Farm Stores, Inc. v. Texaco, Inc., 83-2153-Civ-SMA.
| Citation | 577 F. Supp. 682 |
| Decision Date | 29 December 1983 |
| Docket Number | No. 83-2153-Civ-SMA.,83-2153-Civ-SMA. |
| Parties | FARM STORES, INC., Plaintiff, v. TEXACO, INC., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Miami, Fla., for plaintiff.
Smathers & Thompson, Miami, Fla., for defendant.
THIS CAUSE was heard by the Court at a non-jury trial extending over the course of three days. Numerous witnesses testified, many exhibits were admitted into evidence, and the Court heard extensive oral argument by counsel for both parties, receiving and considering also pretrial memoranda of law, proposed findings of fact and conclusions of law as well as post-trial supplemental memoranda of law from both sides. The Court has had ample opportunity to observe the lay witnesses, the parties and their representatives, as well as an expert witness. Having fully considered all of the foregoing, the Court record, and being otherwise fully advised in the premises, the Court hereby renders this Memorandum Opinion thereon, including herein its Findings of Fact and Conclusions of Law as follows:
I. Nature of the Action
1. Plaintiff, FARM STORES, INC. ("FARM STORES"), filed this action against the Defendant, TEXACO, INC. ("TEXACO"), seeking a declaratory judgment, injunctive relief and damages. The Complaint alleges that TEXACO has failed to renew a gasoline station franchise relationship existing between it and FARM STORES in violation of the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq. (the "PMPA"). FARM STORES also seeks damages contending that TEXACO is indebted to it for certain sums of money, which TEXACO has failed and refused to pay. In addition, TEXACO, by way of Counterclaim, seeks Ejectment of FARM STORES from the premises and mesne profits.
II. Basis of Federal Jurisdiction
2. FARM STORES' Complaint arises from alleged violations of Sections 102 and 104 of the PMPA. The Court has jurisdiction over this action under Section 105 of the PMPA, 15 U.S.C. § 2805, under 28 U.S.C. § 1331 since this action arises under the laws of the United States and involves the requisite jurisdictional amount and under 28 U.S.C. § 1332 since this is an action between citizens of different states involving the requisite jurisdictional amount. The Court has ancillary jurisdiction over TEXACO's Counterclaim.
III. The Procedural Background
3. The Plaintiff, FARM STORES, is a Florida corporation with its principal place of business in Dade County, Florida. FARM STORES is engaged in the business of managing and operating approximately 265 convenience stores and related facilities which sell grocery and dairy products throughout the State of Florida. Approximately 90 of these facilities are utilized for the marketing of both food products and motor fuel. FARM STORES is a branded retailer/dealer in many of the locations. In others, it sells fuel under its own private label.
4. The Defendant, TEXACO, is a Delaware corporation operating as an integrated oil company. TEXACO is engaged in all aspects of the refining, production, distribution, and sale of motor fuel and other related petroleum products throughout the world, and is licensed and does business in the State of Florida. TEXACO conducts its business under trademarks consisting of the name "Texaco", and the logo known as the "Texaco Star", both of which it owns and controls.
5. In August of 1982, FARM STORES and TEXACO entered into a written contract (hereinafter the "Contract") relating to the use of marketing premises consisting of a gasoline island, a convenience store, and a car wash (hereinafter the "Facility"). The Contract provides for a term of one (1) year with automatic renewals for one (1) year terms.
6. In May of 1983, TEXACO, pursuant to the Contract, notified FARM STORES that it would not be renewing the contract relationship relating to the Facility at the end of the first year. On August 25, 1983, FARM STORES filed its Complaint and Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin TEXACO's non-renewal of the Contract. The Complaint alleges that the relationship between the parties is governed by the PMPA and that the notice received from TEXACO does not comply with the PMPA. The Complaint further alleges that FARM STORES has incurred certain expenses which TEXACO is required to reimburse but has failed to do so.
7. On August 30, 1983, a hearing was held on FARM STORES' Motion for Entry of a Preliminary Injunction. The parties stipulated that TEXACO's notice of non-renewal was sent on or about May 26, 1983. The parties also stipulated, and the Court finds, that no notice, if required under the PMPA was, in fact served by TEXACO upon FARM STORES.
8. On August 31, 1983, this Court entered a Preliminary Injunction in this cause.* At the time the Court determined, and herein affirms, that it is necessary to read the applicable provisions of the PMPA in pari materia, each with the other, and as applied to the Contract between the parties.
9. TEXACO filed its Answer, Affirmative Defenses, and Counterclaim for Ejectment on September 15, 1983. Therein, TEXACO admitted, and this Court finds, that venue is proper for purposes of this action. On September 30, 1983, FARM STORES filed its Answer and Affirmative Defenses to the Counterclaim.
IV. The Issue Presented
10. The principal issue presented is whether the contractual relationship existing between FARM STORES and TEXACO is the type of relationship which Congress intended to be protected under the PMPA. The applicability of the PMPA to the innovative gasoline/food marketing relationship examined in this case presents an issue of first impression. The resolution of this issue must be found in a review of the PMPA itself, the PMPA's legislative history, the Contract, and the factual background of this matter.
V. The Factual Background of the Contractual Relationship
11. This lawsuit arises out of a dispute concerning a right to occupy a convenience store and self-service gas station located at 18255 N.W. 57th Avenue, Dade County, Florida (the "Property"), which property was acquired by TEXACO in 1962, and has been continuously owned by TEXACO since that time.
12. TEXACO constructed a retail gasoline service station on the Property prior to January 1, 1979, and leased it to an independent dealer who operated a branded Texaco service station at the location. In 1979 the independent dealer left the Property, and TEXACO closed the location.
13. Prior to January 1, 1982, the Texaco branded station on the Property was destroyed by fire.
14. TEXACO, as owner of the Property, received numerous inquiries from parties interested in purchasing or leasing the property, including offers to lease or purchase made by FARM STORES, which FARM STORES initiated in 1979.
15. TEXACO undertook various studies concerning the prospective use of the Property which had a land market value of $400,000. TEXACO concluded that the best way to get motorists into the gas station through the year 2000 would be to have a combined operation of a self-serve gasoline outlet and a miniature convenience store on the same premises. TEXACO then began building such integrated structures, which it refers to as System 2000's. In 1982, a corporate decision was made by TEXACO to build a System 2000 on the Property. This particular System 2000 incorporates a car wash. (The "Facility"). The improvements to the Property cost TEXACO approximately $500,000.
16. Prior to and during the construction of the Facility, TEXACO considered various alternatives concerning the operation of the Facility and communicated with a number of interested parties, including FARM STORES, regarding the Facility's operation.
17. In the late Spring of 1982 TEXACO advised FARM STORES that it was negotiating a contract with the Southland Corporation, the owner of the 7-11 convenience store chain, and that the subject site would be awarded to Southland Corporation.
18. When advised of this selection, Richard E. King, the Vice President of FARM STORES, inquired whether there was something that FARM STORES could do in order to obtain this location. He was told that FARM STORES might still have a chance to get the location but only if Mr. King wrote a letter agreeing to sign the Contract "as written". Accordingly, on June 1, 1983, without any meaningful negotiation, Mr. King wrote the letter advising that he would accept the Contract as written. (Plaintiff's exhibit 13). Mr. King noted in his letter that "the document is not one we could accept, under ordinary circumstances". The Court finds that FARM STORES had tried for three years to obtain a presence at this valuable location, and Mr. King was, in essence, told "take it, or leave it" when presented with the Contract. See, Lyons v. Mobil Oil Company, 526 F.Supp. 961, 964 (D.Ct.1981). Interestingly, FARM STORES—not Southland Corporation —received the location.
19. TEXACO opened the Facility for sales by FARM STORES of motor fuel on behalf of TEXACO on September 1, 1982, and FARM STORES began selling groceries from the convenience store at the Facility on September 18, 1982.
20. The Contract provides in ¶ 1 that FARM STORES shall, at its own risk and expense, sell the items and services ordinarily offered at a convenience store and that FARM STORES shall receive all revenue and profits from such sales:
Texaco hereby grants Contractor Farm Stores for the term and upon the terms and conditions hereinafter set forth the right to use the Facility as a convenience store and Contractor is obligated to operate a convenience store, together with the building and other improvements thereon, and together the right to use all adjoining parking areas, driveways, sidewalks, roads, alleys and means of ingress and egress to the Facility. Contractor shall, at its own risk and expense, sell those...
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Farm Stores, Inc. v. Texaco, Inc., 84-5070
...98 (1964), found that Farm Stores was constructively covered by the PMPA and granted its claims for declaratory and injunctive relief, 577 F.Supp. 682. After thorough examination of the statute, the legislative history of the PMPA, the prior case law, and the record, we reverse the district......