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Sea Tow Services International, Inc. v. Pontin

January 18, 2007


The opinion of the court was delivered by: Joseph F. Bianco, District Judge


Plaintiff Sea Tow Services International, Inc. ("Sea Tow"), brings this trademark and contract action against defendants Duke Pontin, doing business as Spirit Towing ("Spirit") and Sea Tow Florida Keys (collectively, the "corporate defendants"), as well as Duke Pontin individually (hereinafter, "Pontin" is used to refer to Duke Pontin in his individual capacity).*fn1

Defendants move to dismiss the complaint as unripe, and for lack of personal jurisdiction and improper venue pursuant to Rules 12(b)(2) and 12(b)(3), respectively, of the Federal Rules of Civil Procedure. For the reasons that follow, defendants' motion is denied.



The following facts are taken from the complaint, documents referenced or integrated therein, and documents filed in another court. Plaintiff Sea Tow is a New York corporation that provides emergency and nonemergency nautical services. (Compl. ¶¶ 9, 15.) Sea Tow offers its services to the public through a network of franchisees and licensees. (Id. ¶ 12.)

Defendant Pontin owns and operates Spirit, also known as "Sea Tow Florida Keys." (Id. ¶¶ 10-11.) Spirit is a Florida corporation that performs marine towing and salvage operations. (Id. ¶ 12.)

In July 1992, Sea Tow and defendants entered into a License Agreement (the "Agreement"). (Id. ¶ 16.) The Agreement provided that Pontin, doing business as Spirit, had the exclusive right to use Sea Tow marks and trade dress in offering nautical services to a specific geographic area (the "Area") defined in the Agreement, as well as the right to use the name "Sea Tow Florida Keys." (Id.) In April 2002, Pontin renewed the Agreement in its entirety for a ten-year term. (Id. ¶ 20.)

On June 24, 2006, Sea Tow sent a "Notice of Termination" (the "Notice") to defendants terminating the Agreement. (Id. ¶ 21.) The Notice listed several grounds for termination, including various instances of conduct by Spirit that allegedly breached the terms of the Agreement. (Id. ¶ 22.) In addition, the Notice reminded defendants of their obligation under the Agreement to "immediately discontinue the use of . . . Sea Tow indicia including the Sea Tow marks, and trade dress" upon termination of the Agreement. (Id. ¶ 34.)

Subsequent to termination, Sea Tow alleges that defendants failed to comply with these and other "post-termination requirements" set forth in the Agreement. (Id. ¶¶ 20, 26.) Specifically, Sea Tow alleges that defendants have continued to operate a marine assistance and towing operation but have failed (1) to stop using Sea Tow marks and trade dress on defendants' vessels, vehicles, advertisements, brochures, and "other articles of commercial use," (2) to abide by restrictions against post-termination use of "Sea Tow Know How," including "trade secrets, confidential information and other information relating to the development, operation and results of [Sea Tow's] business," and (3) to make certain payments due to Sea Tow under the Agreement. (Id. ¶¶ 28, 34, 61.) Moreover, Sea Tow alleges that Spirit has continued to present itself as an "authorized licencee [sic] and/or franchisee of Sea Tow" by sending a cease-and-desist letter to a valid Sea Tow licensee operating in the same area that was previously Spirit's exclusive area of operation under the Agreement. (Id. ¶ 34.)

On July 14, 2006, Sea Tow filed the complaint in the instant action alleging that defendants' use of Sea Tow marks and trade dress subsequent to termination of the Agreement constitutes trademark infringement in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1115, and dilution of Sea Tow's mark in violation of the Lanham Act, 15 U.S.C. § 1125(c), and the common law. In addition, Sea Tow alleges that defendants' posttermination use of "Sea Tow Know How" and defendants' failure to make certain payments due to Sea Tow breached the Agreement.


In 2001, Pontin filed suit against Sea Tow in Florida state court (the "Florida Action"). The third amended complaint in the Florida Action was filed in 2005, and alleges breach of contract, fraud, conspiracy to commit fraud, deceptive and unfair trade practices, tortious interference with contractual relations, and breach of fiduciary duty claims. (Declaration of Mitchell Stein in Opposition (hereinafter "Stein Decl.") Exh. A.)*fn2 All of the defendants in the instant action are plaintiffs in the Florida Action; the plaintiff in the instant action is one of several named defendants in the Florida Action. (Id.) Pontin's claims in the Florida Action arise out of allegedly unlawful conduct by Sea Tow that preceded Sea Tow's termination of the Agreement in 2006. (Id.)

On August 26, 2006, after Sea Tow initiated the instant action in this Court, Pontin sought and obtained from the Florida court a temporary injunction against Sea Tow (the "Florida Injunction"). (Stein Decl. Exh. B) The Florida Injunction provided that the Notice sent to Pontin by Sea Tow "is hereby deemed of no force nor effect." (Id.) On November 28, 2006, the Florida court modified the injunction in part but did not change the section that nullified the Notice of Termination. (Supplemental Aff. of Mitchell J. Cook (hereinafter "Cook Supp. Aff.") Exh. C.)



The claims in the instant action arise from defendants' alleged failure to abide by limitations on defendants' conduct following termination of the Agreement. However, defendants argue that the Florida Injunction nullified Sea Tow's termination of the Agreement and, therefore, "the bases of plaintiff's . . . claims of breach of contract and trademark infringement[] have not even occurred to date. As such, Sea Tow's claim is not ripe."*fn3 (Defs.' Mem. at 5.)

1. Legal Standard

Article III of the Constitution precludes the resolution of a legal challenge "in the absence of [a] `direct and immediate dilemma.'" U.S. v. Johnson, 446 F.3d 272, 278 (2d Cir. 2006) (quoting Marchi v. Bd. of Coop. Educ. Servs., 173 F.3d 469, 478 (2d Cir.1999)). Accordingly, "[a] claim is not ripe for adjudication if it rests upon `contingent future events that may not occur as anticipated, or indeed may not occur at all.'" Texas v. U.S., 523 U.S. 296, 300 (1998) (quoting Thomas v. Union Carbide Agric. Prod. Co., 473 U.S. 568, 580-81 (1985)). In each case, it is the plaintiff's burden to show that "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to justify judicial resolution." Marchi, 173 F.3d at 478 (quotation marks and citation omitted). Moreover, in considering ripeness, the Court must "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Oldcastle Precast, Inc. v. U.S. Fidelity & Guar. Co., 458 F. Supp. 2d 131 (S.D.N.Y. 2006) (quoting Texas, 523 U.S. at 296).

2. Application

In the instant action, the facts alleged show that the case is fit for review by this Court - that is, there is a direct and immediate controversy between the parties. Plaintiff alleges that it terminated the Agreement between the parties and, subsequently, that defendants failed to abide by certain "posttermination" obligations imposed by contract or statute. The events underlying these allegations preceded, at least in part, the issuance of the Florida Injunction. Thus, assuming arguendo that the Notice of Termination had "no force or effect" on the date that the state court entered the Florida Injunction, the Court finds that an actual controversy exists regarding defendants' conduct during the period prior to the entry of the Florida Injunction. The Florida Injunction did not, and could not, undo events that preceded the injunction.

Therefore, as to the contract claims, the alleged breach occurred as soon as defendants failed to abide by the post-termination provisions of the Agreement. Under New York law, which governs the Agreement, "[a] breach of contract case . . . is ripe immediately upon the [alleged] breach, even where damages remain uncertain." Argonaut P'ship, L.P. v. Bankers Trustee Co. Ltd., No. 96 Civ. 2222 (MBM), 1997 WL 45521, at *5 (S.D.N.Y. Feb. 4, 1997). In addition, as to the trademark ...

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