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Sea Tow Services International, Inc. v. Pontin

April 17, 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 breach of contract action against defendants Duke Pontin, doing business as Spirit Towing and Sea Tow Florida Keys, as well as Duke Pontin individually (collectively, "Pontin" or "defendants"). Specifically, Sea Tow alleges that defendants' use of Sea Tow marks and trade dress subsequent to the termination of its licensing agreement with defendants 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 licensing agreement.

On January 18, 2007, this Court denied defendants' motion 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. See Sea Tow Servs. Intern., Inc. v. Pontin, No. 06 Civ. 3461 (JFB), 2007 U.S. Dist. LEXIS 3630, (E.D.N.Y. Jan. 18, 2007). Defendants now move to stay the instant action pending the resolution of a related case in Florida state court, pursuant to the abstention doctrine enunciated in Colorado River Water Conserv. Dist. v. United States, 424 U.S. 800 (1976). For the reasons that follow, defendants' motion is denied.


A. The Instant Action

The Court assumes the parties' familiarity with the underlying facts and procedural history of this case. Briefly, however, this action arises from defendants' alleged failure to comply with various "post-termination requirements" set forth in a License Agreement (the "Agreement") between the parties. (Compl. ¶¶ 16, 20, 26.) According to the Complaint, 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 defendants that allegedly breached the terms of the Agreement. (Id. ¶ 22.)

Sea Tow alleges that, following mailing of the Notice, defendants 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 posttermination 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 defendants have continued to present their business as an "authorized licencee 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 within defendants' exclusive area of operation under the Agreement. (Id. ¶ 34.)

B. The Florida Action

In September 2001, five years before Sea Tow issued the Notice, Pontin filed suit against Sea Tow and several other defendants in Florida state court (the "Florida Action").*fn1 In November 2005, Pontin filed his third amended complaint in the Florida Action, alleging breach of contract, fraud, conspiracy to commit fraud, deceptive and unfair trade practices, tortious interference with contractual relations, and breach of fiduciary duty claims. (Jaensch Decl. Ex. 6.)*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.)

On August 26, 2006, after Sea Tow initiated the instant action, Pontin sought and obtained from the Florida court a temporary injunction against Sea Tow (the "Florida Injunction"). (Jaensch Decl. Exh. K.) 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 effect of the Notice of Termination.*fn3 (Jaensch Decl. Exh. L.)

Pontin filed the instant motion to stay the proceedings in this Court on January 29, 2007. Almost one month later, on February 23, 2007, Pontin requested leave to file a "Supplement and Amendment to Third Amended Complaint" in the Florida Action (the "Supplement"). (Jaensch Cert. Ex. B.) On March 27, 2007, the Florida court granted Pontin's request to file the Supplement.*fn4 Notably, the Supplement alleges claims solely against Sea Tow relating to its attempted termination of the Agreement in June 2006, and not against any of the other defendants in the Florida Action, (See Supplement, ¶¶ 33-40.)


Defendants argue that the Court should abstain from exercising jurisdiction over this case in deference to the Florida Action. For the reasons that follow, this Court finds that defendants have failed to demonstrate that "exceptional circumstances" exist to justify abstention. See Moses H. Cone Mem'l hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983).

In considering whether to defer to parallel proceedings in state court, the starting point for federal district courts is the "virtually unflagging obligation . . . to exercise the jurisdiction given them." 424 U.S. at 817; see Royal & Sun Alliance Ins. Co. of Canada v. Century Int'l Arms, Inc., 466 F.3d 88, 93 (2d Cir.2006). Thus, this Court's aim is not to find some reason for the exercise of federal jurisdiction, but rather to determine whether "exceptional circumstances" or the "clearest of justifications" exist to justify the surrender of that jurisdiction. Moses H. Cone, 460 U.S. at 25-26; see Colorado River, 424 U.S. at 813 ("Abstention from the exercise of federal jurisdiction is the exception, not the rule."); Gregory v. Daly, 243 F.3d 687, 702 (2d Cir. 2001) ("[T]he mere fact that parallel proceedings are pending in state court is insufficient to justify abdicating the virtually unflagging obligation to exercise federal jurisdiction.") (quotation marks and citations omitted); see also Amer. Disposal Servs., Inc. v. O'Brien, 839 F.2d 84, 87 (2d Cir. 1988) ("[T]he existence of concurrent federal and state proceedings regarding the same subject matter is not by itself sufficient to ...

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