Summary
holding that KPMG could not compel the plaintiffs into arbitration because KPMG was not a signatory to the arbitration provision; further stating that even if equitable estoppel were available in New York to enable non-signatories to compel signatories into arbitration, the dispute was not intertwined with the agreement which contained the arbitration provision
Summary of this case from American Personality Photos, LLC v. MasonOpinion
No. 194N.
April 10, 2007.
Order, Supreme Court, New York County (Karla Moskowitz, J.), entered December 5, 2005, which, to the extent appealed from, denied KPMG's motion insofar as it sought to stay all proceedings brought by, and compel arbitration with, plaintiffs Gary Rosenbach, Susan Rosenbach, Raj Rajaratnam and Asha Pabla Rajaratnam, unanimously affirmed, with costs.
King Spalding LLP, New York (Edward G. Kehoe of counsel), for appellant.
Grant Eisenhofer, P.A., New York (Stuart M. Grant of counsel), for respondents.
Before: Sullivan, J.P., Williams, Gonzalez, Sweeny and Kavanagh, JJ.
Defendant KPMG cannot compel plaintiffs to arbitrate claims arising out of the allegedly fraudulent tax shelters at issue. KPMG is not a signatory to the Global Fund operating agreement containing the arbitration provision upon which it relies and, even if the doctrine of equitable estoppel were in theory available in this jurisdiction to enable a nonsignatory to compel signatories to an arbitration agreement to arbitrate, it would not avail KPMG in this matter since plaintiffs' claims against KPMG, which is alleged to have marketed the tax strategy at issue, are not "founded in and intertwined" with the operating agreement ( see Denney v Jenkens Gilchrist, 412 F Supp 2d 293 [SD NY 2005]; Stechler v Sidley, Austin Brown Wood, L.L.P., 382 F Supp 2d 580, 591-592 [SD NY 2005]).