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Inc. v. Colbea Enterprises, LLC

United States District Court, D. Rhode Island

April 21, 2016



WILLIAM E. SMITH, Chief Judge.

This dispute involves the leasing, operation and servicing of gas stations in Massachusetts and Rhode Island. Saab 1 Enterprises, Inc. (“SAAB”) has brought claims against Colbea Enterprises, LLC (“Colbea”), Motiva Enterprises, LLC (“Motiva”) and Eastside Enterprises, LLC (“Eastside”) (collectively, “Defendants”) for breach of contract, breach of the covenant of good faith and fair dealing, conversion, and violation of Massachusetts and Rhode Island consumer protection laws. On April 6, 2015, the Court stayed discovery as to the merits of SAAB’s underlying claims pending resolution of Colbea’s threshold argument that they are barred by a settlement agreement (“Settlement Agreement” or “Agreement”). (See Text Order, April 6, 2015.) Now before the Court is Defendants’ Motion for Summary Judgment (“Motion”) pertaining to the Settlement Agreement. (ECF No. 51.) Colbea also seeks summary judgment on SAAB’s conversion claim and on all claims relating to Defendants Motiva and Eastside. For the reasons that follow, the Motion is GRANTED IN PART and DENIED IN PART.

I. Background

Colbea, a limited liability company whose members include Motiva and Eastside, leases gasoline stations in and around Massachusetts to third-parties. (Pl.’s Statement of Undisputed Facts (“SUF”) ¶¶ 1-2, ECF No. 58.) SAAB was one of Colbea’s tenants, leasing and operating a number of stations in Massachusetts and Rhode Island from Colbea. (See id. at ¶ 5.)

Sometime prior to November 2012, a dispute broke out between Colbea and SAAB surrounding seven of the gas stations SAAB operated. The only details of the dispute material to the present Motion are the terms of the November 30, 2012 Settlement Agreement, which was supposed to resolve the dispute. (See Ex. A1 to Defs.’ Mot. [Settlement Agreement] ¶ 16, ECF No. 51-1.) The Agreement placed a number of obligations on both parties. First, it provided that the parties would terminate the contracts for the seven stations at issue in the dispute and that Colbea would discharge any debts or obligations SAAB owed to Colbea on the properties. (Id. at ¶ 1.)

Next, the Agreement provided that SAAB would surrender four of the seven stations to Colbea (the “Relinquished Stations”) and convey title to Colbea for the equipment located in the stations. (Id. at ¶ 2.) As part of the Agreement’s conveyance provision, SAAB warranted that it had marketable title for the equipment and that the equipment was free of any claims, liens, and security interests. (Id. at ¶ 4(iii).) Further, by the effective date of the Agreement, SAAB agreed to give Colbea a signed UCC termination statement and release indicating that a lien held by Rockland Trust was discharged as to the equipment in the Relinquished Stations. (Id. at ¶ 8.) In exchange for the equipment and SAAB’s warranties, Colbea agreed to pay SAAB $200, 000 in the form of fuel credits. (Id. at ¶ 7.) Per the Agreement, Colbea would pay SAAB $100, 000 on the Agreement’s effective date and remit the remaining $100, 000 in credits sixty days after the effective date. (Id.) Colbea could offset the second $100, 000 payment to compensate it for any breaches of the Agreement committed by SAAB during the sixty-day window. (Id.)

The Agreement also provided SAAB with a six month probationary lease for three of the stations at issue in the dispute (the “Retained Stations”). Starting on December 1, 2012, SAAB would lease the stations pursuant to a six-month bridge lease attached to the Agreement. (Id. at ¶ 9.) SAAB’s first rental payment under the new lease was due on December 1, 2012. (Id.) Colbea would extend the lease for another six months if SAAB did not breach the bridge lease or Settlement Agreement during the first six-month period. (Id.) And if SAAB successfully completed the second six-month term, the parties would enter into a formal Retail Facility Lease in December 2013. (Id. at ¶ 11.) Any default or breach on SAAB’s part during the twelve-month probationary period, however, would give Colbea an automatic right to terminate the leases and regain possession of the Retained Stations. (Id. at ¶ 9.) Finally, both parties mutually agreed to release all claims they had against each other as of November 30, 2012. (Id. at ¶¶ 12, 13.)

According to Colbea, SAAB quickly failed to meet its obligations under the Agreement. First, SAAB did not provide Colbea with a release relating to the Rockland Trust lien by the Agreement’s effective date. (Pl.’s SUF ¶¶ 14-15, ECF No. 58.) Second, and more significantly, SAAB failed to make its first set of rental payments on December 1, 2012. (Id. at ¶ 19.) As a result, Colbea notified SAAB on December 19, 2012 that it was terminating SAAB’s leases for the Retained Stations. (Id. at ¶¶ 20-21.)

SAAB, for its part, claims that Colbea also failed to meet its obligations under the Settlement Agreement. SAAB’s principal claim is that it never received any of the $200, 000 fuel credit Colbea agreed to provide. (Ex. A to Pl.’s Opp’n [Saad Aff.] at ¶ 26, ECF No. 57-2.) And SAAB asserts that Colbea breached the Agreement by refusing to accept its rental payments. (Id. at ¶¶ 32-34; see also Pl.’s Opp’n 14, 18, ECF No. 57-1.)[1]

After SAAB failed to pay rent for the stations, Colbea commenced eviction proceedings in Massachusetts state court. (Pl.’s SUF ¶ 22, ECF No. 58.) In a ruling issued on December 12, 2013, Judge Flynn of the Massachusetts District Court found that SAAB had breached the lease agreements and that Colbea was entitled to possession of the Retained Stations. (Ex. M to Defs.’ Mem. [State Court Opinion] ¶ 34, ECF No. 51-15.) Judge Flynn also found that SAAB had not demonstrated any material breach of the lease agreements by Colbea. (Id. at ¶ 39.) Thereafter, judgment entered against SAAB on January 29, 2014, evicting it from the Retained Stations, and ordering it to pay Colbea $510, 603.07. (Pl.’s SUF ¶ 24, ECF No. 58.)

While the eviction actions were pending, SAAB filed the present case. After a tortured early history, the Court granted in part and denied in part Colbea’s motion to dismiss. (See Opinion and Order, Feb. 28, 2014, ECF No. 31.)[2] The Court dismissed Count I, in which SAAB sought a declaratory judgment rescinding the Settlement Agreement. (Id. at 7.) The Court, however, declined to dismiss Counts II (Breach of Contract/Violation of R.I. Gen. Laws § 6a-2-305 & M.G.L. c. 106 § 2-305), Count III (Breach of Good Faith and Fair Dealing), Count IV (Violation of M.G.L. c. 93A), and Count VI (Conversion). (Id. at 10-11.)[3] It also denied Colbea’s motion to dismiss the other named defendants, Motiva and Eastside. (Id. at 11.)

II. Standard of Review

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). An issue of fact is only considered “‘genuine’ if it ‘may reasonably be resolved in favor of either party.’” Cadle Co. v. Hayes, 116 F.3d 957, 960 (1st Cir. 1997) (quoting Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)). When deciding a motion for summary judgment, the court must “examine[] the entire record ‘in the light most ...

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