Judge Christian R. Gullon, Case Number: 23PSCV02321, Date: 2023-10-19 Tentative Ruling

Judge: Christian R. Gullon, Case: 23PSCV02321, Date: 2023-10-19 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

Plaintiff GARDEN GROVE PETROLEUM SERVICES, INC’s MOTION FOR PRELIMINARY INJUNCTION is GRANTED; Plaintiff is to post bond/undertaking in am amount TBD at the conclusion of the hearing (likely $279,04 plus prejudgment interest and attorney fees, as requested by Defendants).[1]

This is a contracts case. Plaintiff GARDEN GROVE PETROLEUM SERVICES, INC alleges the following against Defendants ANABI OIL CORPORATION, a California Corporation, SAMMER ANABI, an individual, RAWA ANABI, an individual (collectively, “Defendants”): In February 2018, Plaintiff purchased from Gharpetian Family Properties, Inc. (“Gharpetian”) certain real property, fuel station, and convenience store (in toto “Property”). (Complaint ¶17.)[2] At the time Plaintiff purchased the Property, Gharpetian and Defendants were parties to two agreements: the Retailer Product Sales Agreement (“RPSA”) with an expiration date of October 31, 2022 and Retailer Facility Development Incentive Program Agreement (“RFDIP”) with an expiration date of November 1, 2022 (¶18) (collectively, the “agreements”).[3] Two promissory notes were also issued by Defendant to Gharpetian to secure repayment of monies advanced to Gharpetian under the terms of the RFDIP. (¶¶18, 19.)[4] On November 1, 2012, Gharpetian executed a deed of trust (DOT) that encumbered the Property to secure Gharpetian’s obligations to Defendants under the promissory notes, the RFDIP and the RPSA. “Defendants represented to Plaintiff . . . that Defendants would charge Plaintiff the same per-gallon price as they had charged Gharpetian.” (¶24.) However, in violation of the representation and the contractual notice term (via Article 3(d) of the RPSA and Section 1 of the 2012 RPSA Amendment), Defendants changed Plaintiff’s per-gallon-pricing from the Gross Rack Price to the Effective Market Price. (¶27.) Additionally, due to the COVID-19 pandemic and debranding, Plaintiff could not comply with the minimum purchase requirements of the RPSA, Part I. (¶28.) Moreover, Plaintiff’s director/offer’s cancer diagnosis affected his ability to operate the Property. (¶32.) Despite those circumstances ((i) could not comply with minimum purchase requirements and (ii) cancer-related disability)) Defendants “unreasonably refused to grant Plaintiff any relief for reduced performance whatsoever.” (¶30.) Plaintiff tendered in good faith two payments to satisfy Defendants’ demand for liquidated damages of $140,243.79 for the alleged breach of RPSA (minus certain costs) (¶52) but Defendants refuse to accept payment as their computation of damages $349,656.70 (¶42.)[5]

On September 8, 2023, the court issued the following minute order regarding Hearing on Ex Parte Application Notice Of Ex Parte Application For Order To Show Cause Re Preliminary Injunction And For A Temporary Restraining Order: The Court and Counsel confer re: the Ex Parte Motion and the details as it pertains to the Defendants recorded Notice of Trustee's Sale. The parties stipulate and agree to amend and reissue the Notice of Trustee's Sale to a date on or after October 27, 2023.

On September 14, 2023, per the filing entitled ‘Order Re Stipulation Re Withdrawal Of Ex Parte Application And Postponement Of Non-Judicial Foreclosure Sale,’ the parties stipulated to the following: Plaintiff’s ex-parte application for OSC and TRO was withdrawn and Defendants postponed the non-judicial foreclosure sale of the Property to take place no earlier than 11 :00 a.m. on October 27, 2023, pending further Order of this Court.

The CMC is set for 1/10/2024 and the hearing on the demurrer is set for 1/24/2024.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (See Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.) The burden of proof is on the plaintiff as moving party. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. (Code Civ. Proc. § 526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors (1967) 255 Cal.App.2d 300, 307.)

The trial court considers two factors in determining whether to issue a preliminary injunction: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the court grants a preliminary injunction.[7] (Code Civ. Proc. § 526(a); Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67.) These two showings operate on a sliding scale: “[T]he more likely it is that [the party seeking the injunction] will ultimately prevail, the less severe must be the harm that they must allege will occur if the injunction does not issue.” (King v. Meese (1987) 43 Cal.3d 1217, 1227.) The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. (Thornton v. Carlson (1992) 4 Cal.App.4th 1249, 1255.)

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Proc. § 529(a); Cal. Rules of Court, rule 3.1150(f); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal.App.4th 916, 920.)

Plaintiff seeks a preliminary injunction barring Defendants from noticing and/or conducting a trustee’s sale of the real property of the Property pending adjudication of and judgment on Plaintiff’s claims. (See Proposed Order.)

For reasons to be discussed below, as (1) the purpose of a preliminary injunction is to preserve the status quo—here, that being Plaintiff operating its Fuel Station even if no longer in an RFDIP agreement with Defendants—and (2) Plaintiff has made a sufficient showing that it will prevail on the merits (Defendants’ purported breaches have led to their improper calculation of damages, thus a defective Notice of Default)—the court grants the motion.

Preliminary comments aside, the court will now turn to the merits of the motion. A reading of the complaint, moving papers, and opposition provides that there are two predominant issues in the case:

1. Whether the 2014 RPSA Amendment (which extended the expiration date of the RPSA from October 31, 2022 to April 30, 2026) extended the expiration date of the RFDIP from November 1, 2022 to April 30, 2026 (which affects the damages owed for debranding).

2. Whether Defendants represented a certain price per gallon and whether notice of price per gallon change(s) was required.

Based upon those issues, Plaintiff appears to argue that it owes damages only for minimum purchase shortfalls (Motion p. 6:11-25) whereas Defendants are attempting to recover for additional costs.

Plaintiff contends that the RFDIP expired 11/1/2022 because the 2014 RPSA Amendment referenced an extension to the RFDIP, but the parties never executed an amendment to the RFDIP; thus, the reference in the 2014 RPSA Amendment was ineffective to create such an extension. (Complaint ¶18, see also Motion p. 4:20-22, see also Reply p. 1.)

In Opposition, Defendants aver that the RPSA and the RFDIP were not set to expire until April 30, 2026 because (i) the 2014 RPSA Amendment states the two agreements will have the same expiration dates, (ii) the 2012 RFDIP expressly sated that “The parties agree that the term of the RPSA will be extended so that the RPSA and Brand Commitment expire on the same date (RDIP, p. 1, Article 3), and (iii) the parties (Gharpetian and Defendants) so anticipated at the time of the 2014 RPSA Amendment. (Opp. p. 6.)[10]

On one hand, the court finds Plaintiff’s interpretation reasonable: Section 13 of the RFDIP—which is to remain “unaltered and in full force and effect”—requires that any modification of the RFDIP be in writing and signed by the parties, but here, the RFDIP does not in writing nor signed by the parties extend the expiration date to 2026. Plus, the 2014 RPSA Amendment was executed for the purpose of “extend[ing] the term of the RPSA,” suggesting the amendment pertained solely to the RPSA, not the RFDIP. (Complaint, Ex. D [2014 RPSA Amendment, p. 80 of 107 of PDF, emphasis added.)

On the other hand, the court also finds Defendants’ interpretation reasonable: the 2014 RPSA Amendment reads, “Except as expressly provided herein, all other terms and provisions of the Retailer-Product Sales Agreement and all other agreements between the parties, including but not limited to the Retailer Facility Development Incentive Program ('RFDIP') Agreement, shall remain unaltered and in full-force and effect through the amended expiration date of the RPSA.” (Complaint, Ex. D [2014 RPSA Amendment, p. 80 of 107 of PDF, emphasis added.)

Here, however, the court cannot interpret the agreement because neither party has briefed the issue.[11] Rather, both parties have merely provided conclusory statements without citation to instructive legal authority as to why their interpretation controls.[12]

Notwithstanding the foregoing, for purposes of this motion, the court determines Plaintiff has made a sufficient argument that the RFDIP expired in 2022 (notably as the agreements are separate contracts and the RFDIP is not an addendum to the RPSA).

Having established for purposes of this motion that the RFDIP expired in 2022 and not in 2026, then Plaintiff’s contention that little damages are owed for debranding is correct. Plaintiff last purchased Shell Oil brand gasoline on October 27, 2022, meaning Plaintiff did not brand until the end of October 27, 2022. Even assuming Plaintiff debranded earlier in the month, damages under the RFDIP would cover at most less than a month.

Based thereon, with little, if any, damages owed under debranding, the court need not address the rebrand default compensation.[13]

Plaintiff’s primary argument for breach of contract[14] is that Defendants failed to comply with the 2012 RPSA Amendment and/or its requirement that they provide notice before raising the per gallon price of gasoline.

Defendants breached the RPSA by increasing its per-gallon pricing from the Gross Rack Price to the Effective Market Price without providing Plaintiff with notice as required by the Article 3(d) of RPSA and Section 1 of the 2012 Amendment . . . As a result of the concealed increase in fuel price and failure by Defendants to provide the contractually required notice of such change, Plaintiff is informed and believes and based thereon alleges that ANABI OIL has overcharged Plaintiff by an average of $0.11, per gallon from February 5, 2018 through November 1, 2022.

Effectively, the issues are whether during discussions between Plaintiff and Defendants regarding Plaintiff’s purchase of the Property and its proposed succession to the terms of the RPSA as amended, the RFPID, the Promissory Notes, and the Deed of Trust, Defendants unequivocally represented that they would charge Plaintiff the same per-gallon price as they had charged Gharpetian and whether the RPSA and 2012 RPSA Amendment require Defendants to provide Plaintiff with notice of an increase in a fuel price change.

Here, as to the first issue of representation, the parties provide differing accounts: Defendants’ Senior Director of Wholesale (Reem Annabi) attests that no such representation was made whereas Plaintiff attests otherwise. Thus, though the evidence is in conflict, the court interprets the facts in the light most favorable to Plaintiff as it has presented more facts (see Shafik Decl., ¶5) to support its positions.[16]

Here, next turning to the issue of notice, section 3d of the RPSA provides the following:

(Complaint, Ex. B [2012 RPSA Amendment], Section 1 ‘Product,’ p. 65 of 107 of PDF.)

First, as noted by Defendants in opposition, Article 3(d) of the RPSA pertains to Defendants’ payment terms such as credit terms, electronic fund transfers, etc. (Opp. p. 9.) Thus, absent a term pertaining to fuel price changes, the court cannot insert such a term to the RPSA. (See Vons Companies, Inc. v. United States Fire Insurance Co. (2000) 78 Cal.App.4th 52, 58-59 [“A contract extends only to those things which it appears the parties intended to contract. Our function is to determine what, in terms and substance, is contained in the contract, not to insert what has been omitted. We do not have the power to create for the parties a contract that they did not make and cannot insert language that one party now wishes were there.”].) The Reply does not address this argument. Thus, Article 3(d) of RPSA did not require Defendants to provide Plaintiff with notice of fuel price changes.

Second, as for Section 1 of the 2012 RPSA Amendment, the plain meaning of the provision, and as otherwise not disputed by Defendants, Defendants (i.e., Seller) can change the fuel price upon notification to Retailer (i.e., Gharpetian).

In opposition, however, Defendants argue that “Plaintiff was not a party to the 2012 RPSA Amendment and has no rights thereunder because it was non-assignable and non-transferable” (Opposition, p. 9:15-16.)

(Complaint, Ex. B, Section 17 ‘No Assignment or Transfer,’ p. 68 of 107 of PDF.)

As noted by Plaintiff, that is not so. The 2012 RPSA Amendment states that the Retailer (i.e., Plaintiff’s predecessor, Gharpetian) cannot transfer or assign the agreement, and here, Plaintiff does not allege that the previous Retailer/Gharpetian, assigned the 2012 Amendment to Plaintiff. Rather, Plaintiff contends that Defendants made the assignment. (Reply p. 8:4-8.) Indeed, Section 1 of the Consent to Assignment provides that Defendants consent to Gharpetian’s assignment to Plaintiff of the “Retailer Documents, including all agreements, instruments, and documents amending, supplementing or in any way relating to the Retailer Documents or operations thereunder.” (Anabi Decl., Ex. 1, p. 4 of 9 of PDF, emphasis added.)

Therefore, as Defendants consented to (i.e., allowed for) the assignment of all agreements (i.e., agreement includes the 2012 RPSA Amendment), then Plaintiff was entitled to notice that Defendants changed the per-gallon pricing from the Gross Rack Price to the Effective Market Price. With that, this would presumably affect the liquidated damages owed under the RPSA.

In sum, Plaintiff’s request for injunctive relief is predicated upon the main contention that the Notice of Default is predicated upon an inaccurate calculation of damages. (Motion p. 7:21-22.) Having made a sufficient showing that Defendants are not entitled to some of the damages they seek and as denying the motion would result in irreparable harm to Plaintiff (loss of real property), the court need not address the ancillary COAs (and other costs, e.g., attorney fees) as the breach of contract COA (and issues addressed) form the crux of the lawsuit. Based on the foregoing, the injunction is GRANTED and Plaintiff is to post an undertaking.

[1] The Reply does not address Defendants’ proposed amount of undertaking.

[2] “Under the terms of Plaintiff’s purchase of the Property, Plaintiff succeeded to Gharpetian’s rights and obligations under the RPSA, RFDIP, Promissory Notes, and Deed of Trust.” (¶23.) At the sale’s completion, Defendants acknowledged that Plaintiff was an owner-operator of the Fuel Station. (¶24.)

[3] According to the complaint, there was an amendment to the RPSA in 2014 RPSA extending the expiration date of the RPSA to April 30, 2026. But the parties never executed and amendment to the RFDIP extending its expiration date, so this reference in the 2014 RPSA Amendment was ineffective to create such an extension. (¶18, subd. (d).)

[4] The first promissory note was for $125,000 (“Redevelopment Promissory Note”) and the second was for $60,000. (Complaint ¶¶19, 20.)

[5] In sum, for clarity, at the time Plaintiff purchased the Property, Gharpetian and Defendants were parties to six (6) written agreements: (1) the 2012 RPSA with an expiration date of 10/31/22 (Complaint, Ex. A); (2) the 2012 RPSA Amendment detailing the calculation of the price per gallon for gasoline purchased under the RPSA (Ex. B); (3) the RFDIP with an expiration date of 11/1/22 (Ex. C); (4) 2014 RPSA Amendment (purporting to) extend the expiration date of the RPSA to 4/30/26 (Ex. D); (5) the first promissory note; and (6) the second promissory note.

[6] As noted by Defendants in opposition to the instant motion (and not addressed by in Reply), abuse of process involves a court process. (See Opp. p. 13, citing S.A. v. Maiden (2014) 229 Cal.App.4th 27, 41; see also ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1014.) Here, however, Plaintiff’s claims involve a non-judicial foreclosure; therefore, it is uncertain how Defendants have misused the judicial process.

[7] As to the second prong, California law presumes that real property is unique and not easily interchangeable. (Real Estate Analytics, II.C v. Vallas (2008) 160 Cal. App.4n 463, 464; Cal. Civ. Code § 3387; Wheat v. Thomas (1930) 209 Cal. 306.) This point is acknowledged by Defendants in opposition. (Opp. p. 8:25-27 [“Anabi recognizes the weight typically afforded to non-judicial foreclosures in the consideration of the immediate or irreparable harm component for injunctive relief.”].) Thus, as the moving paper and opposition focus more accurately on the element of whether Plaintiff has made a showing of a likelihood of success on the merits, so too will the court’s analysis. (See Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 459 [While a court must consider both factors in making its decision, it may deny a preliminary injunction if either of the two facts alone would support a ruling denying relief.].)

[8] In fact, Plaintiff admits it had a “duty to pay” damages to Defendants (¶40)[8] and that damages amounted to $140,243.79 for the alleged breach of RPSA (¶52).

[9] Plaintiff suffered at least a 20% decline in gallons sold as a result of the COVID-19 pandemic and the government issued stay-at-home orders. (¶30, see also Shafik Decl., ¶6.)

[10] Though not discussed by Defendants, Gharpetian and Defendants’ intent in signing the 2014 amendment plays a role in contract interpretation. (See Burch v. Premier Homes, LLC (2011) 199 Cal.App.4th 730, 744 [“In cases where there is ‘any apparent conflict between its different clauses or provisions, the circumstances surrounding its execution and the conditions and motives of the parties as shown by recitals in the contract or matters in evidence should be taken into consideration in order that the true intent of the parties may be ascertained.’”], internal citation omitted omitted.)

[11] And on the issue of inadequate briefing, neither party has discussed the purpose of the two agreements. For example, whether the agreements are independent of each other or are they required to co-exist.

[12] See Ables v. Ghazale Brothers, Inc. (2022) 74 Cal.App.5th 823, 828 [“The arguments in Ables's brief are undeveloped, lack sufficient citations to authority and to the record, and fail to allege any trial court error. Consequently, we consider them forfeited. [Citations omitted]. It was Ables's burden, not ours, to make arguments from legal authority….”].)

[13] It is unclear how much Defendants seek for debranding. At one point, Defendants sought $43,750.00 and then at another point sought $109,777.72 (under 6(b) of the RFDIP) and an additional $43,750.00 under section 6(a) of the RFDIP. (Reply pp. 3-6.) Though perhaps the confusion ties into Plaintiff’s argument that Defendants have not offered a calculation of rebranding/debranding damages. (Reply p. 7:17-20 [“Defendants take a Wild West approach to this case, strolling into Court like it is a frontier saloon, declaring, in effect: ‘We know what you owe. We don’t have to explain how or why. We don’t have to have paid it to anyone or explain how we are calculating our demand. Just give us this much money or we will take your gas station.’”].)

[14] Plaintiff also asserts breach of contract based upon, inter alia, Defendants alleged bad faith in refusing to grant Plaintiff an excuse for non-performance of the Minimum Quantity purchases (¶64) or allegations that Defendants “intentionally concealed the pricing increase in order to enrich itself without compliance with its duties under the contract (¶60.) However, those pertinent allegations more appropriately fall under the 2^nd COA for breach of implied covenant of good faith and fair dealing or fraud as Plaintiff has not cited to contractual terms/provisions that require such performance or promise by Defendants.

[15] Though not expressly stated in the 1^st COA (rather expressly stated in the 4^th COA for fraudulent misrepresentation and 5^th COA for negligent misrepresentation ¶¶79, 86), Plaintiff appears to argue that Defendants’ promise that they would charge Plaintiff the same per-gallon price as they had charged Gharpetian falls under this COA as well.

[16] See Hilb, Rogal & Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812, 1820 [“Regardless of whether the trial court has granted or denied an application for a preliminary injunction, if the evidence before that court was in conflict, we do not reweigh it or determine the credibility of witnesses. ‘[T]he trial court is the judge of the credibility of the affidavits filed in support of the application for preliminary injunction and it is that court's province to resolve conflicts.’ [internal citation omitted]. Further, if the evidence on the application is in conflict, we must interpret the facts in the light most favorable to the prevailing party and indulge in all reasonable inferences in support of the trial court's order.”