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BORSACK v. CHALK & VERMILION FINE ARTS

August 7, 1997

RONALD BORSACK, a/k/a RON BELL, Plaintiff, against CHALK & VERMILION FINE ARTS, LTD., SEVENARTS, LTD., CHALK & VERMILION FINE ARTS, LLC., and DAVID ROGATH, Defendants.


The opinion of the court was delivered by: PARKER

 BARRINGTON D. PARKER, JR., U.S.D.J.

 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"), *fn1" 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.

 On September 23, 1987, Sevenarts and Chalk & Vermilion Fine Arts, Ltd. *fn2" 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 "thirty (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 agreed 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. P 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. § 3, 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 ...


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