Bridge St. Auto., Inc. v. Green Valley Oil, LLC

985 F.Supp.2d 96

BRIDGE STREET AUTOMOTIVE, INC., et al., Plaintiffs,

v.GREEN VALLEY OIL, LLC and ARFA Enterprises, Inc.

Civil Action No. 12–10750–PBS.

United States District Court, D. Massachusetts.

Nov. 6, 2013.

Caby Elnakhle, Oughton, MA, pro se.

Matthew Mackay O'Leary, LeClair Ryan, P.C., Boston, MA, for Plaintiffs.

Thomas O. Bean, Kathleen O'Donnell Wyatt, Sara E. Hirshon, Verrill Dana LLP, Boston, MA, for Green Valley Oil, LLC.

PATTI B. SARIS, Chief Judge.

I ADOPT the report and recommendation without opposition and DISMISS ARFA for lack of personal jurisdiction.

REPORT AND RECOMMENDATION ON ARFA'S MOTION FOR SUMMARY JUDGMENT

October 17, 2013.

DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action was brought by a group of seventy-four gasoline station owners against defendants, Green Valley Oil, LLC (“Green Valley”) and ARFA Enterprises, Inc. (“ARFA”), to recover, among other things, security deposits that were held by Green Valley in its capacity as the plaintiffs' landlord and gasoline supplier. Green Valley does not dispute that it owes the plaintiffs over $1.6 million in security deposits, but it contends that it is out of business and has no assets. Accordingly, the plaintiffs have sought to recover the amounts due to them from ARFA, based on allegations that ARFA was Green Valley's alter ego, and that it unlawfully obtained funds, including rent and security deposits, that the plaintiffs had paid to Green Valley.

Since the inception of the litigation, seventy-three of the plaintiffs have been dismissed from the action due to lack of prosecution ¹ or as the result of a settlement, and a number of the plaintiffs' original claims against ARFA have been withdrawn or dismissed by the court. Consequently, only one plaintiff, Gaby Elnakhle, d/b/a G & E Getty (“Elnakhle”), remains in the case, and the claims remaining against ARFA consist of claims for unjust enrichment (Count VI), conversion (Count VII), fraudulent transfer (Count VIII), and alter ego liability (Count X).

The matter is presently before the court on the “Motion of ARFA Enterprises, Inc. for Summary Judgment.” (Docket No. 148). By its motion, ARFA is seeking summary judgment, pursuant to Fed.R.Civ.P. 56, on the merits of each of Elnakhle's remaining claims against it. In addition, ARFA contends that it has no contacts with Massachusetts, either generally or with respect to the particular claims at issue, and that therefore, it is entitled to summary judgment based on a lack of personal jurisdiction. As described below, this court finds that ARFA lacks sufficient contacts with Massachusetts to support this court's assertion of personal jurisdiction over it. Moreover, to the extent Elnakhle is relying on an alter ego theory to establish that Green Valley's contacts with Massachusetts should be imputed to ARFA for purposes of personal jurisdiction, this court finds that the undisputed facts are inadequate to show that ARFA is an alter ego of Green Valley. Therefore, while it is very unfortunate that Elnakhle has suffered financial loss through no fault of his own, and may have no ability to recover any portion of his security deposit despite Green Valley's admission of liability, this court recommends to the District Judge to whom this case is assigned that ARFA's motion for summary judgment be ALLOWED, and that this case be dismissed for lack of personal jurisdiction. In light of this recommendation, this court does not reach the merits of the claims brought against ARFA.

II. STATEMENT OF FACTS

Scope of the Record

During oral argument on the defendant's motion for summary judgment, ARFA noted that Elnakhle had failed to file a statement of facts pursuant to Local Rule 56.1, or to submit any affidavits or other evidence in support of his opposition to the motion. Accordingly, ARFA argued that the facts set forth in its statement of material facts should be accepted as true for purposes of summary judgment. Although the plaintiff did not dispute that he had failed to submit evidence at the summary judgment stage, he urged this court to consider the Affidavit of George Jriej (“Jriej”), which had previously been filed by the plaintiffs in connection with their opposition to ARFA's motion to dismiss. This court finds that it is appropriate to consider Jriej's testimony under the circumstances presented here.

Ordinarily, under Local Rule 56.1, “[m]aterial facts of record set forth in the statement required to be served by the moving party will be deemed for purposes of the motion to be admitted by opposing parties unless controverted by the statement required to be served by opposing parties.” However, this court finds that an exception should be made in this case. At the time Elnakhle filed his opposition to the motion for summary judgment, the plaintiffs' prior counsel had withdrawn from the case and Elnakhle was proceeding pro se. Moreover, although Elnakhle's present counsel filed an appearance before this court heard oral argument on the motion, he had limited time to review the docket, which is substantial, and prepare to defend against summary judgment at the hearing. Under these circumstances, it was not unreasonable for Elnakhle's new counsel to ask the court to consider the Jriej Affidavit, which has been on the court's docket, and has been part of the record in this case, since June 7, 2012. ( See Docket No. 66). Therefore, this court concludes that the Affidavit should be deemed part of the record for purposes of summary judgment.² Nevertheless, as detailed below, the Affidavit is insufficient to establish the existence of disputed facts.

The Parties

At all times relevant to this action, defendant Green Valley was a Pennsylvania limited liability company with a principal place of business in East Providence, Rhode Island. (DF ¶ 5). Between 2009 and 2012, Green Valley leased gasoline stations and sold gasoline to station owners, or “dealers,” in Maine, New Hampshire, Connecticut, Massachusetts, and Rhode Island. ( Id. ¶¶ 2, 11). The plaintiff, Elnakhle, was one of the dealers who obtained gasoline and leased property from Green Valley in order to operate a gasoline station in Massachusetts. ( See Am. Compl. (Docket No. 55) ¶¶ 21, 78–81). However, in 2012, Green Valley ceased its operations. (DF ¶ 5). Elnakhle claims that Green Valley has failed to return his security deposit and caused him to incur additional damages as well. ( See Am. Compl. ¶¶ 103, 107).

Defendant ARFA is a New Jersey corporation, which was formed in 1985 and has a principal place of business in Pennsauken, New Jersey. (DF ¶¶ 1, 4). ARFA's business consists of selling and distributing gasoline and diesel fuel on a wholesale basis to customers located in southern and central New Jersey and in the Philadelphia area of Pennsylvania. ( Id. ¶ 2). It also owns and leases gasoline stations that are located in New Jersey and Pennsylvania. ( Id. ¶ 3). However, ARFA does not conduct business, and is not registered to do business, in Massachusetts. ( Id. ¶¶ 1, 26). Nor does it maintain any employees, offices, customers, telephones, or bank accounts in the Commonwealth. ( Id. ¶ 26). Moreover, it is undisputed that ARFA does not purchase or sell any product in Massachusetts, does not advertise or solicit business here, and does not derive any of its revenue from sources located in this forum. ( Id.).

As detailed below, while ARFA and Green Valley operated in the same industry, and shared some employees, they maintained their status as separate entities. Elnakhle has failed to establish that ARFA is the alter ego of Green Valley.

The Formation of Green Valley

Green Valley was formed by Oleg Aliferov (“Aliferov”). (Aliferov Aff. ¶ 1). During the time period from 1995 to 2009, Aliferov was employed by ARFA, where he was responsible for managing gasoline stations located in New Jersey and Pennsylvania, and for overseeing ARFA's environmental compliance, as well as its construction, repair and maintenance operations. (DF ¶¶ 8–9). In early 2009, Aliferov was offered an opportunity to lease gasoline stations that were located in New England from Getty Petroleum Marketing, Inc. (“GPMI”), and to sell gasoline through those stations. ( Id. ¶ 10). Aliferov formed Green Valley in February 2009 in order to pursue this opportunity. ( Id.). He has remained the sole member, manager and owner of Green Valley since that time. (Aliferov Aff. ¶ 1).

After forming Green Valley, Aliferov continued to perform work for ARFA. ( See DF ¶ 10). However, beginning in June 2009, he proceeded to wind down his responsibilities at ARFA and to transition his work to Green Valley. ( Id.). Aliferov ultimately ceased working for ARFA on December 13, 2009. ( Id.).

During the period of its operations, Green Valley distributed and sold gasoline to dealers in New England. ( Id. ¶ 11). It also leased a number of gasoline stations from GPMI, which it then subleased to third-party station operators, including Elnakhle. ( Id.). Some of the security deposits that Green Valley obtained from the dealers were transferred to Green Valley from GPMI at the time Green Valley took over GPMI's leases. ( Id. ¶ 18). Others were paid directly to Green Valley from the dealers at the time they began subleasing a gasoline station. ( Id.).

In order to carry out its leasing and gasoline distribution business, Green Valley took over GPMI's office space in Rhode Island. ( Id. ¶ 13). It also hired 25 full time and 4 part-time employees who had been working for GPMI at that location. ( Id.). Those employees, who remained at Green Valley's offices in Rhode Island, performed what is known in the gasoline distribution industry as “front of the house” operations. ( Id.). Thus, Green Valley's Rhode Island employees were responsible for purchasing gasoline from suppliers, arranging for deliveries of gasoline to stations, maintaining relations with dealers, and handling such matters as advertising and human resources. ( Id.).

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