Honey Farms, Inc. v. Exxon Mobil Corp.

26 Mass. L. Rptr. 105
CourtMassachusetts Superior Court
DecidedSeptember 11, 2009
DocketNo. 081601D
StatusPublished

This text of 26 Mass. L. Rptr. 105 (Honey Farms, Inc. v. Exxon Mobil Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Honey Farms, Inc. v. Exxon Mobil Corp., 26 Mass. L. Rptr. 105 (Mass. Ct. App. 2009).

Opinion

Tucker, Richard T., J.

On February 3, 2009, the plaintiff, Honey Farms, Inc. (“Honey Farms”), filed a second amended complaint against numerous defendants, including OPW Fueling Components, Inc. (“OPW”), alleging that the defendants are liable for damages caused when methyl tertiary butyl ether (“MTBE”), a gasoline additive, leaked from underground gasoline storage tanks at the Honey Farms convenience store and gas station located at 36-38 Worcester Road in Charlton, Massachusetts. The matter is before the court on OPWs motion for judgment on the pleadings, pursuant to Mass.R.Civ.P. 12(c), to dismiss Count II of Honey Farms’ complaint for failure to state a claim.2 For the following reasons, the motion is ALLOWED.

[106]*106BACKGROUND

The following facts are drawn from the complaint and taken as true for the purposes of this motion. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 625 n.7, 636 (2008).

In August 2002, Honey Farms leased property in Charlton, Massachusetts, for the purpose of developing a Honey Farms convenience store and gas station. As part of a franchise agreement with Exxon Mobil Corp., Honey Farms was required to purchase gasoline-dispensing equipment. In September 2002, Honey Farms purchased the necessary equipment from Wildco Petroleum Equipment, Inc. (“Wildco”). The equipment purchased from Wildco included vacuum-assist nozzles that OPW had manufactured.

In January 2004, Honey Farms discovered MTBE contamination beneath the surface of its properly. Honey Farms alleges that the contamination was caused by the over-pressurization of its underground tank system, which occurred because the gasoline-dispensing equipment, which included OPWs vacuum-assist nozzles, was incompatible with the onboard refueling vapor recovery systems installed in many motor vehicles manufactured and sold since 1998. Honey Farms incurred considerable costs to replace the equipment and remediate the MBTE contamination. This action followed.

DISCUSSION

The Supreme Judicial Court recently adopted the standard of review for motions to dismiss set forth by the United States Supreme Court in Bell Atl Corp. v. Twombly, 127 S.Ct. 1955 (2007): “While a complaint attacked by a . . . motion to dismiss does not need detailed factual allegations ... a plaintiffs obligation to provide the ‘grounds’ of his entitle [ment] to relief requires more than labels and conclusions ... Factual allegations must be enough to raise a right to relief above the speculative level. . . [based] on the assumption that all the allegations in the complaint are true (even if doubtful in fact) . . .” Iannacchino, 451 Mass. at 636, quoting Bell Atl. Corp., 127 S.Ct. at 1964-65 (internal quotations omitted). Under this heightened standard, what is required at the pleading stage are factual allegations that possess enough heft to show that the pleader is entitled to relief. Id.

Count II of Honey Farms’ second amended complaint alleges that each defendant breached an implied covenant of good faith and fair dealing. OPW contends that the count should be dismissed because Honey Farms has failed to allege the existence of a contract between them. In opposition, Honey Farms contends that it was an intended third-party beneficiaiy of a distribution agreement between OPW and Wildco, and that OPWs failure to warn Wildco and Honey Farms of the limitations of its vacuum-assist nozzles constituted a breach of the implied covenant of good faith and fair dealing.

Every contract implies good faith and fair dealing between the parties to it. Warner Ins. Co. v. Commissioner of Ins., 406 Mass. 354, 362 n.9 (1990). The implied covenant of good faith and fair dealing provides that “neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471-72 (1991) (citations omitted). “The covenant may not, however, be invoked to create rights and duties not otherwise provided for in the existing contractual relationship, as the purpose of the covenant is to guarantee that the parties remain faithful to the intended and agreed expectations of the parties in their performance.” Uno Restaurants v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). It follows, therefore, that a plaintiff seeking recovery under a third-party beneficiaiy theory must prove that both (1) a contract existed and (2) the plaintiff was an intended beneficiary of that contract. Baldwin v. Mortimer, 403 Mass. 142, 144 (1988).

Although Honey Farms contends in its opposition that it was an intended third-party beneficiaiy of an agreement between OPW and its distributor, Wildco, it has not even alleged that a distribution contract existed between OPW and Wildco. Honey Farms’ position appears to be that a contract between OPW and Wildco may be inferred from the fact that Wildco sold Honey Farms equipment that included OPW parts. The assumption that a contract existed, however, does not amount to a factual allegation sufficient to raise Honey Farms’ right to relief above a speculative level. See Iannacchino, 451 Mass. at 636.

Even assuming, however, that the complaint had properly alleged the existence of a contract between OPW and Wildco, it fails to allege that Honey Farms was an intended beneficiaiy of that contract. See Baldwin, 403 Mass. at 144. A contract is intended for a third party’s benefit “when one person, for a valuable consideration, engages with another, by simple contract, to do some act for the benefit of a third, the latter, who would enjoy the benefit of the act . . .” Rae v. Air-Speed, Inc., 386 Mass. 187, 195 (1982), quoting Brewer v. Dyer, 7 Cush. 337, 340 (1851), and adopting Restatement (Second) of Contracts §302. Although Honey Farms now claims in its opposition that OPW and Wildco entered into a distribution agreement for the benefit of Honey Farms, as an eventual end-user of OPWs nozzles, it has not pled sufficient facts to support its claim. Compare id. at 195 (plaintiffs complaint alleged that defendants entered into contract “for the benefit of’ her decedent).

While an intended beneficiary may recover under a contract made for its benefit, “[a]n incidental beneficiary acquires by virtue of the promise no right against the promisor or promisee” (emphasis in original). Flattery v. Gregory, 397 Mass. 143, 148 (1986), quoting Restatement (Second) of Contracts §315. In Flattery, [107]*107on which Honey Farms relies, the Supreme Judicial Court held that an injured driver was the intended beneficiary of an agreement between an insurance agent and its insured, the alleged tortfeasor, where the insurance agent allegedly promised to provide its insured with increased-limit, optional liability coverage that would potentially inure to the benefit of an injured party, such as Flattery, if the insured was legally responsible for the accident. Id. at 149. In that case, although the injured driver had not been identified at the time the promise to provide optional coverage was made, the Court found that he was an intended beneficiary, rather than an incidental one, because the standard insurance policy in place at the time obliged the insurer to pay damages directly to a class of individuals that included the injured driver. See id.

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Related

Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Baldwin v. Mortimer
526 N.E.2d 776 (Massachusetts Supreme Judicial Court, 1988)
Rae v. Air-Speed, Inc.
435 N.E.2d 628 (Massachusetts Supreme Judicial Court, 1982)
Flattery v. Gregory
489 N.E.2d 1257 (Massachusetts Supreme Judicial Court, 1986)
Anthony's Pier Four, Inc. v. HBC ASSOCIATES
583 N.E.2d 806 (Massachusetts Supreme Judicial Court, 1991)
Warner Insurance v. Commissioner of Insurance
548 N.E.2d 188 (Massachusetts Supreme Judicial Court, 1990)
Jarosz v. Palmer
766 N.E.2d 482 (Massachusetts Supreme Judicial Court, 2002)
Uno Restaurants, Inc. v. Boston Kenmore Realty Corp.
805 N.E.2d 957 (Massachusetts Supreme Judicial Court, 2004)
Iannacchino v. Ford Motor Co.
451 Mass. 623 (Massachusetts Supreme Judicial Court, 2008)

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Bluebook (online)
26 Mass. L. Rptr. 105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/honey-farms-inc-v-exxon-mobil-corp-masssuperct-2009.