Herman v. Charter Marketing Co., Civ. No. H-87-459 (PCD).

• Decision Date: 24 August 1988
• Docket Number: Civ. No. H-87-459 (PCD).
• Parties: Paul HERMAN, d/b/a Herm's Amoco v. CHARTER MARKETING COMPANY, et al.
• Court: U.S. District Court — District of Connecticut

692 F. Supp. 1458

Paul HERMAN, d/b/a Herm's Amoco v. CHARTER MARKETING COMPANY, et al.

Civ. No. H-87-459 (PCD).

United States District Court, D. Connecticut.

August 24, 1988.

Carl T. Holt, Farrell & Barr, Stamford, Conn., for plaintiff.

Steven M. Greenspan, Day, Berry & Howard, Hartford, Conn., for defendant.

RULING ON PENDING MOTIONS

DORSEY, District Judge.

I. Facts and Procedural History

On or about February 21, 1984, plaintiff and defendant¹ entered into a franchise agreement which authorized plaintiff to operate a service station. The lease between plaintiff and defendant provided an effective term from March 1, 1984 to February 28, 1987. Lease Agreement at 1.

Defendant had leased the real property on which the service station was located from Wethersfield Developers, Inc. ("underlying lease"). That lease had an initial expiration date of June 30, 1987. Plaintiff was not informed, in writing, of that date, but was told by defendant's representative, George Hubbard, of defendant's lease of the property and that that lease expired toward the end of plaintiff's lease. See Affidavit of Plaintiff (filed November 30, 1987) at ¶ 6; Deposition of Paul Herman at 48-49. Plaintiff also claims that defendant told him it had a five-year renewable option on the property so that the lease would effectively last for at least eight years. Id. The parties disagree as to when plaintiff was made aware of the fact that defendant did not, in fact, have a renewable option.

On September 18, 1986, defendant notified plaintiff that because Wethersfield Developers, Inc. had not agreed to extend its underlying lease, it could not renew plaintiff's lease beyond March 1, 1987.

Plaintiff alleges:

1. Defendant violated the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2802(c)(4), by failing to give him notification, in writing, prior to the commencement of the franchise, of the duration of the underlying lease and that said lease would not be renewed during the term or at the end of the franchise.

2. Defendant fraudulently misrepresented or omitted critical information concerning the underlying lease.

3. Defendant violated the Connecticut Fair Conduct in Franchising Act ("CFCFA"), Conn.Gen.Stat. § 42-133j, by not dealing in good faith with him insofar as it misrepresented or omitted information concerning the underlying lease.

4. Defendant violated the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn.Gen.Stat. § 42-100(a), et seq., by failing to inform him about the existence of and duration of the underlying lease.

5. Defendant violated CFCFA, Conn. Gen.Stat. § 42-133l (b) by failing to give him one year's notice of non-renewal of his lease.

Plaintiff now moves for summary judgment on Counts One and Five. Defendant has filed a cross-motion on those same counts.

II. Discussion

Plaintiff argues that § 2802(c)(4) of the PMPA requires that a franchisor provide the franchisee with written notification prior to the commencement of the franchise as to the duration of the underlying lease. Absent such written notification, plaintiff argues that defendant may not rely on § 2802(b)(2)(C) to justify its termination of the franchise. Accordingly, plaintiff requests the entry of summary judgment as to Count One.

Defendant argues that, while plaintiff was not provided with written notice concerning the expiration date of the underlying lease, it is undisputed that he was orally advised prior to the commencement of his lease with defendant that the underlying lease would expire at or near the time of the scheduled expiration date of his lease. It, therefore, claims that it complied with the intent of § 2802(c)(4) and is entitled to the benefit of § 2802(b)(2)(C). It further argues that plaintiff cannot claim that it relied upon defendant's erroneous representation that it had an option to renew the underlying lease for five years because, even if such an option existed, it was under no obligation to exercise such.

As to Count Five, plaintiff argues that defendant's September 18, 1986 notice that plaintiff's franchise would be terminated effective March 1, 1987, violated Conn.Gen. Stat. § 42-133l (b) because it did not provide plaintiff with one year notice of termination of his franchise. See Bellmore v. Mobil Oil Corp., 783 F.2d 300 (2d Cir.1986). Defendant argues initially, however, that § 42-133l (b) is preempted by the PMPA and that plaintiff cannot, therefore, recover any good will damages it may have incurred. Alternatively, it argues that § 42-133l(b) was not violated because plaintiff actually received more than one year notice that his lease would not be renewed if the underlying lease expired. Finally, defendant argues that plaintiff has no right to claim the protections of § 42-133l(b) because the relationship between the parties did not qualify as a franchise under the CFCFA inasmuch as the agreement did not impose on plaintiff a "marketing plan or system prescribed in substantial part" by defendant. Conn.Gen. Stat. § 42-133k(b).

A. Summary Judgment

Fed.R.Civ.P. 56(c) provides, in part, that summary judgment shall be rendered only when a review of the entire record demonstrates "that there is no genuine issue as to any material fact." The burden falls on the moving party to establish that no relevant facts are in dispute. Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir.1975); accord Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 ... (1970). Moreover, in determining whether a genuine issue has been raised, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 82 S.Ct. 993, 994, 8 L.Ed.2d 176 ... (1962) (per curiam); Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980). Therefore, not only must there be no genuine issue as to the evidentiary facts, but there must also be no controversy regarding the inferences to be drawn from them. Schwabenbauer v. Bd. of Educ., 667 F.2d 305, 313 (2d Cir.1981); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242 106 S.Ct. 2505, 91 L.Ed.2d 202 ... (1986).

Properly employed, summary judgment allows the court to dispose of meritless claims before becoming entrenched in a frivolous and costly trial. Knight v. U.S. Fire Ins. Co., 804 F.2d 9 (2d Cir.1986), cert. denied, 480 U.S. 932... 107 S.Ct. 1570 94 L.Ed.2d 762 ... (1987). It must, however, be used selectively to avoid trial by affidavit. Judge v. Buffalo, 524 F.2d 1321 (2d Cir.1975). Hence, the fundamental maxim remains that on a motion for summary judgment a court "cannot try issues of fact; it can only determine whether there are issues to be tried." Heyman, 524 F.2d at 1319-20. As long as the plaintiff has adduced sufficient facts to substantiate the elements of his claim, summary judgment is inappropriate. Celotex Corp. v. Catrett, 477 U.S. 317 106 S.Ct. 2548, 91 L.Ed.2d 265 ... (1986).

Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57-58 (2d Cir.1987).

B. Count One

The PMPA "prohibits a franchisor from terminating or failing to renew a franchise without satisfying certain notice provisions and without stating a reason for termination sanctioned by the act." Checkrite Petroleum, Inc. v. Amoco Oil Co., 678 F.2d 5, 7 (2d Cir.), cert. denied, 459 U.S. 833, 103 S.Ct. 74, 74 L.Ed.2d 73 (1982). Section 2802(c)(4) provides that the loss of a franchisor's right to grant possession of the premises justifies non-renewal of the franchise if the franchisee was notified in writing, prior to the commencement of the franchise, of the existence of the underlying lease and the fact that it might not be renewed.

As noted, supra, there is no dispute but that plaintiff was told orally — not in writing — prior to signing his lease, of the underlying lease and the fact that it would expire toward the end of his three year lease. Affidavit of Paul Herman at 6, 7; Deposition of Paul Herman at 48-49. Plaintiff claims, however, that he was told that defendant had an option which would effectively extend the underlying lease and, therefore, his lease, for an additional five years. Defendant does not dispute this claim, but does dispute as to when plaintiff was informed that no such option existed. Affidavit of Paul Herman at 6. The issue presented is whether the PMPA precludes reliance on § 2802(c)(4) if the notice provided was not written.

1. Requirement of Written Notice

The early cases which studied the issue of whether strict compliance with the notice provisions of the PMPA was required held that such was implicitly required inasmuch as Congress had not provided the courts with any power to cure a defective notice. See Blankenship v. Atlantic-Richfield Co., 478 F.Supp. 1016, 1018 (D.Ore.1979); see also Escobar v. Mobil Oil, 678 F.2d 398, 400 n. 2 (2d Cir.1982); Thompson v. Kerr-McGee Refining Corp., 660 F.2d 1380, 1390 (10th Cir.1981); Mobil Oil Corp. v. Clark, 652 F.2d 2, 3 (8th Cir.1981); Daniels v. Dilmar Oil Co., 502 F.Supp. 178, 181 (D.S.C.1980); Davy v. Murphy Oil Co., 488 F.Supp. 1013, 1016 (W.D.Mich.1980). The later cases, however, have opted for a less strict reading of the statute holding that Blankenship and its progeny exalt form over substance. See Brown of American Petrofina Marketing, Inc., 555 F.Supp. 1327, 1335 (M.D. Fla.1983), aff'd, 733 F.2d 906 (11th Cir. 1984). In Hutchens v. Eli Roberts Oil Co., 838 F.2d 1138, 1143 (11th Cir.1988), the court held that, although the notice provision under § 2802(c)(4) had not been met, the lease could still be canceled inasmuch as the franchisee had indicated "that the term of the base lease made no difference to him and that he had made no effort to discover it." See also Dandy Oil, Inc. v. Knight Enterprises, Inc., 654 F.Supp. 1265, 1270 (E.D.Mich.), appeal dismissed, 830 F.2d 193 (6th Cir.1987); Martin v. Texaco, Inc., 602 F.Supp. 60, 62-63 (N.D.Fla. 1985); Sutton v. Atlantic Richfield Co., ...