber  as                      passive.  The  Court therefore  considers                      of greater significance  the location  of                      the corporations' primary activity.  This                      activity is the renovation  and operation                                            ____________________            3.  The record reveals that  Lerfer's and Calumet's Boards of            Directors  held two  "special meetings"  in San  Juan, Puerto            Rico, in connection with  the initial purchase and subsequent            refinancing of the Hotel.                                          -8-                                          8                      of  the  [Hotel],  which  is  located  in                      Puerto Rico.            Taber Partners  I, 798 F. Supp. at 912.   We do not concur in            _________________            the district court's analysis.                                          III.                                         III.                                         ____                                      DISCUSSION                                      DISCUSSION                                      __________                      A district court's determination of citizenship for            purposes of diversity jurisdiction is a mixed question of law            and  fact.   As such,  we  will not  set  aside the  district            court's decision unless it is "clearly erroneous."  Lundquist                                                                _________            v.  Precision Valley Aviation, Inc., 946 F.2d 8, 11 (1st Cir.                _______________________________            1991);  Media Duplication, 928 F.2d at 1237.  In addition, we                    _________________            review the facts of this case mindful that the party invoking            the jurisdiction  of a  federal court carries  the burden  of            proving its existence.  See, e.g., Lundquist, 946 F.2d at 10.                                    ___  ____  _________                      In this  circuit, we  utilize "three  distinct, but            not   necessarily  inconsistent  tests"   for  determining  a            corporation's principal  place of  business:  (1)  the "nerve            center" test, which  searches for the location from which the            corporation's activities are controlled and directed; (2) the            "center of  corporate activity" test, which  searches for the            location of the corporation's  day-to-day management; and (3)            the  "locus of the operations of the corporation" test, which            searches  for  the  location  of   the  corporation's  actual                                         -9-                                          9            physical operations.  Topp v. CompAir Inc., 814 F.2d 830, 834                                  ____    ____________            (1st Cir. 1987).                      While we have not had occasion to apply these tests            to a general partnership  whose partners are corporations, we            frequently  have  applied  them to  corporations  involved in            parent-subsidiary   relationships.      See,   e.g.,   U.S.I.                                                    ___    ____    ______            Properties Corp. v.  M.D. Constr.  Co., Inc., 860  F.2d 1,  7            ________________     _______________________            (1st  Cir.  1988),  cert.   denied,  490  U.S.  1065  (1989);                                _____   ______            Rodriguez v. SK & F Co., 833 F.2d 8, 9 (1st Cir. 1987); Topp,            _________    __________                                 ____            814 F.2d at 833-39; Lugo-Vina v. Pueblo Int'l, Inc., 574 F.2d                                _________    __________________            41, 43-44 (1st Cir.  1978); de Walker v. Pueblo  Int'l, Inc.,                                        _________    ___________________            569 F.2d 1169, 1170-73 (1st Cir. 1978).  In  this context, we            have repeatedly held  that, where there  is no evidence  that            the integrity  of the corporate  form has been  violated, the            separate  corporate  identities of  a  parent  and subsidiary            should be  honored  when determining  either one's  principal            place  of business.   See  U.S.I. Properties,  860 F.2d  at 7                                  ___  _________________            (recognizing  separate  corporate   identity  of   subsidiary            despite   evidence  that   subsidiary  was   wholly-owned  by            "grandparent"  corporation,  shared  all  its   officers  and            directors with grandparent, was grossly undercapitalized, and            did not prepare its own budget, construction requirements, or            policies  and   procedures);   Rodriguez,  833   F.2d  at   9                                           _________            (recognizing separate corporate  identity of subsidiary where            evidence showed  that  it  operated  independently  from  its                                         -10-                                          10            parent);  Topp,  814   F.2d  at  833  (recognizing   separate                      ____            corporate  identity  of  subsidiary  holding  company despite            evidence that it could not act without the express permission            of its parent,  and that its  sole function was  to serve  as            financial  conduit for  parent);  Lugo-Vina, 574  F.2d at  43                                              _________            (recognizing  separate  corporate  identity of  parent  where            evidence  showed  it operated  independently  of wholly-owned            subsidiary);  de  Walker,  569  F.2d   at  1173  (recognizing                          __________            separate  corporate identity of  parent despite evidence that            parent consolidated its profits  and losses with that  of its            wholly-owned  subsidiary  in  presenting  parent's  financial            reports  to shareholders,  that subsidiary  was  considered a            "division" of  parent, and that subsidiary  accounted for 60%            of parent's  and subsidiary's  combined operations).   Accord                                                                   ______            Danjaq,  S.A. v.  Pathe Communications  Corp., 979  F.2d 772,            _____________     ___________________________            774-75   (9th  Cir.  1992)  (recognizing  separate  corporate            identity  of   parent   despite  evidence   that   subsidiary            "perform[ed] the lion's share" of the film production for the            parent)  (citing  Lugo-Vina,  574  F.2d  at  43-44);  Pyramid                              _________                           _______            Securities Ltd. v.  IB Resolution, Inc., 924 F.2d  1114, 1120            _______________     ___________________            (D.C.  Cir.)  (recognizing  separate  corporate  identity  of            parent despite  evidence that  parent was "alter-ego"  of its            subsidiary and  was being  sued for  acts of  its subsidiary)            (citing  U.S.I.  Properties  Corp.,  860 F.2d  at  7),  cert.                     _________________________                      _____            denied, 112  S. Ct.  85 (1991);  Schwartz v. Electronic  Data            ______                           ________    ________________                                         -11-                                          11            Sys., Inc., 913  F.2d 279, 283  (6th Cir. 1990)  (recognizing            __________            separate  corporate  identity  of  subsidiary  where evidence            showed "formal  separation [was] maintained")  (citing U.S.I.                                                                   ______            Properties  Corp., 860  F.2d at  7; Topp,  814 F.2d  at 835).            _________________                   ____            Contra Freeman  v. Northwest Acceptance Corp.,  754 F.2d 553,            ______ _______     __________________________            557 (5th Cir. 1985) (imputing citizenship of a  subsidiary to            its parent  and alleged "alter-ego") (citing  Toms v. Country                                                          ____    _______            Quality Meats, Inc., 610 F.2d  313, 315-16 (5th Cir.  1980));            ___________________            Bonar, Inc. v. Schottland, 631 F. Supp. 990, 997-98 (E.D. Pa.            ___________    __________            1986)  (imputing citizenship  of  parent to  subsidiary where            evidence showed that the business of both was "identical" and            court determined  that their formal separation  was "merely a            corporate fiction").                      For instance,  in Topp,  we held that  the district                                        ____            court erred in applying  the "nerve center" test in  a manner            which  "ignore[d]  the  separate  corporate  identity of  the            corporation whose citizenship [was] being sought."  Topp, 814                                                                ____            F.2d at 835.   In  that case, the  district court  determined            that the principal  place of business  of the subsidiary  was            England, the  location  of the  parent.   Id.  at 832.    The                                                      ___            subsidiary   in  Topp   was   a  holding   company  with   no                             ____            manufacturing, purchasing,  or sales facilities.   Id. at 834                                                               ___            n.3.   Its  principal  function was  to  act as  a  financial            conduit   for  its   parent,  providing   administrative  and            financial services to  various other subsidiaries  across the                                         -12-                                          12            United  States.  Id. at 834.   The district court found that,                             ___            although  the subsidiary maintained  an office  and conducted            its business  activities in New Hampshire,  it was controlled            by the parent  who made  all of the  major policy  decisions,            including  the hiring  and  firing of  the  employees of  the            subsidiary.   As a result,  the district court  reasoned that            England was the subsidiary's "nerve center."  Id. at 832.                                                          ___                      We  reversed the  district court  and held  that it            erroneously merged  the activities of the  subsidiary and the            parent in  determining the subsidiary's "nerve  center."  Id.                                                                      ___            at 834.  We  made clear that, in determining  a corporation's            principal place  of business,  the activities of  the company            whose citizenship is  at issue are  those that are  relevant.            Id.   Moreover,  we  held  that  as  long  as  the  corporate            ___            formalities are preserved by  the parent and subsidiary, they            are entitled to recognition:                      [D]efendants   presented   uncontradicted                      evidence     that     [the    subsidiary]                      maintained,  in  New  Hampshire, its  own                      general  ledger,  corporate minutes  book                      and register of  unissued stock, its  own                      bank  accounts,  and  its  own  executive                      offices.  [The subsidiary] filed  its own                      federal and state income and unemployment                      taxes, social  security contributions and                      excise  taxes.   This  evidence indicates                      that the separate  corporate identity  of                      [the  subsidiary]  is   entitled  to   be                      recognized.             Id. at 837.   We therefore concluded that, while  "the shots"            ___            may  have been called by the parent in England, the principal                                         -13-                                          13            place of business  of the subsidiary  was New Hampshire,  the            "operational  center of the corporation in question."  Id. at                                                                   ___            835 n.4.                      Likewise,  in de  Walker, we  held that  a parent's                                    __________            principal place of business was Puerto Rico, the situs of its                                                                      ___            "day-to-day management and operations," rather than New York,            the  place  where   its  wholly-owned  subsidiary   conducted            business.  de Walker,  569 F.2d at 1172.   Despite compelling                       _________            evidence  that the  parent and  subsidiary in de  Walker were                                                          __________            closely intertwined, see id.  at 1171, we were  not persuaded                                 ___ ___            to  ignore their separate corporate identities.  Id. at 1172.                                                             ___                      The critical  factual question in de  Walker, as in                                                        __________            Topp, was not the degree of control the parent exercised over            ____            the  subsidiary,  but whether  the  two  businesses preserved            their separate corporate identities.  We reasoned that:                      While the  documents . .  . indicate that                      [the  parent]  was  ultimately  the  sole                      beneficiary   and    director   of   [the                      subsidiary's] corporate activities, there                      is  nothing  in the  record  to undermine                      [the   parent's]   claim  that   the  two                      corporations        were       separately                      incorporated,  had   separate  boards  of                      directors,  kept separate  accounting and                      tax records, and had  separate facilities                      and operational personnel.   And, leaving                      aside the activities  of [the  subsidiary                      in New York], there is next to nothing in                      the   record   to  establish   that  [the                      parent],   in  its   corporate  capacity,                                 __  ___   _________  ________                      conducted  any  business  outside  Puerto                      Rico.                                         -14-                                          14            de  Walker, 569 F.2d at 1171 (emphasis supplied).  We further            __________            reasoned that the close interrelationship of the corporations            was  incidental to  the  parent's ownership  of  100% of  the            subsidiary's  stock  and   did  "not  justify   ignoring  the            otherwise separate character of  the two corporations."4  Id.                                                                      ___            at 1173.                        Thus, pertinent circuit authority, particularly our            opinions in Topp and  de Walker, stand for the  following two                        ____      _________            unremarkable  propositions:    (1)  that  in   determining  a            corporation's principal place of business, a district court's            inquiry must focus  solely on the business activities  of the                                ______            corporation whose  principal place  of business is  at issue;            and  (2) that an exception to this general rule applies where            there is evidence that the separate corporate identities of a            parent and subsidiary have  been ignored.  We can  discern no            reason  why these  propositions should  not apply  with equal            force where the entities at issue are corporate partners.5                                            ____________________            4.  An exception to this  general rule exists in cases  where            there  is  evidence  that  the  parent  and  subsidiary  have            violated  the  integrity of  the corporate  formalities which            they selected.  E.g., de Walker, 569 F.2d at 1173.                            ____  _________            5.  The  appellees attempt  to justify  the district  court's            treatment of  Taber, Lerfer,  and Calumet  as one  entity for            diversity  purposes by  relying almost  exclusively upon  New            York partnership law, which they contend regards the partners            and  a  partnership  as a  single  entity.    Whether or  not            appellees are  correct in their characterization  of New York            partnership  law,  a  proposition  on  which  we  express  no            opinion,  such law is not controlling in light of federal law                                                              _______            which distinguishes  between a partnership  and its  partners            for purposes  of diversity jurisdiction.   See, e.g., Carden,                                                       ___  ____  ______                                         -15-                                          15                      Here, the uncontroverted facts reveal that the sole            corporate  "activities"  of  Lerfer  and  Calumet consist  of            holding or administering their assets  in Taber, and that all            such administering occurs exclusively in New York.  Moreover,            there  is no evidence that  Lerfer and Calumet  engage in the            operation  and/or management  of  the Hotel.   Indeed,  it is            uncontroverted that Taber was expressly created by Lerfer and            Calumet,  as  stated  in  the Agreement,  "to  acquire,  own,            operate and manage [the Hotel in Puerto Rico]."  See also 798                                                             ___ ____            F. Supp. at 905,  906 (characterizing as undisputed  the fact            that "Taber's business is the operation and management of the            [Hotel]").   It  is  also apparent  from  the Agreement  that            Lerfer  and Calumet  delegated the  day-to-day management  of            Taber  to   Taber's  officers,   Eugene  and   Linda  Romano.            Appellees have introduced no  evidence to suggest that either            Lerfer or Calumet ever usurped that role.6                                            ____________________            494 U.S. at  195-96.  We  therefore find appellees'  argument            unpersuasive.            6.  We are aware that the district  court found that Lerfer's            and Calumet's "primary activity  . . . is the  renovation and            operation of the  [Hotel], which is located in  Puerto Rico."            See Taber Partners I, 798 F. Supp. at 912.   However, we have            ___ ________________            not  found any evidence to  support such a  finding.  Indeed,            the district  court itself  found that "[Lerfer  and Calumet]            devote almost  all of their corporate  activity to administer            their assets in the  partnership," id., activity which occurs                                               ___            almost  exclusively  in New  York.    It further  found  that            "Taber's  business is  the  operation and  management of  the            [Hotel]." Id. at 906.  Given that the district court  made no                      ___            attempt to reconcile  these findings, we are not  inclined to            accord them any deference.                                            -16-                                          16                      In sum, the record  reveals that Lerfer and Calumet            serve  as  holding companies  which  manage  their assets  in            Taber, a separate, and legally distinct, partnership  entity,            and that  all their  "activities" as holding  companies occur            exclusively in  New York.   We  need go  no  further.   Under            either the  "nerve center" test  or the "center  of corporate            activity"  test,7 the  principal  place of  business of  both            Lerfer  and Calumet is New York.8   Cf. Vareka Invs., N.V. v.                                                ___ __________________            American Inv. Properties, Inc., 724 F.2d 907, 910 (11th Cir.)            ______________________________            (holding that  Ecuador corporation which  served as  "passive            investment vehicle"  for  Florida  real  estate  venture  had            principal place  of business  in Ecuador where  it maintained            its  corporate   books  and   records,  made   all  corporate            decisions, held all corporate  meetings, hired its employees,            and obtained loans for the initial purchase of  the venture),            cert.  denied, 469 U.S. 826 (1984).9  Both Lerfer and Calumet            _____  ______                                            ____________________            7.  Because Lerfer  and Calumet  have no  physical operations            (i.e., factories, warehouses, sales offices, etc.) the "locus             ____            of  the operations  of  the corporation"  test  would not  be            helpful.  See Topp, 814 F.2d at 834 n.3 (rejecting utility of                      ___ ____            a "locus of physical operations of  the corporation" test for            a holding company).            8.  Because we find that  New York is the principal  place of            business of both  Lerfer and Calumet under  either the "nerve            center" or "center of corporate  activity" test, we need  not            determine which of  the two tests  is most appropriate  under            these facts.              9.  In  so holding, we are not unaware  of a line of cases in            which district courts, in  determining the principal place of            business of a holding company, have looked to the business of            the entity whose  assets are  being held rather  than to  the                                         -17-                                          17                                            ____________________            business of the holding company.  See Bonar,  631 F. Supp. at                                              ___ _____            996 ("[the holding  company] was created to hold  and operate            [parent's] interest in [Pennsylvania  company], and it has no            business other  than this  venture.  Therefore,  [the holding            company's]   principal   place   of   business   is   clearly            Pennsylvania,  not  the  state  in which  its  executive  and            administrative offices may be located . . . ."); Hanna Mining                                                             ____________            Co. v. Minnesota  Power & Light Co., 573  F. Supp. 1395, 1400            ___    ____________________________            (D. Minn. 1983) ("[The  holding company] was created  to hold            and  operate [parent's] interest  in [Minnesota venture], and            it  has no business other than this venture.  Therefore, [the            holding company's] principal place  of business is clearly in            Minnesota,  not  in the  state  in  which its  executive  and            administrative offices may be  located . . . ."),  aff'd, 739                                                               _____            F.2d 1368 (8th Cir. 1984); Hereth v. Jones, 544 F. Supp. 111,                                       ______    _____            112  (E.D. Va.  1982) ("[The  holding company's]  sole raison                                                                   ______            d'etre is to be the corporate general partner in [a] Virginia            ______            nursing home venture.   Thus[,]  such activity  as exists  in            Virginia  is  greater  than  the non-activity  in  any  other            [s]tate.").                   While  we were unable to discern from the facts of Hanna                                                                    _____            Mining exactly what level of activity took place in the state            ______            where the  holding company's offices were  located, the facts            of both Bonar and Hereth reveal that the holding companies at                    _____     ______            issue  in each  case performed  no corporate activity  of any                                            __            kind in the states where their offices were located.  Indeed,            in Bonar, the evidence revealed that  the "office" was merely               _____            a mailing  address, and that  the company  had no  employees,            executives,  officers, or  directors in  the state  where the            "office"  was located.  Bonar, 631 F.  Supp. at 994-95.  As a                                    _____            result, the court  was persuaded to look  to Minnesota, where            the holding company's attorney  resided and worked, where its            officers and  directors resided, and  where the  negotiations            over  the  initial  stock purchase  occurred.    Id.  at 995.                                                             ___            Likewise, in Hereth, the court found that the holding company                         ______            had  "absolutely  no function  or activity"  in the  state of            incorporation, and had "no  employees anywhere."  Hereth, 544                                                              ______            F.  Supp.  at 112.   As  a result,  the  court looked  to the            activities  of the  business venture  that was  owned  by the            partnership  in  which  the  holding company  was  a  general            partner.  Id.                       ___                 The   instant  case,   however,  presents   an  entirely            different  fact  pattern.    As detailed  above,  Lerfer  and            Calumet  operate out  of  New York.    They have  an  office,                     _______            employees,   bank  accounts,   a  working   capital  account,            corporate books and records,  and Board of Directors meetings            in New York.  The corporate officers and directors all reside            in New York,  and almost all  of the corporations'  decisions                                         -18-                                          18            are  therefore  citizens  of   New  York.    And   because  a            partnership is  a  citizen  of  those  states  in  which  its            partners  are citizens, see supra p. 3, it follows that Taber                                    ___ _____            is also a citizen of New York, and that the  district court's            contrary determination was clearly erroneous.                                   IV.  CONCLUSION                                   IV.  CONCLUSION                                   _______________                      As  Taber is a citizen  of New York,  the amount in            controversy is ample, and  none of the entities on  the other            side  of  the  lawsuit  shares  Taber's citizenship,  subject            matter  jurisdiction is  present.   We therefore  reverse and            remand the case for  further proceedings consistent with this            opinion.                      Reversed and remanded.                      ______________________                                            ____________________            are made  in New York.   As such, Lerfer and  Calumet, unlike            the  holding  companies at  issue  in Bonar  and  Hereth, are                                                  _____       ______            holding  companies with  corporate  operations distinct  from            those of the company whose assets they hold.  As a result, we            find the reasoning in the above line of cases inapposite.                                          -19-                                          19
