Premier Petroleum, Inc. v. HEER, Inc.

899 S.E.2d 785

PREMIER PETROLEUM, INC.

v.HEER, INC. et al.

A23A1432

Court of Appeals of Georgia.

March 15, 2024

Justyn Dylan Alioto, Atlanta, John T. McGoldrick Jr., Macon, Timothy S. Walls, Lawrenceville, for Appellant.

Kenneth E. Barton III, Macon, Michael Devlin Cooper, Kareem Asem Kashlan, for Appellee.

Doyle, Presiding Judge.

In this breach of contract action, Premier Petroleum, Inc. ("Premier"), appeals from the trial court’s refusal to enforce a contract between it and HEER, Inc., and Ajay Patel (collectively "the defendants") after the court determined that the contract was unconscionable. Premier argues that the trial court erred by (1) finding that the contract was unconscionable, and (2) alternatively, for refusing to enforce the contract as a whole after so finding, rather than striking only specific unconscionable provisions. For the reasons that follow, we affirm.

The record shows that Ajay, who was born in 1958, and his wife, Uma, who was born in 1967, moved to the United States around 1985, first living in New Jersey and later moving to Douglas, Georgia, in 2000. Ajay had an eleventh grade education, and he did not take any English language courses or obtain formal education after moving to the United States, could not read English, and he only spoke minimal "practical" English. Uma had a sociology degree from India, but she could not read written English. The Patels spoke Gujarati, which is not widely spoken in the United States, but they also understood Hindi, in which many government documents are made available. Additionally, the couple had three daughters, born between 1994 and 1999, whom they occasionally consulted to translate on their behalf. The couple would bring their sister to their attorney’s office to help translate for them in the instant litigation.

When the couple moved to Georgia, they leased and operated a convenience store that did not sell gasoline; the couple from whom they leased the company also spoke Gujarati. Around 2004 to 2006, the couples formed HEER, Inc., and they purchased a gas station and convenience store located in Cochran, Georgia. This station was supplied with gasoline by a related company that sold them the station; thereafter, the owner decided to exit the gasoline supply business in 2009, and consequently, the defendants needed to find a new supplier. While reading an Indian-American news publication, Ajay saw an advertisement for Action Fuels, a supplier located in Gwinnett County. Ajay traveled to Action Fuels’s office, but he had not set up a meeting prior to arrival and discovered that the office was closed. Premier’s office was located next door and was open, so Ajay visited that company, eventually speaking with Aziz Dhanani, the president of the company, who also spoke Gujarati.

According to Ajay, Dhanani visited his station in Cochran, and the parties negotiated a verbal supply contract in Gujarati between HEER and Premier for a ten-year term during which time the price of the gasoline would be $0.01 over rack price.¹ Ajay had requested a five-year term, but Dhanani refused. As customary when changing gasoline suppliers, Ajay requested that Premier refurbish the store to reflect the new brand (in this case, Chevron to Shell). And in order to account for the money in making these changes to the station, Premier would charge $0.02 over rack price for the first two years and $0.01 for the remainder of the ten-year term.

Ajay could not identify the written contract when it was presented to him during the court hearing, because he could not read English, and he stated that he signed because Dhanani explained that the written contract said what the two had negotiated verbally. Ajay testified that he was not given a physical copy of the contract before signing, although he was told it would be sent, he was not given a copy after he signed it, and he did not request time to review it before signing because he trusted Dhanani’s statements that the contract reflected their negotiated terms. Ajay testified that Dhanani knew he could not read English because they had a good relationship, and Dhanani never asked if he wanted the contract in Gujarati or English.

According to Ajay, the two did not negotiate or discuss a renewal clause for the contract. Nevertheless, the written contract reflected five, ten-year renewal periods, with the first renewal being automatic and the next four being at Premier’s discretion for a possible total contract length of sixty years; HEER was given no discretion or ability to end the renewals for any reason. The renewal provision was located on the ninth page of the contract among the general contract provisions, not the same provision as the initial ten-year term, which was on the first page of the contract.²

In 2014, the Patels needed a loan and were given $50,000 from Premier, and they signed a restrictive covenant at that time, which Ajay testified was the contract for the loan and a "formality." The restrictive covenant, which was also written in English, was not related to the loan, and it was instead related to the improvements made to the gas station in 2009; the covenant stated that "[t]he Agreements commence on the 23rd day of November, 2009, and expire on the 22nd day of November, 2019 plus renewals as described on page 9 Para: 26 of the contract supply agreement."

In 2019, Ajay testified that they did not receive any calls or inquires from Premier about a making a new contract or about renewal of the old contract, so they negotiated a new contract with D & D Energy Group ("D & D"). Uma testified that she contacted Dhanani about the end of the contract and was told it would be over in February 2020 because it actually ran ten years from the date of the first shipment of gasoline; he did not mention a renewal at that time. For this new contract with D & D, the defendants agreed to purchase a set number of gallons of gasoline over a ten-year time frame, and if they had not purchased that many gallons, the contract would continue until that required number of gallons was reached.

Ajay testified that they wanted to switch suppliers because Premier had been consistently late with deliveries starting about two or three years after signing the contract, had required them to pay for repairs that the defendants did not believe they should have been responsible for, and had overcharged the defendants on the contracted rate for the last eight years of the contract (Ajay believed they should be paying $0.01 over rack for the last eight years of the contract). When the defendants signed with D & D, they made sure to have an interpreter with them to read the contract, but Ajay also stated that the company explained the written contract to them.

Uma testified that the defendants would not have signed the Premier contract if they had known the renewal provision was added because they were not even sure they would live for 60 years from 2009. She also explained that while she had brought friends or family members to assist with signing other contracts over the years, the Patels did not bring anyone to Premier because Dhanani also spoke Gujarati, so they trusted him.

With regard to the 2014 restrictive covenant, Uma testified that her mother-in-law was seriously ill at the time, and the family needed money quickly, so they went to Dhanani because he had loaned money to her inlaws and to avoid a lengthy process with the bank. Dhanani told the couple to come to his office with five checks, and he would give them a loan. When they arrived he presented them with documents purported to be for the loan, but later were revealed to include a restrictive covenant related to the 2009 supply agreement, which included a clause that prohibited the sale of gasoline supplied by other companies. Uma testified that Dhanani did not discuss this with them at that time.

Dhanani, the CEO of Premier, had been in the gasoline supplier business for about 22 years at the time of the hearing, spoke Gujarati and English, was aware that the Patels primarily spoke Gujarati, but he provided the written contract only in English. Dhanani testified that the Patels approached him about supplying their station, and on one occasion, he met Ajay’s mother, who implored him to "consider him as your Hindu brother and take care of him." Dhanani also testified that he initially proposed $160,000 for refurbishing the canopy and gas pumps at the station because the station’s maximum capacity of 35,000 gallons was too small for an adequate return, but he ended up agreeing to increase the amount to $200,000 in exchange for the $0.02 above rack rate rather than $0.01.³ He also testified that he would need "four renewals" to get the money back, and he disputed the testimony by the Patels, instead detailing the discussions of the terms of the contract, the changes to the prices, and the reasons for the renewals.

Dhanani stated that Premier had over 200 contracts at the time of the hearing, with terms as short as 10 years with certain gallon requirements up to 75 years with renewals, and each contract was based on different negotiations and needs of the locations. He did not dispute that the contract was in English, but he stated that the Patels were given multiple copies of the contract prior to signing it. When asked about a provision of the contract related to the supplier markup, Dhanani admitted that Premier had the option to change their markup on the delivered gasoline at any time without any upper limit, but he denied that he ever increased the markup from $0.02 over rack. Dhanani also testified that the renewal provision allowed him discretion to renew each ten-year period because with the rise of electric vehicles, he may not want to be in business beyond a certain point in time.

On February 14, 2020, after the defendants signed the contract with D & D, Premier sent a cease and desist letter to the defendants, explaining that they were in default of the current term of the...