Borsack v. Chalk & Vermilion Fine Arts, Ltd.

• Decision Date: 07 August 1997
• Docket Number: No. 96 CV 6587 (BDP).,96 CV 6587 (BDP).
• Citation: 974 F.Supp. 293
• Parties: Ronald BORSACK, a/k/a Ron Bell, Plaintiff, v. CHALK & VERMILION FINE ARTS, LTD., Sevenarts, Ltd., Chalk & Vermilion Fine Arts, LLC., and David Rogath, Defendants.
• Court: U.S. District Court — Southern District of New York

974 F.Supp. 293

Ronald BORSACK, a/k/a Ron Bell, Plaintiff, v. CHALK & VERMILION FINE ARTS, LTD., Sevenarts, Ltd., Chalk & Vermilion Fine Arts, LLC., and David Rogath, Defendants.

No. 96 CV 6587 (BDP).

United States District Court, S.D. New York.

August 7, 1997.

COPYRIGHT MATERIAL OMITTED

Steven J. Popkin, Brooklyn, NY, for Plaintiff.

Guy Fairstein, Kurzman & Eisenberg, White Plains, NY, for Defendants.

MEMORANDUM DECISION AND ORDER

PARKER, District Judge.

Plaintiff Ronald Borsack a/k/a Ron Bell ("Borsack") brings this breach of contract action against defendants Chalk & Vermilion Fine Arts, Ltd. ("Chalk & Vermilion"), Sevenarts, Ltd. ("Sevenarts"),¹ Chalk & Vermilion Fine Arts, LLC. ("Chalk & Vermilion-CT"), and David Rogath. Defendants removed this action, which was commenced in New York Supreme Court, County of New York, to this Court, pursuant to 28 U.S.C. §§ 1441, 1446, based on diversity jurisdiction. See 28 U.S.C. § 1332(a). Defendants subsequently asserted that in addition to diversity jurisdiction, the Court has jurisdiction over this action pursuant to the Convention for the Recognition and Enforcement of Foreign Arbitration Awards. See 9 U.S.C. §§ 203, 205. Presently before the Court are defendants' motion to stay the action pending arbitration and plaintiff's cross-motion to remand the action to state court. For the reasons stated below, defendants' motion for a stay pending arbitration is granted and plaintiff's motion to remand is denied.

BACKGROUND

On September 23, 1987, Sevenarts and Chalk & Vermilion Fine Arts, Ltd.² entered into an agreement ("the License Agreement") pursuant to which Sevenarts licensed Chalk & Vermilion to cast and sell limited edition sculptures from models created by Romain de Tirtoff, the artist known as Erte ("Erte sculptures"). The License Agreement contains the following arbitration clause: "In the event of any claim or dispute between the parties concerning this Agreement, the parties irrevocably agree to submit to binding arbitration to take place in London before a single arbitrator."

On September 27, 1987, Sevenarts and Chalk & Vermilion modified the Agreement through a handwritten document ("the Addendum") that reads:

Addendum

Sevenarts and Chalk & Vermilion agree to modify their contract of 9/23/87 as follows: 35 artists proofs shall be created rather than 30 artists proofs as previously indicated by clause 11. The parties shall divide the cost for the additional five casts and they shall be distributed to Ron Bell [a/k/a Ronald Borsack].

Clause 11 of the License Agreement states that "[t]hirty (30) `artists proofs' shall be produced within each edition of sculpture and the License warrants that no more than 30 'artists proofs' will be produced within each edition." The Addendum was signed by David Rogath, president of Chalk & Vermilion, and Eric Estorick, then managing director of Sevenarts. Borsack did not sign either the License Agreement or the Addendum.

Borsack claims that before the execution of the License Agreement, he had, at the request of Rogath, helped convince the principals of Sevenarts to grant the exclusive licensing rights for the Erte sculpture to Chalk & Vermilion. According to Borsack, Rogath, over a series of discussions, promised to pay him a finders fee if his "efforts culminated in their [sic] being granted additional licensing agreements with Sevenarts.... Rogath agree[d] on behalf of [Chalk & Vermilion] to provide me with five Erte artist proof sculptures each time a new Erte sculpture was produced. It was further agreed that such five sculptures would be provided to me free of cost for resale purposes." Borsack Aff. ¶ 14. Borsack claims that he asked Rogath for written memorialization of their agreement and that Rogath subsequently delivered to him a photocopy of the Addendum. Borsack asserts that the Addendum was evidence of Chalk & Vermilion's oral agreement to pay him a "finders fee" of five artists proofs each time a new Erte sculpture was produced. Rogath denies having entered into any such agreement.

Borsack contends that after approximately six and a half years of receiving his "finders fee," defendants ceased to deliver the five proofs each time a new sculpture was produced. On July 16, 1996, plaintiff initiated this litigation in Supreme Court of the State of New York, County of New York, asserting, inter alia, breach of contract claims against Chalk & Vermilion and Sevenarts and a fraudulent conveyance claim against Chalk & Vermilion-CT.

On August 29, 1996, defendants removed the action to this Court claiming diversity jurisdiction under 28 U.S.C. § 1332(a). Defendants subsequently alleged federal question jurisdiction based on 9 U.S.C. § 203. Defendants now move, pursuant to 9 U.S.C. § 203, to stay the action pending arbitration in accordance with the Licence Agreement or, in the alternative, to dismiss the complaint. Borsack cross-moves for an order remanding the action to Supreme Court of the State of New York on the ground that this Court lacks subject jurisdiction over plaintiff's claims under both 28 U.S.C. § 1332(a) and 9 U.S.C. § 203. The parties have since stipulated that defendants' motion to dismiss would be held in abeyance pending the Court's resolution of the jurisdictional question.

DISCUSSION

A. Subject Matter Jurisdiction

Defendants, having invoked federal jurisdiction by removing the action to this Court, have the burden of proving that the case is properly in federal court. See United Food & Commercial Workers Union v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir.1994). If the removing party's "allegations of jurisdiction are challenged by [its] adversary in any appropriate manner, the removing party must support them by competent proof." Id. (emphasis in original) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936)). The Court addresses both of defendant's asserted grounds for jurisdiction in turn.

Defendants initially removed this action based on diversity jurisdiction alleging that plaintiff is a citizen of Florida, while defendant Chalk & Vermilion is a citizen of New York, defendants Chalk & Vermilion-CT and Rogath are citizens of Connecticut, and Sevenarts is a citizen of England. Under 28 U.S.C. § 1332(a), a federal court has subject matter jurisdiction over cases in which the citizenship of each plaintiff is diverse from the citizenship of each defendant. See Caterpillar Inc. v. Lewis, ___ U.S. ___, ___, 117 S.Ct. 467, 472, 136 L.Ed.2d 437 (1996); Leveraged Leasing Admin. Corp. v. PacifiCorp Capital, Inc., 87 F.3d 44, 47 (2d Cir. 1996).

For the purposes of diversity jurisdiction, a person's citizenship is determined by his domicile. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 2220-21, 104 L.Ed.2d 893 (1989). Domicile requires two elements: the party's physical presence in the state and the intent to remain in the state indefinitely. See National Artists Management Co. v. Weaving, 769 F.Supp. 1224, 1227 (S.D.N.Y.1991) (citing Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 109 S.Ct. 1597, 104 L.Ed.2d 29 (1989); Gutierrez v. Fox, 966 F.Supp. 214, 217 (S.D.N.Y.1997)). "Although a person may have more than one residence, [he] may only have one domicile at any one time." National Artists, 769 F.Supp. at 1227. Where there is evidence that the party has more than one residence, a court should focus on where the party intends to remain. See id. When determining whether a party has the intent to remain indefinitely in a state, a court should consider the following factors: voting registration; place of employment; current residence; location of real and personal property; location of spouse and family; driver's license; automobile registration; location of bank account; payment of taxes; tax return address; and location of a person's physician. See 3 Moore's Federal Practice ¶ 102.36[1]; see also National Artists, 769 F.Supp. at 1228; Boston Safe Deposit & Trust Co. v. Morse, 779 F.Supp. 347 (S.D.N.Y.1991).

Although plaintiff's opposition papers are notably silent as to a number of those factors, the weight of the objective indicia suggests that, at the time the action was removed, plaintiff intended to remain in New York indefinitely. Plaintiff lives for the majority of the year in New York and has lived at the same address in New York City for the past seventeen years. He works in New York, operating and managing an art gallery in New York City. His attorney, accountant, dentist and doctor all reside or practice in the New York City metropolitan area. Meanwhile, the only factors asserted by defendants in support of their contention that Borsack is a domiciliary of Florida is Borsack's wife's ownership of property in Florida, against which the Internal Revenue Service filed a tax lien naming Borsack as taxpayer, and Borsack's possession of a Florida driver's license.

On balance, considering the totality of the evidence, I conclude that plaintiff was domiciled in New York when this action was filed and at the time of removal. Because defendant Chalk & Vermilion was incorporated in New York and had its principal place of business in New York, the citizenship of the parties was not diverse. See United Food, 30 F.3d at 302 ("a corporate entity['s][] citizenship is determined by its place of incorporation or its principal place of business").

Defendants, however, further contend that federal question jurisdiction also exists under chapter 2 of the Federal Arbitration Act ("the Act"), 9 U.S.C. §§ 201-208. Chapter 2 of the Act affords district courts original jurisdiction, regardless of the amount in controversy, over any "action or proceeding falling under the Convention [on the Recognition and Enforcement of Foreign Arbitral Awards]." 9 U.S.C. § 203. An action will fall "under the Convention" for the purposes of establishing federal question jurisdiction if it...