ExxonMobil Oil Corp. v. Black Stone Petroleum Inc., Case No. 1:16–cv–148
Decision Date | 09 November 2016 |
Docket Number | Case No. 1:16–cv–148 |
Citation | 221 F.Supp.3d 755 |
Parties | EXXONMOBIL OIL CORPORATION, Plaintiff, v. BLACK STONE PETROLEUM INC., et al., Defendants. |
Court | U.S. District Court — Eastern District of Virginia |
Joseph J. Aronica, Duane Morris LLP, Washington, DC, for Plaintiff.
This diversity breach of contract action arises from a dispute concerning two contracts regarding the sale of a New Jersey service station. The two named defendants did not file an answer to the complaint or otherwise respond or appear in this action, and thus the matter was referred to the Magistrate Judge for a Report and Recommendation ("R&R") pursuant to 28 U.S.C. § 636(b). The Magistrate Judge's R&R concluded:
Accordingly, the record warrants the entry of judgment against both defendants, jointly and severally, for the amount of contractually-required liquidated damages, plus post-judgment interest at the statutory rate.
Plaintiff ExxonMobil Oil Corporation ("Exxon") is a New York corporation with its principal place of business in Texas. Exxon is in the business of, inter alia , owning and leasing roadside service stations in the United States. Defendant Black Stone Petroleum, Inc. ("Black Stone") is both incorporated and headquartered in New Jersey, and was lessee on one of Exxon's New Jersey service station properties. Defendant FDD Realty, LLC ("FDD Realty") is a New Jersey limited liability company operating in New Jersey.
On January 27, 2012, Exxon and Black Stone executed a contract (the "Exxon Agreement") in which Black Stone exercised its right of first refusal to purchase the New Jersey station that Black Stone had previously leased from Exxon. The Exxon Agreement includes the following pertinent provisions:
Two days before entering the Exxon Agreement, Black Stone, unbeknownst to Exxon, executed a separate agreement with FDD Realty (the "FDD Agreement") in which Black Stone contracted to convey its interest in the New Jersey service station to FDD Realty. The FDD Agreement includes the following pertinent terms:
The closing date of the Exxon Agreement was April 23, 2012. Thereafter, on July 22, 2013, Exxon made the agreed payment of $350,000 toward the cost of replacing the underground storage tanks at the service station. On October 18, 2013, shortly after the storage tanks were replaced, Black Stone rebranded the station as a "Raceway" service station and ceased selling Exxon-branded fuel, in violation of the Exxon Agreement.2 In response, Exxon demanded that Black Stone pay liquidated damages pursuant to the Exxon Agreement. Black Stone rejected this demand, and instead directed Exxon to collect any liquidated damages due from FDD Realty, which also rejected Exxon's demand.
On February 12, 2016, Exxon filed the instant action against Black Stone, alleging breach of the Exxon Agreement arising from Black Stone's failures (i) to sell Exxon-branded fuel, and (ii) to pay the contractually-required liquidated damages. A month later, on March 14, 2016, Exxon filed an amended complaint, adding FDD Realty as a defendant and asserting damages arising from FDD Realty's breach of the FDD Agreement. Specifically, Exxon averred that FDD Realty, by signing the FDD Agreement, assumed Black Stone's obligation to pay the contractually-required liquidated damages to Exxon in the event of a breach of the Exxon Agreement. Exxon alleged that FDD Realty's assumption of that obligation created an enforceable legal right in Exxon as an intended beneficiary of the FDD Agreement. Accordingly, because neither Black Stone nor FDD Realty paid the contractually-required liquidated damages, Exxon sought compensatory damages and liquidated damages against both defendants. Notably, however, the amended complaint did not specifically seek pre-judgment interest.
Both Black Stone and FDD Realty were properly served via their registered agents, but neither defendant filed an answer or otherwise responded, nor has either defendant entered any appearance in this action. As a result, on June 21, 2016, the Clerk of Court entered a default against both defendants, pursuant to Rule 55(a), Fed. R. Civ. P. Ten days later, Exxon moved for the entry of default judgment in the amount of $299,871 in liquidated damages,3 plus pre- and post-judgment interest. A hearing on Exxon's motion for the entry of default judgment was held on July 29, 2016. In the course of this hearing, neither defendant appeared.
On August 10, 2016, the Magistrate Judge issued the R&R at issue here, recommending (i) that Exxon's motion for the entry of default judgment and an award of $299,870.76 in liquidated damages be granted against Black Stone; (ii) that Exxon's motion for the entry of default judgment against FDD Realty be denied, on the ground that Exxon is not an intended third party beneficiary of the FDD Agreement and thus lacks standing to enforce the FDD Agreement; and (iii) that Exxon's motion for pre- and post-judgment interest be denied, because Exxon's amended complaint never explicitly sought such relief.
Two weeks later, on August 23, 2016, Exxon filed objections to the Magistrate Judge's R&R, pursuant to Rule 72(b)(2), Fed. R. Civ. P. and 28 U.S.C. § 636(b)(1)(C). Specifically, Exxon claims that the Magistrate Judge erred in determining (i) that Exxon was not an intended third party beneficiary of the FDD Agreement, (ii) that Exxon was not entitled to pre-judgment interest, and (iii) that Exxon was not entitled to post-judgment interest.
Before reaching the merits of Exxon's objections, it is important to address four threshold issues.
A de novo standard of review applies to "any part of the magistrate judge's disposition that has been properly objected to." Fed. R. Civ. P. 72(b)(3). Here, default judgment is appropriate if the well-pled allegations of the complaint establish that Exxon is entitled to relief and defendants have failed to plead or defend. Fed. R. Civ. P. 55. Importantly, a defendant in default admits the complaint's well-pled factual...
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