Anand v. Bp West Coast Products LLC

• Decision Date: 12 April 2007
• Docket Number: No. CV 06-1896 MMM (EX).,CV 06-1896 MMM (EX).
• Parties: Usha ANAND, an individual, Plaintiff, v. BP WEST COAST PRODUCTS LLC, a Delaware limited liability company, and Does 1 through 25, inclusive Defendants.
• Court: U.S. District Court — Central District of California

484 F.Supp.2d 1086

Usha ANAND, an individual, Plaintiff, v. BP WEST COAST PRODUCTS LLC, a Delaware limited liability company, and Does 1 through 25, inclusive Defendants.

No. CV 06-1896 MMM (EX).

United States District Court, C.D. California.

April 12, 2007.

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James N. Kahn, Thomas P. Bleau, Bleau Fox and Fong, Los Angeles, CA, for Plaintiff.

John D. Arya, Deborah Y. Jones, Kurt Osenbaugh, Sayaka Karitani, Weston Benshoof Rochefort Rubalcava & MacCuish, Los Angeles, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

MORROW, District Judge.

On March 29, 2006, plaintiff Usha Anand filed this action against defendant BP West Coast Products LLC ("BP") and certain fictitious defendants. Plaintiff was formerly a party to an ARCO service station franchise agreement with defendant. She alleges that defendant violated the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801-2806, by failing to renew the agreement in bad faith and outside of the normal course of business, and by subsequently selling the service station to her at a price above its fair market value. She seeks compensatory damages, punitive damages, attorney's fees and costs, as well as declaratory relief. On March 5, 2007, defendant filed a motion for summary judgment.

I. FACTUAL BACKGROUND

Anand is a former ARCO service station dealer, whose am/pm MINI-Market and PMPA Franchise Agreements with defendant BP expired on April 1, 2005.¹ Anand's service station and the land on which it was situated were owned by BP.² In August 2004, as part of its "L.A. Network Plan," BP decided to cease doing business at plaintiff's location and sell the property, both because there was another ARCO am/pm location nearby and because BP would have had to make a substantial investment in the station to bring it up to current BP standards.³ As a result, on August 26, 2004, BP sent a notice of franchise non-renewal to Anand via certified mail. The notice stated that the franchise agreements would not be renewed when they expired on April 1, 2005, and that she would receive either a sales offer from BP or be given a right of first refusal regarding third-party offers for sale.⁴

BP then commissioned an independent MAI appraisers⁵ to value plaintiff's station and — consistent with that appraisal — offered to sell the station to Anand for $1,131,000. BP sent Anand a standard form agreement for the sale of service stations to franchisees.⁶ The sales agreement contained, inter alia, the following provisions: (1) a mineral reservation, under which BP retained the rights to any minerals, oil, gas, or other hydrocarbon substances below a depth of 500 feet; and (2) a waiver of claims for delay or termination, under which Anand waived any claims against BP arising from termination of the sales agreement or delay in closing escrow due to the discovery before closing of environmental contamination on the property.⁷ The agreement also obligated Anand to execute and deposit into escrow a "Declaration of Environmental Restriction and Other Environmental Covenant and Condition,"⁸ under which, inter alia, she (1) waived all claims against BP arising from the presence of any environmentally hazardous materials on the property; (2) agreed, for a period of twenty-five years, not to excavate any soil at a depth greater than four feet in certain designated "Restricted Areas" on the property, i.e., locations where underground petroleum storage tanks were located or had previously been located, and where the station's above-ground "dispenser island" was located; and (3) agreed not to install any new underground petroleum storage tanks in the "Restricted Areas," other than replacements for the existing underground storage tanks.⁹

After receiving BP's offer, Anand applied for a purchase money loan from Citicorp, which commissioned its own appraiser to value the property;¹⁰ that appraiser concluded that the raw land, real property improvements, and other equipment at the site were worth $1,560,000.¹¹ Thereafter, on June 3, 2005, plaintiff's husband commissioned a third appraiser to value the station; he found that the real property and attendant equipment had a value of $950,000.¹²

II. DISCUSSION

A. Standard Governing Motions For Summary Judgment

A motion for summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.PROC. 56(c). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. On an issue as to which the nonmoving party will have the burden of proof, however, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. See id. If the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, "specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In judging evidence at the summary judgment stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all inferences in the light most favorable to the nonmoving party. See T.W. Electrical Service, Inc. v. Pacific Electrical Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). The evidence presented by the parties must be admissible. FED.R.CW.PROC. 56(e). In addition, conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Thornhill Pub. Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.1979); see also Falls Riverway Realty, Inc. v. Niagara Falls, 754 F.2d 49, 56 (2d Cir.1985).

B. Application Of The PMPA

"Recognizing the vast disparity in bargaining power between franchisors and franchisees in the petroleum industry, Congress enacted the PMPA in an attempt to level the playing field on which these parties interact." Beachler v. Amoco Oil Co., 112 F.3d 902, 904 (7th Cir.1997). As the Ninth Circuit has observed, "[t]he overriding purpose of Title I of the PMPA is to protect the franchisee's reasonable expectation of continuing the franchise relationship." Ellis v. Mobil Oil, 969 F.2d 784, 788 (9th Cir.1992); see also Patel v. Sun Co., Inc., 141 F.3d 447, 459 (3d Cir. 1998) ("The PMPA's goal is to protect a franchisee's `reasonable expectation' of continuing the franchise relationship while at the same time insuring that distributors have `adequate flexibility ... to respond to changing market conditions and consumer preferences,'" quoting Slatky v. Amoco Oil Co., 830 F.2d 476, 478 (3d Cir.1987) (en banc), and S. REP. No. 95-731, at 18-19 (1978), reprinted in 1978 U.S.C.C.A.N. 873, 877). To this end, the Act provides franchisees with certain protections against arbitrary termination or non-renewal. See Darling v. Mobil Oil Corp., 864 F.2d 981, 983 (2d Cir.1989) (the "overriding purpose" of the PMPA is to provide "protection for franchisees from arbitrary and discriminatory terminations or nonrenewals," quoting S. REP. No. 95-731 at 15, reprinted in 1978 U.S.C.C.A.N. at 874); Harris v. Equilon Enterprises, LLC, 107 F.Supp.2d 921, 924 (S.D.Ohio 2000) ("Congress enacted the PMPA in 1978 to protect franchisees from arbitrary or discriminatory termination or nonrenewal of their franchises"). One such protection is the requirement that any franchisor that decides to terminate or non-renew for a reason other than franchisee misconduct must do so "in good faith and the normal course of business." See 15 U.S.C. § 2802(b)(3)(D). A second is that a franchisor that has elected to terminate or non-renew for business reasons must make "a bona fide offer to sell, transfer or assign" its interest in the premises to the franchisee, or, where applicable, offer the franchisee a right of first refusal as to any third party offer received. Id. The bona fide offer provision "assur[es] the franchisee an opportunity to continue to earn a livelihood from the property while permitting the distributor to end the franchise relationship.'" Sandlin v. Texaco Refining and Marketing, Inc., 900 F.2d 1479, 1481 (10th Cir.1990) (quoting Slatky, 830 F.2d at 484).

The provisions of the PMPA must "be liberally construed consistent with the goal of protecting franchisees." Ajir v. Exxon Corp., 855 F.Supp. 294, 297 (N.D.Cal.1994), aff'd, 185 F.3d 865, 1999 WL 393666 (9th Cir.1999) (Unpub.Disp.); accord Unocal Corp. v. Kaabipour, 177 F.3d 755 (9th Cir.1999); see also Beachler, 112 F.3d at 904 ("[A]s remedial legislation, the PMPA must be given a liberal construction consistent with its overriding purpose to protect franchisees" (internal quotations omitted)).

1. Whether BP's Non-Renewal Decision Was Made in Good Faith and in the Normal Course of Business

"Under the PMPA, the franchisee has the initial burden of proving that his franchise was not renewed. The burden then shifts to the franchisor to demonstrate that the non-renewal was proper under the PMPA. The PMPA prohibits the termination or non-renewal of any gasoline industry franchise unless `such termination [or non-renewal] is based upon a ground' described in the PMPA." Reyes v. Atlantic Richfield Co., 12 F.3d...