ARFA ENTERPRISES, INC. v. JK CITGO, LLC et al

Filing 33

MEMORANDUM OPINION. Signed by Judge Jerome B. Simandle on 6/29/2018. (dmr)

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

ARFA ENTERPRISES, INC.,

HONORABLE JEROME B. SIMANDLE

Plaintiff,

Civil Action No.
17-cv-3347 (JBS-KMW)

v.
JK CITGO, LLC and HARDEEP
SINGH,

MEMORANDUM
OPINION

Defendants.

SIMANDLE, District Judge:
In this case under the Petroleum Marketing Practices Act,
15 U.S.C. § 2801-2841 (“PMPA”), plaintiff Arfa Enterprises, a
petroleum products distributor (“ARFA”), sued defendants JK
Citgo, LLC and Hardeep Singh (“Defendants”) for violation of the
PMPA and breach of contract in connection with the operation of
a retail gas service station located at 3034 Route 73 North,
Maple Shade, New Jersey (the "Facility”).
Plaintiff principally alleged that Defendants willfully
misbranded and sold motor fuel and made untimely payments in
violation of the PMPA, and that Defendants breached the parties’
contract by purchasing motor fuel from a non-ARFA supplier while
operating under ARFA’s Citgo brand.
The Court previously convened a hearing on ARFA’s motion
for preliminary injunction, which was granted, ordering

Defendants to vacate the Facility, terminating the contracts,
and requiring Defendants to pay the sums owing to ARFA.

[Order

for Preliminary Injunction, June 13, 2017 (Docket Item 19)].
Defendants answered the Complaint and the partied completed
pretrial discovery on January 31, 2018.

[Docket Items 30 & 31.]

Presently before the Court is ARFA’s motion for summary
judgment, filed February 22, 2018 [Docket Item 32], which is
unopposed by Defendants.
I.

UNOPPOSED SUMMARY JUDGMENT MOTION
Summary judgment is appropriate “if the movant shows that

there is no genuine dispute as to any mater8ial fact and that
the movant is entitled to judgment as a matter of law.”
56(a), Fed. R. Civ. P.

Rule

The Court must view the evidence in the

summary judgment motion record in favor of the non-moving party
by extending any reasonable favorable inference to that party,
and shall deny the motion if there are “any genuine factual
issues that properly can be resolved only by a finder of fact
because they may reasonably be resolved in favor of either
party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250

(1986).

The moving party always bears the initial burden of

showing that the genuine dispute of material fact exists,
regardless of which party ultimately has the burden of
persuasion at trial.
323 (1986).

Celotex Corp. v. Catrett, 477 U.S. 317,

“Where, as in the present case, the Plaintiff’s
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motion for summary judgment is unopposed, the Court nonetheless
has the duty to ascertain whether the movant’s evidence is
sufficiently probative and consistent to form the basis of a
reasonable factfinder entering a verdict in Plaintiff’s favor
under the applicable principles of law.”

TCG Insurance Co. v.

Privilege Care Marketing, Inc., 2005 WL 9944581 at *2 (D.N.J.
Apr. 27, 2005).

Under Rule 56(e), Fed. R. Civ. P., if a party

“fails to properly address another party’s assertion of fact as
required by Rule 56(c), the court may... (3) grant summary
judgment if the motion and supporting materials -- including the
facts considered undisputed -- show that the movant is entitled
to it...,”

Rule 56(c)(3), Fed. R. Civ. P.

Further, where, as here, the movant has properly documented
its motion in a Statement of Material Facts not in Dispute
(“SMF”) as required by L. Civ. R. 56.1(a), if the opponent fails
to file a responsive statement of material facts, addressing
each paragraph of the movant’s statement, “any material fact not
disputed shall be deemed undisputed for purposes of the summary
judgment motion.”

Id.

The movant’s compliance with L. Civ. R.

56.1(a) has the salutary effect of providing the explicit
evidentiary basis for the granting of its motion when
unaddressed by the opponent, or for substantially narrowing the
facts if only partially addressed.

Thus, where the movant’s

Local Rule 56.1 statement is properly supported by citations to
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the affidavits and other documents of record, the opponent’s
failure to file responding papers may result in the movant’s
facts being deemed undisputed.
The court, even in this situation, retains the duty to
review the motion and determine whether summary judgment is
“appropriate.”

Wells Fargo Bank v. Bertea, 2016 U.S. Dist.

LEXIS 40191 (D.N.J. Mar. 28, 2016); Willow Int’l v. Standard
Casing Co., 2013 U.S. Dist. LEXIS 177560 (D.N.J. Dec. 18, 2013).
II.

FACTUAL BACKGROUND
This is a motion in which the moving plaintiff has fully

supported its motion by citations to the record for each
necessary fact, tied together not only in its brief but more
importantly in its SMF [Docket Item 32-2].

The SMF cites, on a

fact-by-fact basis, in individual paragraphs, to the pertinent
portions of the accompanying declaration and Exhibits A-N.
These facts, properly supported by citation to the record, are
undisputed.

L. Civ. R. 56.1(a).

The court has reviewed, and it

hereby adopts, Plaintiff’s factual statements in ¶¶ 1-28 of the
SMF [Docket Item 32-2], as if set forth in full herein.
In summary, these facts establish that ARFA supplied motor
fuel and motor oil to Defendants who leased the Facility from
ARFA and operated it as a Citgo service station.

The

relationship was governed by three contracts detailing their

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agreement to lease the retail station and purchase the motor
fuel that Defendants dispensed to retail motorists.
Under the parties’ Dealer Supply Agreement (“DSA”), ¶ 3(a)
of the DSA required Defendants to purchase 100% of the
Facility’s motor fuel and motor oil requirements from ARFA.
Paragraph 17 of the DSA required all retail motor fuel
advertised or sold at Defendants’ Facility to be sold under the
“CITGO” trademarks, and Paragraph 18 of the DSA authorized ARFA
to terminate the DSA upon, inter alia, (1) breach by Defendants
of any provision of the DSA; (2) Defendants’ failure to pay ARFA
in full or in a timely manner; or (3) delivery to the Facility
or sales of non-ARFA fuel.
Defendants have admitted, and ARFA has proved, that JK
Citgo began purchasing motor fuel from another supplier, and JK
Citgo accepted deliveries of misbranded (non-Citgo brand) fuel
on at least five occasions.
Defendants also failed to make full and timely payments for
ARFA’s petroleum products, as Defendants’ requests for
electronic funds transfers were dishonored by Defendants’ bank
on numerous occasions, including on or about February 22, 2016
($24,126.52), April 29, 2016 ($31,475.00), June 21, 2016
($15,995.68), and March 14, 2017 ($17,705.68).
these dishonored payments is $89,302.88.

The total of

Furthermore, ARFA

learned on or about March 23, 2017 that Defendants failed to pay
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the municipal sewer and water bills as required, rendering
Defendants non-compliant with the local laws governing their
operation of the Facility.
Defendants duly served a notice of termination and nonrenewal and to vacate the Facility due to Defendants’ multiple
breaches, namely (a) Defendants’ failure to pay fees owed to
ARFA in a timely manner despite demand; (b) Defendants’ willful
adulteration, mislabeling, and misbranding of the motor fuels
and other violations of the Citgo trademarks; and (c)
Defendants; failure to comply with the laws/requirements for
operation of the Facility.
Defendants remained at the Facility until vacating in
compliance with the Court’s order for Preliminary Injunction,
filed June 13, 2017, and Defendants have asserted no
counterclaim (for which the time expired on November 9, 2017) or
other proceeding to seek to retake possession of the Facility to
date.
III. DISCUSSION OF LAW
A.

PMPA Claims

This Court has federal question jurisdiction, 28 U.S.C. §
1331, under the provisions of PMPA, including 15 U.S.C. § 2802,
regulating a franchisor’s termination of the franchise
relationship.

The court also exercises supplemental

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jurisdiction, 28 U.S.C. § 1367, over the contractual claims and
eviction process arising at state law.
First, the Defendants have knowingly and willfully sold
misbranded (non-Citgo) fuel in violation of PMPA § 2802(c)(10)
which lists “willful adulteration, mislabeling or misbranding of
motor fuels or other trademark violations by the franchisee” as
an authorized ground for termination of the franchise.
Defendants misbranded non-Citgo motor fuel while operating the
franchise under ARFA’s Citgo Flag, which misbranding occurred,
as Defendants have admitted, on at least five occasions.
Second, Plaintiff has proven that Defendants repeatedly
failed to pay ARFA in a timely manner the sums due on at least
four occasions totaling $89,302.88 for franchise payments, in
violation of PMPA at § 2082(c)(8), which specifies that “failure
by the franchisee to pay the franchisor in a timely manner when
due all sums to which the franchisor is legally entitled” is an
authorized ground for franchise termination.
ARFA has demonstrated it complied with the procedural
requirements of PMPA regarding franchise termination, including
providing written notice to Defendants within 120 days of actual
or constructive knowledge of Defendants’ PMPA violations, 15
U.S.C. § 2082(b)(2)(C)(i).

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Plaintiff ARFA is thus entitled to summary judgment as a
matter of law, specifically, a declaratory judgment and
injunctive relief, on its Count I PMPA claim.
The Court is authorized to grant the remedy of declaratory
relief, 28 U.S.C. § 2201, as a judgment that “declare[s] the
rights and other legal relations of any interested party seeking
such declaration, whether or not further relief is or could be
sought.”

28 U.S.C. § 2201.

The Court finds that Plaintiff ARFA

is entitled to a declaratory judgment determining that
“Plaintiff’s termination of the franchise and franchise
relationship with Defendants was lawful under the Petroleum
Marketing Practices Act, 15 U.S.C. §§ 2801-2841,” and judgment
in Plaintiff’s favor will be issued accordingly.
Further, Plaintiff seeks that the Court’s preliminary
injunction be enlarged to a permanent injunction.

A permanent

injunction may be granted if the Plaintiff satisfies a fourfactor test by demonstrating:
(1) that it has suffered an irreparable
injury; (2) that remedies available at law,
such as monetary damages, are inadequate to
compensate
for
that
injury;
(3)
that,
considering the balance of hardships between
plaintiff and defendant, a remedy in equ8ity
is warranted; and (4) that the public interest
would not be disserved by a permanent
injunction.
eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 390 (2006);
accord, Ortho-McNeil Pharm. Inc. v. Mylan Labs., Inc., 2007 WL
8

869545 at *1 (D.N.J. Mar. 20, 2007), aff’d, 520 F.3d 1358 (Fed.
Cir. 2008).
This Court previously made detailed findings of fact and
conclusions of law supporting the granting of preliminary
injunctive relief in its Oral Opinion on June 12, 2017, set
forth in Tr. 6/12/17 at 61:24 to 77:22 [Docket Item 32-15].
Those findings, that Plaintiff ARFA satisfied each required
element of preliminary injunctive relief, are unchallenged by
Defendants and indeed are borne out by the present summary
judgment record.

The facts and circumstances supporting

injunctive relief have been fortified by the subsequent
completion of discovery.

Those findings, as well as those set

forth in this Memorandum Opinion, are incorporated herein as a
basis for permanent injunctive relief.
Namely, the Plaintiff has demonstrated it suffered
irreparable injury through the Defendants’ repeated purchase and
sale of misbranded gasoline impairing Plaintiff’s Citgo
trademarks; such conduct also has the tendency to erode customer
confidence in the brand and the goodwill of customer loyalty
that cannot be readily monetized.

Monetary damages are

inadequate to compensate for such injuries.

The balance of

hardships favors ARFA’s interests in distributing its products
through a service station and lessee that honors its agreements,
plays by the rules, and does not continue to obtain and sell
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misbranded (non-Citgo) products after promising not to do so, as
occurred here; these interests far outweigh the hardship to
Defendants of being enjoined from continuing at the Facility,
notwithstanding that the parties had enjoyed a more constructive
relationship for several years predating these troubles.
Finally, the public interest is well-served by ending the
prospect of continued misbranding of petroleum products and
enforcing ARFA’s statutory PMPA rights without infringing PMPA’s
protections afforded to the Defendants/franchisee.

Plaintiff’s

motion for permanent injunctive relief, enjoining Defendants
from occupying and operating the Facility, will therefore be
granted and the accompanying Final Judgment will be entered.
B.

Breach of Contract Claims

The parties’ DSA required Defendant “to purchase 100% of
its motor fuel and motor oil requirements directly from [ARFA]
and not from any other person or entity.”

Ex. I at ¶ 3(a).

The

undisputed facts show that Defendants admitted purchasing motor
fuel from another entity, demonstrated by numerous exhibits in
the case as outlined above.

While Defendants at the preliminary

injunction phase originally took the position that their breach
was excusable because ARFA allegedly overcharged Defendants on
certain dates, this assertion is not supported by any evidence
and ARFA has denied there was any material overcharge.

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Plaintiff has also proved, through undisputed facts, that
Defendants violated the DSA by failing to remit full and timely
payments for the motor fuel that ARFA provided and Defendants
sold, contrary to DSA ¶ 18, supra.
These breaches concerned fundamental aspects of the DSA and
entitle Plaintiff ARFA to summary judgment in its favor
terminating the DSA due to Defendants’ continued material
breaches.
C.

The accompanying Final Judgment will so provide.
Attorneys’ Fees and Costs

Plaintiff ARFA also seeks an award of reasonable attorneys’
fees and costs arising from Defendants’ breach of the DSA.

The

DSA provides for an award of attorneys’ fees as follows:
43.
Attorneys’ Fees.
A party to this
Agreement who is the prevailing party in any
legal proceeding against the other party
brought under or with respect to this
Agreement shall be entitled to recover, in
addition to any award of damages or injunctive
relief, court costs and reasonable attorneys’
fees from the non-prevailing party.
DSA ¶ 43 [Docket Item 32-12].
Plaintiff is the prevailing party in this suit for
Defendants’ breach of the DSA, and is thus entitled under that
agreement to recover from Defendants its reasonable attorneys’

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fees and costs in connection with Plaintiffs’ pursuit of this
favorable judgment.1
Plaintiff’s counsel shall submit an affidavit for
compensation for services rendered and reimbursement of costs in
the format required in L. Civ. R. 54.2(a), within fourteen (14)
days.

Defendants will thereafter have a period of fourteen (14)

days to file any objection to the amounts claimed.

The Court

will thereafter enter an appropriate award.
IV.

CONCLUSION
For the foregoing reasons, the Court will grant Plaintiff’s

motion for summary judgment including declaratory and injunctive
relief and an award of reasonable attorneys’ fees and costs.
The accompanying Final Judgment will be entered.

June 29, 2018
Date

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s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

Plaintiff’s proposed form of Order would also provide for an
award of “interest,” but there is no provision in the DSA for an
award of interest, nor is Plaintiff entitled to prejudgment
interest where Plaintiff is not recovering compensatory damages
for breach of contract. To the extent Plaintiff seeks prejudgment interest, the application is denied.
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