LLB Convenience & Gas, Inc. v. Se. Petro Distribs., Inc.
| Decision Date | 12 June 2020 |
| Docket Number | Case No. 6:18-cv-914-Orl-40EJK |
| Citation | 476 F.Supp.3d 1225 |
| Parties | LLB CONVENIENCE & GAS, INC., Plaintiff, v. SOUTHEAST PETRO DISTRIBUTORS, INC., Defendant. |
| Court | U.S. District Court — Middle District of Florida |
Kevin A. Reck, Sarah Guo, Foley & Lardner, LLP, Orlando, FL, for Plaintiff.
Robert MacFarlane Mayer, Robert M. Mayer & Associates, Miami, FL, for Defendant.
This cause is before the Court following a three-day bench trial beginning on February 24, 2020. Having considered the pleadings, evidence, argument, and relevant legal authority, and having made determinations on the credibility of the witnesses, the Court hereby renders its decision on the merits of this case pursuant to Federal Rule of Civil Procedure 52.
A. Background
Defendant Southeast Petro Distributors, Inc. ("Southeast "), is a wholesale distributor of petroleum products. (Doc. 50, ¶¶ 4, 6). Plaintiff LLB Convenience & Gas, Inc. ("LLB "), is corporation that owns and operates a gas station located at 8788 Vineland Avenue, Orlando, FL 32821 ("Vineland Station " or "Station "). (Doc. 44, ¶ 6). LLB entered into a franchise agreement with Southeast for the supply of motor fuel. (Doc. 14-1; Pl. Ex. 1). LLB now claims that Southeast violated the Petroleum Marketing Practices Act ("PMPA " or "Act "), 15 U.S.C. § 2801, et. seq. (Doc. 44), by terminating the franchise without providing the required notice. (Count One) (Id. ¶¶ 43–44). LLB also alleges that Southeast's conduct constitutes anticipatory repudiation "by refusing to supply LLB with Shell-branded motor fuels and by demanding [LLB] debrand the Vineland Station." (Count Two) (Id. ¶ 54). Finally, LLB claims Southeast breached the Dealer Supply Agreement by refusing to allow LLB to continue processing Shell's credit cards via the Shell system. (Count Three) (Id. ¶¶ 62–63).
Southeast obtains Shell-branded fuel pursuant to a Wholesale Marketer Agreement ("WMA ") with Motiva Enterprises, LLC ("Motiva "). (Doc. 50; Pl. Ex. 7). The WMA grants Southeast Petro permission to use the Shell trademark at service stations subject to the terms of the WMA.
(Id. ).1 The WMA requires Southeast to follow, and to cause its franchisee retail outlets ("Retail Outlets ") to follow, "all rules, regulations, standards, and guidelines [Motiva] establishes from time to time relating to the use and display of the [Shell] Identifications." (Pl. Ex. 7, ¶¶ 5(c), 7). For instance, Southeast must ensure that its Retail Outlets "diligently and efficiently merchandise[ ] and promote[ ]" the Shell fuel; conduct operations "in a professional, business-like, ethical and moral manner"; provide the public "with prompt, courteous, and efficient service"; and "promptly and courteously respond to any customer complaints (including written responses when appropriate) and take immediate action to resolve satisfactorily each customer complaint." (Id. ¶ 7(c)–(e)). If any Southeast Retail Outlet fails to meet Motiva's brand standards, the WMA grants Motiva the power to "revoke its permission to display the [Shell] Identifications at the [Retail Outlet]." (Id. ¶¶ 7(b), 24).2
Southeast and LLB entered into a Dealer Supply Agreement ("DSA "). Pursuant to the DSA, Southeast agreed to supply LLB with Shell-branded fuel and to permit LLB to use the Shell Identifications at the Vineland Station. (Pl. Ex. 1, ¶ 2(a)). "LLB [was also] authorized to use the credit card programs currently being offered by [Motiva]"—namely, Shell's credit card processing system. (Id. ¶ 12). This allowed the Vineland Station to "make sales of products and services ... to persons presenting a valid credit card listed and approved by [Motiva]." (Id. ). In executing the DSA, LLB acknowledged and agreed that "[e]ach of Shell's brands ... [were] ... owned by [Motiva]" and that LLB had "no rights therein except as permitted by [Motiva]." (Id. ). LLB also agreed to "use Shell's brands only in accordance with standards established by [Motiva] from time to time" and that "[t]he privilege of using Shell's brands [would] automatically terminate when the franchise relationship between [Motiva] and [Southeast] [was] terminated, or on thirty (30) days’ written notice, in the event of [LLB]’s violation of any provision ... or any ... standards" in the DSA. (Id. ).
As illustrated in paragraph 3 of the DSA, LLB "understood that [Southeast] was obligated under its agreement with [Motiva] to abide by certain standards of operation and appearance." (Id. ¶ 3(a)). LLB agreed to comply with requirements imposed on it by Southeast. (Id. ). Notwithstanding this provision, the DSA is silent as to the price LLB could charge per gallon for Shell-branded fuel. The DSA gave Southeast "the right at any time to change, withdraw, substitute or add brands and grades of petroleum products, TBA, trademarks, identification signs or color schemes." (Id. ¶ 5). And, if Southeast's relationship with Motiva "terminate[d]" or the Shell "brand bec[ame] unavailable," Southeast agreed to rebrand the Vineland Station with another brand that it wholesales, such as BPAmaco, Citgo Oil, ExxonMobil or Sunoco. (Id. ¶ 6).
Congress enacted the PMPA in 1978 to protect motor fuel franchisees from arbitrary or discriminatory termination or nonrenewal of their franchise agreements. Shukla v. BP Expl. & Oil, Inc. , 115 F.3d 849 (11th Cir. 1997) ). The PMPA applies to four types of franchises, including contracts between "a distributor and a retailer, under which ... distributor ... authorizes or permits a retailer ... to use, in connection with the sale ... of motor fuel, a trademark which is owned or controlled ... by a refiner which supplies motor fuel to the distributor which authorizes or permits such use." 15 U.S.C. § 2801(1)(A)(iv). Thus, it is undisputed that the DSA between Southeast and LLB falls within the ambit of the PMPA. (Doc. 50, ¶ 5).3
The PMPA prohibits a franchisor from, inter alia , terminating a franchise unless the franchisor does so pursuant to one of the grounds enumerated in § 2802(b)(2) and meets the notification requirements contained in § 2804. 15 U.S.C. § 2802(a) – (b). If a franchisor fails to terminate a franchise in accordance with the PMPA, the franchisee may maintain a civil action under § 2805. The franchisee bears the threshold burden of "proving the termination of its franchise" within the meaning of the Act. Id. § 2805(c). Only then does the franchisor have the burden of establishing that it is entitled to one of the affirmative defenses permitted under the Act. Id. § 2805(c).
The Act specifies that "[t]he term termination includes cancellation[,]" but it does not further define the term "terminate" or its incorporated term "cancel." See id. § 2801(17). However, giving these terms their ordinary meanings, the Supreme Court has held that the PMPA "is violated only if an agreement for the use of a trademark, purchase of motor fuel, or lease of a premises is ‘put to an end’ or ‘annulled or destroyed.’ " Mac's Shell Serv., Inc. v. Shell Oil Prods. Co. LLC , 559 U.S. 175, 183, 130 S.Ct. 1251, 176 L.Ed.2d 36 (2010). The DSA contains an addendum which modifies the Rebranding Provision "to add that should [Southeast] notify [LLB] that [Motiva] has decided to withdraw from the market and that its brand is no longer available, then in that case [LLB] shall have the right, in its sole discretion, to terminate the [DSA] with 15 days written notice from date of notification." (Pl. Ex. 1, p. 12). The Court previously interpreted "no longer available" to mean "not possible to get or use" or "unable or unwilling to do something." (Doc. 81, p. 18). The Court concluded that the Rebranding Provision allowed Southeast to rebrand the Vineland Station in circumstances where the Shell brand became impossible "to get or use." ( Id. ).4
Anticipatory repudiation of a contract relieves the non-breaching party of its duty to perform under the contract and creates an immediate cause of action for breach of contract. Hosp. Mortg. Grp. v. First Prudential Dev. Corp., 411 So. 2d 181, 182 (Fla. 1982) ; Gaylis v. Caminis, 445 So. 2d 1063, 1065 (Fla. 3d DCA 1984) (); Twenty–Four Collection, Inc. v. M. Weinbaum Constr., Inc. , 427 So. 2d 1110, 1111 (Fla. 3d DCA 1983) ; see also Exim Brickell LLC v. PDVSA Servs. Inc. , 516 F. App'x 742, 758 (11th Cir. 2013) (); Fla. Stat. § 672.610. The non-breaching party must be willing and able to perform the contract at the time of the anticipatory repudiation. See, e.g. , Fla. Stat. §§ 672.610, 672.711 ; Hosp. Mortg. Grp. , 411 So. 2d at 182.
To state a claim for breach of contract under Florida law, a plaintiff must establish the following elements: (1) a valid contract; (2) a material breach; (3) causation; and (4) damages. Handi–Van, Inc. v. Broward Cty. , 116 So. 3d 530, 541 (Fla. 4th DCA 2013) ; Abbott Labs., Inc. v. Gen. Elec. Capital , 765 So. 2d 737, 740 (Fla. 5th DCA 2000).
LLB opened for business in February 2008. (Doc. 109, 33:19–22). Mr. Faisal Ansari, LLB's president and owner, increased the price charged for fuel from rack plus 30 to rack plus 80 cents per gallon. (Id. 32:25, 38:8–13). By August 2011, LLB was charging $5.99 per gallon for regular unleaded fuel. (Id. 39:13–23). At one point, LLB raised the price to $6.44 before lowering it back to $5.99 due to negative press...
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