Judge: Joel L. Lofton, Case: 23AHCV02909, Date: 2024-01-05 Tentative Ruling
Case Number: 23AHCV02909 Hearing Date: January 5, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: January 5, 2024 TRIAL DATE: No date set.
CASE: CIRCLE K STORES
INC., a Texas corporation, v. JANUS FUELS INC., a California corporation; WAKIM
JEREJIAN, an individual; and DOES 1 through 10, inclusive.
CASE NO.: 23AHCV02909
EX
PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER
MOVING PARTY: Plaintiff Circle K Stores Inc.
RESPONDING PARTY: Defendants
Janus Fuels Inc. and Wakim Jerejian
SERVICE: Filed December 12, 2023
OPPOSITION: Filed December 22, 2023
RELIEF
REQUESTED
Plaintiff filed this ex parte
application seeking the issuance of a temporary restraining order (“TRO”)
enjoining Defendants from removing ExxonMobile trademarks and branding from
Defendants’ gas station and enjoining Defendants from purchasing gasoline from
vendors other than Circle K.
BACKGROUND
This case arises out of Plaintiff
Circle K Stores Inc.’s (“Plaintiff”) claim that Defendants Janus Fuels Inc. and
Wakim Jerekian (“Defendants”) breached a franchise agreement to operate a gas
station at 475 N. Allen Ave., Pasadena, California 91106 (“Gas Station”) in
compliance with Plaintiff’s standards and requirements. Plaintiff alleges that
the parties agreed on July 18, 2023, for Defendants to use branded products
from Circle K and ExxonMobil Oil Corporation. Plaintiff alleges that the
parties agreed to extend the contract to be effective until July 31, 2025.
Plaintiff alleges that Defendants provided written notice that they intended to
breach the contract by removing Plaintiff and ExxonMobil’s branding and
obtaining products from other suppliers prior to the end of the contract term.
Plaintiff filed this complaint on
December 18, 2023, alleging three causes of action for (1) specific
performance, (2) breach of contract, and (3) breach of guaranty.
TENTATIVE RULING
Plaintiff’s
application for a temporary restraining order is DENIED.
DISCUSSION
A temporary
restraining order may not be granted without notice to the opposing party
unless it appears from the facts shown by affidavit or verified complaint that
great or irreparable injury will result to the application before the matter
can be heard on notice. (Code Civ. Proc. section 527, subd. (c)(1).)
“ ‘In determining whether to issue a preliminary
injunction, the trial court considers: (1) the likelihood that the moving party
will prevail on the merits and (2) the interim harm to the respective parties
if an injunction is granted or denied.’ ” (City of Vallejo v. NCORP4, Inc. (2017)
15 Cal.App.5th 1078, 1085.) “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 allege will occur if the injunction does not issue.’ ” (Integrated
Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178,
1183.)
California Rules of Court, Rule 3.1202, subdivision (c), provides: “An applicant must
make an affirmative factual showing in a declaration containing competent
testimony based on personal knowledge of irreparable harm, immediate danger, or
any other statutory basis for granting relief ex parte.”
Likelihood of Prevailing
The first issue is whether
Plaintiff has demonstrated a likelihood it will prevail on the merits.
The essential elements of a breach
of contract are: (1) the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) the defendant’s breach, and (4) the resulting damages to
the plaintiff. (Green Valley Landowners Assn. v. City of Vallejo (2015)
241 Cal.App.4th. 425, 433.)
“The trial court's order on a request for a preliminary
injunction ‘reflects nothing more than the superior court's evaluation of the
controversy on the record before it at the time of
its ruling; it is not an adjudication of the ultimate merits of the dispute.’
[Citations.] The preliminary injunction is intended to ‘preserv[e] ... the
status quo until a final determination of the merits of the action.’ ” (People
v. Uber Technologies, Inc. (2020) 56 Cal.App.5th 266, 283.)
Plaintiff
focuses on Defendants’ letter stating that they intended to unilaterally
terminate the agreement. (Topham Decl. ¶ 19, Exhibit F.) Because the
parties agreed to extend the contract, an early termination could establish
Defendants’ breach. (Id. ¶ 12, Exhibit B.) Further, the agreement
provides that “Purchaser agrees that money damages may not be a sufficient
remedy for the breach of this contract, and that, therefore, in additional to
all remedies available at law, Seller shall be entitled to specific
performance, injunctive relief, declaratory judgment, and/or other equitable remedies, as
appropriate.” (Id. ¶ 10, Exhibit A ¶ 38.)
In opposition, Defendants do not contest that
they stated they would terminate the contract early. However, Defendants argue
that Plaintiff failed to establish its own performance. In support of their
argument, Defendants assert that Plaintiff failed to demonstrate compliance
with Civil Code section 1598 and Commercial Code section 2305. Defendants cited
those sections as the basis for their early termination of the contract and
argues that Plaintiff must establish compliance. (Id. ¶ 19, Exhibit F.)
However, Defendants do not establish that Plaintiff failed to perform by
arguing that Plaintiff failed to adequately address the reasons Defendants
themselves provided for terminating the contract. Thus, although Plaintiff did
not fully address the issue of its own performance in its application, it has
established some likelihood it will succeed on the merits based on Defendants’
own representations that they intended to terminate the contract early.
Balance of Harm
The next issue is whether Plaintiff has demonstrated that
the balance of harms weighs in its favor. Plaintiff argues that it will suffer
irreparable harm through harm to its relationship with ExxonMobil, loss of
goodwill, environmental liability, and a threat to its community of dealers.
Defendants argue that Plaintiff’s claims for harm are
speculative and that a liquidated damages provision provides an adequate
remedy. (Topham Decl. ¶ 10, Exhibit A.) “Purchaser shall pay unto
Seller, as liquidated damages, and not as a penalty, to compensate Seller for
such losses . . . The amount of liquidated damages shall be the greater of
three cents ($0.03) per gallon . . ..”
While the liquidated damages provision does
provide a basis for monetary damages, the provision itself does not address the
other harms Plaintiff asserts it will face based on Defendants’ breach. In
particular, Plaintiff argues that Defendants’ breach would result in harm to
Plaintiff’s reputation and goodwill with its customers. (Topham Decl. ¶¶
35-39.) Plaintiff has demonstrated some level of harm it would face if a
previously ExxonMobile/Circle K gas station switched to a separate brand.
However, the harm is lessened by the fact that Plaintiff’s own allegations is
that the agreement expires on July 31, 2025. (Complaint ¶ 21.) Thus, unless the
parties agree to continue their relationship, the same purported harm will
occur pursuant to the very agreement between the parties that forms the basis
of this claim.
In the present case, the harm faced by
Plaintiff is loss of a year and half of branding and supplying one gas station.
Plaintiff’s claim of environmental harm or harm to its relationship with
ExxonMobile is not supported factually or connected logically to Defendant’s
actions. (Topham Decl. ¶¶ 15, 23, and 33.) Plaintiff also contends that
Defendants’ actions could cause a ripple effect through its dealer network
causing reputational harm. (Id. ¶¶ 26-31.) As a preliminary note,
Plaintiff’s contentions here are speculative. Additionally, Plaintiff’s
argument that the liquidated damages it agreed to in its various contracts is
insufficient to prevent other breaches is not supported by any evidence.
Plaintiff’s argument employs the slippery slope fallacy, with no evidentiary
support, to assert that allowing one gas station to renege will cause
irreparable harm in the form of many other gas stations repudiating their
contracts. Plaintiff also does not establish that the redress it may obtain through
the present litigation is insufficient. Plaintiff has failed to demonstrate the
balance of harm sufficiently weighs in its favor to support issuance of an
injunction, especially since Plaintiff has only narrowly demonstrated some
likelihood of prevailing.
CONCLUSION
Plaintiff’s
application for a temporary restraining order is DENIED.
Dated: January 5,
2024 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court