BP W. Coast Prods., LLC v. Crossroad Petroleum, Inc., Case No.: 12cv665 JLS (JLB) (Lead Case)
| Decision Date | 18 July 2016 |
| Docket Number | Case No.: 12cv665 JLS (JLB) (Lead Case) |
| Court | U.S. District Court — Southern District of California |
| Parties | BP WEST COAST PRODUCTS, LLC, Plaintiff and Counter-Defendant, v. CROSSROAD PETROLEUM, INC., ET AL., Defendants and Counter-Claimants. AND RELATED CONSOLIDATED ACTIONS |
ORDER (1) GRANTING BP'S PMPA MOTION FOR SUMMARY JUDGMENT; (2) DENYING BP'S INDEMNITY MOTION FOR SUMMARY JUDGMENT; (3) DENYING AS MOOT BP'S MOTION FOR SUMMARY JUDGMENT AGAINST PACIFIC EXPOTECH; (4) DENYING BP'S MOTION TO STRIKE UNTIMELY FILINGS; AND (5) DENYING AS MOOT BP'S MOTION TO STRIKE SCHILLER DEFENDANTS' OPPOSITIONS
Presently before the Court are three motions for summary judgment filed by plaintiff and counter-defendant BP West Coast Products (BP): BP's Motion for Partial Summary Judgment on the PMPA Claims (PMPA MSJ), (ECF No. 492-2); BP's Motion for Partial Summary Judgment Re Indemnity Obligations (Indemnity MSJ), (ECF No. 493-2); and
/ / / BP's Motion for Summary Judgment Against Pacific Expotech and Its Guarantors (Expotech MSJ), (ECF No. 494-1).
In its Expotech MSJ, BP seeks summary judgment against defendant and counter-claimant Pacific Expotech and its Guarantors. These Defendants/Counter-Plaintiffs1 reached a settlement agreement with BP at a June 8, 2016 Mandatory Settlement Conference with Magistrate Judge Jill L. Burkhardt. (See ECF No. 530.) Accordingly, the Court DENIES AS MOOT BP's Expotech MSJ.
Although several other Defendants have reached settlement agreements with BP, BP initially directed its PMPA MSJ against 53 Defendants2 and its Indemnity MSJ against two groups of Defendants: 53 against whom it seeks to enforce franchise indemnity agreements and 79 against whom it seeks to enforce guaranty agreements.3
Three opposition briefs were filed in response to BP's PMPA MSJ: Meetra's Opposition, (Meetra PMPA Opp'n, ECF No. 504); the Schiller Defendants' Opposition,4 (Schiller Opp'n, ECF Nos. 506 & 507); and Crossroad's Opposition, (Crossroad PMPA Opp'n, ECF No. 509). BP filed a single reply in support of its PMPA MSJ. (PMPA Reply, ECF No. 515.)
/ / / Likewise, three opposition briefs were filed in response to BP's Indemnity MSJ: the Meetra Defendants' Opposition, (Meetra Indemn. Opp'n, ECF No. 505); the Schiller Defendants' Opposition, (Schiller Opp'n, ECF Nos. 506 & 507); and the Crossroad Defendants' Opposition, (Crossroad Indemn. Opp'n, ECF No. 510). In support of its Indemnity MSJ, BP filed three reply briefs, one responding to each opposition brief.
The briefing on these MSJs elicited yet another round of motions and briefing. In response to the Schiller Defendants' briefing, BP filed a Motion to Strike Evidentiary Objections to Schiller Defendants' Responses to BPWCP's Motions for Summary Judgment (Motion to Strike Schiller Oppositions), (ECF No. 518-1), and in response to the Crossroad Defendants' late-filed oppositions, BP filed a Motion to Strike Crossroad Petroleum, Inc.'s Untimely Responses to BPWCP's Motions for Summary Judgment (Motion to Strike as Untimely), (ECF No. 519-1). The Crossroad Defendants filed an opposition to, (Strike Opp'n, ECF No. 528), BP's Motion to Strike as Untimely. The Court DENIES BP's Motion to Strike as Untimely.5
For the reasons stated below, the Court GRANTS BP's PMPA MSJ, DENIES BP's Indemnity MSJ, and DENIES AS MOOT BP's Motion to Strike Schiller Oppositions.
The Defendants operated gas stations under franchise agreements with BP on sites they leased from BP, and the guarantor Defendants backed these lease and franchise agreements. BP did not own the land, but leased the more than 200 gas station sites relevant to this litigation as a package deal from Thrifty Oil Co. (Thrifty).
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/ / / Thrifty leased the land to BP under the Agreement to Lease Retail Gasoline Facilities (Master Agreement). (Statement of Facts, ¶¶ 1-2, ECF No. 493-3 [hereinafter "Indemnity SOF"]; Wolfe Decl., Ex. A ¶ 4.) The deal involved more than 200 gas station sites in California. BP and Thrifty executed individual lease agreements for each site, referred to as "Master Leases," each of which incorporated the Master Agreement by reference. (Indemn. SOF ¶ 2.) By organizing hundreds of gas stations under the Master Agreement, Thrifty achieves "(i) benefits of economies of scale, (ii) ease of management, and (iii) efficiency of enforcement of master lessee obligations and direct recourse to remedy any damages suffered by the master lessor." (Statement of Facts ¶ 5, ECF No. 492-3 [hereinafter "PMPA SOF"] (citing Esses Report, Risner Decl. Ex. 139, ECF No. 492-178).)
The Master Leases were set to begin expiring in 2012, but gave BP an option to extend (Extension Options). (PMPA SOF ¶¶ 1-8, 14.) However, BP had to exercise the Extension Options well in advance, by July 1, 2010, or else they would expire. (PMPA SOF ¶ 14.) The Extension Options terms provided, "In order to exercise an Extension Option under any Lease, [BP] must exercise the corresponding Extension Options of all Leases, except those Leases which by their provisions have terminated prior to the date of exercise." (PMPA SOF ¶ 14.)
Before entering the franchise agreements, each of the Defendants subject to the PMPA MSJ acknowledged that the premises they leased were subject to the Master Lease, (PMPA SOF ¶ 12 (citing Risner Decl. Exs. 1-52, 127, 128, 131, 132, ECF Nos. 492-6-492-82, 492-157-492-163, 492-166-492-171)), although they were not actually provided a copy of the contract between BP and Thrifty. The acknowledgements stated, for example:
(PMPA MSJ ¶ 5; see also, e.g., Risner Decl., Ex. 1, ECF No. 492-6, at 44.)6
In May 2010, BP notified Thrifty that it would not exercise the Extension Options. (PMPA SOF ¶ 15.) BP had not completely abandoned the leased gas stations, however, and attempted to negotiate a new contract with Thrifty. (See PMPA SOF ¶ 17.) These negotiations did not lead to a deal and, in September 2011, BP learned that Thrifty had agreed to lease these gas stations to Tesoro Refining & Marketing Company (Tesoro). (PMPA SOF ¶ 18.) Soon after learning about the Tesoro deal, BP began sending the franchisees "Notices of Nonrenewal/Termination of the Franchise Agreements" (Notices). (PMPA SOF ¶ 19 (citing Risner Decl. Exs. 1-52, 127, 128, 131, 132, ECF Nos. 492-6-492-82, 492-157-492-163, 492-166-492-171).) These Notices informed the franchisees of the date upon which BP would lose the right to grant them possession of the sites, and consequently, when they would have to relinquish control of their gas station premises. (See PMPA SOF ¶ 20.) These Notices were sent at least ninety days before each termination or nonrenewal took effect. (PMPA SOF ¶ 22.) In February and March 2012, BP sent the franchisees additional Notices with "amended termination/nonrenewal dates." (PMPA SOF ¶ 21.)
Soon before the underlying Master Leases were due to expire, BP learned that many of the franchisees were preparing to refuse to leave the gas station properties or to sue BP. (Indemn. SOF ¶ 14.) BP preemptively filed lawsuits in March 2012 seeking declaratory and injunctive relief affirming the propriety of the terminations and nonrenewals under the Petroleum Marketing Practices Act (PMPA) and to ensure the franchisees turned over the
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/ / / properties. (Indemn. SOF ¶ 14.) Several franchisees and guarantors filed their own lawsuits later that month, suing not only BP, but also Thrifty. (Indemn. SOF ¶ 15.) All of these actions were consolidated to this Court.
The franchisees and Thrifty had no contractual franchise relationship. Although they operated gas stations on Thrifty's land, Thrifty leased the land to BP, and BP sub-leased the land to the franchisees. The Defendants in April 2012 moved for a temporary restraining order and preliminary injunction against BP and Thrifty. (ECF Nos. 17, 24, & 31.) The Court denied these motions on April 19, 2012. (ECF No. 43.) BP and Thrifty all the while urged the Defendants to dismiss their claims against Thrifty. (Indemn. SOF ¶¶ 19, 22, 23.) The Defendants eventually relented, dismissing their claims against Thrifty in May 2012. (ECF Nos. 71, 79.)
Both the Master Agreement and Master Leases obligated BP to indemnify Thrifty for any claims "related to the Gasoline Stations or any Lease Premises" and for Thrifty's "becoming a party to any action instituted by [BP] against any third party . . or by any third party against [BP] . . . ." (Indemn. SOF ¶¶ 3-4.)
The franchise agreements between BP and the franchisees required the franchisees, among other things, to maintain the leased premises and equipment in a particular manner, perform maintenance in some circumstances, return possession of the stations and leased equipment to BP at the expiration of the franchise agreements, and assign permits and licenses—such as licenses for alcohol, beer, and wine—to BP at the expiration of the lease. (Indemn. SOF ¶ 6.) The franchise agreements also included the following indemnity provision:
Franchisee agrees to indemnify, hold harmless and defend BPWCP, its parents, subsidiaries, officers, directors and employees, from . . . any damages, claims, costs, expenses, fines or penalties relating to operation(s) . . . on the Premises, arising out of or in connection with any failure or...
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