LUKOIL NORTH AMERICA LLC v. TURNERSVILLE PETROLEUM INC. et al

Filing 55

OPINION. Signed by Judge Renee Marie Bumb on 9/16/2015. (TH, )

NOT FOR PUBLICATION

[Docket No. 38]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

LUKOIL NORTH AMERICA LLC,
successor in interest to Getty
Petroleum Marketing, Inc.,
Civil No. 14-3810 (RMB/AMD)
Plaintiff,
OPINION
v.
TURNERSVILLE PETROLEUM INC.,
successor to N.B. Oil Inc., by
assignment, and SURINDER
BINDRA,
Defendants.
APPEARANCES:
Brett Berman
Lauren Winchester
Barry Muller
Christopher Kinkade
Fox Rothschild LLP
2000 Market Street, 20th Floor
Philadelphia, PA 19103
Attorneys for Plaintiff
Shalom Stone
Lora Fong
Brown Moskowitz & Kallen, P.C.,
180 River Road 07901
Summit, New Jersey
Attorneys for Defendants
BUMB, United States District Judge:

This matter comes before the Court upon a Motion by
Plaintiff, Lukoil North America LLC (“LNA” or “Plaintiff”), to
dismiss Counts I and II of the amended counterclaims filed by
Defendant, Turnersville Petroleum Inc. (“Turnersville” or
“Defendant”), pursuant to Federal Rule of Civil Procedure
12(b)(6).

For the reasons set forth below, Defendant’s motion

will be denied.
Factual and Procedural Background1

I.

LNA, through its predecessor in interest, Getty Petroleum
Marketing Inc., and Turnersville, successor to N.B. Oil Inc. by
assignment, were parties to a Petroleum Marketing Practices Act
(“PMPA”) Franchise Agreement effective June 1, 2005, and related
additional agreements (together referred to as the “Franchise
Agreement”).

Complaint at ¶ 15 [Docket No. 1].

LNA has the

exclusive right to license and use in the United States the
trademark “LUKOIL” and various related trade names, trademarks
and services marks, logos and derivations thereof.

1

Id. at ¶ 9.

As the Court writes only for the parties, it assumes the
reader’s familiarity with the facts and recites only those
relevant to the decision herein. A complete recitation of the
facts of this case may be found in the Court’s April 16, 2015
Opinion (the “April 2015 Opinion”) [Docket No. 32].
2

Citing default, LNA terminated the franchise relationship with
Turnersville effective on November 26, 2013.

Id. at ¶ 20.

On June 14, 2014, LNA filed its Complaint alleging breach of
contract and violation of various sections of the Lanham Act.
Id. at ¶¶ 24-54.

On September 12, 2014, Turnersville filed its

Answer to the Complaint and asserted four counterclaims against
LNA:





Count I: breach of contract;
Count II: violation of the Uniform Commercial Code
(“U.C.C.”);
Count III: breach of duty of good faith and fair dealing;
and
Count IV: violations of the New Jersey Franchise Practices
Act.

Counterclaim at ¶¶ 19-34 [Docket No. 12].
LNA subsequently moved to dismiss Turnersville’s
counterclaims, arguing that all claims are preempted by the PMPA
and, in the alternative, arguing that Turnersville failed to
state a claim under Counts I, II, and III.

On April 16, 2015,

this Court granted the motion to dismiss without prejudice as to
Counts I and II for failure to state a claim and denied the
motion to dismiss as to Counts III and IV.

The Court gave

Turnersville the opportunity to amend its counterclaims as to
Counts I and II within twenty-one days.

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Accordingly, Turnersville filed its First Amended
Counterclaim on May 7, 2015 and LNA has now moved to dismiss
Counts I and II with prejudice for failure to state a claim.
II.

Standard

A motion to dismiss a counterclaim under Rule 12(b)(6) must
be decided on the face of the counterclaim.

Barefoot Architect,

Inc. v. Bunge, 632 F.3d 822, 835 (3d Cir. 2011).

The

counterclaim has been adequately pled only “if it contain[s]
sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)).

However, legal conclusions and

“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.”

Iqbal,

556 U.S. at 678; see also James v. City of Wilkes-Barre, 700 F.3d
675, 679 (3d Cir. 2012) (“disregard[ing] rote recitals of the
elements of a cause of action, legal conclusions, and mere
conclusory statements” on motion to dismiss).
III. Analysis
LNA argues that Counts I and II of Turnersville’s Amended
Counterclaim remain insufficiently pled and must be dismissed

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under Rule 12(b)(6) for failure to state a claim.

The Court has

reviewed the parties’ submissions and, for the reasons set forth
below, holds that Turnersville has pled facts sufficient to
withstand a motion to dismiss as to both Counts I and II.
A. Breach of Contract
To survive a motion to dismiss, Count I must adequately
plead each of the elements of a breach of contract.

See Malleus

v. George, 641 F.3d 560, 563 (3d Cir. 2011) (citing Iqbal, 55
U.S. at 675).

Under New Jersey law, “[t]o state a claim for

breach of contract, [a plaintiff] must allege (1) a contract
between the parties; (2) a breach of that contract; (3) damages
flowing therefrom; and (4) that the party stating the claim
performed its own contractual obligations.”

Frederico v. Home

Depot, 507 F.3d 188, 203 (3d Cir. 2007); Gordon v. United Cont’l
Holding, Inc., 73 F. Supp. 3d 472, 478 (D.N.J. 2014).
In the April 2015 Opinion, this Court found that
Turnersville had adequately pled three of the four elements of a
breach of contract claim.

The Court, however, dismissed Count I

as originally pled because it contained “no allegations
discussing Turnersville’s performance of its obligations under
the contract” and therefore failed to plead one of the essential
elements of the claim.

April 2015 Opinion at 17.
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The Court gave

Turnersville the opportunity to amend its counterclaim to resolve
this deficiency.
Turnersville’s Amended Counterclaim now expressly alleges
the missing element of the breach of contract claim.
Counterclaim at ¶ 19 [Docket No. 35].

Amended

For purposes of a motion

to dismiss, the pleading standard does not require Turnersville
to plead detailed facts regarding each of the ways in which it
has performed under the Franchise Agreement.2

Instead, the

counterclaim simply “must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible
on its face.’”
at 570).

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S.

The Amended Counterclaim meets this standard, and LNA’s

motion to dismiss Count I shall be denied.
B. Uniform Commercial Code
LNA contends that Turnersville’s Amended Counterclaim fails
to adequately plead notice of breach as required by Section 2-607
of the U.C.C. or N.J.S.A. 12A:2-607(3) to state a cause of action

2

The Court notes that the parties are required to make all
allegations of fact in good faith under Rule 11. With this in
mind, the Court accepts Turnersville’s sparse allegations as to
its contractual performance as true in resolving this motion.
However, should the evidence establish that Turnersville did not
perform each of its contractual obligations, the Court may
revisit the issue of Turnersville’s good faith in alleging such
claims.
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for a violation of the U.C.C. and therefore must be dismissed.
Section 2-607 of the U.C.C. and N.J.S.A. 12A:2-607(3) provide, in
relevant part, that “[w]here a tender has been accepted (a) the
buyer must within a reasonable time after he discovers or should
have discovered any breach notify the seller of breach or be
barred from any remedy.”
Notice “need merely be sufficient to let the seller know
that the transaction is still troublesome and must be watched. .
. . The notification . . . need only be such as informs the
seller that the transaction is claimed to involve a breach, and
thus opens the way for normal settlement through negotiation.”
N.J.S.A. 12A:2-607(3), Comment 4.

Threats of litigation “or

other resort to a remedy” need not be made.

Id.

While “buyers enjoy some degree of flexibility with respect
to the form of notice that must be given,” generalized complaints
about price, without more, are insufficient to establish the
requisite notice.

Slack v. Suburban Propane Partners, L.P., No.

10-2548, 2010 WL 5392845, at *5 (D.N.J. Dec. 22, 2010); JOC, Inc.
v. ExxonMobil Oil Corp., No. 08-5344, 2010 WL 1380750, at *5
(D.N.J. Apr. 1, 2010) (“Generalized allegations that Exxon knew
that these stations were struggling financially do not suffice as
an assertion that notice of a breach of contract had been given.
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Plaintiffs have not alleged in the Complaint that they notified
Exxon that they believed their PMPA Agreements had been breached
as a result of the high prices or resulting financial
difficulties.”).
Turnersville’s allegations in its Amended Counterclaim
recount more than mere generalized complaints as to LNA’s pricing
practices and its own financial struggles.

Rather, the Amended

Counterclaim alleges that Turnersville “notified LNA that the
situation was economically damaging, and that continuation of
LNA’s pricing practices was unacceptable.”
at ¶ 20.

Amended Counterclaim

As a result, LNA prepared an amendment to the Franchise

Agreement that included “a new pricing schedule” and “revised the
competitive allowance rates for gas,” which Turnersville then
executed.

Id. at ¶¶ 22, 25.

Taken together, the facts pled in

the Amended Counterclaim sufficiently allege not only that
Turnersville notified LNA that its pricing practices under the
Franchise Agreement were “troublesome,” but also that they were
intolerable and “involve[d] a breach,” which “open[ed] the way
for normal settlement through negotiation.”
607(3), Comment 4.

N.J.S.A. 12A:2-

This Court holds that Turnersville has

adequately pled notice as required under U.C.C. Section 2-607 and

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N.J.S.A. 12A:2-607(3).

Accordingly, LNA’s motion to dismiss

Count II shall be denied.
C. Conclusion
For the reasons set forth above, the Plaintiff’s motion to
dismiss will be denied.

An appropriate Order will issue on this

date.

s/Renée Marie Bumb_
RENÉE MARIE BUMB
United States District Judge

Dated:

September 16, 2015

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