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SHELL OIL CO. v. CAPPARELLI

July 28, 1986

SHELL OIL COMPANY, Plaintiff,
v.
ALBERT U. CAPPARELLI, Defendant



The opinion of the court was delivered by: TENNEY

TENNEY, J.,

In this diversity action, the plaintiff, Shell Oil Company ("Shell"), is seeking a declaratory judgment pursuant to 28 U.S.C. ยงยง 2201, 2202, stating that Shell is entitled to recover the oil storage tanks that Shell installed at the automobile service station presently owned by the defendant, Albert U. Capparelli ("Capparelli"). *fn1" Shell contends that it has the right to remove the tanks from the premises pursuant to the terms of a 1958 lease ("Lease") between Shell and the individual who owned the service station in 1958. Capparelli argues that Shell has no right to remove the tanks because (1) the 1958 Lease is no longer in effect, or (2) if the Lease is in effect, the tanks constitute an "improvement" to the property and therefore belong to Capparelli pursuant to the terms of the Lease.

Both parties now move for summary judgment. For the reasons set forth below, the Court concludes that the terms of the Lease govern and the tanks are equipment that belong to Shell. Accordingly, the plaintiff's motion for summary judgment in its favor is granted to the extent set forth below, and the defendant is enjoined from interfering with Shell's removal of the tanks at issue.

 BACKGROUND

 The facts in the case at bar are not in dispute, and a brief outline of the background will suffice. In 1958, Shell entered into a leasing agreement with Benjamin DiNapoli, ("DiNapoli") whereby Shell leased DiNapoli's service station which was located at Main Street and Fishkill Avenue in Beacon, New York. *fn2" In 1965, DiNapoli assigned the Lease to Joseph A. Gallagher ("Gallagher"), with Shell's consent, *fn3" and in 1967, Gallagher purchased the premises.

 In 1983, Shell sent Gallagher a letter, stating that the Lease would be terminated in 1984. Shell subsequently attempted to remove the gasoline storage tanks, in February and in March of 1984, but Gallagher would not permit Shell to do so.

 In March 1984, Gallagher filed a petition under Chapter 7 of the Bankruptcy Code, and in August 1984, the defendant, Capparelli, purchased the premises at a New York State mortgage foreclosure sale, with the permission of the Bankruptcy Court. After purchasing the premises, Capparelli refused to allow Shell to remove the gasoline storage tanks at issue here, and this action ensued.

 DISCUSSION

 Summary judgment may be granted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. ("Rule") 56(c);

 Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444 (1980). In this instance, there is no dispute concerning the facts, and both parties have moved for summary judgment. The case centers on the question of whether the tanks belong to Shell or whether they belong Capparelli.

 1. The 1958 Lease

 Shell contends that it owns the tanks pursuant to the terms of the 1958 Lease. In order to reach that issue, however, the Court must first determine whether or not Capparelli is bound by the terms of the Lease. The Court concludes that he is so bound.

 The Lease provided for a primary term of 15 years--1958 to 1973--together with an option to extend the term for one additional period of five years. The Lease also provided that it would be automatically renewed on a yearly basis unless one of the parties acted to cancel the Lease. *fn4" It is clear from the record that no action was taken to terminate the Lease before 1984, when Shell sent Gallagher a letter terminating it.

 When Capparelli purchased the subject premises in 1984 at the mortgage foreclosure sale, the Bankruptcy Court set forth the terms and conditions of the sale in a document entitled "Terms of Sale," which was signed by Capparelli. That document provided that the premises were sold subject to the terms and conditions contained in the 1967 deed, which transferred ownership of the premises from DiNapoli to Gallagher. *fn5" Thus, ...


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