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Sentis Group, Inc. v. Shell Oil Co.

United States Court of Appeals, Eighth Circuit

August 14, 2014

Sentis Group, Inc.; Coral Group, Inc., Plaintiffs - Appellants
v.
Shell Oil Company; Equilon Enterprises, LLC, doing business as Shell Oil Products US, Defendants - Appellees

Submitted April 14, 2014.

Appeal from United States District Court for the Western District of Missouri - Kansas City.

For Sentis Group, Inc., Coral Group, Inc., Plaintiffs - Appellants: Jeffrey Ryan King, King Law Offices, Independence, KS; Rebecca Jean McMahon Lathrop & Gage Kansas City, MO; Mark A. Samsel, Lathrop & Gage, Overland Park, KS; Frederick Kent Starrett I, Douthit & Frets, Leawood, KS.

For Shell Oil Company, Equilon Enterprises, LLC, doing business as: Shell Oil Products US, Defendants - Appellees: David M. Harris, Dawn Morville Johnson, Abby L. Risner, Greensfelder & Hemker, Saint Louis, MO.

Before RILEY, Chief Judge, MELLOY and BENTON, Circuit Judges.

OPINION

Page 920

MELLOY, Circuit Judge.

Plaintiffs Sentis Group, Inc., and Coral Group, Inc., sued Defendants Shell Oil Company and Equilon Enterprises, LLC, alleging contract and fraud claims, and violations of Missouri franchise laws as well as the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq. The allegations relate to the inception and execution of a gas-station and convenience-store operating agreement involving clusters of stores in and around Kansas City. In a prior appeal, we reversed an earlier dismissal sanction and remanded for reconsideration. On remand, the district court received evidence and made a factual finding that Plaintiffs controlled and failed to preserve certain evidence. The district court concluded Plaintiffs' failure to preserve evidence caused sufficient prejudice to Defendants to serve as sanctionable spoliation. Given Plaintiffs' cumulative pattern of conduct in this matter, and given the nature of the missing evidence and its role in Plaintiffs' and Defendants' cases, the district court concluded dismissal with prejudice was the appropriate sanction. We affirm.

I. Background

We discussed the facts and history of this case in detail in our prior opinion. See Sentis Group, Inc. v. Shell Oil Co., 559 F.3d 888, 892-98 (8th Cir. 2009). We review those facts briefly here and address in greater detail discovery and rulings that took place following remand from our prior opinion.

The primary arguments behind Plaintiffs' lawsuit relate to provisions in the operating agreement imposing a duty on Defendants to make payments to Plaintiffs for certain site-specific expenses associated with maintaining retail gas-station facilities. The expense payment provision states:

7(b) Expenses. Company shall pay Operator, for each month, an amount deemed sufficient to cover Operator's reasonable, legitimate, and necessary expenses to operate the Motor Fuel Facilities at the Locations in the Cluster in a reasonable and efficient manner. Expense payment amounts hereunder will be established by Company in its sole discretion for a market and Location type by taking into consideration industry standards or best practice standards, or, where applicable, historical data or specific projected operating circumstances in the market. Expense payment amounts for each Location are set forth in Exhibit A. Company will periodically review the expense payment amounts, not less frequently than annually, and may, in its sole discretion and at any time, increase or decrease the expense payment amount for any Location upon notice to the Operator. If Operator's actual expenses, in the aggregate, for operating the Motor Fuel Facilities at the Locations in the Cluster for any month according to the obligations and standards set forth in this Agreement are less than Company's aggregate payment for expenses under this subarticle, the Operator may retain the overpayment as additional compensation for that month. If Operator's actual expenses, in the aggregate, for

Page 921

operating the Motor Fuel Facilities at the Locations in the Cluster for any month exceed the aggregate amount paid by Company, Operator shall be responsible for the shortfall amount. Notwithstanding the foregoing, if Operator establishes, to Company's satisfaction in its sole discretion, that any expense shortfall amount experienced by Operator, in the aggregate, in operating the Motor Fuel Facilities at the Locations in the Cluster for any year is the result solely of an increase of an Uncontrollable Expense, or of a Controllable Expense due to extraordinary or unforeseeable circumstances, then Company shall reimburse Operator, upon presentation by Operator of an invoice with documentation of such ...

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