Division of Triple T Service, Inc. v. Mobil Oil Corp.

• Citation: 60 Misc.2d 720,304 N.Y.S.2d 191
• Parties: , 1970 Trade Cases P 73,085, 6 UCC Rep.Serv. 1011 DIVISION OF the TRIPLE T SERVICE, INC. d/b/a Eastchester Service Center, Plaintiff, v. MOBIL OIL CORPORATION, Defendant.
• Decision Date: 05 September 1969
• Court: United States State Supreme Court (New York)

Page 191

304 N.Y.S.2d 191

60 Misc.2d 720, 1970 Trade Cases P 73,085,

6 UCC Rep.Serv. 1011

DIVISION OF the TRIPLE T SERVICE, INC. d/b/a Eastchester

Service Center, Plaintiff, v. MOBIL OIL CORPORATION, Defendant.

Supreme Court, Westchester County.

Sept. 5, 1969.

Engelman, Kiernan & Fishman, New York City, for plaintiff.

Bleakley, Platt, Schmidt, Hart & Fritz, White Plains, for defendant.

JOSEPH F. GAGLIARDI, Justice.

Motion by plaintiff for an injunction Pendente lite; and cross-motion by defendant for an order dismissing the complaint for failure to state a cause of action, are disposed of in accordance with the following decision.

Plaintiff, the lessee of certain premises operated as an automobile service station in the Town of Eastchester, brings this action for a permanent injunction to restrain defendant, the lessor, from terminating a 'franchise' or 'distributorship' agreement. On July 5, 1966, the parties executed a retail dealer contract and service station lease for a term of three years, both agreements to commence on August 1, 1966 and end on July 31, 1969, unless renewed as provided for in the agreements. Said contracts in fact superseded a certain similar agreement dated July 17, 1964, that plaintiff had executed with defendant or one of its affiliates. Plaintiff has been operating an automobile service station on the demised premises since July 17, 1964, and alleges that he has expended substantial sums of monies for improvements thereon.

The July 5, 1966 retail dealer contract denominates defendant as 'seller' and plaintiff as 'buyer' of defendant's products listed in the agreement. The contract provides that the seller shall sell and the buyer shall buy not less than the minimum nor more than the maximum quantity of specified products for any contract year. Pursuant to the contract and the separate lease agreement of even date, plaintiff was obligated to purchase various petroleum products and automobile accessories from defendant and pay a monthly rental computed on the purchases of motor fuel. Pursuant to a 'Rent Security Rider' incorporated in the lease, plaintiff deposited $1,500 as security which sum was returnable to him upon termination of the agreements and in 'the event that (plaintiff) shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of said Lease and Retail Dealer Contract * * *.' The parties also entered into an equipment loan agreement whereby defendant loaned plaintiff certain equipment necessary to the successful operation of the service station. Plaintiff agreed to maintain insurance and indemnify defendant against liability for injuries caused any person on the demised premises. These agreements are standard forms used by the defendant and common to the industry.

The retail dealer contract and lease each provide in paragraph two thereof that the original term of the agreements shall be for three years and is automatically renewable for successive three year periods 'provided that it shall terminate at the end of any current period (original or renewal) by notice from either party to the other, given not less than 90 days prior to such termination, * * *.' Said paragraph also gives the defendant the right to cancel the agreements on 30 days' notice during the first 12 months of the agreements.

On April 25, 1969, defendant's district manager notified plaintiff by certified mail that defendant elected to terminate the lease agreement because a 'further renewal of the lease would be inadvisable.' Plaintiff thereafter learned that defendant's proposed reason for termination is its desire to convert the property into a diagnostic and repair service center. Plaintiff notified defendant that such conversion would require changes in the applicable zoning ordinances and requested defendant to extend the term of the lease until such time as defendant could lawfully operate a diagnostic center. Plaintiff also requested that defendant attempt to locate another area where plaintiff could operate a service station. Defendant has refused the first request and done nothing about the second.

The parties appear to agree that plaintiff's performance has been more than satisfactory during the latest three-year period. Nor does plaintiff claim that defendant did not fulfill its obligations under the contract and lease. Furthermore, no questions of fraud, duress, deceit, coercion, mistake, misrepresentation or ignorance are raised. Nevertheless plaintiff contends that defendant's arbitrary action is not in good faith as required by the Uniform Commercial Code and is an attempt to seize the good will created by plaintiff during his five-year leasehold. Plaintiff further contends that defendant's failure to renew constitutes unfair practices under the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)) and amounts to conduct in illegal restraint of trade under the Sherman Act (15 U.S.C. § 1(d)). However, on a motion to dismiss pursuant to CPLR 3211 the Court may, as requested by plaintiff in his affidavit in opposition to the cross-motion, consider such motion as one for summary judgment (Mareno v. Kibbe, 32 A.D.2d 825, 302 N.Y.S.2d 324 (2d Dept.)), and plaintiff must come forward with evidence which will raise an issue as to the facts pleaded (CPLR 3211, subd. (c); Leonard v. Leonard, 31 A.D.2d 620, 296 N.Y.S.2d 375). Considering the allegations in the complaint as to violations of federal statutes, and in the absence of any evidence contained therein or in the motion papers and affidavits submitted hereon which 'show a genuine issue of fact' (Silinsky v. State-Wide Ins. Co., 30 A.D.2d 1, 6, 289 N.Y.S.2d 541, 548), those 'causes of action' are dismissed (see 8 Encyclopedia, New York Law of Contracts, ch. 29; City Trade & Ind. v. New Central Jute Mills Co., 25 N.Y.2d 49, 302 N.Y.S.2d 557, 250 N.E.2d 52). Nevertheless, '(a) motion to dismiss a complaint cannot be granted if it contains any valid cause of action' (Rosenblatt v. Birnbaum, 16 N.Y.2d 212, 216, 264 N.Y.S.2d 521, 523, 212 N.E.2d 37, 38). The Court looks to substance and not form (Kaufman v. Sweigard, 27 A.D.2d 717, 277 N.Y.S.2d 498) and it must determine whether plaintiff has sufficiently set forth a cause of action for improper termination of a sales contract under the Uniform Commercial Code. 'The inquiry is whether the pleader has a cause of action rather than whether he has properly stated one' (Kelly v. Bank of Buffalo, 32 A.D.2d 875, 302 N.Y.S.2d 60).

Before discussing the merits it should be noted that the relief requested by plaintiff (a temporary and eventually a permanent injunction) is not provided for in the Code (Uniform Commercial Code, Article 2, Part VII; see 17 A.L.R.3d 1010 et seq., Anno., 'Uniform Commercial Code--Sales'). However, it does provide that where the seller fails to deliver the goods the buyer, in a proper case, may obtain specific performance (Uniform Commercial Code § 2--711(2) (b)). The Code further provides that specific performance 'may be decreed where the goods are unique or in other proper circumstances' (Uniform Commercial Code § 2--716(1)). Official Comment 2 to the last cited section states in pertinent part:

'The test of uniqueness under this section must be made in terms of the total situation which characterizes the contract. Output and requirements contracts involving a particular or peculiarly available source or market present today the typical commercial specific performance situation * * *.'

While the complaint herein seeks a permanent injunction it is clear that the effect of a favorable decision will be to require defendant to maintain its business relationship with plaintiff, albeit perhaps at a different location. This is a form of specific performance which is properly accorded to requirements contracts and other agreements akin thereto (cf. 12 Carmody-Wait 2d, Injunctions §§ 78:37, 78:41). As will be indicated Infra, the federal courts have not hesitated in the exercise of their equitable discretion to grant injunctions under the 'Dealers' Day-in-Court Act' (15 U.S.C. § 1221 et seq.) despite the absence of any statutory injunctive remedy specifically conferred upon the franchisee. Moreover, Governor Rockefeller did not approve the proposed New York State franchise legislation, which shall also be discussed hereafter, on the ground that the injunctive remedies granted to franchisees was too broad and that it would be advisable to leave to the courts any question of injunctive relief. Clearly, the power to issue injunctions is inherent in the courts (Schwartz v. Lubin, 6 A.D.2d 108, 110--111, 175 N.Y.S.2d 652, 654--655), and it is the policy of this State to make the remedy more available, not to restrict it (Peo. ex rel. Bennett v. Laman, 277 N.Y. 368, 383, 14 N.E.2d 439, 445). Since the avowed purpose of the Code is to enable the judiciary to fashion relief according to the commercial nature of the transaction an injunction Pendente lite or permanent in nature may, in the exercise of discretion, be granted pursuant to established principles (Polin v. Kaplan, 257 N.Y. 277, 177 N.E. 833; Butterick Pub. Co. v. Frederick Loeser & Co., 232 N.Y. 86, 133 N.E. 361; Belmont Quadrangle Drilling Corp. v. Galek, 137 Misc. 637, 244 N.Y.S. 231; Spielman v. Sigrist, Sup., 72 N.Y.S.2d 861; Berrien v. Pollitzer, 83 U.S.App.D.C. 23, 165 F.2d 21; CPLR 6301; 12 Carmody-Wait 2d, Injunctions §§ 78:46--48).

The ultimate question raised herein is whether franchisors or distributors with tremendous bargaining power can terminate agreements with franchisees pursuant to their contract but without cause? Plaintiff offers for the Court's consideration a plethora of cases concerning price fixing and restraint of trade, which is not this case, and cases involving the 'Dealers' Day-in-Court Act' (15 U.S.C. § 1221 et seq.; see General Business Law § 197). While the federal legislation governing the automobile industry is not applicable at bar, it and...