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Alpha Petroleum Co. v. Daifallah

Court of Appeals of Missouri, Western District, First Division

September 24, 2019

ALPHA PETROLEUM COMPANY Appellant-Respondent,
v.
HANI DAIFALLAH, ET AL., Respondents-Appellants.

          Appeal from the Circuit Court of Jackson County, Missouri The Honorable Gregory B. Gillis, Judge

          Before Cynthia L. Martin, Presiding Judge, Victor C. Howard, Judge and Alok Ahuja, Judge

          Cynthia L. Martin, Judge

         Alpha Petroleum Company ("Alpha Petroleum") appeals from a judgment in its favor which awarded it $43, 760.00 and statutory interest against Hani Daifallah ("Hani") and Mohammed Daifallah ("Mohammed")[1] (collectively "Defendants") for its claim of nonpayment on account, but which denied an alternative claim of unjust enrichment which sought the same damages. The Defendants cross-appeal, claiming error in the grant of judgment in favor of Alpha Petroleum because there was no substantial evidence to support the trial court's conclusion that the Defendants were personally liable to Alpha Petroleum. We affirm.

         Factual and Procedural Background[2]

         Alpha Petroleum is a wholesale supply company that purchases gasoline products from refining companies like ConocoPhillips and then sells those products to convenience stores. Alpha Petroleum's sister company, A.J. Partnership, is a real estate holding company that primarily owns convenience stores. Alpha Petroleum is the required fuel supplier for all convenience stores owned by A.J. Partnership. Javaid Chaudhri ("Javaid") and Arshad Chaudhri ("Arshad")[3] are each 50 percent owners of Alpha Petroleum and are the sole partners in A.J. Partnership.

         In 2007, A.J. Partnership purchased ten convenience stores out of receivership, including a convenience store with gasoline services located at 700 East 85th Street in Kansas City, Missouri ("the Convenience Store").[4] At the time of A.J. Partnership's purchase of the Convenience Store, the Defendants were the Convenience Store's tenants and used two fictitious names for the store: "Every Day 700" and "Happy Day Conoco." The Defendants entered into a lease agreement with A.J. Partnership, the terms of which included the requirement that the Defendants purchase gasoline products from Alpha Petroleum.

         Throughout the Defendant's tenancy at the Convenience Store, Alpha Petroleum authorized the Defendants to request fuel by directly contacting a third-party transportation company which had a contract with Alpha Petroleum. The third-party transportation company sourced fuel from ConocoPhillips and delivered it to the Convenience Store. ConocoPhillips would then bill Alpha Petroleum for the fuel, with payment due in seven days. Alpha Petroleum would then send the Defendants an invoice for the fuel. After collecting credit card payments made by the Convenience Store's customers and crediting that amount to the Defendants' account, Alpha Petroleum would debit the Defendants' bank account for the remaining balance.

         In early 2012, Alpha Petroleum advised the Defendants that it was terminating the Defendants' lease of the Convenience Store. The Defendants requested additional time to vacate. Alpha Petroleum agreed to give the Defendants six months to vacate the Convenience Store. The Defendants vacated the Convenience Store at the end of July 2012.

         Before the Defendants vacated the Convenience Store, there were two instances where Defendants received a fuel delivery for which Alpha Petroleum was not paid. On February 17, 2012, a delivery of fuel was made to the Convenience Store, and Alpha Petroleum issued an invoice addressed to "Everyday 700 (Happy Days Conoco)." The invoice indicated that the balance due was $23, 189.28, [5] and that the balance would be drafted electronically from the Defendants' bank account on February 23, 2012.[6] Due to an internal accounting error, Alpha Petroleum failed to debit the Defendants' bank account for the February 17, 2012 fuel delivery. Alpha Petroleum did not discover its error until July 2012, during a reconciliation of its records for the Convenience Store. Upon discovering its error, Alpha Petroleum attempted to debit the Defendants' bank account for the unpaid invoice, but it was notified that a stop payment had been entered for the invoice.

         On July 11, 2012, the Defendants received a final fuel delivery for the Convenience Store. Alpha Petroleum issued an invoice to "Everyday 700 (Happy Days Conoco)" reflecting a balance due for the fuel delivery in the amount of $26, 445.09, which "[would] be drafted EFT from your bank account on: 7/17/2012."[7] Alpha Petroleum attempted to collect payment from the Defendants' bank account but learned that a stop payment had been entered for the invoice.

         On July 23, 2012, Javaid sent a demand letter to the Defendants for the unpaid invoices totaling $49, 634.37. Following a final inventory of the Convenience Store in July 2012, the Defendants were credited for fuel remaining in the storage tanks, leaving a balance due on the two unpaid invoice in the amount of $43, 760.35.

         Alpha Petroleum filed suit against the Defendants, both of whom were identified in the petition as doing business as "Every Day 700" and "Happy Day Conoco" seeking to collect the unpaid invoices. Count I sought recovery on a theory of nonpayment on account. Count II sought recovery on a theory of unjust enrichment.

         During a bench trial, Alpha Petroleum presented testimony from Javaid and two other employees to establish the balance due from the Defendants for fuel delivered to the Convenience Store. Hani and Mohammed testified that Zik Moe, Inc. ("Zik Moe"), a corporation owned in part by Mohammed, operated the Convenience Store, and that Zik Moe was responsible for the unpaid invoices. The ...


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