Joe, a resident of New Jersey, wants to open 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 Café Olé, 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 suit 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.
(a) Issue: Which party's choice between two alternatives was at the heart of the issue on the appeal of the Reese case?
(b) Rule of Law: What rules of interpretation did the appellate court use to construe the language of the statutes that created those alternatives?
(c) Applying the Rule of Law: How did the court construe the language of those statutes?
(d) Conclusion: How did the court's construction of that language lead to the result?