Cheim and Read, LLC v. Faurschou Projects Aps

Background

Cheim and Read, LLC ("C&R") and Jerry Gorovoy, Alain Bourgeois, and Jean-Louis Bourgeois, as trustees and on behalf of the Louise Bourgeois Revocable Living Trust, petitioned to confirm an arbitration award against Faurschou Projects ApS ("FP") under the Federal Arbitration Act and the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards.

In October 2018, C&R and FP entered into an agreement under which FP would locate a potential buyer for Crouching Spider, a sculpture owned by the Trust, and introduce that buyer to C&R. The Trust was not a party to that agreement and did not know about it. After the Trust later sold the sculpture to the buyer through a third-party gallery, FP began arbitration against C&R and the Trust. FP asserted contract, fraud, and equitable claims and sought $1.8 million in damages.

The arbitrator, Judge Theodore H. Katz, conducted discovery and a four-day hearing before issuing a 62-page decision in June 2021. He found for the petitioners and awarded them $935,983.25 in attorneys’ fees and expenses: $617,158.76 to C&R and $318,824.49 to the Trust. The petitioners filed this case to have the award confirmed. FP was served with the petition and the court’s order setting a deadline for opposition, but did not oppose the petition.

Legal standard

The court explained that an arbitration award must generally be converted into a court judgment before it can be enforced. Under the Federal Arbitration Act and the New York Convention, a court must confirm an award unless one of the recognized grounds for refusing or delaying enforcement is shown. Because FP did not answer the petition, the court treated the petition as an unopposed motion for summary judgment, meaning a request for judgment without a trial because there is no genuine dispute over a material fact.

Court’s analysis

The court found no material factual dispute preventing enforcement. First, the dispute fell within the agreement’s arbitration clause because FP’s underlying claims arose from or related to the agreement. Second, the arbitrator acted within his authority because the agreement allowed him to allocate arbitration costs and reasonable attorneys’ fees to the prevailing party. Third, the evidence showed that FP participated in the arbitration and received a full and fair opportunity to present arguments and defenses. The arbitration included extensive discovery, written submissions, a four-day hearing, and examination of fact and expert witnesses.

The court concluded that the petitioners had shown they were entitled to judgment as a matter of law and that the arbitration decision had more than the required minimally sufficient justification.

Disposition

The petition to confirm the arbitration award was granted. The court confirmed the award in favor of the petitioners and ordered them to submit a proposed judgment by May 27, 2022. The court also stated that, if the petitioners continued to seek interest on the award or fees and costs for enforcing it, they had to submit supporting documentation.