American Petroleum Products, Inc. v. Mom and Pop Stores, Inc.
| Citation | 497 S.E.2d 616,231 Ga.App. 1 |
| Decision Date | 06 March 1998 |
| Docket Number | No. A97A2302,A97A2302 |
| Parties | , 98 FCDR 1053 AMERICAN PETROLEUM PRODUCTS, INC. v. MOM AND POP STORES, INC. |
| Court | United States Court of Appeals (Georgia) |
Henderson & Henderson, Richmond Hill, Michael P. Ludwiczak, Athens, for appellant.
Smith & Floyd, Terry K. Floyd, St. Marys, for appellee.
American Petroleum Products, Inc. ("American") filed suit against Mom and Pop Stores, Inc. ("Mom and Pop") for the balance due on an account. Mom and Pop counterclaimed, alleging fraud and seeking overcharges for freight, Florida pollution taxes and volume incentives. A jury awarded Mom and Pop $71,000. American appeals, and we affirm.
On October 26, 1988, Mom and Pop, a corporation which owns and operates convenience stores, entered into a dealer supply contract with Golden Isles Petroleum, Inc. ("Golden Isles"), a distributor of Amoco petroleum products, which obligated it to purchase all of its fuel needs from Golden Isles. The contract stated the fuel was to be priced on a cost plus a specified mark-up basis. The contract further stated that taxes and freight charges were to be added to the price. Golden Isles took the net Amoco price it paid for the fuel and added its mark-up according to the pricing policy, deducting allowances and credits due Mom and Pop under the contract and then adding "applicable" taxes and freight charges.
On January 1, 1991, American advised Mom and Pop it had purchased the Amoco franchise from Golden Isles and that "[t]here will be very few changes in the overall operation." Mom and Pop knew that the petroleum it received was being exported by American from the state of Florida.
Florida imposes three separate pollution taxes on petroleum produced within the state: (1) a water quality tax; (2) a coastal protection tax; and (3) an inland protection tax. The taxes are originally collected when the product is purchased at the refinery. However, an application can be made by the distributor for a refund of the water quality tax and inland protection tax if the product is ultimately exported from Florida. Mom and Pop was unaware of these pollution taxes and the refund procedure. In addition, while Florida law requires that any pollution taxes due are shown on an invoice relating to the wholesale transaction, the Florida pollution taxes were not shown on the invoices American sent to Mom and Pop.
Beginning in January 1991, American was being charged the three pollution taxes and passing this cost on to Mom and Pop as part of the purchase price. American began making monthly applications to Florida for refunds on two of the pollution taxes. It received its first refund in May 1992. American does not deny that it received refunds for pollution taxes which were included in the price of fuel charged to and paid by Mom and Pop. For the period of time American sold fuel to Mom and Pop and passed on the pollution taxes, it received refunds from Florida totaling nearly $144,000.
In April 1992, Mom and Pop discovered that it was losing money on its petroleum sales and asked American's representative why it was not making a profit. American provided Mom and Pop with a breakdown of its bills and paid Mom and Pop a "competitive allowance" for May and June 1992. The breakdown documents did not mention the Florida pollution taxes. In fact, the breakdown documents stated that American had sustained a loss as the result of giving Mom and Pop the allowance. However, American admitted at trial that it did make a profit on these months in the amount of the undisclosed pollution tax refunds.
Mom and Pop attempted to obtain Amoco invoices from American so it could compare American's actual cost of fuel to the prices being charged to Mom and Pop. American refused to produce or share the invoices it received from Amoco. The Amoco invoices for fuel sold to American contained an itemization of the pollution taxes. In December 1992, Mom and Pop began subscribing to a service which allowed it to check the daily price that Amoco was charging American. Mom and Pop concluded there were discrepancies between the prices American actually charged and the prices it should have charged. On February 11, 1993, Mom and Pop informed American that it was terminating the dealer supply contract.
Subsequently, Mom and Pop learned of the Florida pollution taxes and met with American regarding those taxes and the refund procedure. At the March 31, 1993 meeting, American admitted that it had been including refundable Florida pollution taxes in the price of fuel. However, American stated that it had not obtained any refunds of the pollution taxes. In addition, an American document discovered by Mom and Pop after the meeting indicated that the first application for pollution tax refunds would be April 1993. It is undisputed that American had been filing for pollution tax refunds since January 1991 and had received $62,000 in refunds by the time of the March 31, 1993 meeting.
The parties agreed to try and negotiate another dealer supply contract with a new pricing policy which specifically addressed the issue of how the pollution taxes would be handled. From April 1993 through July 1993, the parties attempted to reach an agreement and Mom and Pop continued to accept and pay for petroleum from American.
In April 1993, Mom and Pop contacted the Florida Department of Revenue to learn how to apply for and obtain refunds for the pollution taxes. Mom and Pop then contacted American, informed it that only American could obtain the refunds and stated that American had to attach the Amoco invoices showing the pollution taxes had been paid to the application for refund that it sent to the Florida Department of Revenue. American complained that doing this would entail a lot of work and that it would have to find the Amoco invoices. When Mom and Pop offered to assist American in preparing the refund applications, American responded that it would not allow Mom and Pop to see the Amoco invoices. American stated that while it might be able to obtain the refunds for future purchases, it could not receive refunds for back purchases. Mom and Pop specifically asked if American had already applied for the refunds, and American stated that it had not.
On June 7, 1993, Mom and Pop again spoke with American in an effort to obtain refunds of the prior pollution taxes paid by Mom and Pop and to discuss a new dealer supply contract. When Mom and Pop asked American why the pollution taxes were not shown on its invoices, American's representative responded, "Well, I just don't want to show it on the invoice." Later that month, American informed Mom and Pop that it would apply for a refund of the pollution taxes already paid and reimburse Mom and Pop for the taxes paid if Mom and Pop would sign a long-term contract. American admitted that it routinely withheld returning refund money so it could coerce customers into signing long-term contracts.
On June 15, 1993, Mom and Pop wrote a letter advising American that it would be doing business with another Amoco franchise. Mom and Pop faxed the same letter to American on July 8, 1993, because American continued to call Mom and Pop's store managers to obtain gas inventory levels. American stated that as long as its signs were on Mom and Pop's property, it would not allow Mom and Pop to receive gasoline from anyone else. Mom and Pop then instructed American to remove its signs, at which point American instructed Mom and Pop's new supplier not to deliver gasoline to the store.
In August 1993, Mom and Pop discovered from the Florida Department of Revenue that American had been receiving refunds since December 1991. As a result, Mom and Pop opened an escrow account and deposited an amount of money equal to the total invoices which American had rendered for fuel delivered from July 2, 1993 through July 8, 1993. American's deliveries during this period totaled approximately $71,000.
At trial, a certified public accountant in both Georgia and Florida agreed that regardless of whether the parties had a contract or not, the pollution taxes should not have been passed on to a dealer and then a rebate obtained and not given to the dealer. The expert also performed a comparative analysis of the prices for gasoline actually charged by American to Mom and Pop and the prices as they should have been computed pursuant to the dealer supply contract. The expert concluded that the total overcharges for the pollution taxes were $105,000 and the total for freight overcharges resulting from a ten percent volume discount from White's Fuel Oil to American was $5,000. Mom and Pop had also been overcharged $21,000 due to American's practice of rounding up pollution taxes. Finally, the expert found that Mom and Pop had been overcharged $15,000 due to American's failure to pass along volume incentives Mom and Pop was entitled to receive.
The evidence showed that the Florida pollution tax was not charged on fuel which American purchased from Amoco's Savannah, Georgia terminal and delivered to Mom and Pop, yet in at least one case American added an overcharge equal to the rate of the Florida pollution tax to Mom and Pop's fuel costs. Likewise, the tax was not imposed by Florida for fuel shipped in Amoco fuel trucks or by a subcontractor of Amoco, yet American charged Mom and Pop.
1. In its first enumeration of error, American contends the trial court erred in denying its motion for a partial directed verdict with regard to Mom and Pop's counterclaim for fraud. American argued that everyone is presumed to know the law and that Mom and Pop's president and bookkeeper admitted that if they had known the Florida tax law, they would have made further inquiry and would not have been misled. However, the record shows that Mom and Pop's president and bookkeeper actually stated that they would have made further inquiry if they known they were being charged the Florida pollution taxes.
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