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George Oshana and Gto Investments, Inc. v. Buchanan Energy and Exxonmobil Oil Corporation

February 10, 2012


The opinion of the court was delivered by: Judge Joan B. Gottschall


Plaintiffs George Oshana and GTO Investments, Inc. ("GTO") move to file their First Amended Complaint. Defendants Buchanan Energy ("Buchanan") and ExxonMobil Corporation ("Mobil") oppose the plaintiffs' motion to amend and concurrently move to dismiss the plaintiffs' proposed amended complaint. For the reasons stated below, the court grants the plaintiffs' motion in part and grants them leave to file an amended complaint consistent with this opinion. Additionally, the defendants' motion to dismiss is granted in part and denied in part.


The plaintiffs operated a Mobil-branded gasoline station in Itasca, Illinois pursuant to a lease agreement entered into with Mobil in 2006 (the "Lease"), which was later assigned to Buchanan in 2010. Oshana was the guarantor on the Lease, which was formally in GTO's name. The plaintiffs allege that the rent to be charged in the Lease was to be set in accordance with Mobil's National Rent Guidelines (the "Rent Guidelines"). The plaintiffs, however, allege that they were not charged rent consistently with those Guidelines. They also allege that the defendants have wrongfully withheld the plaintiffs' credit card receipts in violation of the Lease, and that the plaintiffs' franchise was eventually terminated by Buchanan for invalid and pretextual reasons. Accordingly, the proposed amended complaint alleges that the defendants violated the Petroleum Marketing Practices Act (the "PMPA"), 15 U.S.C. § 2801. Other counts allege that the defendants committed various state law violations including breaches of contract and conversion, and that their actions were justified by the doctrine of equitable recoupment.

This case was originally filed in the Circuit Court of DuPage County on May 10, 2011, but was removed to this court based on diversity. On June 23, 2011, the defendants filed a motion to dismiss, after which the plaintiffs filed their current motion to amend their complaint on December 6, 2011. After the defendants filed a second motion to dismiss on December 21, 2011, the court consolidated the motions to amend and to dismiss into a single briefing schedule. For this reason, the court considers the motions concurrently.


Federal Rule of Civil Procedure 15 governs motions to amend complaints. Complaints may be amended once as of right if the motion to amend is filed within twenty-one days of the filing of a motion to dismiss. See Fed. R. Civ. P. 15(a)(1)(B). In other cases, "a party may amend its pleading . . . with . . . the court's leave. The court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). Courts interpret this standard to allow amendment "when there is a potentially curable problem with the complaint or other pleading." Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010). Nonetheless, "it is well settled that a district court may refuse leave to amend where amendment would be futile." Id. at *12 (citing Foster v. DeLuca, 545 F.3d 582, 584 (7th Cir. 2008)). And claims raised in a proposed amendment "[are] futile if [they] would not withstand a motion to dismiss." Vargas-Harrison v. Racine Unified Sch. Dist., 272 F.3d 964, 974 (7th Cir. 2001).

When reviewing a motion to dismiss, the court notes that, under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Documents attached to the pleadings may be considered when reviewing a motion to dismiss "if [those documents] are referred to in the plaintiff's complaint and are central to [the plaintiffs'] claim[s]." Wright v. Associated Ins. Co. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994)."To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The pleadings must "provide the defendant with fair notice of the claim and its basis." Maddox v. Love, 655 F.3d 709, 718 (7th Cir. 2011). However, pleadings that are mere conclusory statements of legal principles or elements of causes of action are not entitled to the presumption of truth. Iqbal, 129 S.Ct. at 1949-50.


Because this court must assess the plaintiffs' proposed amended complaint for futility, and the futility analysis blends with the analysis governing a motion to dismiss, the court analyzes each of the relevant counts of the complaint as if this were a motion to dismiss under Rule 12(b)(6).

A.Plaintiffs' Breach of Contract Claims (Counts I & VI)

1. Count I

Count I alleges that the defendants have not properly set GTO's rent. It alleges that "Mobil and its successor in interest Buchanan are obligated to set the rent for the Location in accordance with the Rent Guidelines," (Prop. Am. Compl. ¶ 21), but that they "breached the Lease by failing to set the rent in accordance with the Rent Guidelines and collect[ed] more rent than was due according to the lease." (Id. ¶ 23.) The court, following the rule in the Seventh Circuit, incorporates both the Lease and the Rent Guidelines into the pleadings, as well as the other documents that are referenced in the plaintiffs' complaint and are central to their claims. See Wright,29 F.3d at 1248.

According to the Rent Guidelines, the rent Mobil charges its franchisees "is determined by multiplying the total property value by 12% and adding the real property tax charge." (See Rent Guidelines at 1, ECF No. 1-1.) The total property value is "established by a third party appraiser selected by ExxonMobil." (Id.) Mobil's rent proposal that would govern GTO's rent from 2011-2014 was dated August 13, 2010 and was attached to plaintiffs' complaint as Exhibit 2. It ...

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