391 F.3d 312 (1st Cir. 2004), 03-2324, Getty Petroleum Marketing, Inc. v. Capital Terminal Co.

Docket Nº:03-2324.
Citation:391 F.3d 312
Party Name:GETTY PETROLEUM MARKETING, INC., and Getty Properties Corporation, Plaintiffs, Appellees, v. CAPITAL TERMINAL COMPANY and Dunellen, LLC, Defendants, Appellants.
Case Date:December 10, 2004
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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391 F.3d 312 (1st Cir. 2004)

GETTY PETROLEUM MARKETING, INC., and Getty Properties Corporation, Plaintiffs, Appellees,

v.

CAPITAL TERMINAL COMPANY and Dunellen, LLC, Defendants, Appellants.

No. 03-2324.

United States Court of Appeals, First Circuit

December 10, 2004

Heard April 7, 2004

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[Copyrighted Material Omitted]

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Gerald J. Petros, with whom Charles J. Blackman, Hinckley, Allen & Snyder, LLP, and Duffy & Sweeney, Ltd were on brief, for appellants.

James W. Ryan, with whom Robert K. Taylor and Partridge, Snow & Hahn, LLP were on brief, for appellees.

Before LYNCH and LIPEZ, Circuit Judges, and GARCÍA-GREGOR Y, District Judge.[*]

PER CURIAM.

This case requires us to determine whether appellant Capital Terminal Company was entitled to reach a jury on its claim that certain improvements to a fire suppression system were required by "regulations" under the terms of its written agreement with appellee Getty Properties Corporation. At the conclusion of appellant's case, the district court granted appellee's motion for judgment as a matter of law because, in the court's view, appellant had failed to establish a basis for instructing the jury on the content of such regulations, and hence could not link the required improvements to those regulations. We affirm.

I.

Appellant Capital Terminal Company (Capital) owns the Wilkesbarre Pier (the Pier) in East Providence, Rhode Island. The Pier is used primarily for offloading petroleum--mostly gasoline and home heating oil--from barges and deep water vessels. Two pipelines begin on the Pier and extend approximately 2.5 miles to a pair of underground oil terminal facilities located in East Providence.1 Capital owns one of the underground terminals; appellee Getty Properties Corporation (Getty Properties) owns the other and leases it to Getty Petroleum Marketing, Inc. (Getty Marketing). Getty Properties also owns a usage interest in the Pier.

An Operating Agreement executed in 1975 governs the parties' relationship regarding costs associated with the Pier. In 1997, a dispute arose over the nature and extent of repairs to the Pier. As a result of this dispute, the parties, including Getty Properties and Capital's predecessor in interest, agreed to a First Amendment to the Operating Agreement. That amendment provides that Getty Properties is responsible for "[t]he cost of compliance with all City, State, or Federal regulations applicable to the operation of the pipelines." The term "regulations" is not defined in the Operating Agreement or the First Amendment to the Operating Agreement.2

Before 1992, the closest source of pressurized water to the Pier was a hydrant located on neighboring property owned by

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the Union Oil Company of California (Unocal). In the event of a fire, water from the hydrant would have been used to spray fire-retardant foam onto the pipelines. In 1992, the East Providence Water Department shut off water to the hydrant because it was concerned that chemicals from Unocal's operations might contaminate the water supply. This action left the Pier without sufficient ability to suppress a fire on the pipelines. The parties that used the Pier began to discuss this problem as early as 1994.

In 1997, the East Providence Fire Department contacted Capital about the lack of a pressurized water supply on the Pier. Beginning in 1998 and continuing until 2000, Capital attended a series of meetings (the Advisory Group meetings) at the Coast Guard's Marine Safety Office. At these meetings, representatives of Capital, Unocal, the Coast Guard, the State Fire Marshal's Office, and the East Providence Fire Department discussed how best to provide adequate fire suppression services to the Pier. A representative of Getty Marketing also attended several of the Advisory Group meetings. The parties dispute whether the representative of Getty Marketing also represented Getty Properties.

On May 8, 2000, Capital wrote a letter to Gerald A. Bessette, Chief of the East Providence Fire Department, setting out a proposal for fire suppression at the Pier. It included four specific measures: extension of an existing water main to the Pier, purchase of a mobile Foam Tote Trailer that the Fire Department could use to suppress a fire anywhere in the city, installation of a radio signal alarm box at the Pier, and purchase of a portable chemical fire extinguisher to be housed at the Pier. The letter stated that "[t]he estimated total cost for the four ... improvements is approximately $200,000." It appears that Capital anticipated paying for these improvements, as the letter stated that "[t]his amount is a major expenditure for [Capital], and represents a hardship, above which we cannot extend ourselves."

On May 12, 2000, the Advisory Group, including representatives of both Capital and Getty Marketing, as well as Chief Bessette, discussed Capital's proposal. The minutes from the meeting state that "[a]ll of the key players agreed to the following proposal (summarized)... submitted by Capital." The proposal listed in the minutes included all four measures outlined in Capital's May 8, 2000, letter, plus the additional measure of installing a pipeline from the head of the Pier to a separate manifold area of the Pier.

On May 17, 2000, Chief Bessette sent a letter to Capital, Getty Marketing, and Getty Properties, stating that "[a]s a result of a number of [Advisory Group] meetings ... in regard to a lack of adequate fire protection at the Wilkesbarre Pier, the following are minimal acceptable improvements to that facility." The letter then listed the five improvements that the Advisory Group had agreed upon during its May 12, 2000, meeting. Shortly thereafter, Capital demanded that Getty Properties pay for the cost of implementing the improvements listed in Chief Bessette's letter, contending that those improvements were required by "regulations" under the terms of the Agreement between the parties.

II.

On August 2, 2000, Getty Properties and Getty Marketing sought a declaratory judgment from the district court that they were "not obligated to install a water line or fire suppression system for the pier." On September 8, 2000, Capital filed a compulsory counterclaim seeking $300,000 to cover the costs of the fire suppression system that it had already begun to install.

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The district court divided the trial into two phases. In phase one, the court tried Capital's counterclaim before a jury.3 In phase two, tried at a later time, the court conducted a bench trial to address Getty Properties's and Getty Marketing's declaratory judgment action.4

During the jury trial, Capital introduced into evidence the historical documents governing interests in the Pier, including the Agreement between Capital and Getty Properties obligating Getty Properties to pay "[t]he cost of compliance with all City, State, or Federal regulations applicable to the operation of the pipelines." Capital also introduced a report written by Orville Slye, a consultant hired by Capital to assess the fire suppression needs on the Pier. That report had been presented to the Advisory Group and had been used by Capital in developing its proposal for fire suppression on the Pier. Capital also introduced the minutes of the Advisory Group meetings.

At the close of Capital's case, Getty moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a) (1). Getty argued that "[t]here has been absolutely no testimony here regarding any particular regulation or any rule of law that Getty Properties did not comply with." This statement somewhat misstates the issue that was before the court. The issue was not whether Getty Properties had failed to comply with any regulation or rule of law. Rather, the issue was whether the improvements listed in Chief Bessette's letter were required in order to comply with "regulations" as that term was used in the Agreement, and therefore whether Getty Properties was responsible for paying the cost of installing those improvements.

In response to this motion, the court pressed Capital to "point [the court] to the regulation which requires the installation of the fire suppression system that you seek compensation for." Capital directed the court to R.I. Gen. Laws § 23-28.22-5,5 which with an exception not relevant here, states: "The construction, installation, use, storage, and maintenance of facilities storing, using, and dispensing flammable and combustible liquids within the scope of this chapter shall be in accordance with N.F.P.A. Standard 30, 1987 edition." Capital asserted that the 1987 edition of the National Fire Protection Association Standard 30 (NFPA 30), a "Flammable and Combustible Liquids Code" developed by a nongovernmental entity, was incorporated into Rhode Island law pursuant to R.I. Gen. Laws § 23-28.22-5, and thus constituted a "regulation" for the purposes of the Agreement.6

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The court asked Capital where the regulation was and Capital responded, "I can get a copy, I suppose." When asked whether it was introduced into evidence, Capital responded, "It's a matter of law, your Honor." The court continued to push Capital, stating, "Show me the Rhode Island Building Code which you say has force of law," to which Capital responded, "I don't have the building code." The court articulated its belief that the Standard should be part of Capital's papers in the case.

The court then asked for the citation. Capital responded, "It is NFPA 30 and the Rhode Island Building Code, your Honor, and I will find it and bring it to you, I promise, or at least I should say I will find it and try to bring it to you." The court stated that the violation of a regulation was the "bedrock of [Capital's] claim against Getty" and that it was...

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