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October 13, 2005.

DAVID R. POWELL, SR., Plaintiff,

The opinion of the court was delivered by: GEORGE HOWARD JR., District Judge


On June 21, 2004, plaintiff filed suit, pursuant to diversity jurisdiction, for breach of contract and conversion arising out of the removal by defendant of underground storage tanks and piping from the leased property used as a convenience store and retail automotive fuel facility. Defendant filed an answer and counterclaim on July 13, 2004, for declaratory judgment and breach of contract under the same lease agreement.

Defendant filed a motion for summary judgment on March 25th supported by brief, exhibits, and a separate statement of undisputed facts. It contends that it is entitled to summary judgment as a matter of law because the fuel system removed from the leased property during environmental remediation was permitted to be severed and removed under the lease agreement and because it was a trade fixture and not a real estate fixture. Defendant asserts that the uncontroverted evidence shows that the furl system at the Dumas store was installed by its predecessor-in-interest with the full intention to retain ownership and control over the fuel system at the time of its installation and throughout the lease term; that the fuel system was installed solely for the operation of the business at the Dumas store; that the lease agreement specifically contemplated the severance and removal of the fuel system during or within 30 days of lease termination; and that the fuel system was properly a trade fixture and not a real estate fixture as defined by Arkansas law thereby permitting its removal. It continues that, as plaintiff drafted key language in the lease, any ambiguity must be construed against him and the Court should consider that plaintiff has never registered as an owner of the tanks at the Dumas store as required by Ark. Code Ann. ยง 8-7-813(a) and Regulation 12 of the Arkansas Pollution Control and Ecology Commission and having registered other underground tanks with the State although defendant had registered the tanks as the owner of the fuel system.

  Also on March 25th, plaintiff filed a motion for partial summary judgment supported by brief with a statement of undisputed facts and exhibits. He seeks judgment that the underground storage tanks removed from the real property by defendant constituted fixtures to plaintiff's real property as a matter of law; that because the underground storage tanks and piping were real estate fixtures they became the property of the plaintiff upon the termination of the lease; that defendant's removal of the underground storage tanks and piping was a breach of the lease because defendant failed to return to the landlord the land and premises leased with the improvement thereon in as good condition as the same were in when the lease began; that defendant's removal of the underground storage tanks constitutes conversion, and that plaintiff is entitled to recover reasonable attorney's fees incurred in bringing this action pursuant to the lease.

  Defendant responded to plaintiff's motion on April 6th stressing that the primary factor in evaluating fixtures is the annexing party's intent and here there is significant evidence that Road Runner and later defendant intended to maintain ownership and control of the fuel system. It continues that the case mainly relied upon by plaintiff is inapplicable as it involved a claim by a third-party supplier for equipment installed on an owner's property by the tenant, the lease language is different as this lease uses the term sever which contemplated the removal of items from the property after those items became attached to the real estate, and the lease agreement not only lists certain items that can be removed but "other [sic] any part of same" and all have indicated that the entire fuel system is considered a single unit. Defendant further argues that intervening statutes and environmental regulations since 1984 have made it impossible to return the property to the "same condition" and the parties did not contemplate a change in the law. Defendant filed its response to plaintiff's statement of facts on April 14th.

  On April 7th, plaintiff responded to defendant's motion as well as its statement of facts. He argues that the lease is not ambiguous and, even if it were, the Court could not apply extrinsic evidence at this stage. Plaintiff insists that the Arkansas appellate court has ruled as a matter of law that storage tanks are real estate fixtures where they could not be removed without serious injury to the realty and the requisite intent was supplied by the terms of the lease under review and not defendant's subjective intent. He continues that while storage tanks were specified in what could be installed, they were not listed in the removal paragraph. Plaintiff also contends that Road Runner was the original drafter and that he negotiated changes that were approved by Road Runner's two lawyers.

  Summary judgment can properly be entered when there are no genuine material facts that can be resolved by a finder of fact; that is, there are no facts which could reasonably be resolved in favor of either party. The Court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2512 (1986). The non-moving party may not just rest upon his or her pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 106 S.Ct. 2548 (1986); Civil Procedure Rule 56. "The mere existence of a factual dispute is insufficient alone to bar summary judgment; rather the dispute must be outcome determinative under prevailing law." Holloway v. Pigman, 884 F.2d 365, 366 (8th Cir. 1989).

  Local Rule 56.1 provides that a party moving for summary judgment must file a separate, short and concise statement of material facts as to which it contends there is no genuine issue to be tried. The rule further provides that unless the non-moving party files a separate, short and concise statement of the material facts as to which it contends a genuine issue exists to be tried, all material facts set forth in the moving party's statement will be deemed admitted.

  Plaintiff's Local Rule 56.1 statement is set out below with defendant's response contained in brackets:

  1. Plaintiff, David R. Powell, Sr., in an Arkansas citizen and resident of McGee, Desha County, Arkansas. [Admitted. However, TPI does not believe this is a material fact.]

  2. Defendant TPI Petroleum, Inc. ("TPI") is a Michigan corporation with its principal office in San Antonio, Texas. [Admitted. However, TPI does not believe this is a material fact.]

  3. The Lease attached as Exhibit A to plaintiff's complaint is a true and correct copy of the lease at issue in this lawsuit.

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