Mikeron, Inc. v. Exxon Co., U.S.A.

• Decision Date: 21 February 2003
• Docket Number: No. CIV.A.DKC 98-1070.,CIV.A.DKC 98-1070.
• Parties: MIKERON, INC. v. EXXON COMPANY, U.S.A.
• Court: U.S. District Court — District of Maryland

264 F.Supp.2d 268

MIKERON, INC. v. EXXON COMPANY, U.S.A.

No. CIV.A.DKC 98-1070.

United States District Court, D. Maryland.

February 21, 2003.

COPYRIGHT MATERIAL OMITTED

Karen Lynn Gilbert, Robert J. Kim, McNamee Hosea Jernigan Kim Greenan and Walker PA, Greenbelt, MD, Allen J. Kruger, Law Offices of Allen J. Kruger, PA, Christopher B. Mead, London and Mead, Washington, DC, Harry C. Storm, Abrams West Storm and Siamond, PC, Bethesda, MD, for Mikeron, Inc., (Plaintiff).

Stuart H Harris, Roger A. Klein, Howrey Simon Arnold and White LLP, Washington, DC, Gregory T. Kenney, Law Office, Houston, TX, for Exxon Company USA, (Defendant).

MEMORANDUM OPINION

CHASANOW, District Judge.

Presently pending and ready for resolution in this case is the motion for summary judgment of Defendant Exxon Mobil Corporation (sued as "Exxon Company, U.S.A." and referred to herein as "Exxon-Mobil" or "Defendant"). The issues have been fully briefed and no hearing is deemed necessary. Local Rule 105.6. For the reasons that follow, the court will grant the motion for summary judgment in its entirety.

I. Background

The following facts are uncontroverted or set forth in the light most favorable to Plaintiff. On or about September 25, 1996, Plaintiff Mikeron, Inc. ("Mikeron" or "Plaintiff") and Defendant entered into a Retail Motor Fuel Store Lease ("Lease") and a Retail Motor Fuel Store Sales Agreement ("Sales Agreement"). Under these agreements, Plaintiff leased from Defendant and operated two Exxon service stations, one in Fort Washington, Maryland and the other in Woodbridge, Virginia, and purchased Exxon-branded motor fuel to be resold at those service stations. The two agreements constituted a franchise pursuant to the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801-2806, which governs the relationship between suppliers and re-sellers of branded petroleum products. The Lease and Sales Agreement covered the period from October 1, 1996 through October 1, 1999.

In the fall of 1997, Plaintiff proposed to Defendant the idea that Plaintiff would transfer its interests in the two service stations to two separate individuals. Plaintiff retained the services of Corporate Investments, a commercial brokerage firm that engages in the sale of service stations, to screen and approve two potential purchasers. Plaintiff then proposed as transferees Hamid Aziz ("Aziz") for the Woodbridge station and Shamsher Singh ("Singh") for the Fort Washington station. However, Defendant refused to consent to the transfer of Plaintiffs interests in either service station to the proposed transferees even though, Plaintiff alleges, both were qualified to operate the businesses. Defendant contends that it rejected Aziz and Singh pursuant to the ExxonMobil Dealer Selection Guidelines ("Guidelines") because Aziz failed a credit review and Singh did not score enough points under the Guideline's six screens.¹

In addition, Plaintiff alleges that Defendant charged other, independently-owned Exxon stations within close proximity to those operated by Plaintiff a substantially lower price-per-gallon of gasoline and other goods. Plaintiff further alleges that Defendant gave other stations greater voluntary concessions, such as rent adjustments and rebates, than it gave to Plaintiff. On April 8, 1998, Plaintiff filed suit charging Defendant with improperly withholding consent to the transfer of the service stations. Plaintiff amended the complaint on October 28, 1998, and then again on November 10, 1998, adding counts pertaining to the allegations of price discrimination against Defendant.

On January 18, 1999, Plaintiff sent a letter requesting an accounting from Defendant and disputing charges for the sale and delivery of certain Exxon products to Plaintiff. The letter also notified Defendant of Plaintiffs intention to sell non-Exxon branded fuel and to begin the debranding and de-identification process as specified in the Sales Agreement. Approximately one week later, on January 25, 1999, Defendant terminated Plaintiffs Lease, Sales Agreement and franchise. The termination letter stated that the grounds for the termination were that Plaintiff (a) breached its Lease with Defendant by using Defendant's motor fuel storage tanks and dispensing equipment for the storage, dispensing and sale of non-Exxon-branded motor fuel and (b) breached its Sales Agreement with Defendant by failing to provide a representative offering of Exxon-branded motor fuel at the two service stations it leased and operated. See Paper no. 79, App. A, Tab 2, Ex. N.

On January 27, 1999, Defendant filed a motion for a temporary restraining order and preliminary injunction, seeking to enjoin Plaintiff from using the Exxon trademark and to prevent Plaintiff from using Defendant's storage tanks, lines, dispensers and other equipment in connection with the dispensing and/or sale of non-Exxon motor fuel. The court granted the temporary restraining order by consent as to the trademark issue, but denied the remainder. Plaintiff then filed a motion to preliminarily enjoin Defendant's termination of the franchise pending litigation. At a hearing on February 19, 1999, the court denied that motion and ordered Plaintiff to vacate both service stations. On February 24, 1999, Plaintiff filed a Third Amended Complaint adding a count for violation of the PMPA to its existing counts. Defendant now moves for summary judgment on all counts.

II. Standard of Review

It is well established that a motion for summary judgment will be granted only if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. FED. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In other words, if there clearly exist factual issues "that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party," then summary judgment is inappropriate. Anderson, 477 U.S. at 250, 106 S.Ct. 2505; see also Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir.1987); Morrison v. Nissan Motor Co., 601 F.2d 139,141 (4th Cir.1979); Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir.1950). The moving party bears the burden of showing that there is no genuine issue as to any material fact. FED. R. CIV. P. 56(c); Pulliam Inv. Co., 810 F.2d at 1286 (citing Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979)).

When ruling on a motion for summary judgment, the court must construe the facts alleged in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Gill v. Rollins Protective Servs. Co., 773 F.2d 592, 595 (4th Cir.1985). A party who bears the burden of proof on a particular claim must factually support each element of his or her claim. "[A] complete failure of proof concerning an essential element ... necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. Thus, on those issues on which the nonmoving party will have the burden of proof, it is his or her responsibility to confront the motion for summary judgment with an affidavit or other similar evidence. Anderson, 477 U.S. at 256, 106 S.Ct. 2505.

In Celotex Corp., the Supreme Court stated:

In cases like the instant one, where the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the "pleadings, depositions, answers to interrogatories, and admissions on file." Such a motion, whether or not accompanied by affidavits, will be "made and supported as provided in this rule," and Rule 56(e) therefore requires the non-moving party to go beyond the pleadings and by her own affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial."

Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. However, "`a mere scintilla of evidence is not enough to create a fact issue.' " Barwick v. Celotex Corp., 736 F.2d 946, 958-59 (4th Cir.1984) (quoting Seago v. North Carolina Theatres, Inc., 42 F.R.D. 627, 632 (E.D.N.C.1966), aff'd, 388 F.2d 987 (4th Cir.1967)). There must be "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted).

III. Analysis

A. Disapproval of Assignment Claims

1. Breach of Contract Claim (Count I)

Plaintiff claims that Defendant breached the Franchise Agreement with Plaintiff, including its obligation of good faith and fair dealing, by arbitrarily and unreasonably refusing to approve Plaintiffs prospective transferees. However, both the Lease Agreement and Sales Agreement (which together constitute the Franchise Agreement) contain provisions explicitly prohibiting Plaintiff from transferring or assigning its franchises to a third party. See Paper no. 79, App. A, Tab 2, Ex. A. The Assignability Rider to the Lease provides that "TENANT shall make no assignment of this Lease ... in whole or in part, directly or indirectly." Id. The Assignability Rider to the Sales Agreement provides that "DEALER shall make no assignment of this Sales Agreement ... in whole or in part, directly or indirectly." Id. Thus, Defendant's refusal to approve the transfer of the two stations, whether reasonable or not, does not violate any contractual provision, and Defendant is entitled to summary judgment.² See, e.g., Bill Call Ford v. Ford Motor Co., 830 F.Supp. 1053, 1056-57 (N.D.Ohio 1993) (finding that where contract prohibited assignment or transfer of franchise, franchisee's claim that...