DuFresne's Auto Service, Inc. v. Shell Oil Co.

• Decision Date: 30 April 1993
• Docket Number: No. 91-35709,91-35709
• Citation: 992 F.2d 920
• Parties: DuFRESNE'S AUTO SERVICE, INC.; Bobby L. Chaney; Denman Bird; Gerald Cochran; Bruce Chapman; Doll's Service Co., Inc.; Robert Peck; Dwight Estby Enterprises, Inc.; Gordon Olson; Norris Olson, Plaintiffs-Appellants, v. SHELL OIL COMPANY, a Delaware corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 920

992 F.2d 920

DuFRESNE'S AUTO SERVICE, INC.; Bobby L. Chaney; Denman Bird; Gerald Cochran; Bruce Chapman; Doll's Service Co Inc.; Robert Peck; Dwight Estby Enterprises, Inc.; Gordon Olson; Norris Olson, Plaintiffs-Appellants, v. SHELL OIL COMPANY, a Delaware corporation, Defendant-Appellee.

No. 91-35709.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 2, 1993.

Decided April 30, 1993.

David S. Shannon, Shannon, Johnson & Bailey, Portland, OR, for plaintiffs-appellants.

William N. Mehlhaf, Markowitz, Herbold, Glade & Mehlhaf, Portland, OR, for defendant-appellee.

Appeal from the United States District Court for the District of Oregon.

Before: TANG, POOLE and RYMER, Circuit Judges.

RYMER, Circuit Judge:

A group of Shell-brand gasoline dealers in the Portland, Oregon area appeals the district court's grant of summary judgment in favor of Shell Oil Company in an action under the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801-2806 (1978). The dealers seek declaratory relief and damages for termination and nonrenewal without notice of their franchises and franchise relationships. These claims arise out of Shell's 1987 assignment of the dealers' franchise contracts to Panoco, Inc., the dealers' subsequent execution of contracts for supply and sale of Shell-branded motor fuels with Panoco, and the expiration of the dealers' franchises with Shell in 1988.

The district court granted summary judgment on the ground of claim preclusion. At the time of its decision, there was a final judgment in a state court action by the same dealers for breach of contract against Shell and Panoco. Chaney v. Shell Oil Co., Multnomah County Circuit Court No. A8903-01752 (Or.Cir.Ct.1989). In the meantime, however, the Chaney judgment has been affirmed as to some claims but reversed as to others. Chaney v. Shell Oil Co., 111 Or.App. 556, 827 P.2d 196 (Or.Ct.App.), review denied, 313 Or. 299, 832 P.2d 455 (Or.1992).

The dealers' appeal challenges the preclusive effect of Chaney on this action. Shell argues that summary judgment may also be affirmed on the basis of the one-year statute of limitations in the PMPA. The dealers respond that this action is not time-barred because they did not know and should not have discovered that Shell had terminated their franchises or failed to renew their franchise relationships prior to November 1989 when Shell raised discharge of its liability on the dealers' franchises by way of affirmative defense in Chaney.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm on the ground that the dealers' action is barred by the statute of limitations.

I

Until February 1987, Shell supplied gasoline directly to Portland dealers and leased gas station properties to them under franchise contracts for the supply of Shell gasoline and the dealers' use of Shell's trademark. Most of the dealers also had motor fuel station leases with Shell. However, in September 1986 Shell entered into a purchase agreement with Panoco, Inc., a jobber, or "distributor" under the PMPA, of Shell-branded products in Oregon, by which all service station properties owned by Shell were sold to Panoco and both leases and supply agreements with the Portland dealers were assigned to Panoco. The agreement required Panoco to assume Shell's obligations under the assigned contracts. Shell also entered into an ancillary franchise agreement with Panoco which permitted Panoco to use Shell's trademark and all dealers to use the trademark in connection with their resale of Shell-branded gasoline. Shell notified the dealers before the assignment was to become effective. This kicked off a series of lawsuits of which this action is one.

First, in 1986, a group of dealers, some of whom are plaintiffs in the present action, sought to enjoin Shell from assigning their franchise contracts to Panoco on the ground that the assignment constituted an improper termination of their Shell franchises in violation of the PMPA. Fresher v. Shell Oil Co., No. CV-86-1307 (D.Or.1986). The district court dismissed the action and we affirmed in Fresher v. Shell Oil Co., 846 F.2d 45 (9th Cir.1988). We observed that "[a] franchise is defined in terms of three elements: a contract to use the refiner's trademark, a contract for supply of motor fuel to be sold under the trademark, and a lease of the premises at which the motor fuel is sold[,]" id. at 46-47, and held that the assignment to Panoco did not constitute a termination of the franchises under the PMPA.

By July 1, 1987 all of the dealers, with the exception of Gordon and Norris Olson, had signed franchise agreements with Panoco. The Olsons continued to buy Shell-branded gasoline from Panoco under an oral agreement. Shell's franchise contracts with all of the dealers expired by their terms by the end of 1988, except for the contract with Bruce Chapman, which had an expiration date of August 31, 1991.

On July 20, 1988, counsel for the dealers wrote a demand letter to Shell asserting that Shell had breached its contractual obligations regarding, among other things, the price at which the dealers purchased gasoline. Shell responded that it would discuss the claims but believed no cause of action was stated. The dealers then filed federal and state court actions against Shell and Panoco alleging common law contract and tort claims, and Oregon state law claims arising out of the assignment of the franchises. The federal action, DuFresne v. Shell Oil Co. (DuFresne I), No. CV-89-339-PA (D.Or.1989), was dismissed for failure to join an indispensable party, but each of the plaintiffs and defendants was joined in the state court action, Chaney v. Shell Oil Co. The state trial court granted summary judgment on or dismissed all claims against Shell.

Chaney was pending on appeal when the instant suit (DuFresne II ) was filed in district court in the District of Oregon on October 1, 1990. By consent of the parties, the case was assigned to Magistrate Judge George Juba pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73.

The dealers assert in this action that Shell has not terminated or nonrenewed their franchises, but that if it has, the termination was effective November 9, 1989 when Shell filed an affirmative defense in Chaney alleging that it was discharged from any contractual liability when the dealers entered into new franchise contracts with Panoco. They allege that the termination was without notice as required by 15 U.S.C. § 2804, and violated the dealers' rights under the PMPA.

Shell moved for summary judgment on the grounds that the dealers' execution of new franchise agreements with Panoco discharged Shell's PMPA liability, the claims are barred by the one-year PMPA statute of limitations, and the claims are barred by the claim preclusive effect of the judgment in Chaney. The district court initially granted summary judgment for Shell on statute of limitations grounds, then granted the dealers' motion for reconsideration and vacated its order of summary judgment. It did so on the footing that the November 1989 affirmative defense was an attempted "notice" which started the statute running--because the notice came after the expiration of the underlying franchise agreements but during the course of continuing franchise relationships, and was done without complying with the PMPA notification requirements. On May 30, 1991, the district court again granted summary judgment for Shell, this time on the ground of claim preclusion. This timely appeal followed.

After briefing of this appeal, the Oregon Court of Appeals affirmed dismissal of the contract claims as to those plaintiffs whose agreements with Shell had expired by January 20, 1988, and reversed the judgment as to Chapman and Doll's Service Co., Inc., whose agreements expired after that date. Chaney v. Shell Oil Co., 111 Or.App. 556, 827 P.2d 196, review denied, 313 Or. 299, 832 P.2d 455 (1992). We ordered supplemental briefing on the effect of the appellate court decision on the district court's judgment, which was based on principles of res judicata (claim preclusion). However, given our view that the judgment must stand because the dealers' claims are time-barred, we do not reach the issue of claim preclusion.

II

A district court's grant of summary judgment is reviewed de novo. Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, 496 U.S. 937, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir.1989). We may affirm a summary judgment on any ground supported by the record. United Ass'n of Journeymen & Apprentices of Plumbing, Local 342 v. Valley Engineers, 975 F.2d 611, 613 (9th Cir.1992), amended on other grounds, (9th Cir. Oct. 16, 1992). A ruling on the appropriate statute of limitations is reviewed de novo. Felton v. Unisource Corp., 940 F.2d 503, 508 (9th Cir.1991).

III

The PMPA contains its own statute of limitations. PMPA claims must be brought within one year after the later of

(1) the date of termination of the franchise or non-renewal of the franchise relationship; or

(2) the date the franchisor fails to comply with the requirements of section 2802 or 2803 of this title.

15 U.S.C. § 2805(a).

Shell argues that the district court was correct in its initial decision that § 2805(a)(1) applies to the dealers' claims and that the one-year period at the latest began to run from the date when a nonrenewal would have occurred, that is, when the franchise contracts of all dealers but Chapman expired. It contends that since there was no actual termination, Chapman's claim is really for "constructive termination," and that such a claim is time-barred because it...