Opinion
16-P-1201
05-16-2017
PETROLEUM WHOLESALERS, INC. v. REGAN'S, INC., & others.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendants, Regan's, Inc., John P. Regan, and Stephen L. Regan (collectively, Regan's), appeal from the entry of summary judgment in favor of the plaintiff, Petroleum Wholesalers, Inc. (PWI), on PWI's claim for breach of contract. Because we conclude that material facts regarding a condition precedent to the enforceability of the contract are in dispute, we vacate the judgment.
Background. "We recite the material facts in the light most favorable to [Regan's], as the nonmoving party." Lyons v. Nutt, 436 Mass. 244, 245 (2002). Regan's owns and operates a gas station located at 2066 Commonwealth Avenue in Newton. PWI is a fuel distributor that, in 2003 or 2004, began distributing fuel to Regan's. Adjacent to Regan's station was another gas station owned and operated by Cumberland Farms, Inc. (Gulf property). Regan's was interested in purchasing the Gulf property for $550,000. In October, 2008, Regan's contacted PWI for assistance in making the purchase. PWI advised Regan's that its chances of purchasing the Gulf property might be better if the offer was accompanied by a promise to continue operating a Gulf gas station on the property.
On October 24, 2008, Regan's and PWI executed an agreement whereby Regan's promised to purchase from PWI 3 million gallons of fuel over a five-year period (Gulf agreement). The Gulf agreement commenced on March 1, 2009, and was set to expire on March 1, 2014. Delivery of the fuel was to be made in five equal installments of 600,000 gallons per year. The agreement provided for renewal, without penalty, beyond the five-year term. John Regan and Stephen Regan initialed every page of the Gulf agreement and several attached schedules. They also personally guaranteed Regan's obligations under the Gulf agreement.
The Gulf agreement set the minimum number of gallons to be purchased (3 million) and the price per gallon. It further provided that "[t]here have been no promises, claims, or representations made by [PWI] or its representatives to [Regan's] that are not contained in this Agreement," and that Regan's had sufficient opportunity to consult with legal counsel and to examine and understand the agreement. The Gulf agreement also contained a binding arbitration clause for "[a]ll claims, disputes, and other matters in question arising out of or pertaining to this Agreement or any breach thereof."
Shortly thereafter, Regan's offered to purchase the Gulf property for $550,000. The offer included a letter informing Gulf's regional sales director of the Gulf agreement, but Cumberland Farms rejected the offer. On September 29, 2009, following a second unsuccessful offer to purchase, Regan's entered into a purchase and sale agreement to purchase the Gulf property for $700,000. PWI was not involved in the transaction. Soon after purchasing the Gulf property, Regan's removed the gas pumps, service islands, and underground storage tanks located thereon. Regan's never purchased any fuel in accordance with the Gulf agreement. Instead, the property was used as a used car lot and repair shop.
On October 20, 2014, PWI commenced this action (1) against Regan's, for breach of the Gulf agreement, and (2) against John Regan and Stephen Regan, for breach of the guarantee. PWI's motion for summary judgment was allowed by a judge of the Superior Court. PWI was awarded damages, attorney's fees and costs, and prejudgment interest from the date of the breach. Regan's moved for relief from the judgment, on the basis that the date of breach was not established. The judge denied the motion, and Regan's appeals from the judgment and from the order denying the motion for relief from the judgment.
The judge identified this date as December 21, 2010.
Discussion. Summary judgment is appropriate where "all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002). We review de novo the grant of summary judgment, viewing the evidence in the light most favorable to Regan's and drawing all reasonable inferences in Regan's favor. Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 680 (2016).
There is no dispute that the Gulf agreement is a valid, binding contract. However, Regan's contends that its acquisition of the Gulf property for $550,000 with PWI's assistance was a condition precedent to its obligations under the contract. Because Regan's acquired the property for $700,000 without PWI's assistance, Regan's argues that the condition precedent was not met. PWI agrees that there was a condition precedent to the contract, but argues that it was satisfied when Regan's acquired the property.
The parties' disagreement about the terms of the condition precedent preclude summary judgment. "A condition precedent defines an event which must occur before a contract becomes effective or before an obligation to perform arises under the contract." Massachusetts Mun. Wholesale Elec. Co. v. Danvers, 411 Mass. 39, 45 (1991). In this case, the terms of the condition precedent are material to PWI's breach of contract claims. More fundamentally, the evidence, viewed in the light most favorable to Regan's, is sufficient to show that the condition precedent (as defined by Regan's) was not met because the Gulf property was not purchased for $550,000 with PWI's assistance. As a result, summary judgment should not have been granted. ,
Given our conclusion, it is not necessary to reach the defendants' additional arguments. We note, however, that the defendants expressly withdrew their claim that the court lacked jurisdiction because of the arbitration clause contained in the contract. See note 2, supra.
PWI's request for attorney's fees is denied.
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Order denying motion for relief from judgment reversed.
Judgment dated April 21, 2016, vacated.