PC Puerto Rico, LLC v. El Smaili

Filing 20

MEMORANDUM AND ORDER re 1 Complaint. The Court GRANTS plaintiff PCPR's request for permanent injunctive relief. The Court also GRANTS plaintiff PCPR's request to evict defendant from the premises where both stations are located. Finall y, the Court GRANTS plaintiff PCPR's request for damages for loss of income, equipment damages, overdue payments for gasoline and rent in the amount of $257,530.00 and all attorneys' fees and costs. Judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 02/28/2013. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
PC PUERTO RICO LLC,
Plaintiff,
v.

CIVIL NO. 12-1973 (FAB)

NIDAL K. EL SMAILI, JOHN DOE,
AND ABC COMPANY, INC.,
Defendants.

MEMORANDUM AND ORDER
BESOSA, District Judge
I.

BACKGROUND
On November 30, 2012, plaintiff PC Puerto Rico, LLC (PCPR)

filed a complaint against defendant Nidal K. El Smaili, John Doe,
and ABC Company, Inc. (Docket No. 1.) In the complaint, plaintiff
alleges trademark infringement and dilution pursuant to the Lanham
Act, 15 U.S.C. Section 1051, et seq., the Trademark Dilution
Revision Act , 15 U.S.C. Section 1125, et seq., and the Petroleum
Marketing Practices Act, 15 U.S.C. Section 2801, et seq.

Id.

The

complaint also alleges Puerto Rico law claims.

Id.

On that same

date,

for

a

temporary

a

permanent

plaintiff

restraining

filed

order,

a

an

ex

parte

preliminary

motion

injunction,

injunction, and an order to show cause.

(Docket No. 2.)

On

Civil No. 12-1973 (FAB)

2

December 3, 2012, the Court denied plaintiff’s motion for an ex
parte temporary restraining order.

(Docket No. 6.)

Plaintiff’s

motion for a preliminary injunction, a permanent injunction, and an
order to show cause remained pending.

Id.

Defendant failed to

answer plaintiff’s complaint. On February 12, 2013, the Court held
a

hearing

injunction.

regarding

plaintiff’s

motion

(Docket Nos. 14 & 15.)

for

a

preliminary

At the hearing, the Court

indicated that the defendant is in default and that he could not
present evidence.

He was represented by counsel who could cross-

examine the witnesses presented by PCPR.

During the hearing, the

Court instructed the parties to file proposed findings of fact and
conclusions of law by February 15, 2013.

(Docket No. 14.)

On

February 14, 2013, plaintiff submitted its proposed findings of
fact and conclusions of law.

(Docket No. 16.)

On February 19,

2013, five days after the Court’s deadline, defendant filed a
memorandum containing his proposed findings of fact and conclusions
of law.
of

fact

(Docket No. 17.)
and

conclusions

After considering the proposed findings
of

law

in

addition

to

the

evidence

presented at the February 12, 2013 hearing, the Court GRANTS
plaintiff’s requests for immediate permanent injunctive relief and
damages.

Civil No. 12-1973 (FAB)
II.

3

FINDINGS OF FACT
A.

The Sub-Lease Agreements
1.

On April, 21 2010 and September 16, 2010, plaintiff

PCPR1 and defendant/retailer Nidal K. El Smaili (“defendant”)2
entered into Sub-Lease Agreements pursuant to which defendant was

1

The contracts were originally entered into between Chevron
Puerto Rico, LLC and defendant. Effective August 1, 2012, however,
Chevron Puerto Rico, LLC changed its name to PC Puerto Rico, LLC
(“PCPR”).
2

As noted by the Honorable Court, because defendant was found
to be in default, he waived all affirmative defenses and was not
allowed to present any documentary evidence or witnesses in his
defense as to damages or the injunctive relief sought.

Civil No. 12-1973 (FAB)

4

granted the right to buy and resale Texaco3 branded petroleum
products and to operate two stations owned by PCPR and located in
Camuy, identified as station #556, and Aguada, identified as
station #662, using the Texaco trademark.

[Plaintiff’s Exhibits 1

(Camuy Station) and 3 (Aguada Station) at p. 1, ¶ 1].
2.
(3)

years,

respectively,

3

The Sub-Lease Agreements were for a term of three
effective
and

April

thereafter

1,
on

2010

and

a

month

November
to

1,

month

2010,
basis.

PCPR is currently authorized to enjoy the exclusive use of
the trademark “TEXACO” and the color combination, font, and design
marks for the canopies of its gasoline stations, which have been
registered in the United States Patent and Trademark Office under
Registration
Nos.
2,259,016
and
2,256,757
and
related
registrations. The Texaco trademark appeared registered in the
United States Patent and Trademark Office under Registration Nos.
57,902; 794,947 and 1,209,440, and related registrations. These
registrations are in full force and effect, unrevoked and
uncanceled. Copies of the certificates of registration for the
marks are attached to the Complaint as Exhibits 1a and 1b. PCPR
has continuously engaged in the production, distribution, and sale
of petroleum related products under the business name of “TEXACO”
since acquiring the exclusive right to the use of the trade name
Texaco, and its related trade names and trademarks, in the
distribution and marketing of gasoline and petroleum related
products, amongst others, through authorized independent dealers
throughout the Commonwealth of Puerto Rico, on July 31, 2012. PCPR
is currently authorized to enjoy the exclusive use of the trademark
“TEXACO”, which has been registered in the United States Patent and
Trademark Office under Registration Nos. 57,902; 794,947;
1,209,440; 1,222,304; 1,222,305 and 1,222,306. These registrations
are in full force and effect, unrevoked and uncanceled. Copies of
the certificates of registration for the marks are attached to the
Complaint as Exhibits 2 (a-h).

Civil No. 12-1973 (FAB)

5

[Plaintiff’s Exhibits 1 (Camuy Station) and 3 (Aguada Station) at
p. 1, ¶ 1].
3.

The Sub-Lease Agreements continue in effect so long

as the primary Lease Agreements continue in force and PCPR does not
elect to terminate them in the manner specifically set out in the
Sub-Lease Agreements.

[Plaintiff’s Exhibits 1 (Camuy Station)

and 3 (Aguada Station) at p. 9, ¶ 13(a)].
4.

The Sub-Lease Agreements provide that defendant must

make all gas and rent payments via electronic wire transfer to a
pre-approved bank account of PCPR.

[Plaintiff’s Exhibits 1 (Camuy

Station) and 3 (Aguada Station) at p. 4, ¶ 4(b)].
5.

The Sub-Lease Agreements provide that defendant must

maintain the condition of all pumps, tanks, and other equipment
owned by PCPR by conducting detailed daily, weekly, and monthly
maintenance; these provisions are designed to facilitate PCPR’s
compliance with applicable federal and state environmental laws,
rules, and regulations, all of which require compliance with strict
monitoring and record-keeping programs.

[Plaintiff’s Exhibits 1

(Camuy Station) and 3 (Aguada Station) at p. 1, ¶¶ 16-20].
6.
defendant

The Sub-Lease Agreements provide that in the event

fails

to

comply

with

any

of

his

duties

under

the

agreements, PCPR would be entitled to terminate the agreements.

Civil No. 12-1973 (FAB)

6

[Plaintiff’s Exhibits 1 (Camuy Station) and 3 (Aguada Station) at
p. 6, ¶ 7(b)].
7.

The Sub-Lease Agreements authorize their termination

pursuant to certain circumstances, including the following:

the

occurrence of any event which constitutes a breach of contract; if
the defendant fails to make his best effort to comply with the
provisions of the agreements; in the event the defendant fails to
make timely payments of any monies owed to PCPR; in the event the
defendant violates the trademarks; in the event that the defendant
shuts down a station or stations for a period of 7 consecutive days
without selling gasoline; if the defendant commits dishonest,
fraudulent, or otherwise illegal acts; or for any termination
grounds available under applicable law.

[Plaintiff’s Exhibits 1

(Camuy Station) and 3 (Aguada Station) at p. 6, ¶ 7(b)(1)-(13)].
8.

Pursuant to the terms of the Sub-Lease Agreements,

if PCPR is made a party to any lawsuit or any legal action as a
result of any act of defendant resulting in non-compliance with the
terms of the Sub Lease Agreements, defendant must indemnify and
hold PCPR harmless from all expenses, fines, suits, proceedings,
claims, losses, damages, liabilities or actions of any kind or
nature, including but not limited to, costs, and attorneys’ fees.

Civil No. 12-1973 (FAB)

7

[Plaintiff’s Exhibits 1 (Camuy Station) and 3 (Aguada Station) at
p. 8, ¶ 11].
9.

The Sub-Lease Agreements constitute a part of the

Franchise Agreements pursuant to the Petroleum Marketing Practices
Act (“PMPA”).
B.

The Supply Agreements
10.

defendant

On April 21, 2010 and September 16, 2010, PCPR and

entered

into

Supply

Agreements

pursuant

to

which

defendant was granted the right to buy and resale Texaco branded
petroleum products and to operate the two stations owned by PCPR
located in Camuy, identified as #556, and Aguada, identified
as #662, using the Texaco trademark.

[Plaintiff’s Exhibits 2

(Camuy Station) and 4 (Aguada Station) at p. 1, ¶ 1].
11.

The Supply Agreements were for a term of three (3)

years, effective April 1, 2010 and November 1, 2010, respectively,
and thereafter on a month to month basis; they were subject to the
duration of the leasing agreements and continued in effect so long
as

the

lease

agreements

continued

in

force.

[Plaintiff’s

Exhibits 2 (Camuy Station) and 4 (Aguada Station) at p. 1, ¶ 1].
12.

The Supply Agreements provide that defendant would

only use the marks, registered marks, trademarks, names, service
distinctions, and/or color patterns that PCPR expressly authorized

Civil No. 12-1973 (FAB)

8

the defendant to use as part of the operation of the stations.
[Plaintiff’s Exhibits 2 (Camuy Station) and 4 (Aguada Station),
Supply Agreements at p. 2, ¶ 4].
13.

The Supply Agreements provide that in the event

defendant failed to comply with any of his duties under the
agreements, PCPR would be entitled to terminate them. [Plaintiff’s
Exhibits 2 (Camuy Station) and 4 (Aguada Station) at p. 4, ¶ 7(b)].
14.

The Supply Agreements authorize the termination of

the Agreements pursuant to certain circumstances, including the
following:

the occurrence of an event which constitutes a breach

of contract; if the defendant fails to make his best effort to
comply with the provisions of the agreements; in the event the
defendant fails to make prompt payments of any monies owed to PCPR;
in the event the defendant violates the trademarks; in the event
that the defendant shuts down a station or stations for a period of
seven

(7)

consecutive

days

without

selling

gasoline;

if

the

defendant commits dishonest, fraudulent, or otherwise illegal acts;
or for any termination grounds available under applicable law.
[Plaintiff’s Exhibits 2 (Camuy Station) and 4 (Aguada Station) at
p. 4, ¶ 7(b)(1)-(13)].
15.

The Sub-Lease Agreements provide that the failure to

comply with any of termination provisions set out in paragraph 7(b)

Civil No. 12-1973 (FAB)

9

of the Supply Agreements may result in the automatic termination of
both the Sub-Lease Agreements and Supply Agreements.

[Plaintiff’s

Exhibits 1 (Camuy Station) and 3 (Aguada Station) at p. 10, ¶ 14].
16.

The

Supply

Agreements

constitute

part

of

the

Franchise Agreements pursuant to the PMPA.
C.

Defendant’s Acts That Lead to the Termination of the
Agreements
17.

The

Sub-Lease

Agreements

provide

that

one

of

defendant’s primary obligations is to make monthly rent payments.
[Exhibits 1 (Camuy Station) and 3 (Aguada Station), Sub-Lease
Agreements at p. 4, ¶ 4(a)].
18.

Beginning in or around the spring of 2012, defendant

began to breach his obligation pursuant to the Sub-Lease Agreements
to

pay

for

all

rent

and

gasoline

due,

and

now

owes

PCPR

approximately $157,530.00.
19.

At

some

point

thereafter,

defendant,

after

depositing money in PCPR’s bank account to pay for overdue rent and
gasoline purchases, withdrew the funds from PCPR’s bank account, an
action which resulted in several “insufficient funds” transactions.
[Plaintiff’s Exhibit 5].
20.

Defendant’s illegal withdrawals violated the terms

of the Sub-Lease and Supply Agreements.

[Plaintiff’s Exhibits 1

Civil No. 12-1973 (FAB)

10

(Camuy Station) and 3 (Aguada Station) at p. 6, ¶ 7(b)(8)].
[Plaintiff’s Exhibits 2 (Camuy Station) and 4 (Aguada Station) at
p. 4, ¶ 7(b)(8)].
21.

Defendant’s default in failing to order gasoline

products from PCPR and to pay the monthly rent for both stations
has continued; defendant owes PCPR approximately $157,530.00 in
overdue rent and gasoline purchases to date. [Plaintiff’s Exhibits
8-1 and 8-2].
22.

Defendant’s default in failing to order gasoline

products from PCPR and to pay the monthly rent for both stations
violated

the

terms

of

the

Sub-Lease

and

Supply

Agreements.

[Plaintiff’s Exhibits 1 (Camuy Station) and 3 (Aguada Station) at
p. 6, ¶ 7(b)(1)].

[Plaintiff’s Exhibits 2 (Camuy Station) and 4

(Aguada Station) at p. 4, ¶ 7(b)(1)].
23.

Defendant has ceased operating of both stations for

several months; the last purchase of gasoline at the Aguada station
occurred in September 2012 and the last purchase of gasoline at the
Camuy station occurred in November 2012.

[Testimony of Francheska

Cortes and Carmen Centeno; Plaintiff’s Exhibits 7-1 through 7-7].
24.

Since September 2012 to the present, defendant has

completely abandoned the Aguada station.

[Testimony of Francheska

Cortes and Carmen Centeno; Plaintiff’s Exhibits 7-2 through 7-7].

Civil No. 12-1973 (FAB)
25.

11

Since November 2012 to the present, defendant has

abandoned operations of the Camuy station, although he continues to
operate a

convenience

store on

those

premises

to

this

date.

[Testimony of Francheska Cortes and Carmen Centeno; Plaintiff’s
Exhibit 7-1].
26.

By abandoning both stations, defendant violated the

express provision in the Sub-Lease and Supply Agreements which
requires him to operate both stations without any interruption for
seven (7) consecutive days,4 for the purpose of selling Texaco’s
petroleum products exclusively and for the purchase and prompt
payment of any and all those products.

[Plaintiff’s Exhibits 1

(Camuy Station) and 3 (Aguada Station) at p. 6, ¶ 7(b)(10);
Plaintiff’s Exhibits 2 (Camuy Station) and 4 (Aguada Station) at
p. 4, ¶ 7(b)(10)].
D.

The Termination Notice
27.

On October 31, 2012, counsel for PCPR sent defendant

a written notice stating that the franchise relationship between
the parties was being terminated as pertains to the two stations,
effective

on

November

10,

2012,

due

to

defendant’s

various

violations of the PMPA and Sub-lease and Supply Agreements; the
4

The PMPA provides that failing to operate a premise for
seven (7) consecutive days is grounds for the termination of a
franchise relationship. 15 U.S.C. § 2801 (c)(9).

Civil No. 12-1973 (FAB)

12

notice was sent by certified mail and also hand delivered to
defendant.

[Plaintiff’s Exhibit 6].
28.

The letter made it clear that PCPR was exercising

its right under the PMPA to cancel the Agreements within a notice
period of less than 90 days due to the nature of defendant’s
repeated violations.
29.

[Plaintiff’s Exhibit 6].

The letter also indicated that the termination of

the franchise relationship did not waive PCPR’s right to pursue:
(1) the payment of all monies owed to the company for overdue rent
and gasoline, (2) compensation for all damages suffered as a result
of defendant’s actions, and (3) the return of full possession of
the stations to the company.
E.

[Plaintiff’s Exhibit 6].

Post-Termination Obligations
30.

Upon

termination

of

the

existing

agreements,

defendant ceased to be an authorized PCPR franchisee for Texaco
branded products.
31.
Texaco

Defendant thus had the obligation to surrender all

property,

including

but

not

limited

to,

the

stations

themselves, signs, and marks, in the same condition as they were
received, to discontinue the unauthorized use of that property, and
to discontinue the exhibition of the Texaco Marks by taking the
necessary measures to cover them from public display. [Plaintiff’s

Civil No. 12-1973 (FAB)

13

Exhibits 1 (Camuy Station) and 3 (Aguada Station) at p. 8, ¶ 10;
Plaintiff’s Exhibits 2 (Camuy Station) and 4 (Aguada Station) at
p. 4, ¶ 4(b)].
32.

Defendant

also

had

the

obligation

to

pay

all

outstanding amounts owed to PCPR for rent and gasoline immediately,
which to date total $157,530.000, in addition to the payment of all
damages suffered by PCPR for equipment damage and/or loss of
income, an amount contractually stipulated to being no less than
$100,000.00.

[Plaintiff’s

Exhibits

8-1

and

8-2;

Plaintiff’s

Exhibits 1 (Camuy Station) and 3 (Aguada Station) at p. 7, ¶ 7(g)].
F.

Breach of Post-Termination Obligations
33.

Defendant has failed to comply with his ongoing

obligations of the terminated Agreements.
34.

First,

defendant

has

retained

some

form

of

possession over the stations in that he currently possesses and
refuses to turn over the keys to both the Aguada and Camuy
stations.

[Testimony of Francheska Cortes and Carmen Centeno].

Defendant also currently possesses and refuses to turn over all of
PCPR’s equipment at both the Aguada and Camuy stations.

The

equipment possessed includes all items listed in the Sub-Lease
Agreements of both stations.
Attachment B].

[Plaintiff’s Exhibits 1 and 3 at

Civil No. 12-1973 (FAB)
35.

14

Defendant’s retention of the keys to the stations

prevents PCPR from having access to, or taking possession of, the
stations and exposes PCPR to potential liability under applicable
environmental laws, rules, and regulations.
36.

Second, to date defendant continues to exhibit the

Texaco Marks at both stations illegally because they have not been
removed or covered as required by the Agreements; these actions
have resulted in the dilution of the Texaco Mark and PCPR’s loss of
goodwill and business on the island.

[Testimony of Francheska

Cortes and Carmen Centeno; Plaintiff’s Exhibit 7-1 through 7-7].
37.

The operation of both stations have been affected

due to defendant’s failure to order fuel, and PCPR’s inability to
reopen them for operation due to defendant’s failure to cooperate
in handing over full, undisturbed possession of both stations.
38.

This failure, together with the lack of interest in

promoting the business, has in turn affected PCPR’s share of the
Puerto Rico market because of defendant’s failure to have Texaco’s
products available for consumers.

Inevitably, these circumstances

have damaged the Texaco brand reputation because of the message
that it sends to the general public:

PCPR has fully equipped

service stations without any Texaco-branded products to sell.

Civil No. 12-1973 (FAB)
39.

Third, defendant has refused to pay:

15
(1) all

amounts for overdue rent and gasoline that he is legally obligated
to pay to PCPR, (2) PCPR’s lost income because it has not been able
to operate the stations for a period of several months, and (3) all
equipment damages.

Contractually, defendant is liable for a

minimum stipulated sum of $100,000.00 for loss of income and
equipment damages, in addition to what he owes for overdue gasoline
and rent; an amount of at least $157,530.00.
40.

Total damages owed are $257,530.006, plus attorneys’

fees and costs.

[Plaintiff’s Exhibits 8-1 and 8-2; Plaintiff’s

Exhibits 1 (Camuy Station) and 3 (Aguada Station) at p. 7, ¶ 7(g)].
III. CONCLUSIONS OF LAW
A.

Introduction
This is a civil action for trademark infringement in

violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1),
and for trademark dilution in violation of the Trademark Dilution
Revision Act of 2006, 15 U.S.C. § 1125 (a) and (c).

PCPR also

seeks equitable relief to enjoin defendant from continuing to

Civil No. 12-1973 (FAB)
exhibit

the

Texaco

Mark

16
at

the

two

stations

illegally.5

Defendant’s acts disparage, dilute, and otherwise damage the value
of the Texaco marks because the defendant was terminated as a PCPR
defendant pursuant to the PMPA and is no longer authorized to use
those marks or operate the stations.

PCPR further seeks equitable

relief directing defendant to cease to display all Texaco marks at
both stations immediately because he has no authority to do so and
is thus violating PCPR’s rights regarding them.
PCPR

also

seeks

declaratory

relief

pursuant

to

the

Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, and Rule 57 of
the Federal Rules of Civil Procedure.

PCPR requests to recover an

amount of approximately $157,530.00 for all gasoline purchases and
rent due to date.

PCPR also wishes to recover for equipment

damages and loss of business or income from defendant in an amount
of no less than $100,000.00, pursuant to Articles 1044, 1054, 1077
and 1206, et seq., of the Puerto Rico Civil Code (“Code”), P.R.

5

Pursuant to a Trademark License Agreement which became
effective July 31, 2012, PCPR has the exclusive right to the use of
the trade name Texaco, and its related trade names and trademarks,
in the distribution and marketing of gasoline and petroleum related
products, amongst others, through authorized independent dealers
throughout the Commonwealth of Puerto Rico.

Civil No. 12-1973 (FAB)

17

Laws Ann. tit. 31, §§ 2994, 3018, 3052, 3371, and 5141, and the
express terms of the Supply Agreement.6
Finally, PCPR seeks to evict defendant from the premises
where both stations are located pursuant to Article 1459 of the
Code, P.R. Laws Ann. tit. 31, § 4066 and protect the environment
and its absolute liability pursuant to Article 45 of the Code,
Environmental Public Policy, P.R. Laws Ann. tit. 12, § 8004n.
B.

Violation of the Lanham Act and Trademark Dilution Act
of 2006
Defendant is fraudulently representing himself to the

general public and consumers as a PCPR franchisee by continuing to
demonstrate the Texaco brand while keeping the stations closed from
operation.

This action is causing confusion and mistake and is

deceiving consumers as to the origin, the licensing, and the
endorsing by PCPR of defendant’s acts, which at this time is
affecting the value of the Texaco Marks and PCPR’s goodwill.
Defendant’s acts constitute trademark infringement in violation of
the Lanham Act, 15 U.S.C. § 1114, et seq., and the Trademark
Dilution Revision Act of 2006, 15 U.S.C. § 1125(a).
tarnish and dilute the Texaco Marks.
6

Those acts

Defendant’s acts have caused

The express language of the Supply Agreements at page 7,
section 7, paragraph (g) draws a distinction between the amounts
owed for overdue rent and gasoline and for equipment damage and
loss of business income as a result of PMPA violations.

Civil No. 12-1973 (FAB)

18

PCPR to suffer injury and damages of such a nature that monetary
damages alone cannot adequately compensate PCPR for the loss
suffered.

Defendant’s acts are greatly and irreparably damaging

PCPR and will continue to be greatly and irreparably damaging to
PCPR unless enjoined and defendant is compelled to return the
stations and equipment to PCPR fully and undisturbed because PCPR
is without an adequate remedy at law.
C.

Trademark Infringement in Violation of Section 43(a) of
the Lanham Act and the Trademark Dilution Revision Act
At

both

stations,

defendant

has

completely

ceased

gasoline operations while continuing to demonstrate the Texaco
brand, creating the false impression that Texaco products are
available to the public at the station on a daily basis, affecting
not only the value of the Texaco marks, but also PCPR’s goodwill.
Defendant’s acts falsely represent that defendant’s services and
products are legitimately approved by PCPR, which constitutes a
violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1114, et
seq., and the Trademark Dilution Revision Act of 2006, 15 U.S.C. §
1125(a).

Defendant’s acts are greatly and irreparably damaging

PCPR and will continue to be greatly and irreparably damaging to
PCPR unless enjoined.

Because an award of monetary damages cannot

Civil No. 12-1973 (FAB)

19

fully and adequately compensate PCPR for its losses, PCPR is
without an adequate remedy at law.
D.

Violation of the Trademark Dilution Revision Act of 2006
Defendant has completely ceased gasoline operations at

both stations while continuing to demonstrate the Texaco brand,
creating the false impression that Texaco products are available to
the public at the stations on a daily basis.

This negative

depiction of the Texaco Marks constitutes dilution, disparagement,
tarnishment and diminishment of the Texaco trademarks, service
marks, and product lines—all proscribed by Section 43(c) of the
Lanham Act, 15 U.S.C. § 1114, et seq., and the Trademark Dilution
Revision Act of 2006, 15 U.S.C. § 1125 et seq.

Defendant’s acts

have caused and will continue to cause dilution, disparagement,
diminution,

and

other

damages

to

the

value

of

the

goodwill

represented by, and of the distinctiveness of, the Texaco Marks, in
violation of Section 43(c) of the Lanham Act, 15 U.S.C. § 1114, et
seq., and the Trademark Dilution Revision Act of 2006, 15 U.S.C.
§ 1125 et seq. Defendant’s acts constitute, therefore, a violation
of Section 43(c) of the Lanham Act, 15 U.S.C. § 1114, et seq., and
the Trademark Dilution Revision Act of 2006, 15 U.S.C. § 1125 et
seq.

Defendant’s acts have caused PCPR to suffer injury and

damages

of

such

a

nature

that

they

may

not

be

adequately

Civil No. 12-1973 (FAB)

20

compensated by an award of monetary damages alone.

Defendant’s

acts are greatly and irreparably damaging PCPR and will continue to
cause great and irreparable damages to PCPR unless enjoined.
Because an award of monetary damages cannot fully and adequately
compensate PCPR for its losses, PCPR is without an adequate remedy
at law.
E.

Injunction Instructing Defendant to Surrender the Texaco
Signage and Marks to PCPR
The PMPA was enacted to protect the franchised retailers

(“franchisees”) of motor fuel in their relationships with their
franchisors and to provide a uniform set of rules to be used
throughout the United States.

The statute specifically prohibits

the enforcement of state and local laws that differ from it.
15 U.S.C. § 2806 (1994).

See

Pursuant to the PMPA, the protection of

franchisees is achieved by delineating the circumstances pursuant
to which termination or nonrenewal of the franchise relationship is
permissible, and the procedure a franchisor must follow for such
termination or nonrenewal.

Congress also fully recognized the

legitimate needs of a franchisor to be able to terminate or not
renew a franchise relationship based upon certain actions of the
franchisee.

Civil No. 12-1973 (FAB)

21

Pursuant to the PMPA, 15 U.S.C. § 2802(b)(2)(C), a
franchisor, such as PCPR, may base a termination and nonrenewal on
“the occurrence of an event which is relevant to the franchise
relationship and as a result of which termination or nonrenewal of
the franchise relationship is reasonable . . . .” (Emphasis ours).
15 U.S.C. § 2802(c)(8) (1994) (Emphasis ours).

The PMPA requires

the furnishing of effective written notice to the franchisee of a
termination or nonrenewal, at least ninety (90) days prior to the
effective date of such termination or nonrenewal, or within any
lesser

period

when,

under

the

circumstances,

it

would

be

unreasonable to furnish 90-day notice. See 15 U.S.C. § 2804 (1978)
(Emphasis ours).
The

cancellation

of

the

Agreements

and

request

for

turning over of the stations within a period less than 90 days was
warranted in light of the serious damages that PCPR is suffering on
a daily basis to its goodwill and brand name as described above and
the

potential

liability

that

PCPR

faces

for

violations

of

Environmental Federal Law due to defendant’s failure to surrender
full and exclusive possession of the stations to PCPR, his failure
to pay for overdue rent and gasoline purchases, including his
withdrawal

of

those

payments

from

PCPR’s

bank

account.

Accordingly, PCPR’s termination of the franchise relationship that

Civil No. 12-1973 (FAB)

22

existed between it and defendant is a valid, legal and enforceable
termination,

effective

as

of

the

termination

date,

and

in

compliance with the applicable provisions of the PMPA.
Moreover, defendant has refused not only to surrender the
Texaco Marks and signage but also to take the necessary measures to
cease to display them to the public, all in open violation of the
PMPA.

Defendant is currently maintaining both stations closed to

consumers, while at the same time exhibiting the Texaco Marks.
Defendant’s acts have caused PCPR to suffer injury and damages of
a nature that cannot be adequately compensated by an award of
monetary

damages

alone.

Defendant’s

acts

are

greatly

and

irreparably damaging PCPR, and will continue to cause great and
irreparable damages to PCPR unless enjoined.
Article 45(b) of the Environmental Public Policy Law
(“EPP”), P.R. Laws Ann. tit. 12, § 8004n, specifically defines
crude oil and its derivatives as a combustible fuel and a dangerous
substance.

Article

46

of

the

EPP

does

not

exempt

from

responsibility any party that may be responsible for an oil spill
or any other type of dangerous substance.

It imposes absolute

responsibility which in this case would be on PCPR.
Ann. tit. 12, § 8004o.

See P.R. Laws

Additionally, Article 45 of the EPP makes

liable any interstate entity that as owner, transfers title,

Civil No. 12-1973 (FAB)

23

possession and the right to use the property to another through
lease, license or permit.
(b)(8)(B).

See P.R. Laws Ann. tit. 12, § 8004n

Regulation No. 4362 of the Control of Underground

Storage Tanks of the Commonwealth of Puerto Rico’s Environmental
Quality Board (“EQB”) is also applicable here.

Pursuant to this

regulation, the EQB together with the Environmental Protection
Agency, may hold the retailer operator, as well as the owner of the
USTs or other equipment that causes the fuel spill liable.
Defendant’s

actions

have hampered

PCPR’s

ability

to

comply with the terms of the Consent Decree entered unto with the
United States in the case of USA v. Chevron Puerto Rico, LLC,
No. Civ. 11-01716 (CCC) (D. Puerto Rico, September 28, 2011), which
requires that PCPR monitor the use of the underground storage tanks
including those located on the premises of both stations. PCPR has
not been allowed full and undisturbed access to the premises of
both stations in order to verify the status of its equipment
accurately; defendant simply has acted in an unreasonable and
non-accommodating fashion at all relevant times.

His actions

create a constant and imminent threat of misuse of the equipment
that can lead to a fuel spill causing serious environmental harm.
The damages that such an accident can cause are irreparable, with
the brunt of the responsibility being borne by PCPR even though it

Civil No. 12-1973 (FAB)

24

is not able to access the station premises.

Because an award of

monetary damages cannot fully and adequately compensate PCPR for
its losses, PCPR is without an adequate remedy at law and defendant
should be enjoined.
F.

Indemnification, Damages, Attorneys’ Fees, and Expenses
Pursuant to the terms of the Sub-Lease Agreements,7 if

PCPR is made a party to any lawsuit or any legal action as a result
of any act by defendant resulting in non-compliance with the terms
of the Sub Lease Agreements, defendant must indemnify and hold PCPR
harmless from all expenses, fines, suits, proceedings, claims,
losses, damages, liabilities or actions of any kind or nature,
including but not limited to, costs and attorneys’ fees.

As a

result of defendant’s acts, PCPR is entitled to recover from
defendant its damages and the attorneys’ fees and the expenses it
has incurred

in

bringing

this

action,

pursuant

to

15

U.S.C.

§§ 1114(1) and 1117(a), 15 U.S.C. § 1125(a) and (c), and the Puerto
Rico Civil Code.
In sum, defendant is liable for any expense, cost, loss
or damage sustained by PCPR as a consequence of any claim made by
any person or entity as a result of defendant’s deceptive and

7

See, plaintiff’s Exhibits 1 (Camuy Station) and 3 (Aguada
Station) at p. 8, ¶ 11.

Civil No. 12-1973 (FAB)

25

illegal acts, including but not limited to, gasoline spills, leaks
from the tanks, fires, explosions, slip and falls, and the like.
Additionally, PCPR has not been allowed full and undisturbed access
to both stations’ premises to verify the status of its equipment
accurately, due to defendant’s failure to turn over possession of
the equipment and keys to the stations, and has suffered several
months of lost income resulting from the failure to operate the two
stations.

Defendant is liable for a minimum stipulated sum of

$100,000.00 for loss of income and equipment damages, in addition
to what he owes for overdue gasoline and rent; an amount of
$157,530.00 to date.

Total damages owed are $257,530.00, plus all

attorneys’ fees and costs.
CONCLUSION
The Court finds that defendant’s acts constitute trademark
infringement and dilution in violation of federal and Puerto Rico
law.

The Court GRANTS plaintiff PCPR’s request for permanent

injunctive relief; defendant is permanently enjoyed from using, and
must

cease

immediately.

to

display,

all

Texaco

marks

at

both

stations

The Court also GRANTS plaintiff PCPR’s request to

evict defendant from the premises where both stations are located.
Defendant must return the premises of both gas stations to the
plaintiff immediately.

Finally, the Court GRANTS plaintiff PCPR’s

Civil No. 12-1973 (FAB)

26

request for damages for loss of income, equipment damages, overdue
payments for gasoline and rent in the amount of $257,530.00 and all
attorneys’ fees and costs.
Judgment shall be entered accordingly.
IT IS SO ORDERED.
San Juan, Puerto Rico, February 28, 2013.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE