853 F.2d 268 (4th Cir. 1988), 87-3843, Jimenez v. BP Oil, Inc.

Docket Nº:87-3843(L), 87-3854 and 87-3855.
Citation:853 F.2d 268
Party Name:Francisco S. JIMENEZ, Plaintiff-Appellee, v. BP OIL, INC., Defendant-Appellant. James PALMER; Torsak Rossaki; French Ray; Leon Uzarowski; Anton A. Bond; Farzin Afsahi; Ojan Fakhriyazdi; Firouz Rezazedeh; Sam Akindura; Edward Parlier; Luiz Azucena; Lal Ith Gnanasiri; Yoav Portnoy; Boo H. Chung; Jeffrey H. Kormann, Plaintiffs-Appellees, v. BP Oil, In
Case Date:August 08, 1988
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 268

853 F.2d 268 (4th Cir. 1988)

Francisco S. JIMENEZ, Plaintiff-Appellee,

v.

BP OIL, INC., Defendant-Appellant.

James PALMER; Torsak Rossaki; French Ray; Leon Uzarowski;

Anton A. Bond; Farzin Afsahi; Ojan Fakhriyazdi; Firouz

Rezazedeh; Sam Akindura; Edward Parlier; Luiz Azucena;

Lal Ith Gnanasiri; Yoav Portnoy; Boo H. Chung; Jeffrey H.

Kormann, Plaintiffs-Appellees,

v.

BP Oil, Inc., Defendant-Appellant.

Carlos HORCASITAS, Plaintiff-Appellee,

v.

BP OIL, INC., Defendant-Appellant.

Nos. 87-3843(L), 87-3854 and 87-3855.

United States Court of Appeals, Fourth Circuit

August 8, 1988

Argued April 7, 1988.

Rehearing Denied Nov. 16, 1988.

Page 269

John Henry Lewin, Jr. (Arthur W. Machen, Jr., Venable, Baetjer & Howard, Baltimore, Md., on brief), for defendant-appellant.

Harry Carl Storm (Abrams, West & Storm, P.C., Bethesda, Md., on brief), for plaintiffs-appellees.

Before WIDENER, and CHAPMAN, Circuit Judges, and MICHAEL District Judge for the Western District of Virginia, sitting by designation only.

CHAPMAN, Circuit Judge:

This case involves the nonrenewal of a petroleum retailing franchise. The district court, 652 F.Supp. 329 (D.Md.1987), ruled that defendant BP Oil Company (BP) was liable to its franchisee-retailer, Francisco Jimenez, for goodwill payments, construing the nonrenewal as a "termination" under the Maryland Gasohol and Gasoline Products Marketing Act ("the Act" or "the Maryland Act"), Md. Comm. Law Code Ann. Secs. 11-301 to -308 (1983). It also ruled that the Federal Petroleum Marketing Practices Act (PMPA), 15 U.S.C. Sec. 2801 et seq. (1982), does not preempt the Maryland Act. Although the district court said BP had not violated the PMPA, it did find that its nonrenewal of the Jimenez' franchise was a termination under the Act, entitling Jimenez to payment for goodwill. The court thus granted summary judgment to appellees on their claim for payments under the Act, but found for appellant BP on the issue of liability under the PMPA. We find that the PMPA preempted the Maryland Act under the facts of the instant case, and we reverse.

I

Plaintiffs Jimenez, Horcasitas, and Palmer were multistation BP franchisees who operated in the Baltimore-Washington area pursuant to three-year franchise agreements. The franchises were scheduled to expire on April 30, 1985. For some time BP had been rethinking its decision to distribute petroleum products in that area. On April 18, 1985, it notified its plaintiffs that it would extend their franchises to October 31, 1985, and it would then determine whether it would remain in the local market and drop some less profitable distributorships, or whether it would completely exit the market. In September 1985 BP entered an agreement with Crown Central Petroleum Corporation ("Crown") by which Crown would purchase all of BP's Baltimore-Washington retail stations as of April 1, 1986. BP notified its franchisees of this agreement by letter dated October 17, 1985. BP then extended its franchises with plaintiffs through April 1, 1986, eleven months beyond the initially scheduled franchise expiration date.

Crown offered current BP franchisees franchises with terms less favorable than the BP franchise: particularly, Crown's prohibition of its franchisees operating more than one station. As a result, some of the BP franchisees, including plaintiffs, rejected offers of Crown franchises.

As planned, BP withdrew from the Baltimore-Washington market, and the Crown franchises with some of the former BP station owners became effective April 1, 1986. The plaintiffs brought an action on March 26, 1986 seeking a temporary injunction to prevent the termination of their BP franchises. They asserted that BP willfully violated the PMPA, and they sought goodwill payments under the Maryland Act. The United States District Court for the District of Maryland denied such relief.

Plaintiffs amended their complaint on July 18, 1986 and alleged that BP violated the PMPA, 15 U.S.C. Sec. 2802(b)(2)(E)(iii)(II), which provides that when a franchisor sells his interest in marketing premises, the purchaser must offer a franchise with terms and conditions "which are not discriminatory to the franchisee as compared to franchises then currently being offered" by the

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purchaser of seller's franchises. Plaintiffs reiterated their claim under the Maryland Act for goodwill payments as a result of the termination of their franchises.

The district court granted summary judgment for BP on the claims under the PMPA. It determined that the terms offered by Crown were nondiscriminatory and that BP's decision to exit the market was a "good faith" economic reason for termination or nonrenewal of their franchises. See 15 U.S.C. Sec. 2802(b)(2)(E).

The district court found for plaintiffs on their claims for goodwill under the Maryland Act. It found that the PMPA did not preempt the Maryland Act because the provisions of the state law as to goodwill payments upon franchise termination were not inconsistent with PMPA but were supplemental thereto. The court held that the instant case involved a termination rather than a "reasonable nonrenewal" for purposes of the Act and that plaintiffs were entitled to goodwill under the Maryland statute.

BP appeals. Its threshold argument is that the Act was...

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