Thomas Petroleum, LLC v. Lloyd

• Decision Date: 02 October 2012
• Docket Number: 1:11-CV-00902-LJO-JLT
• Parties: THOMAS PETROLEUM, LLC, d/b/a EASTERN SIERRA OIL, Plaintiff, v. KENNETH LLOYD, an individual, E.S. OIL, LLC, a California limited liability company, and DOES 1-30, inclusive, Defendants.
• Court: U.S. District Court — Eastern District of California

THOMAS PETROLEUM, LLC, d/b/a EASTERN SIERRA OIL, Plaintiff,

v. KENNETH LLOYD, an individual, E.S. OIL, LLC,a California limited liability company, and DOES 1-30, inclusive, Defendants.

1:11-CV-00902-LJO-JLT

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

Dated: October 2, 2012

ORDER RE PLAINTIFF'S MOTION FOR SUMMARY

ADJUDICATION/SUMMARY JUDGMENT (DOC. 22)

I. INTRODUCTION

This case involves a commercial dispute between Plaintiff Thomas Petroleum ("Thomas Petroleum" or "Thomas"), a Texas-based petroleum products distributor doing business in Bishop, California under the name "Eastern Sierra Oil," and one of its former employees, Kenneth Lloyd ("Lloyd"), who founded a company named "E.S. Oil," which is also involved in the petroleum products business in Bishop. Before the Court for Decision is Thomas Petroleum's motion for summary "adjudication"¹ on its First (Racketeer and Influenced Corrupt Organizations Act), Third (duty of loyalty), Fifth (unjust enrichment), Seventh (intentional interference with existing and prospective economic advantage), Eighth (conversion), Ninth (unfair competition), Fifteenth (federal trademark),Seventeenth (federal unfair competition based on trademark), Eighteenth (state law trademark infringement), and Twentieth (state law unfair competition based on trademark infringement). Doc. 22. Defendant opposed the motion. Doc. 28. Plaintiff replied. Doc. 41. The parties submitted a joint statement of undisputed fact, separate statements of fact, and numerous evidentiary objections. The matter was originally set for hearing on August 21, 2012, but the hearing was vacated and the matter submitted for decision on the papers pursuant to Local Rule 230(g). Doc. 24.

II. BACKGROUND²

A. Thomas Petroleum's Relationship to Bishop and Lloyd.

In October 2009, Thomas Petroleum purchased the assets of Haycock Petroleum Company ("Haycock"). Joint Statement of Undisputed Fact ("JSUF") ## 1-2.³ Haycock had been engaged in business in Bishop, California, under the name "Eastern Sierra Oil" since 1996. JSUF #2. As part of the sale, Thomas Petroleum acquired the right to do business under that name and assumed Haycock's lease in Bishop on a month-to-month tenancy. JSUF ## 2, 4.

Thomas Petroleum also retained all of Haycock's employees, including Lloyd. JSUF #5. Starting in October 2009, Lloyd was Thomas Petroleum's Terminal Manager in Bishop, the highest-ranking employee there. JSUF #6. Lloyd supervised five employees and oversaw budgets, sales, day-to-day operations, management, safety, inventory, facility upkeep, and maintenance. JSUF ##8-9. He was also involved in decisions about how to draft bids to potential customers or for potential projects, and aboutwhich customers to target in Bishop. JSUF #11. One of Lloyd's key duties was drafting and submitting bids, and he had authority to enter into contracts on Thomas Petroleum's behalf. JSUF ##10-11. Lloyd was a long-standing member of the small Bishop community and has been involved in the oil and gas business there since he was a teenager. Lloyd Decl., Doc. 36, ¶¶ 2-5.

Once Thomas Petroleum took over Haycock's business operations in Bishop, Lloyd "became unhappy with the way the company was run for a variety of reasons." Id. at ¶ 12. Among other things, Lloyd believed "his skills, experience, and local goodwill were rarely, if ever, acknowledged by the company, and my advice about how to proceed with negotiating deals was frequently ignored." Id. at ¶ 13.

B. Lloyd's Creation of E.S. Oil, LLC.

While still employed at Thomas Petroleum, Lloyd created "E.S. Oil, LLC" through an online legal service. Id. at ¶ 14. Lloyd "was aware that advantages would be available for certain kinds of governmental contracts if the company could qualify as having sufficient ownership interest held by women, so [he] structured the company with [his] daughter as the largest single holder of equity." Id. He created the company "without any particular idea of what (if anything) [he] would do with [it]." Id. Lloyd's frustration level with Thomas rose and fell and he likewise "ran hot and cold" on the idea of using E.S. Oil to "strik[e] out on [his] own." Id. at ¶ 15.

C. The Bishop Paiute Indian Tribe Deal.

In early 2010, Lloyd proposed to his superiors at Thomas, John Saxon and Steve Moore, that Thomas negotiate with the Bishop Paiute Indian Tribe to expand the Tribe's retail gasoline operations. There was initial interest in a deal, but Lloyd was informed by his superiors that Thomas wanted a long-term deal with the Tribe, while Tribal representatives informed Lloyd that the Tribe was not interestedin a long term deal.⁴ Id. at ¶¶ 23-25. Negotiations continued for several weeks, but stagnated later that year. Id. at ¶¶ 25-28.

According to Lloyd, he "undertook to avoid contact with the Tribe" for some time, because the Tribe was asking questions about approximately $300,000 in sales and excise taxes withheld by Thomas' predecessor (Haycock). The Tribe claimed it was entitled to that money and requested information from Thomas Petroleum via Lloyd. When Lloyd requested direction from Thomas, he was told "not to answer the Tribe's questions." Id. at ¶¶ 25-26. In addition to this monetary dispute, the Tribe was distracted from any potential deal because it began to explore the possibility of building a Wal-Mart store with a gas station attached. Id. at ¶ 27. According to Thomas, Lloyd stopped talking about the project with anyone at Thomas, claiming a "lack of communication." Plaintiff's Statement of Undisputed Fact ("PSUF") #7.

In the fall or winter of 2010, after the Wal-Mart negotiations reached a dead end, Lloyd informed Thomas that there might be a possibility to re-open negotiations. Id. at ¶ 28. However, according to Lloyd, Thomas was still only interested in negotiating a long term deal, which was at odds with the Tribe's negotiating stance. Id. Believing there was no possibility of a deal between the Tribe and Thomas Petroleum, Lloyd negotiated a short-term deal with the Paiute tribe on behalf of his own company: E.S. Oil. Lloyd claims he did not sign onto any such deal until after he resigned from Thomas Petroleum in May 2011. Lloyd Delc. at ¶ 31. However, undisputed evidence indicates the Paiutes considered resolutions related to the E.S. Oil contracts on April 14, 2011 and signed the contracts the following week, all before Lloyd's resignation. JSUF ## 40-42.

D. The Los Angeles Department of Water and Power Deal.

In January or February 2011, the Los Angeles Department of Water and Power ("LADWP")informed Lloyd that LADWP was soliciting bids for an upcoming project. JSUF #51. Lloyd recommended that Thomas should bid on the project, number 242. JSUF #52. Prior to this, Thomas Petroleum had been standing in the shoes of its predecessor, Haycock, under an earlier LADWP contract. Lloyd Decl. at ¶ 35.⁵ LADWP was Thomas Petroleum's second-largest customer in Bishop. JSUF #49.

It is undisputed that Lloyd previously crafted and submitted five successful LADWP bids on behalf of Thomas Petroleum's predecessors. JSUF #54. Lloyd drafted a bid on Thomas Petroleum's behalf for bid 242. JSUF #58. Lloyd used Thomas Petroleum equipment and letterhead to email, fax, and send letters to numerous subcontractors regarding the bid. Id. He drove to and attended a pre-bid conference in Los Angeles. Id. In taking these steps, he purported to represent Thomas Petroleum and act on its behalf. JSUF #59.

However, Lloyd did not submit the bid for Thomas Petroleum. JSUF #61. Instead, he and his daughter (the President of E.S. Oil) signed the $1.15 million bid and submitted it for E.S. Oil. JSUF #63-65. The parties dispute whether the bid submitted on behalf of E.S. Oil utilized and/or attached pricing information from previous bids prepared by Thomas Petroleum. PSUF#18 and Objections (see Doc. 43).

According to Lloyd, LADWP is "very particular about certain things in the bidding process," including "that an officer of the business entity submitting the bid sign it, and that the bid be sealed [i.e. that it bear a corporate seal] or otherwise contain some indication that the corporation (or other business entity) is binding itself to the terms of the bid." Lloyd Decl. at ¶ 38. Without these things, LADWP is likely to reject the bid before even considering its content. Id.

Lloyd claims to have prepared the bid for this business "using [his] own knowledge of the oil industry, the local markets and available subcontractors, and a variety of other information known to me personally." Id. at ¶ 41. He claims he "did not need to, and did not, consult nearly any of ThomasPetroleum's proprietary information" to prepare the bid because he "did not need to" do so. Id. (emphasis added). To the extent Lloyd did consult Thomas Petroleum's confidential material, it was "largely as a convenience rather than a matter of necessity," as he has been "preparing functionally the same bid for LADWP's business, in previous versions since the late 1980s." Id. at ¶ 41.

Initially, Lloyd contacted Steve Moore to secure the signature of Cliff Thomas, Thomas Petroleum's CEO and majority equity owner, for the LADWP bid. Id. at ¶ 42. According to Lloyd, Moore instructed Lloyd to sign the bid himself. Id. Lloyd indicated that his would result in rejection by LADWP. Id.⁶ . Moore responded that Lloyd should sign it "Haycock Petroleum DBA Eastern Sierra Oil." Id. Lloyd again indicated that this would result in the bid being rejected. Id.

Likewise, Lloyd told Moore that a corporate seal was needed. Id. at ¶ 44. According to Lloyd, Moore responded that Thomas Petroleum had no seal and that Lloyd "could maybe get a logo off a cereal box or words to that effect." Id. Lloyd interpreted these communications as indications that Mr. Moore did not take the process seriously. Id.

Lloyd claims to have continued to pursue Moore's assistance with securing appropriate signatures for the LADWP bid throughout 2011. Id. at ¶ 45. Because Moore...