Total v. Efrain Claudio

Case 3:11-cv-01083-FAB Document 1 Filed 01/25/11 Page 1 of 32
IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO
TOTAL PETROLEUM PUERTO RICO CIVIL NO. 11-1083

CORPORATION
Plaintiff RE:
v. TRADEMARK INFRINGEMENT;
TRADEMARK DILUTION;
EFRAIN CLAUDIO CRUZ TERMINATION UNDER PETROLEUM
MARKETING PRACTICES ACT;
Defendant INJUNCTION; DECLARATORY
JUDGMENT; DISPOSSESSION;
COLLECTION OF MONEYS; AND
DAMAGES
VERIFIED COMPLAINT
TO THE HONORABLE COURT:
COMES NOW plaintiff, Total Petroleum Puerto Rico
Corporation (“TPPRC”), through the undersigned counsels, and
respectfully states, alleges and prays as follows:
I
JURISDICTION AND VENUE
1. This Honorable Court has original federal question
jurisdiction over the instant action pursuant to 28 U.S.C. §§
1331 and 1338(a) and (b), as this case involves substantial
claims arising under the Lanham Act, 15 U.S.C. § 1051, et seq.
It also has federal question jurisdiction over the claims
arising under the Petroleum Marketing Practices Act, 15 U.S.C.
1
§§ 2801, et seq., (“P.M.P.A.”) and supplemental jurisdiction
over the Puerto Rico law claims pursuant to 28 U.S.C. §1367(a).
2. Venue is proper in this Court pursuant to 28 U.S.C. §
1391 (b) and (c), given that Defendant Efrain Claudio Cruz,
(“Defendant and/or Claudio”) is a citizen and is doing business
in the Commonwealth of Puerto Rico and the claims alleged in
this Complaint arose in this district.
II
NATURE OF THE ACTION
3. This is a civil action for trademark infringement in
violation of Section 32(1) of the Lanham Act, 15 U.S.C. §
1114(1); for violation of Section 43(a) of the Lanham Act, 15
U.S.C. § 1125(a) and for trademark dilution in violation of
Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c).
4. TPPRC also seeks a preliminary injunction and a
permanent injunction to enjoin Defendant from continuing to
illegally exhibit the TOTAL MARKS at gasoline service station
number 115635 located at Montebrisas urbanization, Street E
intersection Street B, Fajardo, Puerto Rico, since Defendant’s
acts disparage, dilute or otherwise damage the value of the
TOTAL MARKS, because Defendant was terminated as a TPPRC dealer
2
pursuant to the P.M.P.A. and is no longer authorized to use such
marks nor operate the gasoline service station.
5. TPPRC seeks a preliminary injunction and a permanent
injunction, pursuant to Rule 65 of the Federal Rules of Civil
Procedure, instructing Defendant to immediately surrender the
leased premises since it was validly terminated as a TPPRC
dealer pursuant to the P.M.P.A., and thus have no right to
retain possession over the gasoline service station.
6. TPPRC also seeks declaratory relief which may be
granted under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-
2202, and Rule 57 of the Federal Rules of Civil Procedure.
7. TPPRC seeks to recover all amounts owed by Defendant
totaling $22,564.06, and damages for breach of contract in an
amount of no less than $672,000.00, plus interest.
8. TPPRC seeks to judicially dispossess Defendant of the
premises were the gasoline service station is located.
III
THE PARTIES
9. TPPRC is a corporation organized under the laws of the
Commonwealth of Puerto Rico, duly authorized to do, and in fact
doing business in Puerto Rico, with its principal place of
business located at Galeria San Patricio, Tabonuco B-5, Suite
3
202, Guaynabo, Puerto Rico and postal address PO Box 362916, San
Juan, Puerto Rico 00936-2916. TPPRC is a “franchisor” as the
term is defined by Article 101(3) of the P.M.P.A., 15 U.S.C. §
2801(3). TPPRC is the owner of the gasoline service station
number 115635 located at Montebrisas urbanization, Street E
intersection Street B, Fajardo, Puerto Rico.
10. Defendant Efrain Claudio Cruz, with postal address PO
Box 420, Fajardo, P.R. 00738, was the individual authorized to
operate gasoline service station number 115635 located at
Montebrisas urbanization, Street E intersection Street B,
Fajardo, Puerto Rico. (“Station”) Defendant is a “franchisee” as
the term is defined by Article 101(4) of the P.M.P.A., 15 U.S.C.
§ 2801(4).
IV
STATEMENT OF FACTS
A. The Lease Agreement
11. On October 28, 2008, Defendant entered into a Lease
Agreement (“Lease”) with TPPRC for the use of certain real
property located at Montebrisas urbanization, Street E at
intersection Street B, Fajardo, Puerto Rico, in order to operate
a gasoline service station. TPPRC is the owner of the
aforementioned real estate. [Exhibit 1, Lease]
4
12. The Lease had duration of three (3) years, starting on
November 1, 2008. [Exhibit 1 at p. 3, Article 3.1]
13. The Lease expressly provides that the operation of a
gasoline service station and all associated services was the
main consideration at the moment of entering such agreement.
[Exhibit 1 at p. 1-2, Parr. D]
14. The Lease also provides that Defendant expressly
recognized that at the moment the agreement was entered, the
property was fully equipped and qualified to be used as a
gasoline service station. [Exhibit 1 at p. 7, Article 8.1]
15. Defendant recognized that all structures, facilities
and certain additional equipment used for the operation of the
gasoline service station and which are located at said premises
are property of TPPRC. [Exhibit 1 at p. 1, Parr. A]
16. The Lease provides that Defendant would pay TPPRC a
monthly rent of two thousand nine hundred seventy four dollars
($2,974.00) for the use of the aforementioned real state. The
Lease provides that the rent is payable during the first five
(5) days of each month. [Exhibit 1 at p. 3, Article 4.1]
17. The Lease provides that Defendant would use the
property as a gasoline service station in order to sell Total
branded petroleum products, merchandise and services normally
5
rendered in TPPRC’s gasoline and service stations. [Exhibit 1 at
p. 7, Article 8.1]
18. The Lease provides that in the event that Defendant
failed to comply with any of its duties under such agreement,
TPPRC is entitled to terminate the same. [Exhibit 1 at p. 18,
Article 15.1 (b)]
19. The Lease authorizes the termination of the agreement
under the following circumstances, among others: the occurrence
of an event which constitutes a breach of contract; if the
dealer fails to make his best effort to comply with the
provisions of such agreement; in the event the dealer fails to
pay any amounts owed under such agreement; in the event the
dealer violates TPPRC’s trademarks; in the event the dealer
fails to operate the Station for seven (7) consecutive days or
any lesser period unreasonable under the circumstances; or for
any termination grounds available under applicable law. [Exhibit
1, at p. 18-20 Article 15.1 (b)(iv), (c), (d), (i), (q)]
B. The Sales and Supply Agreement
20. On October 28, 2008, TPPRC and Defendant entered into
a Sales and Supply Agreement (“Supply Agreement”) pursuant to
which Defendant was granted the right to buy and resale Total
6
branded petroleum products and to operate the Station under such
trademark. [Exhibit 2, Supply Agreement, at p. 1, Parr. D]
21. The Supply Agreement has duration of three (3) years,
starting on November 1, 2008. [Exhibit 2 at p 5, Article 4.1]
22. Article Three (3) of the Supply Agreement provides
that Defendant will pay each delivery of Total petroleum
products on a COD basis. [Exhibit 2 at p. 3, Article 3.3(b)]
23. Article Nine (9) provides that Defendant would only
use the marks, registered marks, trademarks, names, service
distinctions, and/or color patterns that TPPRC may authorize the
dealer to use as part of the operation of the Station. [Exhibit
2 at p. 8]
24. Article Twelve (12) of the Supply Agreement provides
that Defendant would comply with any and all applicable
environmental laws and regulations. [Exhibit 2 at p. 10]
25. These contract provisions are designed to facilitate
TPPRC’s compliance with applicable federal and state
environmental laws, rules and regulations, which require
compliance with strict monitoring and record keeping programs.
26. Article Seven (7) of the Supply Agreement provides
that in the event Defendant failed to comply with any of its
duties under such agreement, TPPRC is entitled to suspend the
7
delivery of petroleum products and terminate the agreement.
[Exhibit 2 at p. 6, Article 7.7(b)]
27. Article Sixteen (16) authorizes the termination of
said agreement under the following circumstances, among others:
the occurrence of an event which constitutes a breach of
contract; if the dealer fails to make his best effort to comply
with the provisions of such agreement; in the event the dealer
fails to make promt payments of any monies owed to TPPRC, in the
event the dealer claims insolvency or files for bankruptcy; in
the event the dealer violates the Total trademarks; or for any
termination grounds available under applicable law. [Exhibit 2
at p. 12, Article 16.1 (b), (c), (d), (e), (p)]
C. Commodatum Provisions of the Supply Agreement
28. The Supply Agreement grants Defendant the right to
use, in commodatum, the underground storage tanks and other
equipment for the storage and sale of petroleum products located
and/or installed at the Station owned by TPPRC. (“Commodatum
Articles”) [Exhibit 2, p. 18-20, Article 20]
29. The Commodatum Articles incorporate an express
recognition by Defendant to the effect that the underground
storage tanks and the equipment for the storage and sale of
petroleum products located at the Station are property of TPPRC.
8
Defendant also recognized that all the structures, facilities
and certain additional equipment, such as the gasoline pumps,
tanks, electrical and office equipment, patio lamps, and others
used for the operation of the gasoline service station which are
located at the Station are property of TPPRC. [Exhibit 2, p.
18, Article 20.1, Attachment B]
30. Article Twenty (20) expressly states that the
equipment for the storage and sale of petroleum products, and
all other equipment under the Commodatum Articles could only be
used for the storage and sale of petroleum products under the
TOTAL MARKS. [Exhibit 2 at p. 18, Article 20.2]
31. The Commodatum Articles provide that Defendant has a
duty to perform tests on a daily basis in order to verify that
there has been no loss of product, aside from normal
evaporation, and to detect any leaks in the tanks. Defendant has
a duty to keep records of such tests and inspections, and to
allow the inspection of such records at any time by TPPRC and/or
any government entity. [Exhibit 2, p. 19, Article 20.7,
Attachment C]
32. The aforementioned contract provisions are designed to
facilitate TPPRC’s compliance with applicable federal and state
environmental laws, rules and regulations, which require
9
compliance with a strict monitoring and record keeping programs.
[See Exhibit 2, p. 19, Article 20.7, Attachment C]
33. The Commodatum Articles also provide that Defendant
may not remove, eliminate or relocate the equipment received in
commodatum from TPPRC from the places where they are located
and/or installed at the Station without the prior written
authorization of TPPRC, which will be given at TPPRC’s absolute
discretion. [Exhibit 2 at p. 20, Article 20.9]
34. The Supply Agreement provides that, in the event of a
termination, TPPRC would be entitled to repossess the
aforementioned equipment. [Exhibit 2 at p. 14, Article 16.2 (d)]
D. Events of Default Leading to the Termination
35. The Lease provides that Defendant shall make rent
payments during the first five (5) days of each month by means
of U.S. currency. [Exhibit 1 at p. 3, Article 4.1]
36. The Supply Agreement provides that the dealer shall
purchase from TPPRC a monthly minimal amount of gasoline
products of 19,000 gallons and 75 gallons of oil and lubricants
[Exhibit 2, p. 3, Article 3.1, 3.3(b)]
37. The Lease provides that the failure to operate the
Station for a period of more than seven (7) consecutive days, or
any shorter period that may be unreasonable under the
10
circumstances, is sufficient cause to terminate the agreement.
[Exhibit 1, p. 18-19, Article 15.1(i)]
38. Furthermore, the Lease and Supply Agreements contain
cross default provisions which provide for the termination of
all the aforementioned agreements in the event of a breach of
any of them. [Exhibit 1, at p. 19, Article 15.1 (g); Exhibit 2,
at p. 13, Article 16.1 (g)]
39. In order to ensure prompt payment of any amounts to
TPPRC, Defendant authorized direct payment to TPPRC through
electronic transactions between TPPRC and Defendant’s bank.
(“ACH Debit”) [Exhibit 3, Authorization for Direct Payment]
40. During the parties’ business relationship, Defendant
has repeatedly breached the essential obligations of the
aforementioned agreements. Defendant has failed, on numerous
occasions, to pay rent invoiced by TPPRC in relation to the
Station causing him to owe TPPRC significant amounts. TPPRC has
been forced to deal with Defendant’s reiterated refusal to pay
rent and gasoline products.
41. On April 24, 2009, TPPRC sent a letter to Defendant
requesting payment of $13,263.93 corresponding to Defendant’s
outstanding rent payments for the months of November 2008, when
the parties entered into the Lease Agreement, through March
11
2009. Defendant was advised that rent payments were an essential
element of the contracts between the parties. [Exhibit 4, Letter
of April 24, 2009]
42. On August 11, 2009, TPPRC sent a letter to Defendant
reminding him of the payment plan approved by TPPRC during the
month of May 2009, were Defendant agreed to make weekly payments
of $500.00 in order to pay the amounts owed to TPPRC, and
continue making timely rent payments the following months. Since
Defendant did not comply with said arrangement, TPPRC requested
immediate payment of the outstanding rent and other charges,
which at the time totaled $20,663.40. TPPRC also advised
Defendant to comply with the agreements since his continuous
failure to comply with his obligations, especially the monthly
rent payments, were sufficient cause to terminate the franchise
relationship. [Exhibit 5, Letter of August 11, 2009]
43. TPPRC’s requests for payment to Defendant were to no
avail. On December 14, 2009, TPPRC sent another letter to
Defendant in an effort to collect amounts owed for rent and
other charges totaling $15,991.60. Once again TPPRC advised
Defendant that his behavior exposed him to the termination of
the franchise relationship, in accordance with the Lease
12
Agreement and the applicable law. [Exhibit 6, Letter of December
14, 2009]
44. On April 16, 2010, TPPRC delivered gasoline products
to Defendant for a total of $17,394.69. Defendant failed to pay
TPPRC for such product since the ACH Debit was returned by
Defendant’s bank due to insufficient funds. [Exhibit 7, TPPRC’s
notice of return of ACH debit for insufficient funds; Exhibit 8,
TPPRC invoice number 40078417]
45. On May 13, 2010, TPPRC delivered gasoline products to
Defendant for a total of $10,400.83. Defendant failed to pay
TPPRC for such product. Once again, Defendant’s bank returned
TPPRC’s ACH Debit due to insufficient funds. [Exhibit 9, TPPRC
invoice number 40081110; Exhibit 10, TPPRC’s notice of return of
ACH debit for insufficient funds; Exhibit 11, Letter of June 2,
2010 requesting payment due to ACH return]
46. By July 2010 Defendant was not selling Total petroleum
products at the Station. In fact, he had not sold regular
gasoline since June 4, 2010 and premium gasoline since January
4, 2010. On July 6, 2010, TPPRC sent a letter to Defendant
through certified mail informing him that his failure to buy and
sell petroleum products at the Station rendered the Station
closed for contractual purposes because the main consideration
13
of the franchise relationship is the selling of Total branded
petroleum products to consumers. TPPRC advised Defendant that if
the Station was not open and fully operational on or before July
16, 2010, the franchise relationship would be terminated due to
Defendant’s failure to operate the Station for more that seven
(7) consecutive days. [Exhibit 12-Letter of July 6, 2010]
47. On July 29, 2010, TPPRC and Defendant entered into a
written agreement for the payment of the amounts owed by
Defendant for rent, lubricants, petroleum products sold and
delivered and other charges. By virtue of said agreement,
Defendant admitted that as of July 19, 2010, he owed TPPRC
significant amounts. Defendant also admitted that this situation
was not attributable to TPPRC. [Exhibit 13-Private Payment
Agreement (Filed under seal)]
48. Defendant is currently in default and owes TPPRC
$22,564.06 for rent and other charges. [Exhibit 14, Account
statement]
49. Defendant has openly disregarded his main obligations
under the Lease and Supply Agreements, which are, among others,
the uninterrupted operation of the Station and the purchase and
prompt payment of TPPRC’s products and prompt payment of rent.
14
Defendant has failed to operate the Station since June 4, 2010;
that is, for more than seven (7) consecutive months.
50. In order to workout a solution to this situation,
TPPRC repeatedly provided accommodations to Defendant in order
to facilitate the payment of the amounts owed and the renewal of
operations to avoid the termination of the parties’ business
relationship.
51. TPPRC met with Defendant on several occasions and
extended proposals and payment plans to Defendant, as discussed
above, to no avail.
52. Defendant made no efforts to comply with TPPRC’s
request and continues to maintain the operations closed to
consumers and the amounts due are still pending, among other
contractual violations.
E. The Termination Notice
53. Given all the above serious breaches of contracts and
trust of the established relationship, on November 9, 2010,
TPPRC sent Defendant a written notice, through certified mail,
stating that the franchise relationship between the parties was
being terminated, effective immediately, due to Defendant’s
repeated failure to pay TPPRC amounts owed under the Lease
Agreement; failure to comply with the written payment plan
15
entered into with TPPRC; failure to timely pay amounts owed for
products sold and delivered and other service charges; failure
to buy TPPRC’s petroleum products and sell them to consumers;
and failure to operate the Station for over seven (7)
consecutive days, in violation of the aforementioned agreements
between the parties and the P.M.P.A., 15 U.S.C. §§ 2802, et seq.
The termination notice included a “Summary Statement” prepared
by the Secretary of Energy, as required by Article 104(c)(3)(c)
of the P.M.P.A., 15 U.S.C. § 2804(c)(3)(c), and requested
Defendant to turn over the Station to TPPRC. [Exhibit 15,
Termination letter of November 9, 2010]
54. At the moment, Defendant continues to retain
possession over the Station, refuses to pay the outstanding
amounts owed to TPPRC, and maintains the operations closed to
consumers. [Exhibit 16-A through 16-J, Photographs of the
Station]
F. Post-Termination Obligations
55. Upon termination of the existing agreements, Defendant
ceased to be an authorized TPPRC franchisee and, therefore, had
the obligation to surrender the Station and all equipment
property of TPPRC in the same condition as it was received and
16
to discontinue its unauthorized use and exhibition of the TOTAL
MARKS. [Exhibit 1, p. 20, Article 15.2 (a) and (b)]
56. Defendant also has the obligation to immediately pay
all amounts owed to TPPRC, amounts owed to other suppliers and
public utilities, plus the payment of all damages to TPPRC.
[Exhibit 1, p. 21, Article 15.2 (d); Exhibit 2, p. 15, Article
17.1]
G. Breach of Post-Termination Obligations
57. As of today, Defendant has failed to comply with the
abovementioned ongoing obligations of the terminated agreements,
has retained possession of the Station and has continued to
illegally exhibit the TOTAL MARKS while the Station remains
closed to consumers. Moreover, other businesses, such as a car
wash and an inspection center, continue to operate on the
Station’s premises. [Exhibit 16-A through 16-J]
58. Furthermore, Defendant’s actions simply ignore his
contractual and legal obligations towards TPPRC, and exposes
TPPRC to potential liability under applicable environmental
laws, rules and regulations, without allowing TPPRC to take
appropriate measures to supervise and ensure compliance.
17
V
FIRST CLAIM FOR RELIEF
VIOLATION OF THE FEDERAL
TRADEMARK DILUTION ACT OF 1995
Plaintiff incorporates by reference all previous paragraphs
of the Verified Complaint.
59. Defendant is using the TOTAL MARKS; is representing
himself to be a Total franchisee; and is promoting and
advertising his business with the TOTAL MARKS, among other
unauthorized acts.
60. The use of the TOTAL MARKS and color patterns is
causing confusion or mistake and is deceiving consumers as to
the origin, the licensing, and the endorsing by TPPRC of
Defendant’s operation, which at this time is closed to
consumers.
61. Defendant’s aforesaid acts constitute trademark
infringement in violation of Section 32(1) of the Lanham Act, 15
U.S.C. § 1114(1). Said acts tarnish and dilute the TOTAL MARKS.
62. Defendant’s aforesaid acts have caused TPPRC to suffer
injury and damages of such a nature that monetary damages alone
cannot adequately compensate TPPRC for the loss suffered.
63. The aforesaid acts of Defendant are greatly and
irreparably damaging to TPPRC and will continue to be greatly
18
and irreparably damaging to TPPRC unless enjoined by this Court
since TPPRC is without an adequate remedy at law.
64. Defendants have caused and will likely continue to
cause substantial injury to the public and TPPRC, and TPPRC is
entitled to a preliminary and permanent injunction and to
recover Defendants’ profits, actual damages, costs, and
reasonable attorneys’ fees under 15 U.S.C. §§ 1114(1) in an
amount not less than $100,000.00.
VI
SECOND CLAIM FOR RELIEF
TRADEMARK INFRINGEMENT IN VIOLATION OF
SECTION 43(a) OF THE LANHAM ACT
65. Defendant continues to use and exhibit the TOTAL
MARKS; continues to represent himself to be a TPPRC franchisee;
and continues to promote and advertise his business with the
TOTAL MARKS, among other unauthorized acts.
66. Defendant’s aforesaid acts tend to represent falsely
that Defendant’s services and products are legitimately approved
by TPPRC which constitute a violation of Section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a). The continued operation of
other businesses within the Station while the same is not
19
selling petroleum products to consumers and at the same time
exhibiting the TOTAL MARKS constitutes an infringement of the
TOTAL MARKS.
irreparably damaging to TPPRC and will continue to be greatly
and irreparably damaging to TPPRC unless enjoined by this Court
since TPPRC is without an adequate remedy at law.
68. Defendant’s conduct has caused, and is likely to
continue causing substantial injury to TPPRC, and TPPRC is
entitled to injunctive relief, and to recover all available
damages under trademark law, pursuant to 15 U.S.C. § 1125(a), in
an amount not less than $100,000.00.
VII
THIRD CLAIM FOR RELIEF
VIOLATION OF THE FEDERAL TRADEMARK DILUTION ACT OF 1995
69. Defendant ceased operations of the Station and at the
same time exhibits the color patterns that identify a TPPRC
Station and which are part of the TOTAL MARKS and continues to
exhibit the TOTAL MARKS since the same are still clearly visible
to the public.
20
70. This depiction of the Station and the TOTAL MARKS in
such a negative way constitutes dilution, disparagement,
tarnishment and diminishment of the TOTAL trademarks, service
marks, and products lines—all proscribed by Section 43 (c) of
the Lanham Act.
71. Defendant’s acts have caused and will continue to
cause dilution, disparagement, diminution, and other damage to
the value of the goodwill represented by, and of the
distinctiveness of the TOTAL MARKS, in violation of Section 43
(c) of the Lanham Act.
injury and damages of such a nature that they could not be
adequately compensated by an award of monetary damages alone.
irreparably damaging to TPPRC and will continue to cause great
and irreparable damages to TPPRC unless enjoined by this Court.
74. Because an award of monetary damages cannot fully and
adequately compensate TPPRC for its losses, TPPRC is without an
adequate remedy at law.
75. TPPRC is therefore entitled to preliminary injunction,
to be made permanent upon entry of final judgment, preventing
Defendants’ further infringement and to recover all available
21
damages under trademark law in an amount not less than
$100,000.00.
VIII
FOURTH CLAIM FOR RELIEF
PRELIMINARY AND PERMANENT INJUNCTION INSTRUCTING DEFENDANT TO
SURRENDER THE STATION AND THE EQUIPMENT TO TPPRC
76. The P.M.P.A. was enacted to protect the franchised
retailers (“franchisees”) of motor fuel in their relationships
with their franchisors and to provide a uniform set of rules to
be used throughout the United States. The statute specifically
prohibits the enforcement of state and local laws which differ
from it. 15 U.S.C. § 2806.
77. Under the P.M.P.A., the protection of franchisees is
achieved by delineating the circumstances under which
termination or non renewal of the franchise relationship is
permissible and the procedure a franchisor must follow for such
termination or non renewal.
78. However, at the same time, Congress also fully
recognized the legitimate needs of a franchisor to be able to
terminate or not renew a franchise relationship based upon
certain actions of the franchisee.
22
79. Under Article 102(b)(2)(c) of the P.M.P.A., 15 U.S.C.
§ 2802(b)(2)(c), a franchisor, such as TPPRC, may ground a
termination and/or non renewal on “the occurrence of an event
which is relevant to the franchise relationship and as a result
of which termination or non renewal of the franchise is
reasonable”. (Emphasis ours) Article 102(c)(8) of the P.M.P.A.
specifically includes as one of those “events” which justify
termination the “failure by the franchisee to pay the franchisor
in a timely manner when due all sums to which the franchisor is
legally entitled”. (Emphasis ours) 15 U.S.C. §2802(C)(8).
Article 102 (c)(9) also includes as an event which justify
termination, the “failure by the franchisee to operate the
marketing premises for 7 consecutive days, or such lesser period
which under the circumstances constitutes and unreasonable
period of time.” 15 U.S.C. § 2802(C)(9).
80. Article 104 of the P.M.P.A., 15 U.S.C. § 2809,
requires the furnishing of effective written notice to the
franchisee of a termination or non renewal, at least ninety (90)
days prior to the effective date of such termination or non
renewal, or within any lesser period when, under the
circumstances, it would be unreasonable to furnish 90-day
notice.
23
81. On November 9, 2010, TPPRC was forced to notify the
immediate termination of the franchise relationship established
by virtue of the Lease and Sales and Supply Agreements, in order
to avoid further defaults by Defendant. The termination was
prompted by Defendant’s failure to operate the Station and his
failure to pay TPPRC outstanding quantities for rent.
82. Therefore, considering the above detailed facts,
TPPRC’s termination of the franchise relationship which existed
between itself and Defendant was valid, legal and enforceable,
effective as of the termination date, and in compliance with the
applicable provisions of the P.M.P.A.
83. Nonetheless, Defendant has refused to surrender the
Station and all equipment necessary for the operation of the
business in violation of the P.M.P.A. Furthermore, Defendant is
currently maintaining the Station closed to consumers and at the
same time is exhibiting the TOTAL MARKS.
injury and damages of such a nature that they could not be
adequately compensated by an award of monetary damages alone.
irreparably damaging to TPPRC and will continue to cause great
24
and irreparable damages to TPPRC unless enjoined by this Court,
pursuant to Rule 65 of the Federal Rules of Civil Procedure.
86. Because an award of monetary damages cannot fully
and adequately compensate TPPRC for its losses, TPPRC is without
an adequate remedy at law and a preliminary and permanent
injunction should be issued.
IX
FIFTH CLAIM FOR RELIEF
DECLARATORY JUDGMENT
87. In the present case, TPPRC was forced to notify the
immediate termination of the franchise relationship with
Defendant in order to avoid further defaults and the continued
breach of his duty to pay the amounts owed and operate the
Station uninterruptedly.
88. Therefore, considering the above detailed facts,
TPPRC’s termination of the franchise relationship which existed
between itself and Defendant should be declared valid, legal and
enforceable, effective as of termination date, and in compliance
with the applicable provisions of the P.M.P.A., as authorized by
Rule 57 of the Federal Rules of Civil Procedure.
25
SIXTH CLAIM FOR RELIEF

DISPOSSESSION OF PREMISES AND EQUIPMENT
89. A lessor may judicially dispossess the lessee for
default in the payment of the rental price agreed upon and/or
the infraction of any of the conditions stipulated in the
contract and/or failing to use the leased object for the uses or
services stipulated in the contract.
90. Pursuant to the above detailed actions by Defendant,
TPPRC has a right to judicially dispossess Defendant from the
premises of the Station object of the now terminated franchise
relationship established by virtue of the Lease and other
Agreements.
XI
SEVENTH CLAIM FOR RELIEF
COLLECTION OF MONIES AND BREACH OF CONTRACT
91. TPPRC is entitled to recover from Defendant an amount
not less than $22,564.06, plus interest, from the date the debt
was incurred until full payment thereof.
26
92. In addition, TPPRC is entitled to recover damages in
an amount not less than $672,000.00 for Defendant’s breach of
the franchise for the sale of petroleum products and the
underlying contracts, and which has resulted in TPPRC’s
inability to sell its products from the gasoline service station
or in a reduction of the same.
XII
EIGHTH CLAIM FOR RELIEF
INDEMNIFICATION AND DAMAGES
93. If TPPRC is made a party to any lawsuit or any legal
action as a result of any act of Defendant or as a result of
Defendant’s continued possession of the Station, Defendant must
indemnify and hold harmless TPPRC from all expenses, fines,
suits, proceedings, claims, losses, damages, liabilities or
actions of any kind or nature, including, but not limited to,
costs and attorneys’ fees.
94. TPPRC currently has no control of the Station, nor can
it monitor any acts and/or omissions of Defendant as to the
management of hazardous fuel products, for which TPPRC may be
liable under federal and state environmental laws, rules and
regulations, among others.
27
95. Defendant must be made liable for any expense, cost,
loss or damage sustained by TPPRC as a consequence of any claim
made by any person or entity as a result of Defendant’s
deceptive and illegal acts, including, but not limited to,
gasoline spills, leaks from the tanks, fires, explosions, slip
and falls, and the like.
XIII
NINTH CLAIM FOR RELIEF
DAMAGES, ATTORNEYS’ FEES, AND EXPENSES
96. As a result of Defendant’s willful and malicious
conduct, TPPRC is entitled to recover from Defendant TPPRC’s
damages and the attorneys' fees and the expenses it has incurred
in bringing this action.
97. Since Defendant has breached its contractual duties in
an intentional and willful manner, TPPRC is entitled to recover
any and all damages resulting from said breach and which include
all attorneys’ fees to be incurred to prosecute this case and
which are estimated in an amount not less that $100,000.00.
WHEREFORE, TPPRC respectfully requests that this Honorable
Court enters a preliminary and permanent injunction order and a
judgment:
28
1. Instructing Defendant to surrender possession of the
Station and all equipment immediately to TPPRC;
2. Instructing Defendant to file with the Court and serve
upon TPPRC, within five (5) days after service on Defendant of
the injunction sought, a report in writing, under oath, setting
forth, in detail, the manner and form in which Defendant has
complied with said order, and a report of any petroleum product
sales, if any, since the date of the termination until
surrendering of the premises;
3. Instructing Defendant, their agents, servants,
employees, representatives, and all others in active concert or
participation with them be enjoined and restrained during the
pendency of this action and permanently thereafter from using
the TOTAL MARKS, altering or covering the TOTAL MARKS, promoting
or advertising that Defendant was formerly a TPPRC franchisee,
using the TPPRC’s operating manuals, training manuals, sales
manuals and aids, advertising and promotional materials, and all
trade secret and confidential and proprietary material delivered
to Defendant pursuant to the franchise relationship; instructing
Defendant to stop diluting and tarnishing TOTAL trademark,
goodwill, and reputation; instructing Defendant to immediately
surrender to TPPRC all stationery, letterheads, forms, manuals,
29
printed material, films, books, cassettes, videotapes, licensed
software and advertising containing the TOTAL MARKS, including,
but not limited to, the proprietary mark TOTAL;
4. Instructing Defendant to immediately stop or refrain
from tarnishing, obliterating, and disparaging all TOTAL signs
at the gasoline service station which contain the TOTAL MARKS or
other identifying marks;
5. TPPRC also requests that this Honorable Court orders a
speedy hearing of this action and advance it on the calendar in
accordance with Rule 57 of the Federal Rules of Civil Procedure,
in as much as it involves only issues of law on undisputed or
relatively undisputed facts and that an order be entered
instructing Defendant to immediately surrender the Station and
the equipment therein located to TPPRC;
6. TPPRC requests that this Court determines that the
termination of the Lease and Sales and Supply between TPPRC and
Defendant was valid and effective under the provisions of the
P.M.P.A.;
7. That Defendant be ordered to compensate TPPRC for all
amounts owed in an amount not less than $22,564.06, plus
interest;
30
8. That Defendant be ordered to compensate TPPRC for its
loss of income for the period prior to the termination date that
the Station has not sold petroleum products and for the period
after the termination date that he refused to surrender the
Station, and for all damages herein claimed due to non-optimized
sales volumes in an amount not less than $672,000.00, and
attorneys’ fees and other expenses in an amount not less than
$100,000.00;
9. TPPRC requests the entry of a declaratory judgment
whereby Defendant is required to indemnify, reimburse and/or
compensate TPPRC for all expenses, losses, damages or
liabilities, including but not limited to, costs and attorneys’
fees, that TPPRC sustains or could sustain as a consequence of
any act or omission of Defendant which may have caused or may
cause harm to third parties; and
10. TPPRC be awarded such other and further relief as is
just and equitable, and the payment of costs, interest, and
attorney fees.
UNSWORN STATEMENT UNDER PENALTY OF PERJURY
I, Edgar Ramírez, of legal age, married, Retail Supervisor
of Total Petroleum Puerto Rico Corporation, and resident of
31
Gurabo, Puerto Rico, hereby state under penalty of perjury,
pursuant to the Laws of the United States of America, 28 U.S.C.
§ 1746, that I have read the foregoing Verified Complaint and
its supporting exhibits and that, to the best of my knowledge
and belief and/or pursuant to the information and documents in
possession of TPPRC or its employees, all allegations herein
contained are true and correct.
_______________________
Edgar Ramírez
Executed in San Juan, Puerto Rico, on January 25, 2011.
SEPULVADO & MALDONADO, LLP

ATTORNEYS & COUNSELORS AT LAW
Counsels for Plaintiff
Citibank Tower, 19th Floor
252 Ave. Ponce De León
San Juan, P.R. 00918
Tel. 787.765.4949
Fax. 787.294.0073
S/Lee Sepulvado Ramos

Lee Sepulvado-Ramos
USDC-PR No. 211912
leesepulvado@gmail.com
S/Jenyfer Garcia-Soto
Jenyfer García-Soto
USDC-PR No. 222209
jgarcia@slawpr.com
32

Total v. Efrain Claudio

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Total v. Efrain Claudio

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Case 3:11-cv-01083-FAB Document 1 Filed 01/25/11 Page 1 of 32

IN THE UNITED STATES DISTRICT COURT

TOTAL PETROLEUM PUERTO RICO CIVIL NO. 11-1083

TO THE HONORABLE COURT:

COMES NOW plaintiff, Total Petroleum Puerto Rico

Corporation (“TPPRC”), through the undersigned counsels, and

respectfully states, alleges and prays as follows:

1. This Honorable Court has original federal question

jurisdiction over the instant action pursuant to 28 U.S.C. §§

1331 and 1338(a) and (b), as this case involves substantial

claims arising under the Lanham Act, 15 U.S.C. § 1051, et seq.

It also has federal question jurisdiction over the claims

arising under the Petroleum Marketing Practices Act, 15 U.S.C.

§§ 2801, et seq., (“P.M.P.A.”) and supplemental jurisdiction

over the Puerto Rico law claims pursuant to 28 U.S.C. §1367(a).

2. Venue is proper in this Court pursuant to 28 U.S.C. §

(“Defendant and/or Claudio”) is a citizen and is doing business

in the Commonwealth of Puerto Rico and the claims alleged in

this Complaint arose in this district.

3. This is a civil action for trademark infringement in

violation of Section 32(1) of the Lanham Act, 15 U.S.C. §

1114(1); for violation of Section 43(a) of the Lanham Act, 15

U.S.C. § 1125(a) and for trademark dilution in violation of

Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c).

4. TPPRC also seeks a preliminary injunction and a

permanent injunction to enjoin Defendant from continuing to

illegally exhibit the TOTAL MARKS at gasoline service station

number 115635 located at Montebrisas urbanization, Street E

intersection Street B, Fajardo, Puerto Rico, since Defendant’s

acts disparage, dilute or otherwise damage the value of the

TOTAL MARKS, because Defendant was terminated as a TPPRC dealer

pursuant to the P.M.P.A. and is no longer authorized to use such

marks nor operate the gasoline service station.

5. TPPRC seeks a preliminary injunction and a permanent

injunction, pursuant to Rule 65 of the Federal Rules of Civil

Procedure, instructing Defendant to immediately surrender the

leased premises since it was validly terminated as a TPPRC

dealer pursuant to the P.M.P.A., and thus have no right to

retain possession over the gasoline service station.

6. TPPRC also seeks declaratory relief which may be

granted under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-

2202, and Rule 57 of the Federal Rules of Civil Procedure.

7. TPPRC seeks to recover all amounts owed by Defendant

totaling $22,564.06, and damages for breach of contract in an

amount of no less than $672,000.00, plus interest.

8. TPPRC seeks to judicially dispossess Defendant of the

premises were the gasoline service station is located.

9. TPPRC is a corporation organized under the laws of the

Commonwealth of Puerto Rico, duly authorized to do, and in fact

doing business in Puerto Rico, with its principal place of

business located at Galeria San Patricio, Tabonuco B-5, Suite

Juan, Puerto Rico 00936-2916. TPPRC is a “franchisor” as the

term is defined by Article 101(3) of the P.M.P.A., 15 U.S.C. §

2801(3). TPPRC is the owner of the gasoline service station

number 115635 located at Montebrisas urbanization, Street E

intersection Street B, Fajardo, Puerto Rico.

10. Defendant Efrain Claudio Cruz, with postal address PO

Box 420, Fajardo, P.R. 00738, was the individual authorized to

operate gasoline service station number 115635 located at

Montebrisas urbanization, Street E intersection Street B,

Fajardo, Puerto Rico. (“Station”) Defendant is a “franchisee” as

the term is defined by Article 101(4) of the P.M.P.A., 15 U.S.C.

A. The Lease Agreement

11. On October 28, 2008, Defendant entered into a Lease