Power Quality & Electrical Systems, Inc. et al v. BP West Coast Products LLC

Filing 71

ORDER GRANTING DEFENDANT'S MOTON FOR SUMMARY JUDGMENT ON PLAINTIFFS' CLAIMS; DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIMS; AND DENYING DAUBERT MOTIONS AS MOOT by Judge Yvonne Gonzalez Rogers denying as moot 52 Motion in Limine; denying as moot 53 Motion in Limine; granting in part and denying in part 54 Motion for Summary Judgment.Supplemental opposition filed by Friday, 12/22/17; reply filed 1/5/2018. (fs, COURT STAFF) (Filed on 12/12/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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POWER QUALITY & ELECTRICAL SYSTEMS,
INC.; RAJINDER K. SINGH; AND TEJINDAR P.
SINGH,

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United States District Court
Northern District of California

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Plaintiffs,
vs.

Case No.: 16-CV-04791 YGR
ORDER GRANTING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT ON PLAINTIFFS’
CLAIMS; DENYING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT ON
COUNTERCLAIMS; AND DENYING DAUBERT
MOTIONS AS MOOT.

BP WEST COAST PRODUCTS LLC,
DKT. NOS. 52–54

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Defendant.

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This case arises from plaintiffs' Power Quality & Electrical Systems, Inc., Rajinder K.

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Singh, and Tejindar P. Singh suit for breach of contract relating to the purchase of two franchises

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to operate gasoline stations from defendant BP West Coast Products LLC (“BP”). Plaintiffs

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alleged three claims, namely (i) breach of contract; (ii) breach of the covenant of good faith and

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fair dealing; and (iii) violation of California Business and Professions Code section 17200. In

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response, BP asserted ten counterclaims against plaintiffs for breach of contract (Counts I, II, and

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VI); breach of unconditional guaranties (Counts III, V, VII, and IX), breach of loan agreements

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(Counts IV and VIII), and breach of an oral contract (Count X).

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Defendant moves for summary judgment on all of plaintiffs’ claims on grounds that (i) the

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claims are barred by the statute of limitations and equitable estoppel does not apply, and, in any

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event, (ii) the claims fail as a matter of law because plaintiffs cannot establish a triable issue as to

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an essential element of each. (Dkt. No. 54, Motion for Summary Judgment (“Motion”).) BP also

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moves for summary judgment on each of its counterclaims.1

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1

In connection with plaintiffs’ opposition to defendant’s Motion, plaintiffs attached two
separate documents containing various evidentiary objections. (Dkt. Nos. 58-1, 58-35.) Pursuant
to Local Rule (“LR”) 7-3(a), evidentiary objections “must be contained within the [objecting

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Having carefully co
onsidered the pleadings a fully-bri
e
and
iefed motion the hearin held on
ns,
ng

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Dec
cember 5, 2017, and for the reasons set forth belo the Cour GRANTS d
t
s
ow,
rt
defendant’s m
motion for

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sum
mmary judgm on plain
ment
ntiffs’ claims 2 Further, B
s.
BP’s motion for summa judgment is DENIED
n
ary
t

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as to counterclai I, II, IV, VI, VIII an X and tho claims ar dismissed as untimely The parties
o
ims
,
nd
ose
re
y.
s

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shal provide ad
ll
dditional brie
efing on BP’s motion for summary ju
r
udgment as to countercl
laims III, V,

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VII, and IX as specified belo
,
ow.

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I.

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BACKGR
ROUND AND SUMMARY OF RELEVAN FACTUAL ALLEGATIONS
O
NT
L
Plaintiff filed their original com
fs
mplaint in Al
lameda Supe
erior Court o July 22, 2
on
2016. (Dkt.

efendant rem
moved the ac
ction to feder court on the basis of diversity jur
ral
f
risdiction.
No. 1 at 11.) De
tion to dism plaintiff’ first
)
mber 3, 2016 this Court granted defe
6,
endant’s mot
miss
’s
(Id.) On Novem

11

United States District Court
Northern District of California

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ame
ended compl
laint on statu of limitat
ute
tions ground with leave to amend. Plaintiffs fil their
ds
e
led

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Seco Amende Complain on Novem
ond
ed
nt
mber 17, 2016 (Dkt. No. 27 (“SAC”)
6.
).)

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Plaintiff SAC relat to severa franchise a
fs’
tes
al
agreements w BP to o
with
operate gasol stations
line
and Mini Marke (the “Fran
ets
nchise Agree
ements”). T SAC alle
The
eges as follo
ows:

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part
ty’s] brief or memorandu
r
um.” Here, plaintiffs ma their evidentiary objections in a separate
p
ake
mot
tion rather th within th oppositio brief as re
han
heir
on
equired by L 7-3(a). T
LR
Therefore, pl
laintiffs’
obje
ections are OVERRULED as procedur
rally imprope
er.
In BP’s reply brief, defendant moves to excl
r
d
m
lude ¶¶ 5-9, 12-14, 30, a 33 of the declaration
and
e
T
ments “violat the sham a
te
affidavit rule by
e
of Tejindar P. Singh on the ground that these statem
cont
tracting Plaintiff’s sworn testimony and/or the a
n
allegations in the [operati
n
ive] complai
int.” (Dkt.
No. 62, “Reply” at 3.) In su
”
upport thereo BP offers a two-line f
of,
s
footnote which cross-ref
ferences a
arate 10-page chart, (Dkt No. 62-2), which comp
t.
,
mpares each c
challenged st
tatement wit the
th
sepa
oper
rative compl
laint, (Dkt. No. 27, Seco Amende d Complaint (“SAC”)), and Mr. Sin
N
ond
t
ngh’s
depo
osition. (Dk No.55. Ex A (“Singh Dep.”).) Th Court fin that defen
kt.
x.
h
he
nds
ndants’ 10-p
page chart is
also improper un
o
nder LR 7-3(a) and there
efore OVERR
RULES BP’s motion to st
trike. In so holding,
Cou notes that defendant was plainly aware of the requiremen imposed by LR 7-3(a) in light of
urt
t
w
a
nt
y
BP’s specific reference to th rule in its Reply. (Re
his
s
eply at 2-3.) Further, the Court high
e
hlights that
defe
endant previo
ously sought and was gr
t
ranted admin
nistrative relief to extend the page-lim for its
d
mit
Rep
ply. (Dkt. No 61.) If de
o.
efendant requ
uired further relief to pro
r
operly object to Mr. Sing
gh’s
decl
laration, it was incumben upon BP to seek such relief at the appropriate time.
w
nt
t
h
e
e

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2

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Defend also mo
dant
oves to exclu the testim
ude
mony of plaintiffs’ dama
ages expert T
Thomas
Cha
apman and ga station op
as
perations exp Hardeep Gill. (Dkt. Nos. 52, 53 In light o the
pert
p
.
3.)
of
Cou
urt’s ruling, the Court DENIES as moot defendant motions t exclude th expert tes
t
E
t’s
to
he
stimony of
Tho
omas Chapm and Hard
man
deep Gill. (D Nos. 52 , 53.)
Dkt.
2

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A.

Plaintiffs Contract with BP to Purchase Two Franchises

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Since 1998, plaintiffs have operated two gas stations, one in San Ramon, California and one

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in Dublin, California. (SAC ¶ 15.) In or about June 2007, BP sales representative Sonya Branson

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approached plaintiffs offering to brand the stations as ARCO gas stations. (Id. ¶ 16.) “Plaintiffs

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and BP then entered into various agreements (the “Franchise Agreements”) to operate the San

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Ramon and Dublin stations as ARCO-branded fueling stations and Mini Markets.” (Id. ¶ 16, Dkt.

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No. 54-2, Separate Statement of Undisputed Material Facts (“SSUMF”), Exs. F, G, S, and T.) The

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“agreements provided BP with sole discretion for selecting vendors and the manner in which fuel

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was delivered and paid.” (SAC ¶ 16.) Prior to executing the contracts to convert both sites to
ARCO-branded fueling stations and Mini Markets, BP representative “[Shaheenur] Rahman

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United States District Court
Northern District of California

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brought plaintiffs to three other BP and ARCO facilities with ampm Mini Markets that were

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‘similar’ to the San Ramon and Dublin stations.” (Id. ¶ 17.) Rahman allegedly “stated that these

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three stations were extremely profitable with over $100,000 in monthly store sales.” (Id. ¶ 17.)

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Plaintiffs allege that Rahman provided plaintiffs with a $40,000 per month projection of profits for

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the San Ramon station.3 (Id.)

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In or around September 2007, plaintiffs and BP entered into loan agreements of $500,000

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for each site to finance Mini Markets renovations and conversions. (SSUMF, Exs. AE, AF.) BP

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placed a lien on plaintiffs’ San Ramon and Dublin stations. (SAC ¶ 18.) Plaintiffs also obtained a

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private loan of approximately $1 million to cover the remaining costs. (Id. ¶ 19.) On May 28,

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2008, while the conversions were ongoing, plaintiffs received two letters from BP Regional Sales

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Manager Tom Reeder entitled “Notice of Termination” which stated that the Franchise Agreements

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Defendant disputes that Rahman provided any estimates or representations with regard to
profitability for the San Ramon station. Mr. Singh’s testified during his deposition that Mr.
Rahman informed him that he should assume 250,000 gallons of gas sold per month at a profit
margin of 8-10 cents per gallon when completing the “Profit and Loss Statement” component of
plaintiffs’ franchise application for the San Ramon site. (Singh Dep. at 186:15-18, 193:18-25.)
The Court finds that Mr. Singh’s figures yield anticipated profits of $20,000–25,000 per month
which is substantially less than $40,000 the figure alleged in the SAC. The Court notes, however,
that the $20,000–25,000 per month figure excludes Mini Market profits whereas Rahman’s alleged
representations regarding profitability presumably included such profits. Plaintiffs do not allege
that Rahman provided specific profitability figures for the Mini Market.
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“will terminate on November 30, 2008” due to plaintiffs’ failure to “construct improvements” on

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the sites. (Singh Decl., ¶ 7, Exs. 1, 2 (the “Notices of Termination”).) Within days of receiving the

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Notices of Termination, Mr. Singh met with BP franchise business consultant Eric Sell and the

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parties agreed not to terminate the Franchise Agreements.4 (Singh Dep. at 129:9-131:24, 135:8-

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19.)

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B.

The San Ramon Station Suffers Losses and Closes in April 2012

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During the conversion process the San Ramon station began to suffer significant losses. BP
representatives for that region, including Rahman, Sell, and Patrick Lemons “promised that

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everything would improve once the ampm [Mini Market] conversion was complete.” (Id. ¶ 21.)

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In late 2011 and early 2012, plaintiffs had several meetings with BP’s Tom Reeder, who assured

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United States District Court
Northern District of California

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them that they were “operating the station correctly within the guidelines provided by BP and . . .

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that the station would become profitable as promised.” (Id. ¶ 24.) Unfortunately, the losses

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continued. (Id. ¶ 23.)

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Plaintiffs allege that BP breached the Franchise Agreements by (i) refusing to allow

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plaintiffs a temporary voluntary allowance (“TVA”) relating to fuel sales, thereby preventing

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plaintiffs from effectively competing with neighboring gas stations; (ii) preemptively announcing

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that it would not “under any circumstances . . . consent to approve additional and alternative

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vendors for the ampm mini-mart[,]” preventing plaintiffs from competing in the local market; and

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(iii) unreasonably withholding consent to plaintiffs’ repeated requests to reduce cooked food

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supplies during certain hours of operation, leading to higher costs and waste of excess food. (Id. ¶¶

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27, 28.)

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In April 2012, plaintiffs met with Lemon and Sell and informed them that plaintiffs could
not continue operating the station. On April 22, 2012, plaintiffs closed the San Ramon station. (Id.
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Plaintiffs argue for the first time in their opposition brief that these Notices of Termination
voided the Franchise Agreements. (Dkt. No. 58 at 3-4.) However, the Court declines to entertain
this argument for three reasons: First, the SAC makes no mention of these Notices of Termination,
much less alleges that the Notices of Termination voided the Franchise Agreements. Second,
plaintiffs’ first cause of action based BP’s alleged breach of the Franchise Agreements in 2012 is
logically inconsistent with plaintiffs’ new argument that the Franchise Agreements were terminated
in 2008. Finally, Mr. Singh testified that after receiving the Notices of Termination and meeting
with Sell he still considered himself “bound” by the Franchise Agreements.
4

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¶¶ 26, 30.) On May 17, 2012, BP issued plaintiffs a “Notice of Breach of Contract and

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Termination” for the San Ramon station, seeking immediate return of equipment and payment of

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liquidated damages and repayment of loans and financing totaling over $700,000. (SSUMF, Ex.

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C.)

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In late May 2012, plaintiffs met with Sell to discuss the amicable closure of the San Ramon

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station. (SAC ¶ 33.) Plaintiffs allege that they “responded” to BP’s Notice of Breach of Contract

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and Termination by indicating that they were “prepared to contact their counsel and commence

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legal action against BP for misrepresentations as to the San Ramon station and financial

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misconduct as to the Dublin station.” (Id.) Sell provided plaintiffs with the contact information of
an individual who was building his own station, and plaintiffs then arranged to sell him their

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United States District Court
Northern District of California

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equipment. (Id.) Plaintiffs further aver that plaintiffs and BP “agreed and understood that upon the

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sale of the BP equipment . . . the relationship between plaintiffs and BP, with respect to the San

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Ramon station, was terminated and that neither were indebted to each other.” (Id. ¶ 33.) Plaintiffs

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believed that this agreement (the alleged “Walkaway Agreement”) “superseded the alleged claims

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outlined in the San Ramon Termination Letter.” (Id.)

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Plaintiffs claim Sell made assurances that the Franchise Agreements and loan terms were

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concluded with no further obligation and that plaintiffs agreed to forego commencing litigation

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based upon those assurances. (Id. ¶¶ 3, 33, 39, 40.)

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C.

The Dublin Station Starts Off Profitable, Then Closes In July 2012

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On the other hand, the Dublin station was “moderately profitable” when it opened in 2009.

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(Id. ¶ 25.) In June 2012, after plaintiffs closed the San Ramon station, BP changed the fuel

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payment terms from four days after delivery to collect on delivery (“COD”), effective immediately.

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(Id. ¶ 36.) BP controlled the price and timing of all fuel load deliveries under the Franchise

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Agreements. (Id. ¶ 35.) After BP implemented the change, plaintiffs did not have sufficient funds

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or notice to pay for the next two fuel loads. (Id.) BP then initiated an additional fee of

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approximately $2,000 for each fuel load moving forward. (Id. ¶ 36.) Plaintiffs allege that BP was

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retaliating against them for closing the San Ramon station. (Id. ¶ 56.)

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5

1

In “early July 2012,” plaintiffs closed the Du
y
”
c
ublin station (Id. ¶¶ 2, 3
n.
38.) Upon m
meeting with
h

2

Sell, he “confirm that the relationship had termina
med
p
ated and nev mentione payment o liquidated
ver
ed
of
d

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dam
mages, repaym of loan or returni any signa or equip
ment
ns,
ing
age
pment to BP at any point during or
t

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after this meetin
r
ng.” (Id. ¶ 38.) “As with the San Ram station, plaintiffs an Mr. Sell u
h
mon
,
nd
understood

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that the relationship between plaintiff an BP had en
n
nd
nded and tha the parties were not in
at
s
ndebted to

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each other in an way.” (Id
h
ny
d.)
On July 23, 2012, BP issued ano
P
other “Notice of Breach of Contract and Demand for
e
d

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8

Paym
ment” statin that plaint
ng
tiffs had brea
ached the Du
ublin Franch Agreem
hise
ments and dem
manding

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over $1 million in liquidated damages, repayment o loans and f
r
d
r
of
financing, an past deliv
nd
veries of
fuel. (SSUMF, Ex. D.) In early August 2012, plain
e
t
ntiffs contact Lemons to confirm t closure
ted
the

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United States District Court
Northern District of California

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he
on
lin
a
e
012, Notice o Breach of
of
f
of th San Ramo and Dubl stations and to notify him that the July 23, 20

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Con
ntract and De
emand for Pa
ayment lette was incons
er
sistent with t agreeme reached with Sell
the
ents

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rega
arding the ter
rmination of their relatio
f
onship with B (SAC ¶ 40.) Mr. L
BP.
Lemons alleg
gedly

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indicated that he would need “check wit managem on the q
e
d
th
ment
question of w
whether plain
ntiffs could

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disregard the let
tter” but did not contact plaintiffs ag
gain. (Id.)

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D.

Plaintiffs Di
P
iscover BP’s Remaining Liens in 2
s
g
2015

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In or aro
ound 2015, approximatel three year after rebra
a
ly
rs
anding the tw gas statio to sell
wo
ons

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Che
evron gasolin plaintiffs met with th banking representati on an unr
ne,
heir
ive
related matte and
er

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learn that BP had not rem
ned
moved its lien on the Dub station. (Id. ¶ 42.) T
n
blin
They later le
earned that

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BP had not remo
h
oved its lien on the San Ramon stati either. (I ¶ 42.) On or about Ju 22,
n
ion
Id.
uly

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2016, plaintiffs allege that BP secretly contacted Ch
B
c
hevron to inf
form them th they were seeking to
hat
e

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ceed with no
on-judicial fo
oreclosure on the San Ra
n
amon and Du
ublin station (Id. ¶ 43.
ns.
.)
proc
Plaintiff filed the in
fs
nstant suit on July 22, 20
n
016, notably without a cl
laim for quie title.
et

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II.

LEGAL FRAMEWOR
RK
A party seeking sum
mmary judgm bears th initial burd of demo
ment
he
den
onstrating the absence of
f

26

a ge
enuine issue of material fact as to the basis for th motion. C
f
e
he
Celotex Corp v. Catrett, 477 U.S.
p.

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317, 323 (1986) Material facts are thos that might affect the o
).
f
se
t
outcome of t case. An
the
nderson v.

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6

1

Libe Lobby, Inc., 477 U.S 242, 248 (1986). A di
erty
I
S.
(
ispute as to a material fa is “genuine” if there
act

2

is su
ufficient evid
dence for a reasonable ju to return a verdict fo the nonmo
r
ury
n
or
oving party. Id.

3

Where th moving party has the burden of p
he
p
proof at trial, it “must aff
,
firmatively d
demonstrate

4

that no reasonab trier of fa could find other than for the mov
ble
act
n
ving party.” Soremekun v. Thrifty

5

Payless, Inc., 50 F.3d 978, 984 (9th Ci 2007). If the moving party meets its initial bu
09
ir.
f
s
urden, the

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7
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oppo
osing party must then se out specifi facts show
m
et
ic
wing a genuin issue for trial in order to defeat
ne
r
the motion. And
m
derson, 477 U.S. at 250; Soremekun , 509 F.3d a 984; see Fe R. Civ. P 56(c), (e).
at
ed.
P.
The opposing pa
arty’s eviden must be more than “
nce
“merely colo
orable” and m be “sign
must
nificantly

9

prob
bative.” And
derson, 477 U.S. at 249–
U
–50. Further the opposi party ma not rest up mere
r,
ing
ay
pon
10

alleg
gations or de
enials of the adverse par
rty’s evidenc but instea must prod
ce,
ad
duce admissi
ible

United States District Court
Northern District of California

11
12
13
14
15

evid
dence showin a genuine dispute of material fact exists. See Nissan Fire & Marine I Co.,
ng
e
m
t
e
e
Ins.
Ltd. v. Fritz Cos Inc., 210 F.3d 1099, 1102–03 (9th Cir. 2000). “Disputes over irrelev or
s.,
F
1
h
vant
unne
ecessary facts will not preclude a grant of summ
mary judgmen T.W. El Serv., In v. Pac.
nt.”
lec.
nc.
Elec Contractors Ass’n, 809 F.2d 626, 630 (9th Cir 1987).
c.
r.
Neverthe
eless, when deciding a summary jud
dgment motio a court m view th evidence
on,
must
he

16
17

in th light most favorable to the nonmo
he
t
oving party a draw all justifiable i
and
inferences in its favor.
n

18

And
derson, 477 U.S. at 255; Hunt v. City of Los Ange
U
H
y
eles, 638 F.3 703, 709 (9th Cir. 2011). A
3d

19

distr court ma only base a ruling on a motion for summary judgment upon facts that would be
rict
ay
r
t

20

adm
missible in ev
vidence at tri In re Or
ial.
racle Corp. S Litig., 6 F.3d 376 385 (9th C 2010);
Sec.
627
6,
Cir.

21

Fed. R. Civ. P. 56(c).
5

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III.

DISCUSS
SION

23

Defenda argues that all of plaintiffs’ claim fail because they are b
ant
ms
barred by the applicable
e

24

statu of limita
ection A wh
utes
ations. The Court addre
esses in subse
hether each c
claim is time
e-barred. In

25

subs
section B, th Court turn to whether defendant i prohibited from assert
he
ns
r
is
d
ting the statu of
ute

26

limi
itations pursu to the doctrine of eq
uant
d
quitable esto
oppel. Final the Cour addresses d
lly,
rt
defedant's

27

coun
nterclaims.

28

7

1

A.

Statute of Limitations

2

With regard to plaintiffs’ breach of contract claim, under California law the statute of

3

limitations for breach of a written contract is four years. Cal. Civ. Proc. Code § 337(1).

4

Here, plaintiffs allege that BP breached the terms of the parties’ Franchise Agreements for the San

5

Ramon and Dublin station, respectively. (SAC ¶¶ 44–50.)

6

Regarding the San Ramon station, the SAC alleges that on April 22, 2012, plaintiffs closed
that station because “BP refused to abide by the contract terms and/or work with plaintiffs in any

8

meaningful way to improve the profitability of the San Ramon station.” (Id. ¶¶ 30, 31.) The

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alleged breaches of contract leading to the closure of the San Ramon station included BP’s breach

10

of (i) paragraph 5 of the “Contract Dealer Gasoline Agreement” by refusing to grant TVAs (id. ¶

11

United States District Court
Northern District of California

7

47); (ii) article 12.04 of the Mini Market Agreement by informing plaintiffs that any requests for

12

additional or alternative vendors would be not be granted (id. ¶ 48); and (iii) article 13.03 of the

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Mini Market Agreement which caused plaintiffs to maintain an excess supply of food and

14

beverages. (Id. ¶ 49). The SAC states that each of these breaches occurred before plaintiffs closed

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the San Ramon station on April 22, 2012. Therefore, the four-year statute of limitations began to

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run by that date at the latest. Accordingly, plaintiffs’ breach of contract claim regarding the San

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Ramon station filed over four years later on July 22, 2016, is untimely unless, in this case, estoppel

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applies.

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With respect to the Dublin station, plaintiffs similarly allege that BP’s breaches of the

20

Franchise Agreements caused plaintiffs to suffer monetary damages. (Id. ¶ 50.) Plaintiffs closed

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the Dublin station in early July 2012, by which point the statute of limitations commenced. (Id. ¶¶

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2, 38.) Accordingly, for the same reasons as the San Ramon station claim, plaintiffs’ breach of

23

contract claim related to the Dublin station is time-barred unless, again, estoppel applies.

24

With respect to the second claim for breach of the covenant of good faith and fair dealing

25

and the third claim for violations of Business and Professions Code section 17200, the same

26

analysis applies. In California, the statute of limitations for theses claims is four years. See Fehl v.

27

Manhattan Ins. Grp., 2012 WL 10047, at *4 (N.D. Cal. 2012) (citing Love v. Fire Ins. Exch., 221

28

8

1

Cal.App.3d 1136, 1144 (1990)) and Cal. Bus & Prof. Code § 17208, respectively. Accordingly,

2

plaintiffs’ second and third claims are similarly time-barred.
Equitable Estoppel

3

B.

4

The Court now turns to whether defendant is estopped from asserting the statute of

5
6
7

limitations as a defense.
1.

Legal Standard

“A defendant will be estopped to assert the statute of limitations if the defendant’s conduct,

8

relied on by the plaintiff, has induced the plaintiff to postpone filing the action until after the statute

9

has run.” Mills v. Forestex Co., 108 Cal.App.4th 625, 652 (2003); see also McMackin v. Ehrheart,
194 Cal.App.4th 128, 140 (2011). “Under California law, equitable estoppel requires that: (1) the

11

United States District Court
Northern District of California

10

party to be estopped must be apprised of the facts; (2) that party must intend that his or her conduct

12

be acted on, or must so act that the party asserting the estoppel had a right to believe it was so

13

intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and (4) the

14

party asserting the estoppel must reasonably rely on the conduct to his or her injury.” Lukovsky v.

15

City & Cty. of San Francisco, 535 F.3d 1044, 1051–52 (9th Cir. 2008) (quoting Honig v. San

16

Francisco Planning Dep't, 127 Cal.App.4th 520, 529 (2005)). “California equitable estoppel is

17

thus similar to and not inconsistent with federal common law, as both focus on actions taken by the

18

defendant which prevent the plaintiff from filing on time.” Id. at 1052. “Of critical importance is a

19

showing of the plaintiff's actual and reasonable reliance on the defendant’s conduct or

20

representations.” Naton v. Bank of California, 649 F.2d 691, 696 (9th Cir. 1981) (citing Cooper v.

21

Bell, 628 F.2d 1208, 1214 (9th Cir. 1980)).

22

The Ninth Circuit has explained that to establish equitable estoppel a “plaintiff must point to

23

some fraudulent concealment, some active conduct by the defendant . . . ‘to prevent the plaintiff

24

from suing in time.”’ Lukovsky 535 F.3d at 1052 (quoting Guerrero v. Gates, 442 F.3d 697, 706

25

(9th Cir. 2006)). “For a defendant to be equitably estopped from asserting a statute of limitations,

26

the plaintiff must be ‘directly prevented . . . from filing [a] suit on time.’” Vaca v. Wachovia

27

Mortg. Corp., 198 Cal.App.4th 737, 746 (2011) (alterations in original, citation omitted). Further,

28

9

1

a plaintiff must “proceed[] diligently once the truth is discovered.” Lantz v. Centex Homes, 31

2

Cal.4th 363, 384 (2003).
2.

3
4

Discussion

Plaintiffs argue that they were prevented from filing suit within the statute of limitations

5

period as a result of the alleged Walkaway Agreement which led plaintiffs to believe that the

6

parties’ relationship had ended and they would not pursue any claims against each other under the

7

Franchise Agreements. Defendant counters that the alleged Walkaway Agreement fails to establish

8

equitable estoppel because (i) plaintiffs did not actually rely on the Walkaway Agreement, (ii) even

9

if plaintiffs did rely on the Walkaway Agreement such reliance would not have been reasonable,
and, in any event (iii) plaintiff did not proceed diligently in filing suit once they discovered that the

11

United States District Court
Northern District of California

10

liens on their property had not been extinguished. The Court addresses each argument.5
a. Actual Reliance

12
13

“Of critical importance [to a claim of equitable estoppel] is a showing of the plaintiff's

14

actual and reasonable reliance on the defendant's conduct or representations.” Naton, 649 F.2d at

15

696 (citing Cooper, 628 F.2d at 1214). First, defendant argues that Mr. Singh did not actually rely

16

on the Walkaway Agreement. In support of this assertion, defendant highlights that Mr. Singh

17

never informed his lenders, accountants, or new franchisor that he had reached an agreement with

18

BP to terminate the Franchise Agreements and forgive over $1.9 million in unpaid debt. (Singh

19

Dep. at 403:16-19, 405:14-18, 408:5-20.) Plaintiffs counter with the testimony of Mr. Singh who

20

states that he did not “pursue litigation against BP in reliance on” the Walkaway Agreement.

21

(Singh Decl. ¶ 31.) The Court declines to make a credibility determination at this juncture and

22

finds that Mr. Singh’s declaration is sufficient to establish a triable issue with regard to plaintiffs’

23

actual reliance on “defendant's conduct or representations.”

24
25
26
27
28

5

Defendant also argues that the oral Walkaway Agreement cannot support equitable
estoppel because the oral agreement was unenforceable under the statute of frauds. However, BP
cites no authority in support of their argument that equitable estoppel cannot be based on an oral
agreement, even if, it is ultimately not enforceable.

10

b. Reasonable Reliance

1
2

Defendant further argues that Mr. Singh’s reliance on the oral Walkaway Agreement was

3

not reasonable. In determining reasonable reliance, courts take into account a plaintiff’s particular

4

knowledge and experience. Hoffman v. 162 N. Wolfe LLC, 228 Cal.App.4th 1178, 1194, as

5

modified on denial of reh'g (2014) (citing All. Mortg. Co. v. Rothwell, 10 Cal.4th 1226, 1240

6

(1995)). The Court finds that Mr. Singh’s reliance on the oral Walkaway Agreement was not

7

reasonable on two grounds.
First, the Franchise Agreements contained bolded disclaimers appearing on the same page

9

as plaintiffs’ signatures which stated, “No representative of BPWCP is authorized by BPWCP

10

to orally modify, amend, add to or waive any provision of this Agreement.” (SSUMF, Exs. F,

11

United States District Court
Northern District of California

8

G, S, T (emphasis in originals).) This was not a burdensome contract, that is, the document itself

12

was two pages with attachments. The disclaimer was on the second page. The record reflects that

13

Mr. Singh is a sophisticated business person who previously worked as an engineering consultant

14

for PG&E and has owned and operated at least five gas stations since 1997. (Singh Dep. at 33:13–

15

13, 33:22–36:10.) However, during his deposition Mr. Singh claimed that he did not read any of

16

the Franchise Agreements before signing them. (Singh Dep. at 275:18–276:20.) Even crediting

17

Mr. Singh's testimony, the Court finds that it was not reasonable for a sophisticated business person

18

like Mr. Singh to fail to read the operative contacts and rely solely on Sell’s oral representations

19

when the Franchise Agreements expressly, plainly, and conspicuously prohibited oral modifications

20

and waivers. See Golden W. Baseball Co. v. City of Anaheim, 25 Cal.App.4th 11, 48 (1994)

21

(finding that plaintiffs’ reliance on an oral representation was unreasonable because the operative

22

contract required modifications in writing).

23

Second, when the alleged Walkaway Agreement was reached BP had already demanded

24

more than $700,000 in unpaid loans, gasoline, and other payments with regard to the San Ramon

25

station. (See SAC ¶¶ 31-32, 38-39.) After the alleged Walkaway Agreement was reached, BP

26

demanded an additional $1.2 million for the Dublin station.6 Mr. Singh never articulated a

27
28

6

The fact that plaintiffs received BP’s demand for $1.2 million approximately one month
after the alleged Walkaway Agreement further suggests that plaintiffs’ reliance was not reasonable.

11

1

plausible theory which explained why BP would agree to forgo its demands and the significant sum

2

of money at stake. Thus, again, the Court finds it was not reasonable for a sophisticated business

3

person such as Mr. Singh to rely on the oral Walkaway Agreement as proof that BP had abandoned

4

its claims for $1.9 million in unpaid expenses.7

5

Plaintiffs argue that their actions were reasonable because BP consistently modified

6

agreements orally. In support of this theory, plaintiffs offer Mr. Singh’s declaration which states

7

that the parties “consistently engaged in a pattern and practice of orally modifying written

8

agreements, disregarding notices of default, and acting as if contracts were operational when they

9

had been terminated”, such as with the May 28, 2007, Notices of Termination. (Singh Decl., ¶ 7,
Exs. 1, 2.) Specifically, Mr. Singh testified that within days of receiving the Notices of

11

United States District Court
Northern District of California

10

Termination he met with Sell and the parties agreed orally not to terminate the Franchise

12

Agreements. (Singh Dep. at 129:9-149:20.)

13

Plaintiffs do not persuade. First, plaintiffs offer no evidence that the incident involving the

14

Notices of Termination reflected a pattern and practice rather than an isolated occurrence. Second,

15

and in any event, the incident regarding the Notices of Termination is distinguishable from the

16

alleged Walkaway Agreement. Unlike the Franchise Agreements, the Notices of Termination were

17

not contracts and did not contain bold disclaimers. Nor did they require revocations to be in

18

writing. Rather, they were notices. Nothing more. The proffered evidence is insufficient to

19

establish a pattern and practice of orally modifying written contracts which contain express

20

prohibitions on oral modification.8

21
22
23
24
25
26
27
28

7

Defendant also argues that it was unreasonable for Mr. Singh to rely on the Walkaway
Agreement for the independent reason that it “should have been obvious” that Sell “did not have
authority to bind [defendant] to such an agreement.” (Motion at 7.) However, this argument fails in
light of the fact that Sell apparently had authority to void the May 28, 2008, Notices of
Termination. (See Dkt. No. 62 at 4.)
8

The Court further notes that plaintiffs offer no explanation as to why plaintiffs’ theory that
the Notices of Termination voided the operative contracts was not raised in any of plaintiffs’
complaints or as an affirmative defense in plaintiffs’ answer to defendant’s counterclaims. (Dkt.
Nos. 1, 14, 18, 27, 41.)

12

1

Accordingly, plaintiffs’ reliance on the oral Walkaway Agreement was not reasonable in

2

light of the circumstances. In reaching this conclusion, the Court notes that (i) the Franchise

3

Agreements specifically indicated, in bold text, on the same page as plaintiffs’ signatures, that the

4

agreements could not be modified orally; (ii) Mr. Singh is a sophisticated business person yet failed

5

to read the operative contracts; (iii) BP had demanded more than $1.9 million in unpaid loans,

6

gasoline, and other payments; and (iv) just one month after Mr. Singh and Sell allegedly entered

7

into the Walkaway Agreement plaintiffs received a demand for $1.2 million for the Dublin station

8

which was wholly inconsistent with the Walkaway Agreement. The doctrine of equitable estoppel

9

cannot be established on this ground.9

10

United States District Court
Northern District of California

11

The Court thus finds that plaintiffs’ claims are time-barred and GRANTS defendants’ motion
for summary judgment on plaintiffs’ claims.
c. Diligence

12
13

Finally, defendant argues that equitable estoppel does not apply because plaintiffs “did not

14

proceed[] diligently [in filing suit] once the truth [was] discovered.” Lantz, 31 Cal.4th at 384.

15

Specifically, defendant point out that Mr. Singh waited nine months after learning that the liens on

16

his property had not been extinguished “during which period the statute of limitations passed.”

17

(Motion at 5.)

18

Defendant does not persuade. During the nine months between when plaintiffs discovered

19

the liens and when they filed suit, plaintiffs investigated their claims, researched legal issues,

20

identified and retained counsel, and prepared a complaint. The Court thus finds that triable issues

21

exist as to whether such a delay constitutes a failure to proceed diligently.

22
23
24
25
26
27
28

9

Accordingly, the Court DENIES defendant’s motion for summary judgment on
counterclaim Counts I, II, IV, VI, VIII, and X as untimely. The Court notes that defendant
concedes that such claims are “pled in the alternative and based on [plaintiffs’] allegations that the
alleged ‘walkaway agreement’ tolls the statute of limitations.” (Motion at 23.)
The Court further finds that the parties’ sparse briefing on counterclaim Counts III, V, VII,
and IX does not provide sufficient information to allow this Court to issue a reasoned decision on
these counterclaims. Specifically, each party devotes less than one page to despite that these
counterclaims arise from at least six different contracts spanning hundreds of pages. (Motion, Exs.
AD, AE, AF, AG, AG, AI.)

13

In summ
mary, because plaintiffs cannot prove reasonable reliance as p of a clai for
e
c
e
part
im

1
2

equi
itable estopp defendan is not barr from ass erting the sta
pel,
nt
red
atute of limi
itations defen and
nse,

3

sum
mmary judgm is GRAN
ment
NTED on plai
intiffs' claim
ms.
C.

4

ant
rclaims I, II, IV, VI, VII and X wer pled in the alternative
,
II
re
e
Defenda concedes that counter

5
6

Defen
ndant's Cou
unterclaims
s.

to plaintiffs’ cla
aims. For the reasons sta above, t
e
ated
those claims similarly fa and are di
ail
ismissed.
With res
spect to coun
nterclaims III, V, VII, an IX, the Co orders a
nd
ourt
additional br
riefing as the
e

7
8

briefing on these countercla
aims was spa
arse. Plaintif shall file an oppositio not to exc
ffs
on
ceed seven

9

es
ant’s motion for summar judgment on counterc
n
ry
t
claims III, V VII, and IX by no
V,
X,
page to defenda
later than Frida Decembe 22, 2017. Defendant may file a re
r
ay,
er
eply not to e
exceed seven pages by
n

11

United States District Court
Northern District of California

10

no later than Th
hursday, January 4, 2018.

12

IV.

CONCL
LUSION

13

For the foregoing rea
f
asons, the Court orders a follows:
as

14

1. BP’s motion for summary ju
s
udgment is G RANTED as to plaintiffs claims for breach of
s’

15

contr (first cau of action breach of the covenan of good fa and fair dealing
ract
use
n),
f
nt
aith

16

(seco cause of action), and Cal. Bus. a Prof. Co section 17200 (third cause of
ond
f
d
and
ode

17

actio on the ground the suc claims are untimely.
on)
ch
e

18
19
20

2. BP’s motion for summary ju
s
udgment is DENIED on co
ounterclaims I, II, IV, V VIII and
s
VI,
X an those claim are dismi
nd
ms
issed as unti
imely.
3. The parties shall provide add
p
ditional brief
fing on BP’s motion for summary ju
s
udgment as

21

to co
ounterclaims III, V, VII, and IX. Pla
s
aintiffs shall file an oppo
osition not to exceed
o

22

seven pages to defendant’s motion for su
n
m
ummary judg
gment on co
ounterclaims III, V, VII,

23

and IX, by no lat than Frid Decemb 22, 2017 Defendan may file a reply not to
I
ter
day,
ber
7.
nt
o

24

exceed seven pag by no lat than Frid
ges
ter
day, Januar 5, 2018.
ry

25

This terminates Docket Nos. 52–54.
D
.

26
27
28

IT IS SO ORDERED.
Date December 12, 2017
e:

____
___________
__________
___________
________
YVONN GONZAL ROGERS
NE
LEZ
S
UNITED STA
ATES DISTRIC COURT JUDGE
CT

14