Marathon Petroleum Company, LP v. Noil Petroleum Corporation

CourtDistrict Court, N.D. Ohio
DecidedJanuary 28, 2020
Docket3:16-cv-02694
StatusUnknown

This text of Marathon Petroleum Company, LP v. Noil Petroleum Corporation (Marathon Petroleum Company, LP v. Noil Petroleum Corporation) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marathon Petroleum Company, LP v. Noil Petroleum Corporation, (N.D. Ohio 2020).

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO WESTERN DIVISION

Marathon Petroleum Company, LP, Case No. 3:16-cv-2694

Plaintiff

v. MEMORANDUM OPINION AND ORDER

Noil Petroleum Corporation,

Defendant

I. INTRODUCTION Plaintiff and Counter-Defendant Marathon Petroleum Company, LP moves for summary judgment on both its claims and those asserted against it by Defendant and Counter-Claimant Noil Petroleum Corporation. (Doc. No. 48). Third-Party Defendant MPC Investment LLC also moves for summary judgment on Noil’s claims asserted against it. (Doc. No. 49). Noil filed a memorandum in opposition to both of these motions, (Doc. No. 53), and Marathon and MPC each filed a reply. (Doc. Nos. 55 & 56). II. BACKGROUND On August 23, 2016, Marathon and Noil executed1 a Sales Agreement (the “Marathon Contract”) under which Marathon agreed to sell Noil 40,000 barrels of slurry oil at a price of the “[a]verage of Platt’s U.S. Gulf Coast 3% Sulfur No. 6 Fuel Oil mean posting effective on August 23, 24, and 25, 2016, plus $0.42 per barrel.” (Doc. No. 4-1 at 2). Pursuant to the Marathon Contract,

1 Adam P. Lauth signed the Marathon Contract on behalf of Marathon. (Doc. No. 4-1 at 2). On the Marathon Contract, he is identified as a “trader” for MPC, Marathon’s general partner. (Id.). Marathon would deliver the slurry by barge from its refinery in Garyville, Louisiana to Magellan Marrero, Louisiana between August 23 and 25, 2016. (Id.). On August 25, 2016, two barges of Marathon slurry arrived at the Magellan Terminal, but no storage tank was available. Because the slurry could not be unloaded into a storage tank, the slurry sat in the Marathon-chartered barges in the Mississippi River while Noil attempted to find a solution to the problem. Eventually, on August 31, 2016, Noil arranged for a transfer of Marathon’s charter

to the barges with Genesis Marine. At this time, possession and title to the slurry transferred from Marathon to Noil. This complication caused a ripple effect since Noil had already agreed to resell the Marathon slurry to Althea Petroleum. The agreement between Noil and Althea was memorialized in a contract (the “Althea Contract”) executed one day prior to the Marathon Contract. In the Althea Contract, Noil agreed to sell “1,890,000 GALLONS TWICE WEEKLY … PER 52 WEEKS” to Althea for a spot price of $0.95 per gallon, which was “[s]ubject to change based on CME GULF COAST NO. 6 FUEL OIL 3.0 % PLATTS FUTURES.” (Doc. No. 4-2 at 2). The slurry was to be shipped by chartered barge from a storage facility in Garyville, Louisiana to Houston. (Id. at 2-3). This did not contemplate the fact that, under the subsequently-executed Marathon Contract, the slurry would be delivered to Noil in Magellan Marrero, Louisiana rather than shipping directly from the Marathon facility in Garyville, Louisiana. In any case, because of the delay in transferring the slurry from Marathon to Noil, Noil was

not able to timely deliver the first load of slurry to Althea. As a result, Althea terminated the Althea Contract. Subsequently, Noil sold the slurry to Davison Petroleum Supply, LLC on September 2, 2016, for $1.3 million dollars – less than Noil would have received from Althea. Meanwhile, on September 1, 2016, Marathon invoiced Noil $1,482,346.54 for the slurry, which Noil failed to pay. Therefore, on November 3, 2016, Marathon filed suit alleging a claim of breach of contract or, alternatively, unjust enrichment. (Doc. No. 1-1). In response, Noil asserted counterclaims of breach of contract, fraudulent misrepresentation, negligent misrepresentation, and tortious interference with a business expectancy. (Doc. No. 4). Noil’s counterclaims are based upon its allegations that Marathon agreed to secure storage for the

slurry at the destination. III. STANDARD Summary judgment is appropriate if the movant demonstrates there is no genuine dispute of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A disputed fact is material only if its resolution might affect the outcome of the case under the governing substantive law. Rogers v. O’Donnell, 737 F.3d 1026, 1030 (6th Cir. 2013). All evidence must be viewed in the light most favorable to the nonmovant, White v. Baxter Healthcare Corp., 533 F.3d 381, 390 (6th Cir. 2008), and all reasonable inferences are drawn in the nonmovant’s favor. Rose v. State Farm Fire & Cas. Co., 766 F.3d 532, 535 (6th Cir. 2014). A factual dispute is genuine if a reasonable jury could resolve the dispute and return a verdict in the nonmovant’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A party opposing summary judgment “may not rest upon the mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Id. at 256.

IV. DISCUSSION The parties agree that Ohio law governs the tort and contract claims asserted in this action. A. BREACH OF CONTRACT CLAIM AND COUNTERCLAIM Marathon and Noil each allege the other breached the Marathon Contract. In Ohio, “[a] cause of action for breach of contract requires the claimant to establish the existence of a contract, the failure without legal excuse of the other party to perform when performance is due, and damages or loss resulting from the breach.” Lucarell v. Nationwide Mut. Ins. Co., 97 N.E.3d 458, 469 (Ohio 2018) (citations omitted). 1. Marathon’s Claim Marathon contends it is entitled to summary judgment on its breach of contract claim because Noil accepted and resold the slurry and, thus, breached the Marathon Contract by failing to

pay for it. I agree. There is no evidence to suggest Noil made any attempt to reject the slurry or terminate the Marathon Contract. As such, by taking possession of the slurry and reselling it rather than rejecting it, Noil “accepted” the slurry under Ohio law. O.R.C. § 1302.64(A). By failing to pay Marathon for the accepted slurry, Noil breached the Marathon Contract. O.R.C. § 1302.83(A)(1). Therefore, Marathon is granted summary judgment on its breach of contract claim and is entitled to recover the price of the slurry. 2. Noil’s Counterclaim Noil’s breach of contract claim rests on whether Marathon was required to secure a storage tank for the slurry at its destination – the Magellan Terminal. Relying on Ohio statutory law, Marathon contends that because the Marathon Contract states “FOB Buyer Facility,” it was Noil’s obligation to ensure storage was available at the Terminal. The Ohio Revised Code provides that, “[u]nless otherwise agreed the term F.O.B. (which means ‘free on board’) at a named place … is a delivery term under which…when the term is F.O.B.

the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in section 1302.47 of the Revised Code.” O.R.C. § 1302.32(A)(2).

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Marathon Petroleum Company, LP v. Noil Petroleum Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marathon-petroleum-company-lp-v-noil-petroleum-corporation-ohnd-2020.