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VERA, INC. v. TUG "DAKOTA"

July 1, 1991

VERA, INC. IN ITS OWN RIGHT AND AS MANAGING JOINT VENTURER OF A JOINT VENTURE BETWEEN VERA, INC. AND WILLIAM DEAKIN, PLAINTIFF
v.
THE TUG "DAKOTA" OR "MISS NATALIE" A VESSEL OF 127 GROSS TONS, REGISTRATION NO. 636565, ITS ENGINES, TACKLE AND FIXTURES, WILLIAM DEAKIN AND ANTHONY MANGONE, DEFENDANTS.



The opinion of the court was delivered by: Bartels, District Judge.

MEMORANDUM AND ORDER

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 Dakota.

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.

BACKGROUND

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.

DISCUSSION

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. 1966)).

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
  irreparable harm."

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 ...


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