Armada Oil & Gas Company Varmada Oil & Gas Warren Petro Mart Inc

CourtMichigan Court of Appeals
DecidedAugust 22, 2024
Docket366043
StatusUnpublished

This text of Armada Oil & Gas Company Varmada Oil & Gas Warren Petro Mart Inc (Armada Oil & Gas Company Varmada Oil & Gas Warren Petro Mart Inc) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Armada Oil & Gas Company Varmada Oil & Gas Warren Petro Mart Inc, (Mich. Ct. App. 2024).

Opinion

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

ARMADA OIL & GAS COMPANY, UNPUBLISHED August 22, 2024 Plaintiff-Appellant,

v No. 366043 Wayne Circuit Court WARREN PETRO MART, INC., HUSSEIN LC No. 20-012322-CB MOHAMED, SAMER ALAYAN, MARIAM BAZZI, ASIL PETRO LLC, HASSAN MOHAMED, ALY BAZZI, BAZCO OIL COMPANY, BAZCO ENTERPRISES INC., 23008 DEQUINDRE PROPERTY LLC, and TELCO INVESTMENTS LLC,

Defendants-Appellees.

Before: MARKEY, P.J., and SWARTZLE and MARIANI, JJ.

PER CURIAM.

This case centers on a product supply agreement (PSA) between plaintiff Armada Oil & Gas Company (Armada) and defendant Warren Petro Mart, Inc. (Warren Petro). Armada sued Warren Petro and a number of other defendants, asserting breach of contract and related tort-based claims. On October 27, 2022, the trial court entered an order granting summary disposition in favor of Armada on one of its breach-of-contract claims against Warren Petro, but limiting Armada’s liquidated damages to $2,742.28.1 The trial court’s order otherwise granted summary disposition on Armada’s claims in favor of defendants Warren Petro; Hussein Mohamed; Hassan Mohamed; Telco Investment, LLC (Telco); Aly Bazzi; 23008 Dequindre Property, LLC (Dequindre LLC); Bazco Oil Company (Bazco Oil); and Bazco Enterprises, Inc. (Bazco

1 While the trial court’s order generally identified this as the amount of liquidated damages, at one point it stated the amount as $2,742.58. For purposes of this opinion, we assume that the trial court intended to award $2,742.28 in liquidated damages.

-1- Enterprises). Armada appeals by right, challenging the trial court’s award of liquidated damages and its grant of summary disposition in favor of defendants.2 We affirm.

I. FACTUAL BACKGROUND

Warren Petro is a corporation created by Hussein Mohamed and non-party Hussein Yassine. In 1997, Hussein Mohamed purchased the property at 23008 Dequindre Road (the Dequindre Property), which came to be used for a gas station. In September 2003, Hussein Mohamed and his wife (a non-party) executed a quitclaim deed conveying the Dequindre Property to Warren Petro. Later that year, in October 2003, Warren Petro obtained a commercial loan from Oakland Commerce Bank and, as a result, Oakland Commerce Bank obtained the mortgage to the Dequindre Property.

Armada and Warren Petro entered into the PSA on June 1, 2005. Armada is a wholesale distributor of petroleum products, including gasoline and diesel fuel. Under the PSA, Warren Petro agreed to purchase at least 14.7 million gallons of “petroleum products” from Armada within a period of seven years, and agreed that the term of the PSA would extend if Warren Petro failed to meet the PSA’s minimum purchase requirements in any given month or year. The PSA also contained a liquidated-damages provision for failing to meet these purchasing requirements, as well as a right-of-first-refusal provision under which Warren Petro agreed not to “sell, grant an option in respect of, nor, except in the ordinary course or conduct of [Warren Petro’s] business, lease or otherwise dispose of” the Dequindre Property without first giving Armada the option “to purchase or otherwise acquire the same on the same terms and conditions as [Warren Petro] is willing to make such disposition to any other party.” Both the liquidated-damages provision and the right-of-first-refusal provision are at issue on appeal.

In July 2011, Warren Petro failed to file an annual report as required by law. The record does not make clear whether, as a result of this failure, Warren Petro was automatically dissolved by operation of law at some point, but there is no dispute that, even if such dissolution did occur, it was temporary and Warren Petro later returned to good standing.3 In August 2011, Bazco Enterprises purchased the loan from Oakland Commerce Bank and assumed the mortgage over the

2 Armada takes its appeal from the final order issued by the trial court on April 19, 2023, which dismissed Armada’s claims against defendants Samer Alayan (Alayan) and Asil Petro, LLC (Asil Petro) and closed the case. Alayan and Asil Petro were dismissed by stipulation of the parties and are not parties to this appeal. Mariam Bazzi, who was never served with the complaints, is also not a party to this appeal. Reference to “defendants” in this opinion does not include Alayan, Asil Petro, or Mariam Bazzi. 3 As set forth in MCL 450.1922(1), automatic dissolution occurs only if the corporation neglects to file an annual report or pay an annual filing fee and the neglect “continues for a period of 2 years from the date on which the [report or fee] was due.” The record is unclear as to when exactly Warren Petro came into compliance with its filing requirements and whether there was a two-year period of neglect that would trigger automatic dissolution under MCL 450.1922(1). For the reasons discussed infra, however, further clarity on these details is not necessary to properly dispose of Armada’s claims.

-2- Dequindre Property. Bazco Enterprises is owned by Aly Bazzi, who also owns Bazco Oil and Dequindre LLC. Relevant to the PSA’s right-of-first-refusal provision, around the same time that Bazco Enterprises assumed the mortgage, the Dequindre Property became the subject of several purported transactions. In August 2011, Dequindre LLC entered into a lease agreement whereby it purported to rent the Dequindre Property to Hussein Mohamed and Hussein Yassine as tenants. It is undisputed that this lease agreement was not legally valid because Dequindre LLC did not have any interest in the Dequindre Property. Also in August 2011, Hussein Mohamed and Hussein Yassine, along with their wives, each purported to execute quitclaim deeds transferring the Dequindre Property to Dequindre LLC.

In 2013, Warren Petro defaulted on the mortgage and Bazco Enterprises initiated foreclosure proceedings on the Dequindre Property. On January 25, 2014, Bazco Enterprises purchased the Dequindre Property at a sheriff’s sale and obtained a sheriff’s deed. When Warren Petro failed to redeem the property, Bazco Enterprises obtained the title to the Dequindre Property. In July 2015, Dequindre LLC purported to execute a quitclaim deed transferring the Dequindre Property to Telco, an entity created in 2015 and owned by Hussein Mohamed’s brother, Hassan Mohamed.4 Like the 2011 lease agreement, the parties do not dispute that this transaction was not legally valid because Dequindre LLC did not have title to the Dequindre Property. In June 2016, however, Bazco Enterprises validly executed a quitclaim deed transferring the Dequindre Property to Telco. The deed was recorded on October 14, 2016. Telco owned the Dequindre Property at all relevant times during the remainder of the proceedings.

Armada continued to supply products under the PSA until August 2020. Although the parties and the trial court offer slightly different numbers, all agree that Warren Petro purchased approximately 13.9 million gallons of gasoline and approximately 700,000 gallons of diesel fuel from Armada under the PSA.

Armada filed suit in September 2020. Relevant here, Armada alleged that Warren Petro breached the PSA’s minimum-purchase and right-of-first-refusal provisions and that Armada was entitled to liquidated damages for the former. Armada also brought claims against Bazco Oil, Aly Bazzi, and Hassan Mohamed for tortious interference with a business relationship or expectancy and tortious interference with contracts, alleging that those defendants intentionally and wrongfully induced Warren Petro to terminate its relationship and contract with Armada.

After the close of discovery, the parties participated in an unsuccessful mediation.

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Armada Oil & Gas Company Varmada Oil & Gas Warren Petro Mart Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/armada-oil-gas-company-varmada-oil-gas-warren-petro-mart-inc-michctapp-2024.