Musket Corporation v. Star Fuel of Oklahoma

606 F. App'x 439
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 6, 2015
Docket13-6133, 13-6146
StatusUnpublished
Cited by7 cases

This text of 606 F. App'x 439 (Musket Corporation v. Star Fuel of Oklahoma) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Musket Corporation v. Star Fuel of Oklahoma, 606 F. App'x 439 (10th Cir. 2015).

Opinion

ORDER AND JUDGMENT *

CARLOS F. LUCERO, Circuit Judge.

Musket Corporation (“Musket”) appeals the district court’s grant of judgment as a *442 matter of law following a jury verdict in its favor on an implied contract claim. Star Fuel of Oklahoma, LLC (“Star”) cross-appeals, challenging the sufficiency of the evidence on several other claims decided in Musket’s favor and arguing that the jury’s award was duplicative. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm in part and reverse in part. We conclude that the district court erred in granting judgment as a matter of law on. Musket’s implied contract claim and remand with instructions to reinstate the jury award. Regarding the issues raised in Star’s cross-appeal, we affirm.

I

The events at issue in this case began while Mark Luitwieler was a regional marketer in Musket’s wholesale fuel business. 1 Luitwieler, in April 2008, proposed a risk-sharing agreement to Link Clifton, a principal and co-owner of Star. In an email dated April 4, Luitwieler made the following proposal:

How about we share the risk on these naked fixed contracts. Ill [sic] buy them when I feel its [sic] right. You sell when it makes sense. We’ll split the profits/losses. OR I can pass on all risk to you and ill [sic] just add a penny to each of these and let you move them.

The email referenced two specific fuel contracts.

Clifton forwarded the 'email to Dan En-gle, Star’s chief financial officer, and Elizabeth Hatcher, who was in charge of wholesale pricing for unbranded fuel at Star, indicating the email was “[f]or your rec’s.” Engle responded that the arrangement had “inherent risk.” He later explained that he was concerned about the arrangement allowing “someone else to make buy decisions for you, when they don’t even work for your company.”

In the ensuing months, Star and Musket proceeded to split profits on several fuel contracts. In these transactions, Musket would purchase fuel from a third party and Star would re-sell the fuel. On April 14, 2008, Hatcher asked Luitwieler to explain the pricing for one of these transactions. Luitwieler replied that Musket would add approximately one half of a cent to the purchase price Musket paid to account for detergent additive and a product authorization fee. Luitwieler told Hatcher to “sell for the best you can and the [sic] we will split the margin.” On April 29, Luit-wieler stated that he was going to “call the ball” on another fuel transaction “if everyone agrees.” He offered two potential scenarios for the transaction, one in which Musket and Star split profits and another in which the companies split losses. After the transaction resulted in a profit, Engle asked Clifton via' email how to split those profits with Musket.

According to forensic accountant David Payne, a majority of the “back-to-back” fuel deals between Musket and Star between March and September 2008 resulted in an approximately even split of profits. 2 *443 The profit margin Star reaped on these deals was substantially higher than would be the case in a normal buyer-seller relationship: a normal “jobber or reseller” would typically reap around one cent per gallon in profit, whereas Star, in that same role, was receiving profits of five or seven cents per gallon. During a period ending July 12, 2008 in which fuel prices were generally rising, Star made $183,758 in profit on these transactions. Hatcher testified that Star had no intention of sharing in losses, however.

Luitwieler purchased 420,000 gallons of gasoline at $3.4982 per gallon on July 3, 2008. He believed that the profit-sharing agreement described in his April 9 email was operative, and that he had authority to make this this gasoline purchase. Shortly thereafter, Clifton told Luitwieler during a telephone call that because the companies had done well on gas trades, they should buy more. Luitwieler understood this comment as an instruction to purchase additional gasoline under the agreement, and bought another 420,000 gallons at $3.15 per gallon on July 17.

On July 21, Musket employee Kendra Garcia emailed Hatcher and another Star employee, James Roosa, stating that Musket purchased 10,000 barrels of gasoline (420,000 gallons) at $3,155 per gallon, and •asked when Star would like to move the fuel. Her email states “Your call-we split the profits.” After the Star employees did not respond, Luitwieler emailed Clifton, asking whether Star would purchase 20,-000 barrels at $3.33 on a fixed-price contract. Clifton forwarded the email to Hatcher and Roosa, asking “What the [f]?” At the time, gasoline was selling on the open market for a substantially lower price.

Luitwieler met in person with Clifton, Hatcher, and possibly Roosa (Luitwieler could not recall if Roosa was present) on July 23, 2008. The Star representatives began “back-pedaling” when Luitwieler brought up the 840,000 gallons noted above. Luitwieler explained that the two options would be to sell now and split the losses, or for Star to take the fuel on a fixed-price contract. Because the Star representatives were adamant that they would not accept an immediate loss, and because Hatcher thought the gasoline market had upside because of potential hurricane impact, Luitwieler gathered that there was a “default agreement” to simply hold the fuel. Luitwieler nonetheless told several Musket co-workers that Star agreed to purchase the 840,000 gallons at $3.35 per gallon. He calculated this rate • by taking an average of the two purchase prices, adding detergent and product authorization, and adding one cent per month Musket held the fuel.

Around the same time period, Star and Musket were negotiating a settlement agreement to resolve an unrelated dispute over an ethanol terminal venture. Seeking to except the 840,000 gallon fuel deal from the release contained in the settlement, Musket’s counsel asked Luitwieler for a copy of the contract. Luitwieler said he had a copy in his files, and stated that the agreement was titled “August fixed price gasoline contract” and had been executed on August 4. On August 15, Luitwieler sent an unsigned copy of this contract, stating that he was “98% confident” he had a signed copy. On the same day, Musket sent Star a draft settlement agreement relating to the companies’ ethanol terminal dispute. The draft provided for a mutual release but expressly excluded claims related to “that certain August Fixed Price Gasoline Contract dated August 4, 2008.” Star and Musket executed the final settlement agreement on September 10, 2008, which included the above-quoted language. However, Luitwieler later admitted that *444 the contract he claimed had been executed on August 4 was actually created on August 15.

Luitwieler’s final day of employment with Musket was September 11, 2008. The very next day, he began working for Star to start up their Supply and Logistics Division. Luitwieler had apparently been preparing for the move for some time.

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Cite This Page — Counsel Stack

Bluebook (online)
606 F. App'x 439, Counsel Stack Legal Research, https://law.counselstack.com/opinion/musket-corporation-v-star-fuel-of-oklahoma-ca10-2015.