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Shahriar Almasi, et al v. Equilon Enterprises

September 10, 2012


The opinion of the court was delivered by: Edward J. Davila United States District Judge

United States District Court For the Northern District of California


Currently before the court is Defendant Equilon Enterprises, LLC's ("Equilon") Motion for Summary Judgment, Partial Summary Judgment, or, in the Alternative, Determination of Facts 19 Without Controversy. See Docket Item No. 87. The Court held oral argument on December 9, 20 2011. After careful consideration of the briefing and evidence submitted by the parties, the motion 21 is GRANTED IN PART and DENIED IN PART for the following reasons. 22


This case concerns Equilon's efforts to sell the real property on which seven Shell-branded 24 service stations are located in San Mateo and Santa Clara Counties (the "Stations"). Each Plaintiff 25 operates a Shell-branded service station in the San Francisco region pursuant to a Retail Facility 26 Lease and a Retail Sales Agreement with Equilon. In 2005, Equilon made the decision to withdraw 27 from the retail gasoline market and sell its retail assets, including all retail sites in the San 28 Francisco region. Decl. David N. Burrow Supp. Mot. ¶ 10. As part of its national withdrawal 2 strategy, Equilon devised a multi-step "portfolio process" to be followed in each of its markets to 3 facilitate its withdrawal. Id. ¶ 11. Equilon's San Francisco market divestment closely followed this 4 "portfolio process," including marketing the Stations to the general public as well as engaging in a 5 competitive bidding process for the retail assets. Id. ¶ 12. 6

Equilon's San Francisco region included approximately 250 properties, divided by Equilon 7 into seven "clusters." Decl. Lawrence D. Coburn Supp. Mot. ¶ 4. Each of the properties at issue in 8 this suit were in "Cluster 7." Id. Equilon initially invited twenty-seven parties to sign a 9 Confidentiality Agreement in order to participate in a first round of bidding. Id. ¶ 5. Twenty-three 10 parties returned the Confidentiality Agreement and were sent first round bid instructions and 13 a bid from Nakash. Id. ¶ 6. Second round bid instructions were sent out to the first round bidders on 14 March 25, 2009, in which Equilon instructed bidders to submit "a bid for the full cluster . . . along 15 with a purchase price allocation for each individual site." Id. ¶ 7. More detailed information 16 regarding each property was made available to second round bidders to assist each in refining their 17 bids. Id. ¶ 7. In the second round, Equilon received six offers from the original ten bidders, 18 including from Nakash, again for all or portions of the market. Decl. Christopher Donelson Supp. 19 Mot. ¶ 6. As part of the second round bid process, Equilon additionally had discussions with the 20 bidders to better understand each bidder's proposed business plan and ability to secure funds for 21 the purchase. Id. ¶ 5. 22

Addendum to Offer to Purchase Premises (the "Addendum") for each Station. Decl. Larry O. 25 81, ("DNOL") Exs. 5-11 (Nakash's Third Party Offers and Addendums for each of the Stations). 27 Equilon's Confidential Information Memorandum for the market. Id. ¶ 5. In response to the first round bid package, Equilon received ten non-binding bids, including Nakash was ultimately selected as the purchaser for Cluster 7, which includes the Stations. Id. ¶ 11. Nakash executed an Offer to Purchase Premises (the "Third Party Offer") and an 24 McCamish Supp Mot. ¶¶ 4-5; Defendant's Notice of Lodgment Exhibits Supp. Mot., Docket No. 26 Equilon sent each Plaintiff a ROFR to purchase its Station on terms identical to the Third Party 28 Offer by Nakash, attaching to each ROFR a copy of Nakash's Third Party Offer. Decl. Larry O. 2 McCamish ¶¶ 7-8, DNOL Exs. 12-18. Plaintiffs each accepted the ROFRs under protest. Id. ¶¶ 9-3 15; DNOL 19-25 (Letters sent on behalf of each Plaintiff to Equilon accepting ROFRs under 4 protest). 5

On August 6, 2010, Plaintiffs filed this lawsuit against Equilon claiming that the Third Party Offers were not "bona fide" and alleging violations of Cal. Bus. & Prof. Code § 20999.25, 7 and Cal. Bus. & Prof. Code § 17200 ("UCL") and requesting declaratory relief and punitive 8 damages. 9


The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party bears the initial burden of establishing the absence of a genuine 13 issue of material fact. Celotex Corp v. Catrett, 477 U.S. 317, 323--24 (1986). That burden may be 14 met by "'showing'-that is, pointing out to the district court-that there is an absence of evidence 15 to support the nonmoving party's case." Id. at 325. Once the moving party has met this burden, the 16 nonmoving party must go beyond the pleadings and identify specific facts that show a genuine 17 issue for trial. Id. at 323--34; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). Summary 18 judgment is appropriate if a party, after adequate time for discovery, "fails to make a showing 19 sufficient to establish the existence of an element essential to that party's case, and on which that 20 party will bear the burden of proof at trial." Celotex Corp v. Catrett, 477 U.S. at 322. 21

Only genuine disputes over facts that might affect the outcome of the suit will properly 22 preclude the entry of summary judgment. Anderson, 477 U.S. at 248; see also Aprin v. Santa Clara 23 Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001) (the nonmoving party must present 24 specific evidence from which a reasonable jury could return a verdict in its favor). "A scintilla of 25 evidence or evidence that is merely colorable or not significantly probative does not present a 26 genuine issue of material fact." Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). 27 28 2 triable fact. [Courts] rely on the nonmoving party to identify with reasonable particularity the 3 evidence that precludes summary judgment." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996); 4 see also Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir.2001) ("The 5 district court need not examine the entire file for evidence establishing a genuine issue of fact, 6 where the evidence is not set forth in the opposing papers with adequate references so that it could 7 conveniently be found."). 8

Local Rule 7-4 states that "Any evidentiary and procedural objections to the opposition must be 13 contained within the reply brief or memorandum. Pursuant to Civil L.R. 7-4(b), the reply brief or 14 memorandum may not exceed 15 pages of text." Here, in addition to Equilon's 15-page reply brief, 15 Equilon filed a 16-page brief objecting to Plaintiffs' evidence submitted in support of their 16 opposition. See Docket No. 98-2. Thus, Equilon violated Civil L.R. 7-4 by failing to include its 17 evidentiary objections in its reply brief and impermissibly submitting an additional 16-pages of 18 argument in reply to the opposition brief. 19

It is not the task of the district court "to scour the record in search of a genuine issue of


A. Additional Briefs Filed Objecting To Evidence

In addition to the motion, opposition, and reply brief and supporting declarations, the parties have also filed separate briefs objecting to evidence and responding to objections. Civil The court therefore will not consider Defendant Equilon Enterprises LLC's Objections To Plaintiffs' Evidence Submitted in Opposition to Equilon's Motion For Summary Judgment, Or, In 21 the Alternative, Determination of Facts Without Controversy, As To Each Plaintiff. See Docket 22

No. 98-2. Additionally, the court will not consider the 15-page brief Plaintiffs filed opposing those 23 evidentiary objections. See Docket No. 101. 24 26 relationship between franchisors and franchisees in the petroleum industry. See 15 U.S.C. §§ 27

B. Cal. Bus. & Prof. Code § 20999.25

Generally, the Petroleum Marketing Practices Act ("PMPA") covers the business 2801--06; see also Atlantic Richfield Co. v. Herbert (In re Herbert), 806 F.2d 889, 892 (9th Cir. 28 1986) ("In enacting the PMPA, Congress attempted to provide national uniformity of petroleum 2 franchise termination law."). The PMPA applies when a franchise is terminated or not renewed. 15 3

1261, 1275 (1997). The PMPA, however, does not cover a situation where the franchise continues, 5 such as when a franchisor assigns its obligations to another. 15 U.S.C. § 2806(b)(1); Forty--Niner, 6

In California, Cal. Bus. & Prof. Code § 20999.25(a) "facilitates the purchase of retail 8 service stations by their independent lessee-franchisees in contexts outside franchise termination 9 and non-renewal." Forty--Niner, 58 Cal. App. 4th at 1273. Accordingly, § 20999.25(a) allows a 10 petroleum marketing franchisee, typically a service station operator, a bona fide opportunity to buy U.S.C. § 2806(a); Forty--Niner Truck Plaza, Inc. v. Union Oil Co. of Cal., et al., 58 Cal. App. 4th 4 58 Cal. App. 4th at 1275. 7

the station if the petroleum marketing franchisor, typically an oil company, is going to sell it to

another. Id. Specifically, under § 20999.25(a), a franchisor, like Equilon, who wants to sell a 13 service station premises that it owns and leases to franchisees, such as Plaintiffs, may either: (1) 14 make a "bona fide offer" to sell its interest in the premises to the franchisee; or (2) give the 15 franchisee "a right of first refusal ["ROFR"] of any bona fide offer acceptable to the franchisor 16 made by another to purchase the franchisor's interest in the premises." Cal. Bus. & Prof. Code § 17

"California law recognizes that parties to a purchase transaction involving many sites can 19 allocate a portion of the total purchase price to a single site to allow another party to exercise a 20 right of first refusal on the single site." Forty--Niner, 58 Cal. App. 4th at 1279. A ROFR is 21 sufficient when (1) the valuation of individual properties is readily apparent and (2) there is no 22 evidence of unfair manipulation. Id. at 1280 (citation omitted). Additionally, the offer made by the 23 third party for which the franchisee is offered the right of first refusal must be bonafide. Id. at 24

Equilon moves this court to find that it presented Plaintiffs with ROFRs based on bona fide 26 offers to purchase the Stations, that the valuations of the Stations were apparent, and that Equilon 27 did not manipulate the values that would render Nakash's Third Party Offers a sham. 28

20999.25(a). 18 1281.

3 apparent from the face of the offers. Here, the parties do not dispute that Nakash's Third Party 4 Offer and Addendum (1) 201 La Cuesta Drive $850,000; (2) 776 N. Mathilda Ave. $1,600,000; (3) 6 Stevens Creek Blvd. $1,175,000; (6) 6097 Snell Avenue $1,500,000; and (7) 3939 Snell Avenue 8

1. Valuation of Individual Properties Is Readily Apparent Equilon moves for partial summary judgment that the valuations of the Stations are readily Offers consisted of the following properties and purchase prices clearly stated in each Third Party 5 2455 Lawrence Expressway $1,650,000; (4) 255 Saratoga/Los Gatos $1,400,000; (5) 20999 7

$1,750,000. DNOL Exs. 5-11. Although Plaintiffs argue that valuation of the individual properties 9 are not readily apparent because the offered price for each Station is inflated, the Third Party Offers 10 clearly state the valuation of each Station. See id. Plaintiffs have cited no authority to support their argument that clearly stated valuations for individual properties are not readily apparent if they are inflated. Thus, Plaintiffs have not shown there exists a genuine issue of fact regarding whether the 13 valuation of the individual properties are readily apparent. Equilon's motion for partial summary 14 judgment that the valuations of the Stations are readily apparent from the face of the offers 15 therefore is GRANTED. 16

Additionally, Equilon moves for partial summary judgment that there is no evidence that 18 the valuations of the Stations were manipulated to Plaintiffs' disadvantage. Plaintiffs argue that 19

Nakash manipulated its purchase price allocations for the individual assets to its advantage or to 20 the advantage of Equilon. Specifically, Plaintiffs argue that because Nakash purchased multiple 21 sites, as well as other rights, from Equilon in the same Asset Purchase and Sale Agreement 22

("PSA"), Nakash was able to manipulate the prices it offered for individual stations without 23 changing the overall cost of the PSA. In support of their ...

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