Pdv Midwest Refining LLC v. Armada Oil & Gas Co.
| Decision Date | 01 October 1999 |
| Docket Number | No. 97-CV-72287-DT.,97-CV-72287-DT. |
| Parties | PDV MIDWEST REFINING LLC, et. al., Plaintiffs/Counter-Defendants, v. ARMADA OIL & GAS COMPANY, INC., et. al., Defendants/Counter-Plaintiffs and Third-Party Plaintiffs, and UNO-VEN Company et. al., Third-Party Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Faith E. Gay, Sidney & Austin, New York City, Dane A. Lupo, Lupo & Koczkur, Detroit, MI, for Plaintiff.
Jamal John Hamood, Hamood& fergestrom, Tryo, MI, for Defendant.
ORDER GRANTING IN PART & DENYING IN PART PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
This matter having come before the Court on Plaintiffs' motion for summary judgment on Counts I, II, III and VI of Plaintiffs' complaint and on Defendants' counter-complaint [Document No. 114];
The Court having reviewed the pleadings submitted herein, and being otherwise fully informed in the matter;
IT IS HEREBY ORDERED that Plaintiffs' motion for summary judgment, relating to Plaintiffs' breach of contract and guaranty claims (Counts I and III), shall be, and hereby is, GRANTED IN PART, as Defendants, jointly and severally, are obligated to pay for the petroleum products they received, and DENIED IN PART, as a genuine issue of material fact exists with respect to whether $574,098.93 of the total amount is owed Plaintiff's motion for summary judgment on their quantum meruit claim (Count II) shall be, and hereby is, DENIED, because Plaintiffs are entitled to recover under the contract;
Plaintiffs' motion for summary judgment with respect to their fraud claim (Count VI) shall be, and hereby is, DENIED;
Plaintiffs' motion for summary judgment on Count II of Defendants' counterclaim, alleging tortious interference of business relationship, shall be, and hereby is, GRANTED as unopposed; and
Plaintiffs' motion for summary judgment on Count I of Defendants' counterclaim, alleging a violation of the Petroleum Marketing Practices Act, 15 U.S.C. §§ 2801-2841, shall be, and hereby is, GRANTED IN PART, to the extent that Defendants seek recovery under 15 U.S.C. § 2802(b)(2)(E)(iii)(II) because the uncontroverted facts establish that recovery is not warranted on that ground;
The remainder of Plaintiffs' motion for summary judgment on Defendants' PMPA counterclaim is DENIED, without prejudice.
On May 14, 1997, Plaintiffs PDV Midwest Refining LLC ("PDV") and CITGO Petroleum Corporation ("CITGO") filed an eight-count verified complaint alleging that Defendant corporation Armada Oil and Gas Company ("Armada") and individual Defendants Allie Berry ("Berry"), Ali Jawad ("Jawad") and Sam Haddas ("Haddas") obtained petroleum products through fraudulent means and failed to pay for over $3 million worth of petroleum products. Subsequently, on July 3, 1997, Defendants filed a counterclaim and third-party complaint alleging that both Plaintiffs and Third-Party Defendants UNO-VEN Company (hereinafter "UNO-VEN") and Union Oil Company of California (hereinafter "Unocal") violated the Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et seq., and Plaintiff CITGO and Third-Party Defendant Knight Enterprises, Inc., interfered with Defendants' business expectations and relationships.1
Individual Defendant Jawad purchased Armada, which operated as an unbranded gasoline distributor, or "jobber," in 1982.2 Armada supplied unbranded gasoline products to retail gas stations until 1990. On July 31, 1990, Armada executed a Marketer Sales Agreement ("Agreement") with UNO-VEN, which was renewed in 1995.3 Under the Agreement, Armada agreed to operate as a branded distributor for Unocal (or "76"-brand) motor fuels and lubricants. It is uncontroverted that Armada did not lease any premises from UNO-VEN; Armada only purchased petroleum products. Section 14 of the Agreement governed the terms of Armada's payment for the gasoline products. See Plfs.' Ex. B(1), the Agreement.4 On July 31, 1990, individual Defendants Berry, Jawad and Haddas entered a written personal guaranty for Armada's obligations under the Agreement. See Plfs.' Ex. B(2), guaranty attached to DeVore Declaration. Currently, Jawad is the president and treasurer of Armada. See Jawad dep. at 10. Berry has served as Armada's vice-president and secretary for approximately ten years. Id.
On April 18, 1997, Plaintiff CITGO sent a letter to all UNO-VEN distributors, including Armada, indicating that as of May 1, 1997, "UNO-VEN's refining and marketing assets will be transferred to an indirect subsidiary of Petroleos de Venezuela, S.A. [Plaintiff PDV]." Plfs.' Ex. C(2). Also on that date, Plaintiff CITGO became operator of both UNO-VEN's Lemont refinery and its terminals and lubricant facilities. Id. The letter also indicated that Plaintiff CITGO would administer all UNO-VEN Agreements for a one-year period, starting May 1, 1997, and continue to supply Unocal branded products during that time. Id. Armada was also informed that during this one-year period, it could "continue to use the Unocal and '76' Marks, and accept the Union 76 credit card." Id.
Subsequently, on April 30, 1997, UNO-VEN sent a letter to Berry, reiterating the facts supplied in CITGO's earlier letter. Additionally, UNO-VEN explained:
Because Unocal will no longer have an interest in the refining and marketing assets, UNO-VEN's right to use the Unocal and 76 trademarks and credit card will be terminated.
... As a consequence of the transaction ... and as a result of the termination of UNO-VEN's right to use the Unocal and 76 trademarks and credit card, UNO-VEN hereby terminates and/or non-renews said Marketer Sales Agreement and does hereby terminate and/or non-renew any franchise relationship, effective as of May 1, 1998, one year from today's date. All agreements relating to the Marketer Sales Agreement are also hereby terminated and non-renewed as of the effective date, May 1, 1998.
Ex. B(3).
In response to the letters sent by CITGO and UNO-VEN, Armada sent a memorandum to its customers indicating that Armada's franchise agreement with UNO-VEN was terminated on May 1, 1997, not the May 1, 1998, date provided in CITGO's and UNO-VEN's letters. See Ex. D, Berry dep. at 56-59 & memo attached as D(2). Armada also expressed that:
Most important is our position that UNO-VEN's statement for terminating your franchises, "loss of right to grant the use of the trademark which is the subject of the franchise."
The most important aspect of this memo is to urge you NOT to sign any agreement with any competitor before you talk to us, for entering into a new BP franchise.
Effective May 15, 1997, we (Armada Oil & Gas Co.) will not accept UNO-VEN or other credit cards processed thru UNO-VEN POS machines ...
Ex. D(2) (emphasis in original).
The parties do not dispute that subsequent to April 18, 1997, but before CITGO began administering UNO-VEN's Agreement, Armada continued to acquire petroleum products through UNO-VEN's distribution terminals. Plaintiffs contend that between April 14 and April 30, Armada had conducted several hundred transactions, but failed to honor the eleven electronic transfer drafts submitted by UNO-VEN. See Galloway Decl. at ¶ 4 & Ex. C(2). Plaintiffs contend that during this period, Armada purchased and failed to pay for products in the amount of $2,412,657.82. Id. After May 1, 1997, when CITGO began administering the Agreement, Armada continued to acquire petroleum products and continued to refuse payment for the electronic fund transfer drafts submitted by CITGO, in the amount of $652,729.31. See Galloway Decl. at ¶¶ 7-8 & Ex. C(5). After May 7, 1997, CITGO supplied petroleum "on a cash-on-delivery basis only." Galloway Decl. at ¶ 11. Plaintiffs have demanded payment for all of the purchases from both Armada and individual Defendants under the Guaranty. Defendants dispute the precise amount that is due, but admit that they have not proffered payment for these purchases.
Currently before this Court is Plaintiffs' motion for summary judgment on Counts I, II, III, and VI of their complaint, and both counts of Defendants' counter-complaint.
Rule 56 mandates the entry of summary judgment if all the evidence shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party has the burden of showing that there is an absence of evidence to support the nonmoving party's case. Id. at 325, 106 S.Ct. 2548. Thus, this Court determines "whether the evidence presents sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Terry Barr Sales Agency, Inc. v. All-Lock Co., Inc., 96 F.3d 174, 178 (6th Cir.1996) (citations omitted). This Court does not weigh the evidence but determines whether there is a genuine issue for trial, viewing the record as a whole and viewing all the facts in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 578, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
In order to avoid summary judgment, the opposing party must have set out sufficient evidence in the record to allow a reasonable jury to find for him at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "[A] party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. at 256, 106 S.Ct. 2505. Summary judgment is appropriate if the evidence favoring the nonmoving party is merely colorable or is not significantly probative. City Management Corp. v. United States Chem. Co., 43 F.3d 244, 254 (6th Cir.1994).
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