Tesoro Ref. & Mktg. Co. v. Alanddon LLC

TESORO REFINING & MARKETING CO., LLC, Plaintiff, v. ALANDDON LLC, DONALD A. LEHR,VALARIE M. LEHR, KIM FIEGEHEN,as Guardian ad litem for ALLAN G. FIEGEHEN, Defendants.

Case No. 3:19-cv-00449-LRH-WGC

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

March 31, 2020

ORDER

Defendants Donald A. Lehr, Valarie M. Lehr, and Kim Fiegehen, as Guardian ad litem for Allan G. Fiegehen, have filed a motion to dismiss the second, third, and fourth causes of action within the amended complaint of plaintiff Tesoro Refining and Marketing Company, LLC ("Tesoro"). (ECF No. 19). The other defendant, Alanddon LLC ("Alanddon"), is not party to defendants' motion to dismiss. Tesoro filed a response (ECF No. 23), and defendants timely replied (ECF No. 24). For the reasons stated below, the Court denies defendants' motion in part and grants it in part.

I. Factual Background and Procedural History

For the purposes of defendants' motion to dismiss, the factual allegations in Tesoro's first amended complaint are presumed to be true. This case concerns an agreement between defendants and Tesoro for defendants to operate a gas station and associated convenience store. In June 2003, BP West Coast Products LLC ("BPWCP") entered into two separate contracts with Jess Pietrzak for the latter to open an "am/pm" branded minimart and gas station in Carson City, Nevada. (ECF No. 17 at 2; ECF Nos. 19-1, 19-2 at 2).¹ In February 2006, Pietrzak executed a release in favor of BPWCP in connection with his assignment of the June 2003 contracts. (ECF No. 19-2 at 2). Then, in May 2006, BPWCP entered into a contract with Alanddon, Allan Fiegehen, and Donald Lehr for the operation of an "am/pm" branded minimart and gas station at the same Carson City location as Pietrzak's establishment. (ECF No. 19-3 at 2). As part of this contract, BPWCP required the members of Alanddon (Allan Fiegehen and Donald Lehr) and their spouses (Valarie Lehr and Kristine Fiegehen)² to enter into guarantee agreements, which were incorporated by reference into the contract. (Id.) Under the guarantee agreements, the guarantors (the defendants who filed this motion to dismiss) agreed to be personally liable to BPWCP for any debts or obligations Alanddon might incur in the course of its business relationship with BPWCP. (ECF No. 19-4 at 2-3). They also agreed to pay BPWCP "any and all expenses" incurred by BPWCP in the event it collected a debt owed to it by the guarantors, including attorneys' fees. (Id.) Neither guarantee agreement contained any temporal limitation or expiration date.

In September 2006, Pietrzak assigned his interests in the June 2003 agreements to Alanddon. (ECF No. 19-5 at 2). This assignment included a provision stating that the June 2003 agreements would not be "extended beyond the expiration date contained in said agreements," which, for the minimart agreement, was anticipated to be July 1, 2018. (Id.; ECF No. 19 at 3). In August 2012, Tesoro acquired certain assets of BPWCP, including the June 2003 agreements and the May 2006 guarantee agreements. (ECF No. 17 at 3). There was little relevant activity among the parties until August 15, 2018, when Donald Lehr emailed Tesoro³ to inform it that Alanddon wished to "debrand [sic] the ampm and keep the ARCO only" upon expiration of the Alanddon/Tesoro contract on August 31, 2018. (ECF No. 19-6 at 2). Accordingly, on that date, Tesoro and Alanddon entered into the "Arco Retail Sales Agreement," whereby Alanddon wouldoperate an Arco-branded minimart and gas station. (ECF No. 23-1). The August 2018 agreement included a provision that stated the agreement "is not to be reformed, altered, or modified in any way by any practice or course of dealing during or prior [to the agreement]. . .or by any representations, stipulations, warranties, agreement or understandings...except as fully and expressly set forth herein." (Id. at 28). A separate provision provided that the agreement "set[s] forth the entire agreement between the Parties and fully supersede[s] any and all prior agreements, representations, promises[,] or understandings between the Parties." (Id. at 29).

Tesoro alleges that on January 23, 2019, Alanddon stopped offering gasoline for sale to the public, and on the following day, closed its minimart and gas station. (ECF No. 17 at 3). In February 2019, Tesoro issued a notice of default and a formal notice that it was terminating the August 2018 agreement. (Id.) Tesoro subsequently filed its first complaint on August 2, 2019, alleging four causes of action: (1) breach of contract against Alanddon; (2) breach of contract against the guarantors; (3) tortious interference with contractual relations against the guarantors, and (4) a declaration that defendants violated the various agreements they signed with Tesoro. (ECF No. 1). Tesoro amended its complaint on November 15, 2019, which did not add any new causes of action but rather substituted defendants. (ECF No. 17). Now pending before the Court is the guarantor defendants' motion to dismiss Tesoro's second, third, and fourth causes of action against them.

II. Legal Standard

Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim, a complaint must satisfy Federal Rule of Civil Procedure 8(a)(2)'s notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9^th Cir. 2008). That is, 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)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; a pleading, however, that offers " 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action' " will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

Furthermore, Rule 8(a)(2) requires a complaint to "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Iqbal, 556 U.S. at 667 (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference, based on the court's judicial experience and common sense, that the defendant is liable for the misconduct alleged. Id. "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Id.

In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as true. Iqbal, 556 U.S. at 667. Even so, "bare assertions. . .amount[ing] to nothing more than a formulaic recitation of the elements of a. . .claim. . .are not entitled to an assumption of truth." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9^th Cir. 2009) (quoting Iqbal, 556 U.S. at 681) (brackets in original) (internal quotation marks omitted). The court discounts these allegations because "they do nothing more than state a legal conclusion—even if that conclusion is cast in the form of a factual allegation." Id. (citing Iqbal, 556 U.S. at 681.) "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Id.

III. Discussion

Defendants have requested the Court dismiss Tesoro's second, third, and fourth causes of action against them. The Court will examine each of defendants' arguments in turn.

A. Tesoro's Claim for Breach of Contract

Defendants argue that because they are not parties to the August 2018 agreement, they cannot possibly have breached it and thus cannot be liable for breach of contract. (ECF No. 19 at 6). They also assert that that because the August 2018 agreement makes "no mention of any prior agreement by the parties," the May 2006 guarantee agreements signed by the guarantor defendants do not apply to it. (Id.) There are four elements to a breach of contract claim: (1) formation of a valid contract; (2) performance or excuse of performance by plaintiff; (3) material breach by thedefendant, and (4) damages. Laguerre v. Nev. Sys. of Higher Educ., 837 F.Supp.2d 1176, 1180 (D. Nev. 2011). Defendants are attacking the first element, arguing that there is no valid contract between Tesoro and themselves. The starting point for the interpretation of any contract is with its plain language. McDaniel v. Sierra Health and Life Ins. Co., Inc., 53 P.3d 904, 906 (Nev. 2002). If the terms of the contract are plain and unambiguous, the words of the contract must be taken in their usual and ordinary significance. Dickenson v. Nevada, 877 P.2d 1059, 1061 (Nev. 1994). On the other hand, if the terms of a contract are ambiguous, the contract will be construed against the drafter. Williams v. Waldman, 836 P.2d 614, 619 (1992). The presumption is that the drafter of the contract will bear the consequences of any ambiguities. Id.

The flaw with defendants' argument is that Tesoro is not arguing that they breached the 2018 August agreement. As defendants recognize, a plain reading of the August 2018 contract shows that the only two parties to it are Tesoro and Alanddon. (ECF No. 23-1 at 2). Instead, Tesoro argues that defendants breached the May 2006 guarantee agreements, which obligated defendants to cover any debts Alanddon might incur in its business dealings with Tesoro's predecessor in interest. (ECF No. 23 at 5; ECF No. 17 at 5). Although defendants argue that May 2006 guarantee agreements were not explicitly renewed in the August 2018 contract, (ECF No. 19 at 6), a review of the May 2006 guarantee agreements reveals no language...