Crown Cent. Petroleum Corp. v. Hill, 962601

• Decision Date: 06 June 1997
• Docket Number: No. 962601,962601
• Court: Virginia Supreme Court
• Parties: CROWN CENTRAL PETROLEUM CORPORATION, et al. v. Frank G. HILL, T/A Cedar Road Amoco Record

Page 345

488 S.E.2d 345

254 Va. 88

CROWN CENTRAL PETROLEUM CORPORATION, et al. v. Frank G. HILL, T/A Cedar Road Amoco

Record No. 962601.

Supreme Court of Virginia.

June 6, 1997.

Christine M. McAnney (Michael W. Robinson, David R. Lasso, Venable, Baetjer & Howard, on briefs), McLean, for plaintiffs.

Richard M. Bing, Richmond, for defendant.

Present: All the Justices.

LACY, Justice.

Pursuant to our Rule 5:42, the United States District Court for the Eastern District of Virginia, Norfolk Division, certified to this Court a question of Virginia law involving the application of the Virginia Petroleum Products Franchise Act, Code §§ 59.1-21.8 through 59.1-21.18:1 (the Act). The district court stated that the answer to the question will be determinative of a proceeding pending before it. We accepted the certification by order entered January 15, 1997.

The following facts are set forth in the district court's certification order. Crown Central Petroleum Corporation (Crown) is a petroleum refiner. It seeks to build a gasoline service station on property owned by its wholly-owned subsidiary, Fast Fare, Inc., and sell Crown gasoline at that station. Frank G. Hill operates a gasoline service station under a lease and dealer supply agreement with Amoco Oil Company, another petroleum refiner. Hill's station is located within one and one-half miles of Crown's proposed station.

Section 59.1-21.16:2(A) of the Act provides, in pertinent part, that:

no refiner of petroleum products shall operate any major brand, secondary brand, or unbranded retail outlet in the Commonwealth of Virginia with company personnel, a parent company, or under a contract with any person, firm, or corporation, managing a service station on a fee arrangement with the refiner; however, such refiner may operate such retail outlet with the aforesaid personnel, parent, person, firm, or corporation if such outlet is located not less than one and one-half miles ... from the nearest retail outlet operated by any franchised dealer.

Pursuant to 28 U.S.C. § 2201(a), Crown sought a declaratory judgment that this provision of the Act does not prevent Crown from building and operating the station on its property because the location prohibition applies only to retail outlets operated by a refiner within one and one-half miles of a retail outlet operated by a franchised dealer of that refiner. To resolve this issue, the district court certified the following question to us:

Whether the Virginia Petroleum Products Franchise Act, Va.Code § 59.1-21.16:2, was only intended to regulate intra brand competition, that is, competition among retailers of the same brand of products and representing the same company, or whether it was also intended to regulate interbrand competition, competition among retailers of different brands of products or representing different refiners as is contemplated by Crown's proposed use of its property.

We conclude that § 59.1-21.16:2(A) regulates interbrand competition because it prohibits a refiner from operating a retail outlet unless that outlet is located one and one-half miles or more from a retail outlet operated by a franchised dealer, including franchised dealers that are not franchisees of the refiner.

In construing statutes, courts are charged with ascertaining and giving effect to the intent of the legislature. City of Winchester v. American Woodmark Corp., 250 Va. 451, 457, 464 S.E.2d 148, 152 (1995). That intention is initially found in the words of the statute itself, and if those words are clear and unambiguous, we do not rely on rules of statutory construction or parol evidence, unless a literal application would produce a meaningless or absurd result. Id.; Allen v. Chapman, 242 Va. 94, 100, 406 S.E.2d 186, 189 (1991); Beach Robo, Inc. v. Crown Central Petroleum Corp., 236 Va. 131, 134, 372 S.E.2d 144, 146 (1988). The statutory language at issue here is clear on its face. It prohibits a refiner from operating any retail outlet in Virginia unless the outlet is located one and one-half miles or more from a retail outlet operated by "any franchised dealer." Nothing in the language used in the Act supports an interpretation that the franchised dealer must be a franchisee of the refiner.

Crown argues, however, that this interpretation improperly ignores explicit legislative findings contained in § 59.1-21.9 of the Act. That section states:

The General Assembly finds and declares that since the distribution and sales through franchise arrangements of petroleum products in the Commonwealth of Virginia vitally affect the economy of the Commonwealth, the public interest, welfare, and transportation, and since the preservation of the rights, responsibilities, and independence of the small businesses in the Commonwealth is essential to economic vitality, it is necessary to define the relationships and responsibilities of the parties to certain agreements pertaining thereto.

Crown asserts that these findings demonstrate that the General Assembly passed the Act to address the relationships between parties to franchise agreements and, therefore, the location prohibition contained in § 59.1-21.16:2(A) applies only to a refiner and its franchised dealer, and not to refiners and franchised dealers unrelated by such an agreement. To apply the location prohibition to such unrelated refiners and franchised dealers is, Crown concludes, inconsistent with the clearly expressed intent of the General Assembly. We disagree.

A number of sections in the Act do address the franchise relationship, such as those prescribing certain terms of the agreement, requiring disclosure of information prior to the execution of the agreement, and setting conditions regarding its termination. ¹ See §§ 59.1-21.11, -21.14, -21.15. The legislative findings, however, do not, as Crown suggests, compel an interpretation of the Act which restricts all economic regulation imposed by the Act to circumstances involving a refiner and its own franchisees.

Section 59.1-21.16:2, the...