Jimenez v. BP Oil, Inc.
| Decision Date | 07 January 1987 |
| Docket Number | Civ. No. JFM-86-785,JFM-86-818 and JFM-86-1007. |
| Citation | 652 F. Supp. 329 |
| Parties | Francisco S. JIMENEZ v. B.P. OIL, INC. Carlos HORCASITAS v. B.P. OIL, INC. James G. PALMER, et al. v. B.P. OIL, INC. |
| Court | U.S. District Court — District of Maryland |
Harry C. Storm, Abrams, West & Storm, Bethesda, Md., for plaintiffs.
John Lewin, Nell Strachan, Venable, Baetjer and Howard, Baltimore, Md., for defendants B.P.
Morton A. Sacks, Baltimore, Md., for defendants Crown Central.
Plaintiffs are former franchisees of B.P. Oil, Inc. who operated retail service stations for B.P. before B.P. withdrew from the Baltimore-Washington market in April 1986. Plaintiffs allege (1) that B.P.'s termination of the franchises was in violation of section 102(b)(2)(E) of the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. section 2802(b)(2)(E), and (2) that B.P. is liable to them under section 11-304(i) of the Maryland Gasohol and Gasoline Products Marketing Act ("The Maryland Act") for the value of any business goodwill which they enjoyed at the time that they were notified of the termination of their franchises.1 The parties have cross-moved for summary judgment on both of these claims.
From 1979 to 1985, gasoline pumped annually at nearly all BP area stations had been continually decreasing. As a result, in 1985, BP decided that either a market withdrawal or restructuring of the operation of its retail service stations in the Baltimore-Washington area was necessary. On April 18, 1985, BP sent letters to each of its dealers in the area telling them of the situation.
Dealers received one of two types of letters. Both letters told the recipient that BP intended to either restructure its operations, which would involve selling half the stations, or to withdraw from the market completely by selling its interest in all of the area stations to another oil company. Beyond those comments, the content of the two types of letters differed.
If the dealer owned a franchise that BP would keep under a market restructuring plan, the dealer received a "keeper" letter. The letter explained that the dealer would be offered a new BP dealer agreement if a marketing restructuring plan was adopted. The dealer was also told that if BP withdrew from the market its BP franchise would be terminated on October 31, 1985 and the dealer would be offered a non-discriminatory franchise by the oil company purchasing BP's interest. The dealer was told that he would be informed of the status of BP's plans within the next 180 days.
If the franchise was one BP determined was undesirable to keep, the dealer received a "non-keeper" letter. This letter explained that regardless of what plan BP adopted, the franchise would be terminated on October 31, 1985. The dealer was told that he would either be offered a non-discriminatory franchise by the oil company purchasing BP's interest or be offered an opportunity to purchase the station operated by the dealer. The dealer was told that he would be informed which alternative applied to him within the next 180 days.
On September 26, 1985, BP signed a letter of intent to sell all of its Baltimore-Washington area retail stations to Crown Central Petroleum Corp. The closing date was set as January 31, 1986. BP notified the dealers of the agreement with Crown by letter dated October 17, 1985. That letter also indicated that the termination of the BP franchise agreements was postponed to the closing date. The letter further said that if the Crown deal did not go through, BP would go ahead with its restructuring plan, keeping certain franchises and selling others to the franchisees, as previously indicated by the keeper and non-keeper letters.
On December 23, 1985, Crown sent a letter to each of the BP dealers. Again, several types of letters were sent out. Certain dealers were notified that they would be offered a nondiscriminatory franchise. Other dealers were notified that they would be offered the right to purchase the station they were operating. Several dealers operated more than one franchise. These "multistation" dealers were notified that Crown would offer a nondiscriminatory franchise to them at only one location selected by Crown and that they would be offered the right to purchase the other locations they operated that were not selected. This offer was a result of Crown's corporate policy of not allowing its franchise owners to operate more than one station.
Certain of the dealers accepted the offers made by Crown and others rejected them. B.P.'s withdrawal from the market and Crown's franchises with the former B.P. station operators became effective April 1, 1986.
The PMPA claim is brought by four multi-station franchisees (Ray, Uzarowski, Chung and Jimenez) who refused the franchise offer made to them by Crown. The focus of their contention is that this offer was untimely under 15 U.S.C. section 2802(b)(2)(E) and that B.P.'s termination of their franchises was therefore unlawful. Section 2802(b)(2)(E) provides as follows:
Plaintiffs argue that under subsection (E)(iii)(I) an offer to purchase a station must be made within 180 days after the notice of termination is given under 15 U.S.C. section 2804. Thus, plaintiffs argue, Crown's offer to purchase was too late since it was made by Crown's letter of December 23, 1985, almost 250 days after B.P.'s initial letter of April 18, 1985 giving notice of termination.2
Plaintiffs contend that in enacting section 2802(b)(2)(E)(iii), Congress carefully distinguished between offers to purchase and offers of a non-discriminatory franchise. As to offers to purchase, Congress required the offer to be made within 180 days of the notice of termination under subsection (iii)(I); Congress imposed no such time limitation for offers of non-discriminatory franchises under subsection (iii)(II). Plaintiffs vaguely argue that Congress may have drawn this distinction in order to assure that the franchisee "will not suffer continued uncertainty when a market withdrawal is involved." However, plaintiffs assert no concrete basis for the distinction and their argument is little more than chimerical. They cite nothing in the legislative history to show that this was Congress' intent. Moreover, it certainly is not self-evident that it is generally in the interest of franchisees to have the franchisor forced into a situation where it must have its successor offer non-discriminatory franchises rather than offer to sell stations where the franchisees had been operating. Likewise, it should not be presumed that Congress had the unrealistic expectation that major market withdrawals which, as the present case demonstrates, necessarily involve financial and legal complexities, can be effected within a six month period.3
Rather than try to glean from the statutory language a distinction and imagined reasons for that distinction which is supported neither a priori nor by the legislative history, it is preferable to acknowledge the simple fact that subsection (iii) is badly drafted. It seems plain that the time period Congress meant to impose when it referred to "the 180-day period after notification was given pursuant to section 2804 of this title" was "the more than 180-day period after notification was given pursuant to section 2804 of this title." All that Congress was trying to do was to describe the sequence in which offers to purchase and offers of non-discriminatory franchises were to be given. If it had meant to mandate that the offer be made within 180 days, it would have expressly said so or, at least, have omitted the word "the" before the words "180-day period."4 As written, it is clear that the phrase is merely meant to paraphrase what section 2804 says, not to mandate a new deadline.
All plaintiffs claim an entitlement to goodwill under the Maryland Act. There are four different types of stations as to which goodwill is claimed: (1) stations as to which an offer to purchase was made by Crown and accepted by the franchisee; (2) stations as to which an offer to purchase was made by Crown and rejected by the franchisee; (3) stations as to which an offer of a franchise was made by Crown and accepted by the franchisee; and (4) stations as to which a franchise offer was made by Crown which was rejected...
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