Korangy v. Mobil Oil Corp.

• Decision Date: 21 January 2000
• Docket Number: Civil No. CCB-98-2803.
• Citation: 84 F.Supp.2d 660
• Parties: Fred F. KORANGY, et al. v. MOBIL OIL CORPORATION, et al.
• Court: U.S. District Court — District of Maryland

84 F.Supp.2d 660

Fred F. KORANGY, et al. v. MOBIL OIL CORPORATION, et al.

Civil No. CCB-98-2803.

United States District Court, D. Maryland.

January 21, 2000.

Harry C. Storm, Abrams, West & Storm, P.C., Bethesda, MD, for Energy Group Ltd.

Edward C. Duckers, Hogan & Hartson, Washington, DC, Stephen G. Vaskov, Hogan & Hartson L.L.P., Washington, DC, Lowell R. Stern, Hogan & Hartson, LLP, Washington, DC, Kimberly D. Ziropoulos, Hogan & Hartson, LLP, Washington, DC, for Mobil Oil Corp.

Morton A. Sacks, McGuire, Woods, Battle & Boothe, Baltimore, MD, Joseph Martin English, IV, McGuire, Woods, Battle & Boothe, LLP, Baltimore, MD, Michael J. Kresslein, McGuire Woods Battle & Boothe, LLP, Baltimore, MD, for Carroll Independent Fuel Co.

Morton A. Sacks, McGuire, Woods, Battle & Boothe, Baltimore, MD, Michael J. Kresslein, McGuire Woods Battle & Boothe, LLP, Baltimore, MD, for HJR-Benson Venture LLC.

MEMORANDUM

BLAKE, District Judge.

Now pending before this Court are motions by Defendants Mobil Oil Corporation ("Mobil"), Carroll Independent Fuel Company ("CIF"), and HJR-Benson Venture LLC ("HJR") for summary judgment. Plaintiff Fred F. Korangy, as agent for and on behalf of Plaintiff Energy Group Ltd. ("Energy Group"), had leased a retail service station from Mobil pursuant to a 1995 franchise agreement. In December 1996, Mobil assigned the franchise to CIF and sold the premises to HJR, which entered into a lease with CIF. Plaintiffs have sued Defendants alleging that Mobil violated the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801-2806, by failing to renew (Count I) and constructively renew (Count II) Plaintiffs' franchise. Plaintiffs have also alleged state law claims against Mobil for breach of contract (Count III), and against CIF and HJR for constructive trust (Count IV). Defendant Mobil has filed a motion for summary judgment on Counts I through III, and Defendants CIF and HJR have filed a motion for summary judgment on Count IV. This matter has been fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons that follow, the Court will grant Mobil's motion in part, deny it in part, and deny the joint motion by CIF and HJR.

STANDARD OF REVIEW

Rule 56(c) of the Federal Rules of Civil Procedure provides that:

[Summary judgment] shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir.1994). In making this determination, the evidence of the party opposing summary judgment is to be believed and all justifiable inferences drawn in her favor. Halperin v. Abacus Tech. Corp., 128 F.3d 191, 196 (4th Cir.1997) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). The non-moving party may not rest upon mere allegations or denials in her pleading, however, but must set forth specific facts showing that there is a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Allstate Fin. Corp. v. Financorp, Inc., 934 F.2d 55, 58 (4th Cir.1991). The "mere existence of a scintilla of evidence in support of the plaintiff's position" is not enough to defeat a defendant's summary judgment motion. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

BACKGROUND

Plaintiff Fred Korangy, as agent for and on behalf of Plaintiff Energy Group, has been the retail service station dealer/franchisee at a Mobil service station at 400 Russell Street, Baltimore, Maryland ("Marketing Premises") since March 28, 1991. (Pls. Opp'n to Mobil's Summ. J. Mot., Ex. 12 ["1995 Franchise Agreement"], p. 1) Defendant Mobil is a New York corporation engaged in the business of refining and marketing petroleum and related products. (Am.Compl., ¶ 2) Mobil leased the Marketing Premises to the Plaintiffs. (1995 Franchise Agreement, p. 1) The latest franchise agreement between Mobil and the Plaintiffs was effective from July 1, 1995, through June 30, 1998. (Id. at p. 2) That agreement provided that "Mobil may assign this agreement, franchise and franchise relationship to any other affiliated corporation." (Id. at p. 23) The agreement also contained a provision stating: "Notwithstanding notice by Dealer to Mobil, any claim by dealer shall be waived and barred unless asserted by the commencement of a lawsuit in a court of competent jurisdiction within 12 months after the event, action or inaction to which such claim relates." (Id. at p. 18)

According to Mobil, in late 1995, it concluded that marketing through a distributor would be the most effective method for increasing its sales in Baltimore County. (Decl. of Stephen J. Bottomly, Mobil's Summ. J. Mot., Ex. 6 ["Bottomly Decl."], ¶¶ 5-11) Therefore, in December 1996, Mobil assigned fifteen service station franchises to Defendant CIF, a distributor of petroleum and related products. (Id. at ¶ 13) As part of the agreement, CIF agreed to purchase approximately 950 million gallons of gasoline from Mobil and agreed to convert many of its existing Citgo brand stations to Mobil brand stations. (Id. at ¶ 14) Since Korangy's station was one of the franchises involved in the agreement, Mobil assigned its rights and duties under the 1995 Franchise Agreement to CIF. (Am.Compl., ¶ 6) At the same time, Mobil sold the Marketing Premises to Defendant HJR, an affiliate of CIF, which subsequently entered into a lease with CIF. (Pls. Opp'n to Mobil's Summ. J. Mot., Exs. 4 & 7)

Korangy was not given a right of first refusal for the premises. (Dep. of Fred F. Korangy, Pls. Opp'n to Mobil's Summ. J. Mot., Ex. A ["Korangy Dep."], p. 68) The parties dispute whether he was given notice of the assignment. According to Mobil, on October 24, 1996, it sent a letter to each of the fifteen franchise owners notifying them that Mobil had completed an agreement with CIF and that, pursuant to the agreement, CIF was to "purchase and assume franchisor rights and responsibilities" for the fifteen stations involved in the transaction. (Bottomly Decl., ¶ 16; Mobil's Summ. J. Mot., Ex. 11) The letter also invited the dealers to attend an informational meeting with Mobil and CIF representatives at Bowman's Restaurant. (Id.) While Plaintiffs admit receiving an invitation to Bowman's Restaurant, they deny receiving a letter containing information about the sale and assignment. (Dep. of Kevin K. Veissy, Pls. Opp'n to Mobil's Summ. J. Mot., Ex. H ["Veissy Dep."], pp. 56-58) On November 7, 1996, a meeting was held at Bowman's Restaurant. (Bottomly Decl., ¶ 17) Kevin Veissy, the day-to-day manager of the Marketing Premises, attended on behalf of Korangy and Energy Group. (Veissy Dep., p. 60) Mobil's representations regarding that meeting are somewhat contradictory. According to one Mobil representative, Mobil informed the dealers at the meeting that CIF would assume Mobil's responsibilities as franchisor and that Mobil was selling the service station premises. (Dep. of Mark F. Booth, Mobil's Summ. J. Mot., Ex. 4 ["Booth Dep."], pp. 23-24) But, James Moran, an asset sales manager for Mobil, stated that the specifics of the agreement were not discussed at the Bowman's Restaurant meeting. (Dep. of James Moran, Pls. Opp'n to Mobil's Summ. J. Mot., Ex. I ["Moran Dep."], pp. 8-9)

Plaintiffs contend that Mobil failed to give any specific details regarding the agreement between Mobil and CIF. (Veissy Dep., p. 63) In addition, Plaintiffs claim that Mobil failed to provide them with any notice of the assignment. (Korangy Dep., p. 68) Plaintiffs admit that, beginning in December 1996, they began purchasing gasoline from CIF and paying rent to CIF. (Veissy Dep., pp. 84-85) But, Plaintiffs claim to have believed that CIF was simply a distributor for Mobil's products in Baltimore, and that, otherwise, the relationship between Mobil and the Plaintiffs had remained unchanged. (Id. at pp. 77-80; Korangy Dep., pp. 44 & 51) Plaintiffs admit that CIF fully performed its obligations under the 1995 Franchise Agreement. (Korangy Dep., pp. 74-75)

On April 27, 1998, CIF presented the Plaintiffs with a proposed franchise agreement to take effect on July 1, 1998, immediately following the expiration of the 1995 Franchise Agreement. (Mobil's Summ. J. Mot., Ex. 8 ["CIF Agreement"]) The CIF Agreement contained terms that differed from the ones in the 1995 Franchise Agreement, including the following: (1) that the relationship creates a subtenancy, (2) a minimum gallonage clause with a $.03 per gallon penalty if the minimum volume is not achieved monthly, (3) a provision for immediate termination of the contract under various conditions, (4) a requirement that as a condition to CIF consenting to any assignment, the proposed assignee must accept a trial franchise, and (5) a provision that CIF may withhold consent to an assignment if the proposed assignment is for greater consideration than the interest to be acquired in the tangible assets of the business. (Id.) Apparently, this agreement was the first notice Plaintiffs received that the Marketing Premises had been sold to HJR. (Korangy Dep., p. 55; Dep. of John H. Phelps, Pls. Opp'n to Mobil's Summ. J. Mot., Ex. B ["Phelps Dep."], p. 71)

In May 1998, after receiving the CIF Agreement, Plaintiffs wrote to Mobil requesting a renewal franchise agreement from Mobil. (Pls. Opp'n to Mobil's Summ. J. Mot., ¶ 13) Mobil did not respond to Plaintiffs' request. (Am.Compl., ¶ 12) In June 1998, Plaintiffs signed the CIF Agreement "under protest" so that they could continue operating the Mobil service station at the Marketing Premises. (Pls. Opp'n to Mobil's Summ. J. Mot., Ex. 16) On June 24, 1998, Plaintif...