269 F.3d 70 (1st Cir. 2001), 01-1161, C.K. Smith & Co v. Motiva Enterprises

Docket Nº:01-1161
Citation:269 F.3d 70
Party Name:C.K. SMITH & CO., INC., Plaintiff, Appellant, v. MOTIVA ENTERPRISES LLC, Defendant, Appellee.
Case Date:October 25, 2001
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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269 F.3d 70 (1st Cir. 2001)

C.K. SMITH & CO., INC., Plaintiff, Appellant,


MOTIVA ENTERPRISES LLC, Defendant, Appellee.

No. 01-1161

United States Court of Appeals, First Circuit

October 25, 2001

Submitted Sept. 12, 2001


[Hon. Nathaniel M. Gorton, U.S. District Judge]

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Thomas Paul Gorman and Sherin and Lodgen LLP on brief for appellant.

Richard E. Powers, Karen M. Connors, and Zizik, LaSalle & Powers, P.C. on brief for appellee.

Before Torruella and Selya, Circuit Judges, and Lisi,[*] District Judge.

SELYA, Circuit Judge.

This appeal requires us to determine whether a franchisor's decision not to renew a service station franchise violated the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801-2841. The ousted franchisee, plaintiff-appellant C.K. Smith & Co., Inc. (CKS), complains that the decision of the franchisor, defendant-appellee Motiva Enterprises LLC, to discontinue the franchise relationship following CKS's failure to execute a renewal lease in a timely manner contravened the PMPA.1 The district court rejected these importunings, see C.K. Smith & Co. v. Motiva Enters., 126 F.Supp.2d 34 (D. Mass. 2000), and so do we. The PMPA does not provide any relief for a franchisee who negligently fails to execute renewal documents in a timely fashion. Hence, we affirm the lower court's entry of summary judgment in favor of the franchisor.

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In accordance with the conventional summary judgment praxis, we take the material facts in the light most favorable to the nonmoving party (here, the plaintiff) and indulge all justifiable inferences in that party's favor. McCarthy v. N.W. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995).

CKS is a Massachusetts corporation engaged in myriad fuel-related businesses ranging from home delivery of heating oil to the operation of service stations. One such venture involved a service station in Randolph, Massachusetts. In mid-1989, CKS entered into a three-year lease and sales agreement with Motiva for the Randolph location and thereby established a franchise relationship within the contemplation of the PMPA. See 15 U.S.C. §§ 2801(1)-(2), 2802. The parties renewed the salient agreements (and the franchise relationship) for additional three-year periods in 1992 and 1995. The last of these renewals -- the lease and sales agreement executed on or about August 1, 1995 -- is at the core of the instant case.

The arrangement negotiated in 1995 was scheduled to expire on July 31, 1998. The lease provided, inter alia, that notices from Motiva to CKS would be addressed to the latter's "place of business," identified in the lease as the service station premises.2 On March 25, 1998, Motiva mailed a renewal package, containing a proposed renewal lease and sales agreement, to the Randolph location. CKS received the materials, but one of its employees misplaced them.

Nearly one month elapsed without any word from CKS to Motiva about the renewal package. Concerned by CKS's silence, Motiva sent written notice on April 24, 1998, advising CKS that the existing lease and sales agreement between the parties would not be renewed beyond the July 31, 1998 expiration date; that Motiva would terminate the franchise relationship on that date; and that the ground for nonrenewal was the parties' failure to reach agreement as to changes and/or additions to the governing documents. In the same communique, Motiva advised CKS that it stood ready and willing to rescind the notice of nonrenewal in the event that the parties entered into a mutually satisfactory lease and sales agreement for a period extending beyond July 31, 1998. CKS acknowledges that it received the nonrenewal notice.

On June 24, 1998, representatives of both companies met to discuss station maintenance issues and the possibility of a renewed franchise relationship. The parties provide differing accounts regarding the substance of that meeting. CKS's version, which we accept for summary judgment purposes, is that Judith Smith (CKS's president) told Motiva's representatives that she wanted to review the details of a program under which Motiva reimbursed its franchisees for a portion of station repair costs (the so-called "Freedom Five Hundred Manual") before executing any documents, but that she gave no indication that she was rejecting any of the renewal terms proposed by Motiva.

As of July 31, 1998, CKS had not executed the renewal lease and sales agreement. Motiva deemed the franchise relationship at an end, and John Molloy, a Motiva official, called Judith Smith on August 4 to

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inquire about her plans for vacating the premises. During that conversation, Smith expressed her firm's desire to continue the franchise relationship and, for the first time, voiced a willingness to execute the documents forwarded by Motiva to CKS on March 25. Smith reiterated these sentiments in a follow-up letter of even date. Motiva spurned Smith's entreaties as too little and too late.

On August 10, 1998, CKS filed a complaint in which it claimed that Motiva had violated the PMPA by refusing to renew the lease and franchise relationship. The complaint sought both injunctive relief and money damages. The district court preliminarily enjoined Motiva from terminating the lease and franchise for the Randolph service station.

In due course, the parties cross-moved for summary judgment. In a closely reasoned rescript, the district court granted Motiva's motion and denied Smith's cross-motion. C.K. Smith, 126 F.Supp.2d at 40. This appeal ensued. At its inception, we stayed the district court's order, see Fed. R. App. P. 8(a), and, therefore, the preliminary injunction remains in effect.


We begin our analysis by limning the applicable standard of review. We next offer an overview of the pertinent portions of the PMPA, and then turn to the merits of the plaintiff's...

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