$ 129,539.33 arbitration award Delta collected from a company called Fritzen. (Asante Dep. Trans. at 26, 27; Asante Exh. 1.) Delta's witness testified that this payment was made to pay down loans owed by Delta to its parent, Ionian. (Asante Dep. Trans. at 27 and 30.) Delta's witness also testified that if the Funds were released to Delta, they would be used to pay attorneys and as operating capital. (Milonas Dep. Trans. at 64-66.)
30. In summary, as it now stands, Delta has no assets, no cash in its one bank account, does no business (except for a minor tugboat managing arrangement), has no employees and no office of its own. Ionian has already taken over a substantial arbitration award won by and paid to Delta. Based on this history, the likelihood is high that the Funds will be paid to Ionian if Alvenus' rights are not protected by this Court. That would be particularly unfair in this case since Delta succeeded in its arbitration against Flopec, in large part, by presenting claims that belong to Alvenus, on Alvenus' documents, and on calculations made by Alvenus and presented to Delta.
31. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1333.
32. In Borden Inc. v. Meiji Milk Products Co., Ltd., 919 F.2d 822, 825-27 (2d Cir. 1990), cert. denied, 500 U.S. 953, 111 S. Ct. 2259, 114 L.E.2d 712 (1991), the Second Circuit stated that "entertaining an application for preliminary injunction in aid of arbitration is consistent with the court's powers pursuant to § 206" of the Convention. 919 F.2d at 826.
33. Alvenus has moved for inter alia, a preliminary injunction and/or an order of attachment enjoining the defendants from disposing of the Funds, viz., the proceeds of the Flopec Arbitration, and/or an order attaching the Funds pending the outcome of the London Arbitration.
34. Under Rule 65, a preliminary injunction will be issued upon a showing of irreparable harm and the likelihood of success on the merits JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79 (2d Cir. 1990). As found by the Court at the conclusion of the August 20, 1993 argument, Alvenus has demonstrated the likelihood of success on the merits. (See Sheinbaum 8/9/93 Aff., PP 7-13.) Therefore, irreparable harm is the remaining issue. (September 10, 1993 Trans. at 35.)
35. As a general rule, irreparable harm is not present when the plaintiff has a claim for money damages. In Re Feit & Drexler, Inc., 760 F.2d 406, 416 (2d Cir. 1985); Hoxworth v. Blinder Robinson & Co. Inc., 903 F.2d 186, 205 (3rd Cir. 1990). However, an exception to the general rule exists when it is shown that a money judgment will go unsatisfied absent equitable relief. Hoxworth, 903 F.2d at 205; Fleet Nat. Bank v. Trans World Airlines, Inc., 767 F. Supp. 510, 517 (S.D.N.Y. 1986); Teamsters Freight, etc. v. Southern Forwarding Co., 424 F. Supp. 11, 13-14 (M.D. Tenn. 1976).
36. Alvenus has demonstrated that absent equitable relief from this Court, a money judgment in the London Arbitration will go unsatisfied. There is nothing in the record that even remotely suggests that Delta could pay Alvenus' likely award in the London Arbitration. Accordingly, Alvenus is entitled to an injunction pursuant to Rule 65.
37. In the alternative, Rule 64 incorporates state-law provisional remedies. One such remedy under New York law is an injunction in aid of arbitration pursuant to CPLR § 7502(c).
38. Section 7502(c) permits a court to order an attachment or an injunction in aid of arbitration where it appears that an award "may be rendered ineffectual without such provisional remedy." CPLR § 7502(c). The movant's burden of proof under CPLR § 7502(c) might, therefore, be seen as less than the burden of proof applicable to Rule 65 injunctions, see Drexel Burnham Lambert Inc. v. Ruebsamen, 139 A.D.2d 323, 331, 531 N.Y.S.2d 547, N.Y.S.2d 547 (1st Dep't 1988), appeal denied, 73 N.Y.2d 703 (1988), although Judge McLaughlin indicates in his Practice Commentary that the burden of proof under both Rule 65 and CPLR § 7502(c) should be the same, i.e., irreparable harm. McLaughlin, Practice Commentary, N.Y. Civ. Prac. Law § 7502 (McKinney 1993), at 75. Applying the stricter standard espoused by Judge McLaughlin, the result is the same in this case -- Alvenus has carried that burden in demonstrating that any award it may recover against Delta "may be rendered ineffectual" without equitable relief and, thus, that without injunctive relief it will be irreparably harmed.
39. Cooper v. De La Motobecane., 57 N.Y.2d 408, 456 N.Y.S.2d 728, 442 N.E.2d 1239 (1982), is no bar to the issuance of an injunction in aid of arbitration. Cooper certainly does not prohibit the issuance of a preliminary injunction under Rule 65. Cooper also conflicts with Borden Inc. v. Meiji Milk Products Co., Ltd. 919 F.2d 822, 825-827 (2d Cir. 1990), cert. denied, 500 U.S. 953, 111 S. Ct. 2259, 114 L.E.2d 712 (1991). In addition, Cooper itself recognizes an exception for claims arising out of maritime contracts (such as the charter party involved in this case). (Complaint at P 1.) See Cooper, 57 N.Y.2d at 415, 457 N.Y.S.2d at 731. Finally, Cooper was decided before the enactment of CPLR § 7502(c), which permits attachment or injunction in aid of arbitration. In permitting injunctions in aid of arbitration, CPLR § 7502 brings New York State in line with every signatory of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. See McLaughlin Practice Commentary, N.Y. Civ. Prac. Law § 7502 (McKinney 1994) at 76.
Accordingly, it is
ORDERED that defendants Law Firm, Flopec and Fleet Bank shall transfer the Funds plus accrued interest, if any (the "Trust Funds") to Cardillo & Corbett, as attorneys for Delta. The Trust Funds shall be deposited in an interest-bearing trust account of the latter attorneys in a reputable commercial bank in this District (the identity of which is to be made known to counsel for Alvenus) or in some other interest-bearing account, as agreed upon by counsel for Alvenus and Delta; and it is further
ORDERED that Delta and its attorneys, Cardillo & Corbett, are enjoined from transferring the Trust Funds or any interest accruing thereon, except as set forth above, pending and subject to the outcome of the London Arbitration between Alvenus and Delta. The ultimate right to the Trust Funds and any interest accruing thereto is to be determined by the outcome of the London Arbitration; and it is further
ORDERED that as Alvenus and Delta have requested and apparently agreed, they are directed to proceed with the London Arbitration pursuant to the arbitration clause in the Head Charter and their agreement in this Court (September 10, 1993 Trans. at 2-3); and it is further
ORDERED that upon the completion of the transfer of the Funds to Cardillo & Corbett ordered above, the Law Firm, Flopec, and the Bank are dismissed from this action. This action, 93 Civ. 5535, is stayed pending the conclusion of the London Arbitration; and it is further
ORDERED that the Interpleader Action (the action bearing Civil Action No. 93 Civ. 5878) is stayed as moot pending the outcome of any appeal in this matter; and it is further
ORDERED that under all the circumstances, including but not limited to the fact that the funds in question will be earning interest, Alvenus is to file an undertaking as security in the amount of $ 10,000 within ten days of the filing of this order.
February 10, 1994
Loretta A. Preska, U.S.D.J.
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