Ketterle v. B.P. Oil, Inc.

• Decision Date: 15 August 1990
• Docket Number: No. 89-3058,89-3058
• Citation: 909 F.2d 425
• Parties: John A. KETTERLE and John E. Ketterle, Plaintiffs-Counter-Defendants-Appellants, v. B.P. OIL, INC., Defendant-Counter-Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 425

909 F.2d 425

John A. KETTERLE and John E. Ketterle Plaintiffs-Counter-Defendants-Appellants, v. B.P. OIL, INC., Defendant-Counter-Plaintiff-Appellee.

No. 89-3058.

United States Court of Appeals Eleventh Circuit.

Aug. 15, 1990.

Maura T. Smith, Smith, MacKinnon, Mathews, Harris & Christiansen, P.A., Orlando, Fla., and Richard W. Farrell, Farrell & Barr, Stamford, Conn., for plaintiffs-counter-defendants, appellants.

Jeffry R. Jontz, Holland & Knight, Orlando, Fla., for defendant-counter-plaintiff, appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TJOFLAT, Chief Judge, and ANDERSON and CLARK, Circuit Judges.

CLARK, Circuit Judge:

The plaintiffs in this case appeal the district court's denial of their motion for attorneys' fees under section 2805 of the Petroleum Marketing Practices Act of 1978 ("PMPA"). ¹ The district court refused to award fees after granting the defendant's unopposed motion to dismiss the case as moot. The court held that because the dismissal on the merits came before the plaintiffs received a final determination of their claims, they did not "prevail" under the Act. Because we find that the district court incorrectly interpreted the Act and that the plaintiffs did indeed prevail under the Act, we now reverse.

I.

The plaintiffs, John A. Ketterle and John E. Ketterle (the "Ketterles"), operate a "Gulf" gasoline service station in Orlando, Florida. The Ketterles have operated the station at this location for over 25 years and it is the family's major source of income. In 1987, the Ketterles operated the station under a franchise agreement with the defendant, B.P. Oil, Inc. ("B.P."). The franchise agreement relevant to this case allowed the Ketterles to operate the station during the period from October 1, 1985 to September 30, 1988.

One of the terms in the franchise agreement specified that the Ketterles were required to keep the station open until midnight. During the period from August 10, 1987 to August 21, 1987, the Ketterles' station closed before midnight each of these twelve nights. The Ketterles allege that during this period their regular night operator was on vacation. Affidavits of the Ketterles filed in district court state that the temporary night operator closed the station early contrary to their explicit instructions, and that they had checked on the temporary operator on more than one occasion and were unaware of his failure to keep the station open. B.P. became aware of the early closures, and on September 1, 1987, the Ketterles were notified that their franchise would be terminated effective December 1, 1987.

On November 25, 1987, the Ketterles filed this action seeking to prevent B.P.'s termination of their franchise agreement. The Ketterles' suit alleged that the threatened termination of their franchise agreement violated the PMPA, which prevents termination of the franchise agreement by the oil company for reasons other than the grounds for termination explicitly specified in the Act. See 15 U.S.C. Sec. 2802 (1982). In its answer, B.P. alleged that termination of the agreement for failure to keep the station open was permitted under sections 2802(b)(2)(A) and 2802(b)(2)(B) of the PMPA. ²

Pursuant to section 2805 of the Act, ³ the Ketterles moved for a preliminary injunction in order to prevent the termination of the agreement before their claim could be adjudicated. After holding an evidentiary hearing, the district court granted the preliminary injunction. The district court recognized that a violation of an "hours of operation" provision has been held to be sufficient grounds for termination of a franchise agreement. Nevertheless, the district court granted the preliminary injunction, finding (1) that the circumstances of this case presented a fair ground for litigation, and (2) that the hardship that B.P. would face from granting the injunction would be less than the hardship to the Ketterles if the injunction was not granted.

The parties then conducted discovery. The Ketterles requested internal B.P. marketing reports that detailed the company's plan for the stations in the Orlando and Tampa area. B.P. strenuously opposed production of these documents, even in the face of an order to produce from the district court. A few days before the date that the pretrial stipulation was due to be filed, the Ketterles filed a motion for imposition of sanctions against B.P. for its failure to comply with the court's discovery order.

The next day B.P. withdrew its notice of termination and moved to have the case dismissed as moot. Thereafter, the Ketterles filed a motion for attorneys' fees and costs pursuant to Sec. 2805(d) of the PMPA. ⁴ The district court denied the motion holding:

This case was concluded by the unopposed Motion of Defendants to Dismiss which was granted by the Court in an Amended Order filed November 15, 1988. There was no determination that the Plaintiffs Franchisees were the prevailing party in this litigation which involved substantial issues of breach of a Franchise Agreement; therefore, the Franchisees are not the prevailing party on the merits of their claim. To award costs and attorneys' fees at this juncture of the proceeding would necessitate the Court hearing the evidence and making a determination on the merits, a judicial proceeding which has been obviated by the dismissal of the case.

District Court Order Denying Attorneys' Fees at 1-2. The plaintiffs now appeal this denial.

II.

We begin with an analysis of the five cases applying Sec. 2805(d)(1) when the plaintiffs failed to receive a PMPA damage award. In Lippo v. Mobil Oil Co., 776 F.2d 706 (7th Cir.1985), the only appellate consideration of Sec. 2805(d)(1), the franchisee obtained injunctive relief under the PMPA and monetary relief based upon a state breach of contract claim. The district court awarded attorneys' fees and the defendant appealed, arguing that the injunction provided an insufficient basis to support a fee award. The court of appeals affirmed the award of fees, holding that "a franchisee who obtains injunctive relief under the PMPA is entitled to attorney's fees even though the franchisee does not obtain either actual or exemplary monetary damages." Id. at 720.

The Lippo court referred to the decision in Lyons v. Mobil Oil Co., 554 F.Supp. 199 (D.Conn.1982), to support its conclusion that injunctive relief is sufficient to allow a plaintiff to receive an attorneys' fee award. In Lyons, the court entered a permanent injunction after finding the defendant's attempt to terminate the franchise violated the PMPA. In finding that the injunctive provisions of the PMPA were important provisions of the Act, the court noted:

Injunctive relief is an important part of the PMPA scheme, being specifically provided for in 2805(b). History of the development of PMPA, combined with a basic understanding of the inequity sought to be corrected in the franchise relationship by the legislation, and the irreparable harm that necessarily would arise from the termination of a franchise relationship, leads logically to only one conclusion. The basic premise of PMPA is that injunctive relief should be available to preserve the franchise in question, so as to avoid the termination of the franchise with inevitable litigation following on the damages issues. Therefore it seems to this court that a franchisee who obtains injunctive relief should be considered a "prevailing party" for the purposes of 2805(d)(1), regardless of whether actual or exemplary monetary damages are awarded. Such would be in keeping with the remedial purpose of PMPA to equalize the otherwise drastically unequal bargaining power of petroleum franchisees and franchisors. In view of the importance of the injunctive relief concept under the statute, it would appear to frustrate the purpose of PMPA if this court were to fail to recompense the franchisee in this case who was required to litigate in order to preserve his franchise.

Id. at 202. Consistent with this view, the court awarded attorneys' fees. Id. at 202-03. Finally, in Trulock v. Union Oil Co, No. C83-1553M (D.Wash. March 23, 1984), a case with facts similar to this case, the court also relied on Lyons.

There are, however, two cases where the court refused to award attorneys' fees. The first is Thompson v. AMOCO Oil Co., 705 F.Supp. 1349 (M.D.Ill.1989). In Thompson, the defendant sought to terminate the franchise because the franchisee had moved 300 miles away from the station allegedly in violation of a contractual provision requiring the franchisee "to devote his personal attention upon the premises to managing the business activities of the gasoline sales facility." Id. at 1551-52. The plaintiff prevailed on his claim for injunctive relief after the court found that the franchisee's conduct did not violate the agreement. The plaintiff had not suffered any damages because the parties agreed to maintain the status quo; therefore, no damages were awarded. The court also rejected the franchisee's claim for exemplary damages. Since Thompson had not received any monetary relief, the court evaluated the attorneys' fee request under the proviso in Sec. 2805(d)(1)(C) allowing the court discretion to award the attorneys' fees when the plaintiff only receives nominal relief. The court declined to award the fees holding:

[S]o in our discretion we decline to charge defendant with these fees. As noted, this has been a close, hard fought battle. Thompson is not clearly in the right here--Clause 15(f) can be read to require actual presence, and AMOCO was not unreasonable in attempting to enforce its policy against a franchisee living 300 miles from the franchised premises. Moreover, ... Thompson can afford to pay his own fees, and so AMOCO will not be required to.

705 F.Supp. at 1359.

In Noe v. Mobil Oil Co., 503 F.Supp. 213 (D.Mo.1980), the court found the franchisee had given improper notice to the...