The opinion of the court was delivered by: Bartels, District Judge.
Plaintiff Vera, Inc. ("Vera") commenced this action in admiralty,
naming the vessel "Dakota", its engines, tackle and fixtures, its
registered owner, William Deakin, and Anthony Mangone, an individual
alleged to have a financial interest in the vessel as defendants
(individually "the Dakota" or "vessel", "Deakin", "Mangone", and
collectively the "defendants"). The focal point of the law suit is the
alleged breach of an oral joint venture agreement between Vera and Deakin
concerning the repair, operation and sale of the Dakota.*fn1 Vera seeks
(1) a permanent injunction requiring specific performance of the joint
venture agreement; (2) an accounting of the joint venture and an order
for the arrest and sale of the vessel; (3) damages for breach of the
joint venture agreement; and (4) expungement of Mangone's interest in the
There are two motions pending before the Court. First, Vera's motion
for a preliminary injunction directing Deakin to refrain from further
interfering with Vera s possession and management of the Dakota until
such time as the joint venture is formally dissolved; and second,
defendants' cross motion to dismiss the complaint because the Court lacks
admiralty jurisdiction over the subject matter,*fn2 and to declare
Vera's maritime lien invalid.
In September 1989, Deakin and Vera (the "parties") orally entered into
a joint venture whereby they agreed to repair and restore the Dakota
which, at the time, was a mere hulk. Towards that goal it was agreed that
the parties would share in the cost of the restoration and that Vera
would provide the bulk of the labor. Vera alleges that in the course of
restoring the Dakota it invested $181,444.46. Deakin and Mangone claim to
have invested $240,000.00. Furthermore, as part of the joint venture the
parties agreed that after the vessel was restored the Dakota would trade
in the spot market, Vera would manage the vessel, and the parties would
evenly split the profits. Finally, as part of the joint venture the
parties agreed that Vera would purchase the vessel, pay for it out of its
share of the profits of the joint venture; however, no price was ever
established. Restoration of the Dakota to serviceable condition took
longer than expected, but in November of 1990 the vessel began to operate
in the spot market doing towing work exclusively for Mobil Oil Company
("Mobil"). Vera alleges that the joint venture was successful, noting
that from November 20, 1990, through April 22, 1991, the Dakota grossed
$281,520.55, from which Deakin received payments totalling $41,000.00. On
the other hand, the defendants claim that Mobil did not have enough work
to make the venture profitable and that Vera unreasonably refused to
accept other towing jobs.
On May 27, 1991, Deakin boarded the Dakota, which was then berthed at
Vera's pier in the Port of Perth Amboy, New Jersey, took control of the
vessel and sailed her to Newtown Creek in Brooklyn, New York, where the
vessel remains docked.*fn3 The parties offer different theories, which
need not be explored at this time, as to why Deakin terminated the
operation of the joint venture and removed the management of the Dakota
from Vera's control.
I. Plaintiff's Motion for a Preliminary Injunction
Courts of admiralty have capacity to apply equitable principles;
however, they do not have, except in limited circumstances, the power to
issue injunctions. See Schoenamsgruber v. Hamburg American Line,
294 U.S. 454, 55 S.Ct. 475, 79 L.Ed. 989, reh'g denied, 294 U.S. 734, 55
S.Ct. 635, 79 L.Ed. 1263 (1935); China Trade and Dev. Corp. v. M.V.
Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987); Eddie S.S. Co. v. P.T.
Karana Line, 739 F.2d 37, 38-39 (2d Cir.), cert. denied, 469 U.S. 1073,
105 S.Ct. 568, 83 L.Ed.2d 508 (1984). Moreover, while recognizing that
other circuits have broadened the traditionally circumscribed powers of
the court in admiralty, the Second Circuit has refused to do so. See
China Trade, 837 F.2d at 35; Eddie S.S. Co., 739 F.2d at 39. Inasmuch as
Vera commenced this action in admiralty the Court lacks the authority to
grant the relief requested in admiralty.
Alternatively, even if this suit had been commenced in law the Court
would not, for the following reasons, grant Vera's request for a
preliminary injunction. "`A preliminary injunction is an extraordinary
remedy that should not be granted as a routine matter'", Firemen's
Ins. Co. v. Keating, 753 F. Supp. 1146, 1149 (S.D.N.Y. 1990) (quoting JSG
Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 80 (2d Cir. 1990)); Patton
v. Dole, 806 F.2d 24, 28 (2d Cir. 1986); Medical Soc'y v. Toia,
560 F.2d 535, 538 (2d Cir. 1977); Diversified Mortgage Investors v. U.S.
Life Title Ins. Co., 544 F.2d 571, 576 (2d Cir. 1976), and "it should not
be used as a device for . . . deciding questions of contract breach,
properly determinable after trial." Diversified Mortgage Investors, 544
F.2d at 576 (citing
Unicon Management Corp. v. Koppers Co., 366 F.2d 199, 204 (2d Cir.
Furthermore, it is well established in this Circuit that in order to
obtain a preliminary injunction a party must demonstrate both irreparable
harm and a likelihood of success on the merits or a sufficiently serious
question regarding the merits to make them a fair ground for litigation
with the balance of hardships tipping decidedly in its favor. JSG
Trading, 917 F.2d at 79; Tucker Anthony Realty Corp. v. Schlesinger,
888 F.2d 969 (2d Cir. 1989); Mattel, Inc. v. Azrak-Hamway Int'l, Inc.,
724 F.2d 357, 359 (2d Cir. 1983); Jackson Dairy, Inc. v. H.P. Hood &
Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979). "A sine qua non for the grant
of preliminary relief is irreparable harm." Stromfeld v. Smith,
557 F. Supp. 995, 998 (S.D.N.Y. 1983) (citing United States Postal
Service v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978)); Litho Prestige v.
News America Pub., Inc., 652 F. Supp. 804, 809 (S.D.N.Y. 1986). With
respect to irreparable harm, the Supreme Court in Sampson v. Murray,
415 U.S. 61, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974), stated
"The key word in this consideration is irreparable.
Mere injuries, however substantial, in terms of
money, time and energy necessarily expended in the
absence of a stay are not enough. The possibility that
adequate compensatory or other corrective relief will
be available at a later date, in the ordinary course
of litigation, weighs heavily against a claim of
Furthermore, to establish irreparable harm the injury must be actual and
imminent, not remote or speculative, Tucker, 888 F.2d at 975;
Consolidated Brands, Inc. v. Mondi, 638 F. Supp. 152, 155 (E.D.N.Y.
1986). Moreover, where an injury is compensable through money damages
there is no irreparable harm. JSG Trading, 917 F.2d at 79; Jackson
Dairy, 596 F.2d at 72; Railroad P.B.A., Inc. v. Metro — N. Commuter
R.R., 699 F. Supp. 40, 43 (S.D.N.Y. 1988). In addition, if the wrongful
activity threatens only the disruption as opposed to the destruction of
an ongoing business there is no irreparable injury. USA Network v. Jones
Intercable, Inc., 704 F. Supp. 488, 491 (S.D.N.Y. 1988) (citing John B.
Hull v. Waterbury Petroleum, 588 F.2d 24, 28-29 (2d Cir. 1978), cert.
denied, 440 U.S. 960, 99 S.Ct. 1502, 59 L.Ed.2d 773 (1979); Newport Tire
& Rubber v. Tire & Battery, 504 F. Supp. 143, 150 ...