Rosenbach v. Diversified Group, Inc.

39 A.D.3d 271, 833 N.Y.S.2d 78

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 10, 2007
• Status: Published

Opinion

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.

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]). Concur— Sullivan, J.P., Williams, Gonzalez, Sweeny and Kavanagh, JJ.