Borsack v. Chalk & Vermilion Fine Arts, Ltd.
Ronald Borsack (also known as Ron Bell) filed a breach of contract action against Chalk & Vermilion Fine Arts, Ltd., Sevenarts, Ltd., Chalk & Vermilion Fine Arts, LLC, and David Rogath. The defendants removed the case from New York Supreme Court to federal court, citing diversity jurisdiction and later jurisdiction under the Convention for the Recognition and Enforcement of Foreign Arbitration Awards. Borsack claimed an oral agreement for a "finders fee" of five Erte artist proofs, which he alleged was memorialized in an addendum to a license agreement between Chalk & Vermilion and Sevenarts. The defendants moved to stay the action pending arbitration as per the license agreement, while Borsack cross-moved to remand the case to state court, arguing a lack of subject matter jurisdiction. The court found that diversity jurisdiction was absent as Borsack was domiciled in New York, the same as one of the defendants. However, the court determined it had federal question jurisdiction under the Federal Arbitration Act's Chapter 2, as the dispute involved an international commercial arbitration agreement. The court further concluded that Borsack, as an intended third-party beneficiary of the License Agreement and Addendum, was bound by its arbitration clause. Consequently, the court granted the defendants' motion for a stay pending arbitration and denied Borsack's motion to remand.