Geib v. Amoco Oil Co.

• Decision Date: 19 July 1994
• Docket Number: No. 92-2129,92-2129
• Citation: 29 F.3d 1050
• Parties: Donald W. GEIB, d/b/a Rochester Colonial Amoco, Plaintiff-Appellant, v. AMOCO OIL COMPANY, a Maryland corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1050

29 F.3d 1050

Donald W. GEIB, d/b/a Rochester Colonial Amoco, Plaintiff-Appellant, v. AMOCO OIL COMPANY, a Maryland corporation, Defendant-Appellee.

No. 92-2129.

United States Court of Appeals, Sixth Circuit.

Argued Aug. 12, 1993.

Decided July 19, 1994.

Lawrence M. Dudek (briefed), Douglas E. Busbey (argued), Miller, Canfield, Paddock & Stone, Detroit, MI, for Donald W. Geib.

Richard J. Stevens, Chicago, IL, Daniel G. Wyllie, Dykema & Gossett, Detroit, MI (argued and briefed), for Amoco Oil Co.

Before MERRITT, Chief Judge; BOGGS, Circuit Judge; and ENGEL, Senior Circuit Judge.

ENGEL, Senior Circuit Judge.

Plaintiff Donald W. Geib appeals the district court's summary dismissal of his action against Defendant Amoco Oil Company. In his amended complaint, Geib alleges violations of the Petroleum Marketing Practices Act ("PMPA"), ¹ the Michigan Franchise Investment Law ("MFIL"), ² and the common law of Michigan, arising out of Amoco's refusal to renew his motor fuel sales and automotive service franchises. We AFFIRM the decision of the district court in all respects with the exception of the issues arising under the MFIL. As to those issues, we certify a question to the Supreme Court of Michigan, in the belief that these issues are important and of first impression in Michigan, and are therefore most appropriately resolved by that state's highest court. We retain jurisdiction pending resolution of the certified question.

I. Background

Geib leased Amoco stations at various locations from 1968 to 1991. Geib operated the Rochester Colonial Amoco in Michigan from 1985 until September of 1991, at which time he relinquished control pending resolution of this suit. Geib retailed gasoline at the Rochester Colonial Amoco pursuant to a "Dealer Supply Agreement" ("DSA") which expired on June 30, 1991, and was not renewed. Geib also performed automotive repair services under Amoco's trademarks pursuant to a "Certicare Automotive Maintenance and Repair Service Franchise Agreement" ("Certicare Agreement").

Under the terms of the DSA, Geib paid Amoco rent for the use of the premises and for the use of Amoco's trademarks. Geib purchased gasoline from Amoco pursuant to a "Meter Marketing Plan" ("MMP"). The MMP provided for consignment sales of gasoline, whereby Amoco continually stocked Geib's tanks, and Geib paid Amoco only after selling the gas to retail customers. The price at which Geib purchased the gasoline was determined by the price prevailing at the time the gas was drawn from his storage tanks and pumped into automobiles. Under the MMP, Geib provided Amoco with regular reports of his gasoline inventory ("regular reports") every Tuesday and Friday. Geib also submitted special price change inventory reports ("price change reports") whenever Amoco changed the dealer's price of gas. Geib's debt to Amoco was calculated by multiplying the quantity sold, as determined by his reports, by the price of gas in effect at the time of the retail sale.

In February of 1991, Amoco began to investigate the possibility that Geib was manipulating his inventory reports to profit from fluctuations in the price of gas. Geib's scheme was relatively simple. When Amoco notified him that a price increase would take effect at midnight on a particular date, Geib would hesitate up to 24 hours after the price change before reading his tank meters for the price change report. This delay enabled Geib to purchase extra gasoline at the previous (lower) price. Conversely, when a price decrease took effect at midnight on a particular date, Geib would read his meters up to 24 hours early, so that he would purchase less gasoline at the previous (higher) price. In this fashion, Amoco calculates that Geib avoided paying the proper price for more that 82,000 gallons of gasoline, resulting in a reduction of Geib's gas bill in 1990 and 1991 of over $2,000. Geib never indicated to Amoco that the meter readings on his price change reports were not taken at the time at which the price changes were scheduled to take effect.

Having discovered that Geib was manipulating the reports, Amoco declined to renew his gas franchise after the DSA expired in June of 1991. Geib was later replaced with a different lessee at the Rochester Colonial Amoco. In his initial complaint, Geib challenged the nonrenewal of his gas franchise as a violation of the PMPA. Geib later amended his complaint to add state law claims, including a violation of the MFIL, breach of contract, fraudulent misrepresentation, and tortious interference with business relations.

II. The PMPA Claim

The PMPA regulates the marketing of automotive fuel by "establish[ing] minimum federal standards governing the termination and nonrenewal of" motor fuel sales franchises. May-Som Gulf, Inc. v. Chevron U.S.A., Inc., 869 F.2d 917, 921 (6th Cir.1989). Geib claims that Amoco's nonrenewal of his Rochester Colonial Amoco franchise violates the provisions of the PMPA which specify the only circumstances under which nonrenewal of such a franchise is permissible.

Geib is correct that the PMPA only permits a petroleum distributor like Amoco to refuse to renew a franchise under specifically defined circumstances. Under 15 U.S.C Sec. 2802(b)(1), Amoco may only refuse to renew Geib's motor fuel sales franchise if Amoco complies with "the notification requirements" of 15 U.S.C. Sec. 2804, and if "such nonrenewal is based upon a ground described" in 15 U.S.C. Sec. 2802(b)(2) or (3). Amoco contends, and the district court agreed, that Amoco was entitled under the PMPA to refuse to renew Geib's franchise after he failed to pay for the gas in the manner specified by the MMP. See 15 U.S.C. Sec. 2802(b)(2)(A) ("grounds for termination of a franchise or nonrenewal of a franchise relationship" include, inter alia, "[a] failure by the franchisee to comply with any provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship").

Viewing the facts of this case in the light most favorable to Geib, we conclude that summary judgment in favor of Amoco on the PMPA claim was proper as a matter of law. Geib does not dispute Amoco's right not to renew his franchise in the event of a breach of the franchise contract. Geib also does not dispute that he repeatedly engaged in the unorthodox inventory reporting techniques described above. ³ Rather, Geib seeks to avoid summary dismissal primarily by arguing that his method of submitting price change reports was not, in fact, a breach of the MMP. Geib argues that the written contract did not mandate any particular reporting technique, and that Amoco representatives orally instructed him to adjust the timing of his reports to take advantage of price changes.

We turn first to Geib's contention that he did not violate any express written provisions of the MMP. Admittedly, the MMP does not specifically instruct Geib when to read his tank meters. However, the inventory reports clearly were designed to enable Amoco to invoice Geib properly for his gasoline purchases. Therefore, the contours of the reporting requirement are defined by the terms of the contract governing Geib's obligation to pay Amoco for the gasoline. The DSA unambiguously and unequivocally provides that Geib will pay for the gas at the price in effect at the time "when title to [the gasoline] passes from Amoco to Dealer." To determine at precisely what moment title to the gasoline shifts, we must refer to the MMP, which explains that "[t]itle to [the gasoline] shall remain in Amoco until the product is withdrawn from the underground storage tanks by Dealer and registered on the pump meter, at which time title shall pass from Amoco to Dealer." The combined effect of these provisions is to set the price at which Geib purchases gas at the price level in effect at the time the gas is pumped from the tanks into his customers' automobiles. The language of the contract gives rise to no other possible interpretation, and Geib suggests none. In fact, Geib clearly indicated at his deposition that he understood the rationale for requiring accurate and timely reporting:

COUNSEL FOR AMOCO: The reason you received a notice from Amoco, of a price change, was to tell you that what you're going to have to pay Amoco for gas, after the effective time of the price change, was going to be X cents a gallon; is that correct?

GEIB: Correct.

COUNSEL: The reason that you would prepare a price change report under those circumstances is to tell Amoco how much gas you had purchased prior to that price change, and pay for it at the old price; is that correct?

GEIB: Basically.

COUNSEL: That is fair and proper, correct?

GEIB: Yes.

COUNSEL: So that you pay for the gas at the price that was in effect when you bought it, correct?

GEIB: Pretty much, yes.

COUNSEL: And that the gas you buy after the price change, you're going to pay at the new price?

GEIB: Correct.

Geib Deposition, supra note 3, at 74-75.

This deposition testimony reveals Geib's awareness that his inventory reporting technique distorted the amount he paid for gas. By delaying his reports after price increases, and by hurrying his reports before price decreases, Geib often paid less than the agreed upon price for the gas he purchased from Amoco. The following exchange during the deposition confirms that Geib completely understood that the manipulation of the reports worked to his advantage at Amoco's expense:

COUNSEL FOR AMOCO: Why would you use the readings from the day before if the price was going down?

GEIB: I didn't always. But if I did, it was within the twenty-four hour period, and it would be in my favor.

COUNSEL: You would always do it so it would be in your favor, if you did it; is that correct?

GEIB: Most likely. I'm not positive.

COUNSEL: It would be in your favor, would it not, to use readings from twenty-four hours before the price change if the price was going down? Would you agree with that?

GEIB: Yes. I'm sorry....