Chevron P.R. LLC v. Martinez-valentin
| Decision Date | 13 January 2011 |
| Docket Number | CIVIL NO. 10-1192 (JP) |
| Parties | CHEVRON PUERTO RICO, LLC, Plaintiff v. ANGEL J. MARTINEZ-VALENTIN, et al., Defendants |
| Court | U.S. District Court — District of Puerto Rico |
By way of background, Plaintiff Chevron Puerto Rico, LLC ("Chevron") previously filed a motion for a temporary restraining order ("TRO") and preliminary injunction (No. 2). The Court denied Plaintiff's motion for a temporary restraining order and ordered Plaintiff to submit any additional relevant evidence not already attached to the complaint to support granting a preliminary injunction (No. 4). Before the Court is Plaintiff's said motion, Defendant Angel J. Martinez-Valentin's ("Martinez") opposition thereto (No. 18), and Plaintiff's reply (No. 23).1 Plaintiff Chevron, previously known as Texaco Puerto Rico, Inc. and Texaco Puerto Rico, LLC requests that the Court enter a TRO and preliminary injunction ordering Defendant Martinez to: (1) immediately surrender to Chevron the gasoline service station number 622 located at 5 de Diciembre Avenue #110, Sabana Grande, Puerto Rico (the "Station") and all tanks and equipment located therein; (2) immediately comply with all other post-termination covenants of the lease and supply agreements between the parties; and (3) refrain from using the Texaco marks. For the reasons stated herein, Plaintiff's motion for preliminary injunction is GRANTED.
Plaintiff Chevron, previously known as Texaco Puerto Rico, LLC and Texaco Puerto Rico, Inc., filed the instant action against Defendant Martinez, John Doe and ABC Company, Inc. alleging claims for trademark infringement and dilution in violation of the Lanham Act, 15 U.S.C. § 1051, et seq. ("Lanham Act") and the Trademark Dilution Revision Act of 2006, 15 U.S.C. § 1125 et seq. ("Trademark Dilution Revision Act"); for cancellation of the franchise agreement pursuant to the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq. ("PMPA"); for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, and Rule 57 of the Federal Rules of Civil Procedure ("FRCP"); for damages for breach of contract and loss of business or income pursuant to Articles 1044, 1054, 1077and 1206 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, §§ 2994, 3018, 3052, 3371, et seq.; lessee dispossession pursuant to Article 1459 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 4066; and damages under Article 1802 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 5141.
On March 18, 2009, Defendant Martinez entered into two agreements with Plaintiff Chevron: (1) a lease agreement ("Lease"); and (2) a supply agreement ("Supply Agreement"). The Lease was for the use of the real property located at 5 de Diciembre Avenue #110, Sabana Grande, Puerto Rico, in order to operate the Station. The Lease term was for a period of three years starting on April 1, 2009 and ending on March 31, 2012. Pursuant to its terms, the Lease converts to a month by month tenancy if Defendant Martinez retains possession of the premises at the end of the three-year term. The Lease provides that Defendant Martinez must pay Chevron a monthly rent. The Lease also provides that Defendant must pay each delivery of the Texaco petroleum products with cash or by electronic transfer or ACH. The Lease stated that Defendant Martinez is obligated to use the property as a gasoline service station to sell Texaco branded petroleum products, merchandise and services normally rendered at Chevron's gasoline and service stations. The Lease also provides that if Defendant Martinez fails to comply with any of his duties under the Lease, Chevron may terminate the Lease.
Under the terms of the Supply Agreement, Defendant Martinez is granted the right to buy for resale Texaco branded petroleum products and to operate the Station under the Texaco trademark. The Supply Agreement is for a period of three years and continues in effect as long as the Lease continues in effect. The Supply Agreement states that payment of each delivery will be in cash prior to receiving the product. The Supply Agreement also states that Defendant Martinez would only use the marks, registered marks, trademarks, names, service distinctions, and/or color patterns that Chevron authorizes. In addition, Defendant Martinez is required to comply with all the applicable environmental laws and regulations. Pursuant to the Supply Agreement Plaintiff can suspend the delivery of petroleum products and terminate the agreement if Defendant fails to comply with the terms of said agreement.
Plaintiff alleges that Defendant Martinez has repeatedly breached the terms of the Lease and Supply Agreement because he has refused to pay for rent and gasoline products. Defendant Martinez owes Chevron a total of $77,109.01 for rent, petroleum products and other products sold and delivered. Defendant Martinez has failed to have Texaco products available for consumers and is selling other brands of gasoline through Texaco's equipment. Plaintiff alleges that Defendant's selling of non-Texaco branded gasoline has affected Chevron's market share.
On December 4, 2009, Plaintiff's counsel sent Defendant Martinez a written notice terminating the franchise relationship, effective ten days from the letter due to Defendant Martinez's violations of the Lease and Supply Agreements and the PMPA, 15 U.S.C. § 2802, et seq. The termination notice explained that the franchise relationship was being terminated because of Defendant Martinez's failure to pay the amounts owed to Chevron. The termination notice requested that Defendant Martinez surrender control of the Station to Chevron and included a summary statement by the Secretary of Energy pursuant to Article 104(c)(3)© of the PMPA, 15 U.S.C. § 2804(c)(3)(c). On January 8, 2010, Chevron's counsel sent Defendant's counsel a supplemental letter stating that the franchise relationship was being terminated, effective immediately due to Defendant Martinez's failure to comply with the Lease and the Supply Agreement.
Defendant allegedly continues to display signs bearing Plaintiff's trademarks and refuses to surrender the Station and the store. Chevron alleges that Defendant Martinez's actions potentially expose Chevron to liability under environmental laws, rules and regulations.
On March 5, 2010, Plaintiff filed the instant complaint. Plaintiff alleges that to date Defendant has failed to surrender control of the station and has refused to pay the amounts owed. Inaddition, Plaintiff argues that due to the termination of the Lease and Supply Agreements, Defendant is no longer entitled to utilize Plaintiff's Texaco trademarks. Plaintiff alleges that Martinez continues to utilize the Texaco marks at the station, thus violating the Lanham Act.
The general purpose of injunctive relief is to prevent future acts or omissions of the non-movant that constitute violations of the law or harmful conduct. United States v. Oregon Med. Soc., 343 U.S. 326, 333 (1952). The United States Court of Appeals for the First Circuit has set forth a four part test for trial courts to use when considering whether to grant preliminary injunction requests. Lanier Prof. Serv's, Inc., v. Ricci, 192 F.3d 1 (1st Cir. 1999); Narragansett Indian Tribe v. Guilbert, 934 F.2d 4, 5 (1st Cir. 1991). A preliminary injunction is appropriate if: (1) the petitioner has exhibited a likelihood of success on the merits; (2) the petitioner will suffer irreparable injury if the injunction is not granted; (3) such injury outweighs any harm which granting injunctive relief would inflict on the respondent; and (4) the public interest will not be adversely affected by granting the injunction. Narragansett Indian Tribe, 934 F.2d at 5; see e.g., Aoude v. Mobil Oil Corp., 862 F.2d 890, 892 (1st Cir. 1988); Hypertherm, Inc. v. Precision Products, Inc., 832 F.2d 697, 699 n.2 (1st Cir. 1987). Whether toissue a preliminary injunction depends on balancing equities where the requisite showing for each of the four factors turns, in part, on the strength of the others. Concrete Machinery Co., Inc. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 611-13 (1st Cir. 1988). Although a hearing is often held prior to entry of a preliminary injunction, a hearing is not an indispensable requirement. Aoude, 862 F.2d at 893.
A. Motion for Preliminary Injunction
Plaintiff Chevron requests that the Court enter a preliminary injunction ordering Defendant to immediately surrender to Chevron the Station, including its underground storage tanks and equipment, and to comply with all post-termination covenants of the Agreements, including discontinuing use of the Texaco marks. The Court shall now consider Plaintiff's arguments in light of First Circuit's preliminary injunction standard.
Plaintiff argues that it is likely to succeed on the merits of its breach of contract and PMPA claims because Defendant has violated the terms of the Agreements, and because the PMPA requirements for termination of the Agreements and initiation of a civil enforcement action have been met. The PMPA provides, in relevant part, Any franchisor may terminate any franchise... or may fail to renew any franchise relationship [for the following reasons, subject to certain timing and notification requirements]...
(A) A failure by the franchisee to pay the franchisor in a timely manner when due all sums to which the franchisor is legally entitled...
(B) A failure by the franchisee to exert good faith efforts to carry out the provisions of the franchise...
© The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable...
15 U.S.C. § 2802(b)(2). The PMPA requires written notice to the franchisee ninety...
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