Total Petroleum Pr. Corp. v. Villa Caparra Esso Serv. Ctr.
| Decision Date | 30 October 2018 |
| Docket Number | Civil No. 16-2436 (PAD/BJM) |
| Parties | TOTAL PETROLEUM PR. CORP., Plaintiff, v. VILLA CAPARRA ESSO SERV. CTR., et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Total Petroleum Puerto Rico Corporation ("Total") filed suit against Villa Caparra Esso Service Center, Rafael Fonseca-Marrero, Fonseca-Marrero's unnamed wife, and their conjugal partnership ("Defendants") on August 3, 2016. Dkt. 1. Total alleged trademark infringement and trademark dilution in violation of the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a), (c), and Total sought injunctive relief, declaratory relief under 28 U.S.C. §§ 2201-2202, damages and collection of monies owed under 31 L.P.R.A. §§ 2994, 3018, 3019, 3024, 3371, to judicially dispossess Defendants under 31 L.P.R.A. § 4066, and all attorney's fees and costs incurred in the litigation. Id. The parties jointly submitted a proposed order for a permanent injunction, which the court then ordered. Dkt. 45.
Total's motion for partial summary judgment and motion to deem unopposed are currently pending before the court. Dkts. 49, 53. Total seeks a declaratory judgment finding its termination of the franchise relationship valid and legally enforceable and ordering Defendants to pay monies owed for rent payments, fee payments, and other product payments pursuant to the contracts governing their relationship. Dkt. 49 at 4. The case was referred to me for a report and recommendation. Dkt. 29.
For the reasons set forth below, Total's motion for partial summary judgment and motion to deem unopposed should be GRANTED IN PART.
The factual record is summarized here using the Local Rule 56 statements of uncontested facts.1 Because Defendants failed to oppose Total's motion for summary judgment, the court begins by adopting as true Total's Statement of Uncontested Facts at Docket 50 ("SUF"). See infra Discussion, Mtn. to Deem Unopposed.
Total is a Puerto Rico company that owns real property in the Municipality of Guaynabo. SUF ¶¶ 1, 4. Rafael Fonseca-Marrero ("Fonseca") is the president of Villa Caparra Esso Service Center, also a Puerto Rico company. SUF ¶¶ 2, 3. On February 15, 2012, Total leased that property to Defendants for three years. SUF ¶ 5. Three separate contracts govern the parties' franchise relationship, and the Defendants' breach of any material provision entitles Total to terminate any of the agreements. SUF ¶ 17.
In the Lease Agreement, Dkt. 16-1, Defendants agreed to use the property only for operating a gasoline service station under the "TOTAL" brand, to pay a monthly rent depending on fuel sales, and to be subject to termination if Defendants failed to make the payments due to Total. SUF ¶¶ 6-8. In exchange, Total would sell Defendants gasoline, motor fuel, and other products for resale at the station, grant Defendants the right to use assets on the real property to sell gasoline and other goods. Dkt. 16-1 at 1. The Lease Agreement states:
Late payments will be charged a late payment fee equivalent to ten percent (10%) per month of the total payment pending. The Retailer acknowledges and agrees that failure to pay the amounts and rents owed under this Contract, whichever the case, constitutes a material breach and a reason to terminate this Contract.
Id. at Art. 4.4. Article 16 further details grounds on which the contract might be canceled or terminated. It specifically warns that "[f]ailure to promptly make payments due or failure to pay any amount owed to the Company" is grounds for termination. Id. at Art. 16.1(c).
Total and Defendants also entered a Sales and Supply Agreement, Dkt. 16-2, in which Defendants promised to pay Total for the delivery of fuel and other products, including "TOTAL" branded ones, in exchange for the right to sell those products and operate a gas station under the "TOTAL" trademark. SUF ¶ 9-10. The parties agreed that Defendants' failure to comply with the agreement would trigger Total's right to demand compliance, suspend product deliveries, cancel credits, and terminate its franchise relationship with Defendants. SUF ¶ 11. The Sales and Supply Agreement states that the grounds for termination of the contract include:
Lack of punctual compliance with the due payments or of any amount indebted to the company priced [sic] that a payment by check will not be considered made until cashed by the Company and that the bouncing of a check issue by the bank may cause a termination of the Contract if after being requested the payment in cash or any other form by the Company the detailer fails to make it within the next twenty-four (24) hours . . . .
Dkt. 16-2, Art. 16.1(c). In the event of termination, the Defendants agreed that any amounts still owed to Total would become due. SUF ¶ 12. The cancellation or termination of the Lease Agreement or Franchise Agreement triggers the automatic expiration of the Sales and Supply Agreement. Dkt. 16-2, Art. 17.1. Breach of the Sales and Supply Agreement makes payable:
The Franchise Agreement, Dkt. 16-3, governs the operation of the convenience store on the property under the "BONJOUR RAPIDE" brand and system. SUF ¶ 13. Under the Franchise Agreement, Defendants agreed to pay Total the greater of $1,300 or six percent of the convenience store's gross sales as a monthly franchise fee. SUF ¶ 14. Defendants' failure to comply with the agreement triggers Total's right to demand compliance and suspend product deliveries, and Defendants are obliged to pay any sums owed to Total should the franchise relationship be terminated. SUF ¶¶ 15-16. Like the Lease Agreement, the contract provides that:
Late payments will be charged a late payment fee equivalent to ten percent (10%) per month of the total payment pending. The Retailer acknowledges and agrees that failure to pay the amounts and franchise charge owed under this Agreement, whichever the case, constitutes a material breach and a reason to terminate this Agreement.
Dkt. 16-3, Art. 10.5. Breach of the payment of franchise fees clause entitles Total to terminate the Agreement. Id. at Art. 10.8. The Franchise Agreement also employs the same clause as the Sales and Supply Agreement, in which both parties agree "[f]ailure to promptly make payments or failure to pay any amount owed" constitutes a material breach of the contract and permits the contract to be canceled and terminated. Id. at Art. 15.1(c). Upon termination, the Agreement obligates Defendants to, among other things:
Pay and satisfy in full the Company and the suppliers and providers or Store Products and Services, any amount owed or payable within fifteen (15) days of the effective date of cancellation or expiration of this Contract, including any applicable accrued interest.
On January 7, 2015, Total requested payment from Defendants. SUF ¶ 20. The emailed request notes that Defendants had not made payments toward their account since December 22, 2014. Dkt. 16-4. The following day, the parties met, and Fonseca admitted that Defendants owed Total money under the Franchise Agreement but did not make any payments. SUF ¶¶ 22-23; Dkt. 16-7. An email memorializes the parties' agreements at the meeting, including that (1) all outstanding rents would be paid, (2) all checks delivered to Total had been applied to the Defendants' account, and (3) all invoices pending payment would be paid once there was evidence that they were received. Dkt. 16-6. Total made email requests for payment again on January 9, 2015 and October 27, 2015 and suggested different methods by which the money could be repaid. SUF ¶¶ 20-21. Defendants failed to pay the money due or otherwise cure their default. SUF ¶ 23.
On July 8, 2016, Total served Defendants with a termination notice, effective immediately. SUF ¶¶ 24, 27; Dkt. 16-8. The notice was in writing and delivered by hand, email, and certified delivery. SUF ¶ 28. The termination notice cites breaches of contractual provisions, namely failure to pay, as grounds for termination. Dkt. 16-8 at 2. In addition to failing to pay amounts owed, Total contends that Defendants' failed to take "reasonable efforts or . . . good faith measures to comply with the terms and conditions of the franchise relationship." Id. Total enclosed a summary of the PMPA and an account statement in the notice. Id. at 3. The account statement reflects that, as of July 8, 2016, Defendants owed Total $17,850.00 plus interest for rent payments under the Lease Agreement, $31,500.00 plus interest for rent payments under the Franchise Agreement, and $46,936.88 plus interest for fuel under the Sales and Supply Agreement. SUF ¶ 19. Currently, Defendants owe Total $18,850.00 under the Lease Agreement, $33,000.00 under the Franchise Agreement, and $51,076.81 under the Sales and Supply Agreement for a total of $102,926.81. SUF ¶ 30, 31.
Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is "genuine" only if it "is one that could be resolved in favor of either party." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004). A fact is "material" only if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions" of the record materials "which it believes demonstrate the absence" of a genuine dispute of...
To continue reading
Request your trial