Irving Oil, Mktg., Inc. v. Canaan One Stop

• Court: Superior Court of Maine
• Decided: December 15, 2011
• Docket: CUMcv-09-540
• Status: Unpublished

Opinion

I

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CIVIL ACTION DOCKET NO: CV-09-940 i FZAC - CL{Nl- '::J./Jtsj~/o/1 IRVING OIL, MARKETING, Inc.,

Plaintiff, ::_~ Z':

v. _,,.,- ORDER If.:

CANAAN ONE STOP/LLC t: \ and

BRETT DAVIS

Defendants

Plaintiff Irving Oil, Marketing, Inc., moves for partial summary judgment on its

complaint and against defendants Canaan One Stop, LLC, and Brett Davis'

counterclaim.

BACKGROUND In 2006, plaintiff Irving Oil Marketing, Inc. (Irving) and defendant Canaan

One Stop, LLC (One Stop) entered into a Dealer Supply Agreement

("Agreement"), effective March 1, 2006. (Pl.'s S.M.F. ']I 4.) In relevant part, the

agreement:

• granted One Stop a license to market and sell motor fuel under the

"Irving" trademark (id.);

• required Irving to sell to One Stop and One Stop to purchase and receive

from Irving certain minimum quantities of Irving's fuel products (id.);

• required One Stop to pay all amounts due to Irving (pl.'s S.M.F. ']I 15);

1 • prohibited One Stop from offering for sale any motor fuel products other

than those provided by Irving (pl.'s S.M.F. '1[ 6); and

• prohibited One Stop from cross-hauling (id.).

After the Agreement went into effect there were several disagreements

between Irving and One Stop regarding payments. (Pl.'s S.M.F. '1[ 8.) In order to

resolve these disagreements the two parties entered into a Settlement Agreement

("Settlement") that required One Stop to abide by the terms of the Agreement.

(Pl.'s S.M.F. '11'11 9, 10.) In the Settlement, Irving agreed to reduce One Stop's

indebtedness in consideration of One Stop's execution of a Promissory Note

("Note") in favor of Irving in the amount of $250,000. (Pl.'s S.M.F. '1[ 11.)

Pursuant to the Note, One Stop agreed to pay Irving three-cents per gallon

of the fuel products Irving sold to One Stop until March 1, 2013. (Pl.'s S.M.F. '1[

12.) Within thirty days of March 1, 2013, One Stop would owe Irving a lump

sum payment for the remaining obligation on the Note. (Id.) The Note also

contained an acceleration clause allowing Irving to make the full amount due on

demand if One Stop defaulted on the Note or Agreement. (Pl.'s S.M.F. '1[ 13.)

As part of the Settlement, defendant Brett Davis1 executed a Guaranty in

favor of Irving to secure the Note. (Pl.'s S.M.F. '1[ 14.) The Settlement also

contained a provision regarding 1-24 cards? (Pl.'s S.M.F. '1[ 15.) One Stop was

not approved to accept 1-24 cards, but other retailers of Irving diesel fuel located

in the region did have approval to accept the 1-24 card. (Def.'s S.M.F. '11'11 12-13.)

1 Davis is the sole owner and principal operating officer of One Stop. (Def.'s S.M.F. 9[ 36.)

2 An I-24 card is a way for trucking companies to pay at certain Irving gas stations. It gives the buyer access to a standard price, which is typically (but not always) lower than what is charged if the trucker pays with a commercial fleet card. (Flynn Dep. at 38: 12- 23.)

2 Under the Settlement, Irving agreed to consider allowing One Stop to accept 1-24

cards and at the time this motion was filed Irving had made progress towards

approving One Stop to accept the card. (Pl.'s S.M.F.

Prior to June 2009, Robin Crawford Wood Contracting ("Crawford") was

One Stop's biggest customer for diesel fuel. (Def.'s S.M.F.

Irving discussed the 1-24 card with Crawford and on April 21, 2009, Crawford

opened an account for the card. (Def.'s S.M.F.

Crawford's monthly purchases of diesel fuel from One Stop had decreased to

zero. 3 (Def.'s S.M.F.

Another clause of the Settlement stated that One Stop had "permission to

purchase and transport motor fuel products from terminals in Searsport, South

Portland and Portsmouth." (Def.'s S.M.F.

denies, that Irving refused One Stop access to the Portsmouth terminal. (Def.' s

S.M.F.

In June 2009 several of One Stop's payments were returned for insufficient

funds. (Def.'s S.M.F.

Irving stating that it was "lifting privileges at all terminals" until it received a

payment of $105,000, at this point Irving stopped delivering fuel products to One

Stop. (Def.'s S.M.F.

hauling and purchasing fuel products from providers other than Irving. (Pl.'s

S.M.F.

When Irving stopped providing fuel products to One Stop, Irving also

stopped receiving periodic payments of three-cents per gallon. (Pl.'s S.M.F.

3 Irving qualifies this fact by pointing out that Irving suspended One Stop's credit and lifting privileges in June 2009. (Opp. Def.'s S.M.F.

3 Opp. Pl.'s S.M.F. «JJ 21.) On June 23,2009, One Stop received a letter from Irving

stating that One Stop had defaulted on the Agreement and Irving was

terminating the Agreement effective September 23, 2009. (Def.'s S.M.F. «JJ«JJ 28-

29.) By the end of August 2009, One Stop had paid Irving what it had owed

dating back to June 2009. (Def.'s S.M.F. 4JI 26.) Around August 25, 2009, One

Stop received another letter from Irving demanding that One Stop cease and

desist cross-hauling, and that One Stop and Davis pay the amount due under the

Agreement and the Note. (Pl.'s S.M.F. 4JI 25.) Irving filed a complaint on

September 29, 2009.

DISCUSSION

I. Standard of Review

Summary judgment should be granted if there is no genuine dispute as to

any material fact and a party is entitled to judgment as a matter of law. M.R. Civ.

P. 56( c). The court will consider "only the portions of the record referred to, and

the material facts set forth in the [M.R. Civ. P. 56(h)] statements." F.R. Carroll,

Inc. v. TD Bank, N.A., 2010 ME 115, «JJ 8, 8 A.3d 646 (quotation marks omitted).

"Summary judgment is appropriate when review of the parties' statements of

material facts and the referenced record evidence, considered in the light most

favorable to the non-moving party, indicates that no genuine issue of material

fact is in dispute." Blue Star Corp. v. CKF Props., LLC, 2009 ME 101, «JJ 23, 980 A.2d

1270. "[W]hen facts, though undisputed, are capable of supporting conflicting

yet plausible inferences - inferences that are capable of leading a rational

factfinder to different outcomes in a litigated matter depending on which of them

the factfinder draws - then the choice between those inferences is not for the

4 court on summary judgment." F.R. Carroll, Inc., 2010 ME 115,

(quotation marks omitted).

II. Counterclaim- Tortious Interference

In its counterclaim, One Stop argues that Irving tortiously interfered with

One Stop's advantageous economic or business relationship with Crawford.

(Opp'n Mot. Summ. J. 5-6.) Irving allegedly interfered by convincing Crawford

to accept an I-24 card, even though Crawford could not use the card and its

purported benefits at One Stop. (Id.) A tortious "[i]nterference with an

advantageous relationship requires the existence of a valid contract or

prospective economic advantage, interference with that contract or advantage

through fraud or intimidation, and damages proximately caused by the

interference." Barnes v. Zappia, 658 A.2d 1086, 1090 (Me. 1995). Since Crawford

was One Stop's best customer, a rational factfinder could find that they had an

advantageous relationship with a "prospective economic advantage." (De£.' s

S.M.F. '1[ 1.) Additionally, One Stop was probably damaged since Crawford

spent less money at One Stop after signing up for an I-24 card. (Def.'s S.M.F. '1[

15.) Finally, a rational factfinder may find that the interference was through

intimidation.

"Interference by intimidation involves unlawful coercion or extortion."

Rutland v. Mullen, 2002 ME 98,

intimidated Crawford into becoming an I-24 card user by telling him that it is the

only way for him to get the preferential rates associated with the card. 4 (Opp'n

Mot. Summ. J. 5-6.) One Stop relies on Pombriant v. Blue Cross/Blue Shield of Me.,

4 Davis' affidavit supports these claims, but it is unclear how he knows what Irving told Crawford. As the non-moving party the court makes inferences in One Stop's favor.

5 562 A.2d 656 (Me. 1989), to show that this behavior is intimidation. In Pombriant,

Blue Cross had a contract with insurance broker Pombriant to allow him to sell

insurance in Maine, and they implied to him that, despite a mistake they had

made, he was customer Bennett's broker. Id. at 658. Blue Cross then gave the

Bennett account to Johnson, another insurance broker, instead. Id. The Law

Court found that a jury could reasonably find "that Blue Cross procured the

breach of contract between Pombriant and Bennett by the intimidating means of

making it clear to Bennett that the only manner in which it could avail itself of

Blue Cross's lower rates for the desired insurance would be by using the

brokerage services of Johnson." Id. at 659. Similarly, in this case, a rational

factfinder could find, based on the disputed facts, that Irving tortiously

interfered with One Stop's business relationship with Crawford.

III. Complaint - Breach of Contract

In its motion for summary judgment Irving argues that One Stop breached

the Agreement, the Settlement, and the Note. Additionally, Irving argues that

Davis breached the Guaranty associated with the Note. In violation of the

Agreement, Irving claims that One Stop failed to make timely payments and

participated in cross-hauling. (Compl. «J[«J[ 29-30.) Similarly, Irving claims that

One Stop breached the Settlement, Note, and Guaranty by failing to pay the

$242,209.03 it owes Irving. (Compl. «J[«J[ 36, 40, 45.)

A. Admitted facts surrounding One Stop's alleged breach of contract

One Stop admits that the Agreement requires timely payments and

prohibits cross-hauling fuel products. (Pl.'s S.M.F. «J[ 6; Opp. Pl.'s S.M.F. «J[ 6.)

Additionally, One Stop admits that pursuant to the Settlement it must abide by

the Agreement and execute a Note for $250,000. (Pl.'s S.M.F. «J[«J[ 10, 11; Opp. Pl.'s

6 S.M.F. <][<][ 10, 11.) One Stop admits that the Note requiring periodic payments

was executed and Davis executed the Guaranty to secure the Note. (Pl.'s S.M.F.

<][<][ 12, 14; Opp. PI's S.M.F. <][<][ 12, 14.) Finally, One Stop admits that after the

Settlement it failed to make payments under the original Agreement, it started

cross-hauling, it did not make the required periodic payments on the Note, and

Davis did not cover the missed payments. (Pl.'s S.M.F. <][<][ 18, 20, 21, 23; Opp.

PI's S.M.F. <][<][ 18, 20, 21, 23.) The only claim that One Stop directly disputes is

that it owes Irving $242,209.03. (Opp. PI's S.M.F. <][ 28.) Instead, One Stop insists

that the amount should be reduced due to Irving's own breach of contract and

the tortious interference allegations set forth in the counterclaim, discussed

above. (Id.)

B. One Stop's claims that Irving breached the contracts.

One Stop argues that Irving's claims are barred by Irving's own material

breaches. (Opp'n Mot. Summ. J. 7.) A material breach of contract "is a non-

performance of a duty that is so material and important as to justify the injured

party in regarding the whole transaction as at an end." Jenkins, Inc. v. Walsh

Bros., 2001 ME 98, <][ 13, 776 A.2d 1229 (quoting Associated Builders, Inc. v. Coggins,

1999 ME 12, <][ 6, 722 A.2d 1278 (quotation marks omitted)). Determining

whether a breach is material is a question of fact. Id.

One Stop claims that Irving materially breached the contracts in three

ways. First, Irving refused One Stop access to the Portsmouth terminal as

required by the Settlement. (Opp'n Mot. Summ. J. 7; see also Opp. Def.'s S.M.F. <][

35.) Second, Irving stopped providing diesel fuel products after One Stop failed

to make required payments, thus forcing One Stop to cross-haul and fail to pay

the three-cents per gallon payments towards the Note. (Opp'n Mot. Summ. J. 8,

7 10.) Third, Irving did not practice good faith in executing the Agreement by

tortiously interfering with One Stop's business relationship with Crawford.

(Opp'n Mot. Summ. J. 8.) This interference made it difficult for One Stop to

make the necessary payments. (Id.)

The claim that Irving breached the Settlement by denying access to the

Portsmouth terminal received little coverage from either party. One Stop simply

said that they were denied access and Irving replied that they do not have

enough information about the denial to properly respond. (Opp. Def.'s S.M.F. err

35.) Additional undisputed facts are needed to understand the impact of this

alleged breach and whether it is material.

One Stop's arguments regarding the stopped fuel deliveries are not

convincing. While the Agreement and the Settlement require Irving to deliver

fuel products, there is no indication that Irving is required to deliver fuel

products if One Stop is not paying for the products. (Opp. Def.'s S.M.F. err 31.)

One Stop's strongest argument is that Irving lacked good faith when it

interfered with the business relationship between One Stop and Crawford. As

discussed regarding the counterclaim, a rational factfinder could find that Irving

tortiously interfered with the business relationship. Under the UCC, a contract

for the sale of goods, such as fuel, "imposes an obligation of good faith in its

performance and enforcement." 11 M.R.S. § 1-1304 (2010). "Good faith is a

question of fact." Woods v. Bath Industr. Sales, Inc., 549 A.2d 1129, 1132 (Me.

1988). One Stop argues that Irving's tortious interference with One Stop's

relationship with Crawford indicates that Irving acted in bad faith. (Opp'n Mot.

Summ. J. 9.) As a result, the issue of Irving's breach of the Agreement, and

whether it is material, is a question of fact for the factfinder.

8 C. The impact of Irving's alleged breaches on the complaint's counts

If Irving did commit a material breach of the contract by acting in bad

faith when it offered the I-24 card to Crawford, or by refusing One Stop access to

the Portsmouth terminal, then it is necessary to determine the impact of these

breaches. Both of these breaches may have occurred prior to One Stop missing

its first payment under the settlement agreement. 5

If Irving acted in bad faith and interfered with One Stop's ability to make

the necessary payments to Irving after the Settlement went into effect then it

breached both the Settlement and the Agreement. (See Pl.'s S.M.F. <[ 10

(incorporating the Agreement into the Settlement).) Likewise, if a factfinder

finds that Irving committed a material breach of the Settlement, then One Stop

could argue that this breach is also a material breach of the Note, and thus the

Guaranty. The Note requires three-cents per gallon of fuel product payments,

but these payments are not possible if Irving has stopped delivering fuel. (Pl.'s

S.M.F. <[ 12.) As a result, all of the counts depend on a factfinder's view of

whether Irving's actions were in good faith.

The entry is: The plaintiff's motion for summary jud

denied.

DATE:~ 15,1.01\

5 It is unclear from the facts when One Stop was denied access to the Portsmouth Terminal.

9 PAGE A - ATTORNEY BY CASE VIEW IRVING OIL MARKETING INC VS CANAAN ONE STOP LLC ET AL UTN:AOCSsr -2009-0108084 CASE #:PORSC-CV-2009-00540 '.·.v••-._

01 0000002864 ' ; :HOBSON, JOHN <·ONE CANAL PLAZA SUITE 900 PO BOX 426 PORTLAND ME 04112-0426 F :IRVING OIL MARKETING INC PL RTND 09/29/2009

·MILLS, S PETER 263 WATER STREET PO BOX 9 SKOWHEGAN ME 04976-0009 F CANAAN ONE STOP LLC DEF RTND 11/06/2009 F ·. · . BRETT DAVIS DEF RTND 11/06/2009