Metro Oil Co., Inc. v. Sun Refining and Marketing Co.

• Decision Date: 24 June 1991
• Docket Number: No. 91-6023,91-6023
• Citation: 936 F.2d 501
• Parties: METRO OIL COMPANY, INC., an Oklahoma corporation, Plaintiff-Appellant, v. SUN REFINING AND MARKETING COMPANY, a Pennsylvania corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 501

936 F.2d 501

METRO OIL COMPANY, INC., an Oklahoma corporation, Plaintiff-Appellant, v. SUN REFINING AND MARKETING COMPANY, a Pennsylvania corporation, Defendant-Appellee.

No. 91-6023.

United States Court of Appeals Tenth Circuit.

June 24, 1991.

Clell I. Cunningham III, Jack S. Dawson, and Jennifer B. Miller of Miller, Dollarhide, Dawson & Shaw, Oklahoma City, Okl., for plaintiff-appellant.

Robin F. Fields and Dixie L. Coffey of McKinney, Stringer & Webster, P.C., Oklahoma City, Okl., for defendant-appellee.

Before ANDERSON, TACHA, and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The cause is therefore ordered submitted without oral argument.

In this diversity case for breach of contract and tortious interference with a business relationship, both parties moved for summary judgment. The trial court granted summary judgment in favor of Sun Refining and Marketing Company (Appellee or Sun), and denied the motion of Metro Oil Company (Appellant or Metro). It is from this ruling that Metro now appeals.

Metro is a wholesale distributor of motor fuel. Metro has purchased fuel from Sun, a manufacturer of motor fuel, under a series of contracts, since 1977. The latest agreement entered into between Metro and Sun in 1987, entitled Distributor Branded Motor Fuel Agreement (Agreement), provided in pertinent part: that Sun could establish and change the terms under which Metro was to pay for the product; and that the Agreement was subject to and governed by the Petroleum Marketing Practices Act, 15 U.S.C. Sec. 2801 et seq. (PMPA).

In 1988, Sun became concerned about Metro's credit position. This concern was prompted by the failure of Metro to deliver mortgages promised for collateral to partially secure Metro's credit line and due to several past due invoices. Consequently, Sun placed Metro on a C.O.D. basis. Letter dated February 5, 1988. Thereafter, in a letter dated February 24, 1988, Metro advised Sun that its action of altering the credit terms and payment methods had "terminated the Distributor Agreement," and if Sun maintained its position for one more day Metro would lose its dealers. The letter further stated: "Sun has breached the Uniform Commercial Code covenant of good faith and fair dealing in its treatment of Metro." Sun responded by letter the next day, February 25, 1988, stating Sun had not terminated the Agreement and had been acting in good faith in "attempting to resolve a difficult credit situation with Metro." Sun further stated that its previous request for adequate assurance of Metro's ability to meet its future performance obligations had not been complied with. Moreover, the letter indicated the interim credit policy that Sun outlined for Metro had been fully satisfied by Sun, but again, Metro failed to comply. About ten days later, in a letter dated March 3, 1988 Metro's counsel again wrote to Sun stating that Metro's position was that the modification of the payment terms imposed by Sun "had the effect of constructively terminating the Distributor Agreement," and notified Sun that "Metro has now lost its dealers." The letter further provided: "You [Sun] will be hearing from us in the very near future on a lawsuit under the Petroleum Marketing Practices Act and other claims which will probably exceed $2 million dollars." Sun responded in a letter dated March 17, 1988, that it had acted in good faith in accordance with the Agreement, and that despite its good faith efforts, Metro demanded an all or nothing resolution; threatened frivolous litigation; and generally failed to act in good faith. Apparently this was the last correspondence between the parties on this matter.

More than two years later, however, on March 19, 1990, Metro filed a complaint against Sun alleging breach of contract and tortious interference with a business relationship. Thereafter, Metro moved for summary judgment as to Sun's liability. Sun moved for summary judgment contending Metro's claims were barred by the applicable statutes of limitation.

The trial court granted Sun's motion concluding PMPA clearly applied to the Distributor Agreement, and therefore Metro's claim that Sun's breach of the Agreement resulted in the termination of the Agreement was barred by the one-year statute of limitations established for franchise terminations. Moreover, the court concluded Metro's claim of tortious interference was barred by the applicable two-year statute of limitations for tort claims under Oklahoma law.

Metro contends the trial court erred in ruling Metro's claim for breach of contract was barred by PMPA. Specifically, Metro argues the agreement was not terminated but breached by Sun, rendering PMPA inapplicable. Metro argues the Oklahoma five-year statute of limitations set forth in Okla.Stat. tit. 12, Sec. 95 governs this controversy.

The Agreement between Metro and Sun expressly provides that it "is subject to and governed by the Petroleum Marketing Practices Act, 15 U.S.C. Sec. 2801 et seq. [PMPA] ... for purposes of expressing the grounds upon which this Agreement may be terminated."

Section 105 of PMPA provides:

If a franchisor fails to comply with the requirements of section 2802 or 2803 of this title, the franchisee may maintain a civil action against such franchisor[,] ... except that no such action may be maintained unless commenced one year after the later of--

(1) the date of termination of the franchise ... or

(2) the...