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Chevron Intellectual Property LLC and v. Alborz Petroleum Inc.

August 11, 2011

CHEVRON INTELLECTUAL PROPERTY LLC AND CHEVRON U.S.A. INC.,
PLAINTIFFS,
v.
ALBORZ PETROLEUM INC., A CALIFORNIA STRIKE AFFIRMATIVE CORPORATION, SHAHIN EDALATDJU, AN DEFENSES INDIVIDUAL, NASILA EDALATDJU, AN INDIVIDUAL, AND DOES 1-10, INCLUSIVE, [DOC. NO. 13] DEFENDANTS. ALBORZ PETROLEUM INC., A CALIFORNIA CORPORATION, SHAHIN EDALATDJU, AN INDIVIDUAL, NASILA EDALATDJU, AN INDIVIDUAL, COUNTERCLAIMANT,
v.
CHEVRON U.S.A. INC., AND ROES 1-20, INCLUSIVE COUNTERDEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER: (1) GRANTING MOTION TO DISMISS COUNTERCLAIM and (2) GRANTING IN PART ANDDENYING IN PART MOTION TO

Presently before the Court are two motions brought by Plaintiff Chevron, U.S.A.: a motion to dismiss the Defendants amended counterclaim; and a motion to strike some of Defendants' Owners' affirmative defenses. For the reasons stated below, the Court GRANTS the motion to dismiss and GRANTS IN PART and DENIES IN PART the motion to strike.

BACKGROUND

This case arises from a franchise agreement and other related agreements between Plaintiffs Chevron Intellectual Property LLC and Chevron, U.S.A., Inc., and Defendants Alborz Petroleum, Inc., Shahin Edalatdju, and Nasila Edalatdju (collectively, the "Owners"). Among other things, Plaintiffs allege that the Owners accepted conditional advance payments, terminated the agreements prematurely and without returning the advance payments, and then continued to display Chevron marks at their station although they were no longer selling Chevron-branded gasoline. [See generally Compl.]

The Owners filed an answer and counterclaim against Chevron, U.S.A. ("Chevron"), which they later amended. [Doc. Nos. 9, 10.] The following allegations are taken from the Owners' amended counterclaim, which is the target of Chevron's present motion to dismiss.

In 2008, the Owners owned and operated an unbranded gas station and convenience store. [Counterclaim ¶ 9.] Chevron owned a competing station nearby. [Id.] With Chevron's competing station on the verge of closure, the Owners approached Chevron about entering a franchise agreement to turn their unbranded station into a Chevron branded station. [Id.] Despite some initial reluctance, Chevron agreed to negotiate. [Id. ¶¶ 10-11.]

During negotiations, the Owners revealed a concern: direct competition with Chevron. [Id.¶ 12-13.] The Owners-and S. Edalatdju, in particular-repeatedly asked about Chevron's intention to open or franchise other Chevron branded stations near the Owners' station. Chevron assured the Owners it did not intend to do so. [Id. ¶ 14.] The Owners relied on Chevron's assurances when they entered into a franchise agreement with Chevron.[Id.]

Having entered into a franchise agreement with Chevron, the Owners converted their station into a Chevron branded station. [Id. ¶ 16.] And, at least initially, the Owners were satisfied. [Id.] But within a year, Chevron opened two new Chevron branded stations within a twomile radius of the Owners' station. [Id. ¶ 17.] The new stations immediately and dramatically reduced the Owners' revenue. [Id.]

The Owners' amended counterclaim asserts claims for fraud, breach of the implied covenant of good faith and fair dealing, and unfair competition under California Business and Professions Code § 17200. [Doc. No. 10.] Chevron filed the present motion to dismiss and motion to strike on July 11, 2011. [Doc. No. 13.]

DISCUSSION

I. Chevron's Motion to Dismiss

A. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the ...


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