Chevron Puerto Rico, LLC v. Perez-Rosado, Civil No. 09-2080(JP).
| Decision Date | 16 November 2009 |
| Docket Number | Civil No. 09-2080(JP). |
| Parties | CHEVRON PUERTO RICO, LLC, Plaintiff v. José L. PÉREZ-ROSADO and Héctor Pérez, Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Kenneth C. Suria-Rivera, William Estrella Law Offices, San Juan, PR, for Plaintiff.
Before the Court is Plaintiff Chevron Puerto Rico, LLC's ("Chevron") motion for a temporary restraining order ("TRO") and preliminary injunction (No. 2). Plaintiff Chevron, previously known as Texaco Puerto Rico, Inc. and Texaco Puerto Rico, LLC, filed the instant action against Defendants José L. Pérez-Rosado and Héctor Pérez alleging claims for trademark infringement and dilution in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1117 and 1125; breach of contract pursuant to Articles 1044 and 1053 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, §§ 2994 and 3017; and the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2801 et seq. Plaintiff Chevron requests that the Court enter a TRO and preliminary injunction ordering Defendants to: (1) immediately surrender to Chevron the gasoline service station number 575 located at 2810 Militar Avenue, Isabela, 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. In light of the Court's immediate granting of the preliminary injunction, the Court FINDS AS MOOT Plaintiff's request for a TRO.
On December 27, 2006, Defendant José L. Pérez-Rosado ("Pérez-Rosado") entered into a lease agreement and supply agreement (the "Agreements") with Plaintiff Chevron. The lease agreement ("Lease") was for the use of real property located at 2810 Militar Avenue, Isabela, Puerto Rico during a period of three years, for the purposes of operating a gasoline service station. The Lease provides for monthly payment by Defendant Pérez-Rosado of $2,000.00 in rent, as well as obligations to continually operate the Station in order to sell Texaco branded petroleum products and merchandise. The Lease further provides that Plaintiff Chevron may terminate the lease in the event that Defendant Pérez-Rosado fails to operate the Station for a period of seven consecutive days, or otherwise fail to comply with the terms of the Lease.
Under the supply agreement ("Supply Agreement") entered into by Plaintiff and Defendant Pérez-Rosado, Defendant agreed to purchase Texaco gasoline and other Texaco products for resale to customers. The Supply Agreement grants Pérez-Rosado permission to use Texaco trademarks and trade names in connection with the sale of Texaco products. Said agreement also requires Defendant Pérez-Rosado to comply with all applicable environmental laws and regulations. The Supply Agreement further provides that Plaintiff may suspend the delivery of petroleum products and terminate the agreement in the event that Pérez-Rosado fails to comply with the terms of the agreement.
On April 14, 2009, Plaintiff Chevron entered into an additional agreement (the "Administrator Authorization"), this time with both Defendants, under which Defendant Pérez-Rosado obtained authorization from Chevron to permit Defendant Héctor Pérez to operate the Station. The Administrator Authorization did not excuse Defendant Pérez-Rosado from his obligations under the Lease and Supply Agreement.
Plaintiff alleges that Defendant Pérez-Rosado, through his own actions and those of Defendant Héctor Pérez, has repeatedly breached the Agreements. Plaintiff alleges that Defendant has failed to pay Plaintiff Chevron for $20,000.00 of gasoline products delivered on June 15, 2009. In addition, Defendant has allegedly failed to pay rent since June 2009. Furthermore, Plaintiff alleges that Defendant Pérez-Rosado has breached the Lease Agreement by failing to operate the Station for a period of over sixty days.
As a result of the alleged breaches, Plaintiff sent Defendant Pérez-Rosado written notice of termination of the Agreements on August 7, 2009. Said notice informed Defendant that the Agreements were being terminated pursuant to the terms of the Agreements as well as the rules established under the PMPA. The notice of termination requested that Defendant turn over control of the Station to Plaintiff. Currently, Defendants have allegedly failed to return control of the Station to Plaintiff. Instead, Defendants continue to use the premises to operate a store to sell groceries. Although Defendants are no longer authorized to sell, and are in fact not offering for sale Texaco gasoline, they allegedly continue to utilize the Texaco marks to attract customers.
Plaintiff has submitted evidence documenting its allegations regarding the contractual breaches and trademark violations. The evidence submitted by Plaintiff includes the Lease and the Supply Agreement, the Administrator Authorization, the termination letter, an invoice addressed to Defendant Pérez-Rosado listing an amount due of $20,600.00, and photographs of the station displaying the Texaco marks but stating no price for gasoline.
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, 72 S.Ct. 690, 96 L.Ed. 978 (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 to issue 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 Defendants 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 ...
(C) 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). Although the PMPA ordinarily requires written notice to the franchisee ninety days in advance of a termination or non-renewal, it allows for a lesser period when ninety days is unreasonable under the circumstances. 15 U.S.C. § 2804.
In the instant case, Plaintiff has submitted evidence indicating that Defendant Pérez-Rosado has failed to pay Chevron rent and amounts owed for gasoline delivered, in excess of $20,000.00. As such, Plaintiff is likely to succeed in showing that cause for termination of the Agreements exists pursuant to the above-cited subsection (A), which lists failure to pay as a valid ground for termination.
Plaintiff also alleges that termination of the Agreements is reasonable due to Defendants' failure to continue selling gasoline at the Station. The PMPA specifically defines "an event ... as a result of which ... termination ... of the franchise relationship is reasonable" as including "failure by the franchisee to operate the marketing premises for ... 7 consecutive days." 15 U.S.C. § 2802(c)(9). The Court finds that Defendants' cessation of gasoline sales at the Station for a period of over sixty days creates a high likelihood that Plaintiff will succeed in showing that termination is also appropriate on the basis of failure to operate.
On August 7, 2009, Plaintiff notified Pérez-Rosado of the termination of the contractual relationship between the parties, effective ten days following the date of the notice. Given the seriousness of Defe...
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