Miller v. Oscar Gruss & Son, Inc.

Background

Frank Miller filed a New York state-court proceeding seeking recognition and enforcement of a February 22, 2008 judgment from a regional court in Krefeld, Germany. The German court had awarded Miller €2,101.98 plus interest against Oscar Gruss & Son, Inc. for losses connected to a trading account. The German court rejected Gruss’s argument that an arbitration agreement prevented the lawsuit, finding that the agreement did not satisfy the formal requirements for an arbitration agreement under the international convention at issue.

In December 2023, Miller asked the New York state court to convert the German judgment into a New York judgment. Gruss removed the case to the Southern District of New York under Chapter 2 of the Federal Arbitration Act, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Gruss argued that the case related to an arbitration agreement. Miller moved to remand the case to state court and requested attorney’s fees and costs under 28 U.S.C. § 1447(c).

Subject-Matter Jurisdiction

The court explained that the Federal Arbitration Act does not independently provide federal subject-matter jurisdiction. Under 9 U.S.C. § 203, federal jurisdiction generally covers actions to compel arbitration, confirm or vacate an arbitral award governed by the Convention, and certain limited proceedings closely connected to arbitration. Section 205 separately permits removal of a state-court action that relates to a qualifying arbitration agreement or award, but the court held that Section 205 is a removal provision, not an independent source of subject-matter jurisdiction.

The court concluded that Section 203 did not provide jurisdiction here. Miller was seeking to enforce a foreign court judgment, not an arbitral award, and he was not seeking to compel arbitration, confirm or vacate an award, or obtain relief supporting an ongoing arbitration. The fact that Gruss might raise the arbitration agreement as a defense did not transform the enforcement action into a proceeding under the Convention. The court found the case materially similar to prior decisions holding that an action to enforce a foreign court judgment does not become a federal arbitration case merely because arbitration is raised as a defense.

Attorney’s Fees and Disposition

The court declined to award Miller attorney’s fees and costs. Although removal was improper, the court found that the relationship between Sections 203 and 205 was complex, no Second Circuit decision directly resolved the circumstances presented, and Gruss’s arguments were objectively reasonable. The court also found no evidence that Gruss removed the case in bad faith or solely to delay the litigation.

The court therefore granted in part and denied in part Miller’s motion. It denied Miller’s application for attorney’s fees and costs, directed the Clerk of Court to remand the action to New York County Supreme Court, terminated the remand motion, and closed the federal case.