CKR Law LLP v. Anderson Investments International, LLC
544 F.Supp.3d 474
S.D.N.Y.2021Background
- Petitioner CKR Law LLP (formerly Crone Kline Rinde) served as escrow agent in a series of international financial transactions and filed a petition under 9 U.S.C. § 4 to compel arbitration of disputes arising from those transactions.
- Petitioner served the out-of-state/international respondents via court-authorized service under Fed. R. Civ. P. 4(f)(3) and 4(h)(2); respondents did not appear.
- The Court held a telephonic hearing on April 7, 2021 with only petitioner present; the Clerk entered default and petitioner moved for default judgment compelling arbitration.
- The Court considered (1) subject-matter jurisdiction under §4 (diversity), (2) whether to decide personal jurisdiction before entering default judgment, and (3) whether default judgment is available in a §4 petition.
- The Court found the petition adequately pleaded complete diversity and amount in controversy, declined to resolve personal jurisdiction at this posture, concluded default judgment can be appropriate in some §4 cases, and held the petition plausibly established an enforceable arbitration agreement and respondents’ refusal to arbitrate.
- The Court granted default judgment directing the parties to arbitrate and — because the contracts did not specify a forum — exercised authority to order arbitration before JAMS International; petitioner was directed to submit a proposed judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction under §4 | Diversity exists; petition alleges parties are completely diverse and amount in controversy exceeds $75,000 | No responsive pleading; jurisdiction not contested on the record | Court found diversity and amount allegations sufficient and exercised jurisdiction |
| Personal jurisdiction before default judgment | Court need not decide PJ now; respondents can later challenge via Rule 60(b)(4) or on appeal | (Potential) respondents could argue lack of personal jurisdiction makes any default void | Court declined to resolve PJ sua sponte in this posture to conserve resources and because PJ can be litigated later |
| Availability of default judgment on a §4 petition | Default judgment appropriate where respondents failed to “otherwise defend” (didn’t appear, didn’t seek extension, didn’t contest merits) | Counterargument: §4 petitions are motions, not complaints, and some courts treat such petitions like summary-judgment motions where default judgment is inappropriate | Court held default judgment can be available in §4 proceedings when respondent has failed to otherwise defend and the petition plausibly establishes entitlement to relief |
| Appropriate remedy / forum selection | Petitioner asked the court to order arbitration before JAMS International | Respondents did not oppose; contracts did not specify an arbitral forum | Court may designate an arbitral forum when the contract is silent; ordered arbitration before JAMS International as requested |
Key Cases Cited
- Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (§4 relief allowed only when district court would have jurisdiction over underlying dispute)
- D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (treats petitions to confirm/vacate awards like summary judgment; cautions about default judgments)
- ISC Holding AG v. Nobel Biocare Finance AG, 688 F.3d 98 (2d Cir. 2012) (§4 petitions decided with dispatch; answers not available to respondent)
- Shaw Grp., Inc. v. Triplefine Int'l Corp., 322 F.3d 115 (2d Cir. 2003) (court’s §4 role limited to existence of arbitration agreement and party’s refusal to arbitrate)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading plausibility standard)
- City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114 (2d Cir. 2011) (default judgment entered without PJ is void)
- Doctor's Associates, Inc. v. Distajo, 66 F.3d 438 (2d Cir. 1995) (complete diversity required for diversity jurisdiction)
- Doctor's Associates, Inc. v. Hamilton, 150 F.3d 157 (2d Cir. 1998) (amount in controversy in §4 petitions determined by underlying dispute)