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Pipkin v. Sun State Oil, Inc.

Supreme Court of Alabama

September 21, 2018

Brian Pipkin
v.
Sun State Oil, Inc., et al.

          Appeal from Mobile Circuit Court (CV-14-902643)

          MENDHEIM, JUSTICE.

         Brian Pipkin appeals from the Mobile Circuit Court's summary judgment in favor of Sun State Oil, Inc. ("Sun State"), on Pipkin's claims of conversion, negligence, and/or wantonness, and trespass with regard to Sun State's removal of gasoline pumps from Pipkin's property. We reverse and remand.

         I. Facts

         On January 21, 2011, IMAS Partnership, LLC ("IMAS"), purchased from William Rivers and Sybil Rivers a parcel of real property located at 15065 Highway 43 North, Bucks, Alabama ("the property"), on which was situated a convenience store and gasoline station. IMAS intended to operate the business as "Bucks Country Store."

         On September 13, 2010, in anticipation of its acquisition of the property, IMAS entered into a "Petroleum Supply Agreement" with Sun State to procure a supply of gasoline to sell to customers of the store ("the PSA"). The PSA provided that Sun State would lease two gasoline pumps to IMAS for 10 years in exchange for IMAS purchasing a minimum of 6 million gallons of petroleum from Sun State over the 10-year term. Specifically, the PSA provided, in part:

         "1.

         "TERM AND PREMISES

"The Agreement shall be effective for a term of Ten (10) years from and after the date of execution by [IMAS]. During the term hereof, [Sun State] shall supply and [IMAS] will purchase all of the supplies which [IMAS] needs to serve [IMAS's] customer[s] at the Business Premises. [IMAS] shall be responsible to furnish the Business Premises with all buildings and equipment necessary for the operation of a service station, with the exception of the equipment to be furnished by [Sun State] as set forth herein. ...

         "2.

         "PRODUCTS AND QUALITY

         "Commodity Schedule

"Total gallons to be purchased during term --6, 000, 000, and all requirements of Supplies to be sold from the Business Premises.
"(a) [Sun State] agrees to sell to [IMAS] and [IMAS] agrees to purchase from [Sun State] the product(s) covered by this Contract in the quantities shown on the Commodity Schedule indicated above. ...
"....
"3.
"LOANED EQUIPMENT AND BRANDING
"(a) [Sun State] agrees to furnish and lend to [IMAS] and [IMAS] agrees to lease from [Sun State] the following items of equipment and branding, delivered and installed at [IMAS's] location. Pending the receipt of the following new equipment by [Sun State] for installation on the Business Premises, [Sun State] shall be permitted to install used or reconditioned equipment:
"Quantity Description
"....
"2 New Gasoline MPDs with card readers
"....
"(b) [IMAS] agrees to use the said equipment only for the purpose of advertising, handling, storing, or otherwise facilitating the marketing at the stated delivery address of petroleum or other products purchased from [Sun State] and in compliance with all laws and requirements of all authorities having jurisdiction thereof.
"(c) The value of the equipment as determined by [Sun State] shall be amortized over a Ten (10) year period with interest rate of 10% per annum. So long as [IMAS] is not in default of this Agreement, the Total Agreed Value shall be amortized and reduced pro-rata over the term of this Agreement based upon the percentage of the minimum gallons purchased by [IMAS] as of the date of expiration or termination of this Agreement. In the event of a breach of this Agreement, or the failure of [IMAS] to satisfy its minimum gallons, the balance due shall be immediately due and payable from [IMAS] to [Sun State], and shall bear interest at the rate of 18% per annum thereafter, both prejudgment and postjudgment. ...
"(d) The equipment, which term includes any replacements and additions, shall remain the personal property of [Sun State], and shall have displayed thereon such markings, colors and/or trademarks as [Sun State] designates. [IMAS] shall execute a UCC-1 Financing Statement governing the loaned equipment for filing with the Florida Secretary of State.[1] Upon breach or termination of this Agreement, [IMAS] agrees to redeliver said equipment detached from the Business Premises in the same condition as when received, reasonable wear and tear excepted, to [Sun State] at [Sun State's] address or any address designated hereafter by [Sun State]. A failure to do so shall authorize [Sun State] to enter [IMAS's] Business Premises and, without liability for damages or trespass, use all reasonable means to remove said equipment. [IMAS] shall then pay [Sun State] any cost incurred in detaching the equipment and the cost of transporting such equipment to [Sun State's] designated address. Upon the successful completion of the requirements of this Agreement, [Sun State] shall transfer title to the loaned equipment to [IMAS] by Bill of Sale.
"....
"11.
"TERMINATION
"(a) This Contract shall terminate upon expiration of the term stated in Paragraph one (1) above.
"(b) This Contract may be terminated by [Sun State]:
"....
"(ii) If [IMAS] fails to pay in a timely manner any sums when due hereunder;
"(iii) If [IMAS] defaults in any of its obligations under this Contract;
"....
"(v) If [IMAS] fails to purchase the minimum gallonage requirements outlined in paragraph 2, the Commodity Schedule, [IMAS] shall be permitted to apportion and allocate the minimum gallonage requirements over a quarterly basis to determine if [IMAS] is meeting its minimum requirement (i.e., 150, 000 gallons per quarter). In the event of termination by [Sun State] pursuant to this provision, [IMAS] shall make payment in full of any amounts due from [IMAS] to [Sun State] pursuant to the equipment loan as described herein; shall make repayment in full of the rebates received by [IMAS] according to the following table, any damages or charges incurred by [IMAS] from Citgo or such other supplier as directed by [Sun State], and payment in full by [IMAS] of the lost profits of [Sun State] for the remaining and unused full term of this Agreement as calculated by [Sun State] based upon the average sales of [IMAS] to the date of termination all of which amounts shall be then accelerated and immediately due and payable.
"....
"(c) This Contract may not be terminated by [IMAS], nor may it be assigned, without the express written consent of [Sun State]. In the event of such consent by [Sun State], such termination shall only be effective upon payment in full by [IMAS] of any amounts due from [IMAS] to [Sun State] pursuant to the equipment loan and/or promissory note as described herein, the payment in full by [IMAS] of any rebates received by [IMAS], and payment in full by [IMAS] of the lost profits of [Sun State] for the remaining and unused full term of this Agreement as calculated by [Sun State] based upon the average sales of [IMAS] to the date of termination, or the minimum gallonage requirements, whichever is greater.
"....
"(e) Termination of this Contract for any reason shall not relieve the parties of any obligation there[to]fore accrued under this Contract. In the event of the termination of this Agreement for any reason, [IMAS] shall additionally make payment in full of any amounts due from [IMAS] to [Sun State] pursuant to this Agreement, the equipment loan as described herein, the lost profits of [Sun State] as set forth herein, any unamortized equipment loan or lease payments, any damages or charges incurred by [IMAS] from Citgo or such other supplier as directed by [Sun State], and repayment in full of the rebates received by [IMAS], all of which amounts shall be then accelerated and immediately due and payable. Such payments shall be due immediately upon termination of this Agreement. However, should [Sun State] cancel this Agreement due to [Sun State's] inability to supply petroleum products to [IMAS] ... due to [Sun State's] inability to procure such products from Citgo or such other supplier as determined by [Sun State] on terms agreeable to [Sun State], then [IMAS] may make repayment of equipment loan on a monthly basis.
"...."

(Emphasis added.)

         In January and February 2011, Sun State installed two new gasoline pumps on the property. At some point in 2012, Sun State stopped doing business with IMAS because, according to Sun State representative Richard E. Blow II, "[w]hat I was told by one of the members of IMAS was that they were not making money at the store and they were going to have to give the keys back to the Riverses."

         On July 20, 2012, IMAS executed a warranty deed in lieu of foreclosure conveying the property back to the Riverses. That deed contained no specific reference to the gasoline pumps. According to Blow, the reason Sun State did not reclaim the gasoline pumps at that time was "[p]rimarily because we had talked with the Riverses about leaving the pumps at the facility for a period of time to let them get a tenant in there .... So we were trying to maintain the store as a customer."

         On December 13, 2013, the Riverses executed a vendor's lien deed conveying the property to Pipkin for a purchase price of $75, 000. Pipkin testified by deposition that William Rivers made it absolutely clear when they negotiated the sale of the property that the gasoline pumps were included in the purchase price.

         Shortly after Pipkin purchased the property, he received a telephone call from Blow in which Blow told Pipkin that Sun State owned the gasoline pumps and that he wanted to know what Pipkin intended to do with the property. According to Pipkin, he told Blow that he had purchased the gasoline pumps along with the rest of the property. A few weeks later, in January 2014, Pipkin and Blow met in person to discuss the possibility of Sun State supplying gasoline to Pipkin, but Pipkin stated that he did not yet know what he wanted to do with the property.

         According to Blow, near the summer of 2014, he telephoned Pipkin and told him that he had seen some "shady characters" loitering around the property and that Sun State was concerned about the gasoline pumps. In June 2014, Sun State hired a company to come onto Pipkin's property and remove the gasoline pumps. Blow testified that he told Pipkin that the reason the gasoline pumps were being removed was that Sun State was "concerned about vandalism [or] theft" but that the gasoline pumps could be reinstalled once Pipkin "had a tenant ready, willing, and able, or if he was going to operate the store." Blow testified that the gasoline pumps were moved to a warehouse in Pensacola, Florida.

         In a letter dated June 20, 2014, addressed to Blow in his capacity as a representative of Sun State, counsel for Pipkin demanded that Sun State return the gasoline pumps to the property because, he said, counsel had "searched the UCC records of the Alabama Secretary of State and [did] not see where a UCC financing statement was filed regarding the pumps." Sun State declined to return the gasoline pumps.

         On September 12, 2014, Pipkin sued Sun State and the Riverses in the Mobile Circuit Court. Against Sun State, Pipkin asserted claims of conversion, negligence, and/or wantonness for removing the gasoline pumps from the property. Pipkin asserted claims of breach of warranty and misrepresentation ...


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