Miller v. WH Bristow, Inc.

• Citation: 739 F. Supp. 1044
• Decision Date: 31 May 1990
• Docket Number: Civ. A. No. 4:89-2668-15.
• Parties: Loren D. MILLER, Plaintiff, v. W.H. BRISTOW, INC. and W.H. Bristow, Jr., Defendants.
• Court: United States District Courts. 4th Circuit. United States District Court of South Carolina

739 F. Supp. 1044

Loren D. MILLER, Plaintiff, v. W.H. BRISTOW, INC. and W.H. Bristow, Jr., Defendants.

Civ. A. No. 4:89-2668-15.

United States District Court, D. South Carolina, Florence Division.

May 31, 1990.

S. Jahue Moore, Kirkland, Taylor, Wilson, Moore, Allen & Deneen, P.A., West Columbia, S.C., for plaintiff.

E.S. Swearingen, Swearingen & Luther, Florence, S.C., Robert S. Bassman, Alphonse M. Alfano, Roy F. Dunshee, Bassman, Mitchell & Alfano, Chtd., Washington, D.C., for defendants.

ORDER

HAMILTON, District Judge.

I. Introduction

Plaintiff, Loren D. Miller, sells motor fuels and groceries at a retail service station in Darlington County, South Carolina. The property is owned by Ruth Borders and was leased to Bekms Corporation on February 1, 1983. Bekms assigned the lease to defendant W.H. Bristow, Inc. (Bristow)¹, who then subleased the property to plaintiff. Bristow is a petroleum marketer who uses a variety of methods to sell fuel to the public. The method employed with respect to Miller is called a "retail consignment basis," under which Bristow places gasoline and diesel fuel (hereinafter referred to collectively as "fuel") at the location on consignment.

The parties signed two contracts: A "Lease" for the real property (hereinafter "Sublease") and an "Agreement for the Supply of Personnel" (hereinafter "Agreement"), both dated July 28, 1983. Paragraph 3 of the Sublease provided for a term of one year, "and continuing thereafter from month to month until terminated, provided, however, either party shall have the right ... to cancel and terminate this agreement at any time during the initial or any renewal term by giving written notice of intent to cancel and terminate at least 30 days prior to the effective date of such cancellation and termination." The Agreement also includes a thirty day notice of cancellation provision. See Agreement, para. 14. In addition, the Agreement contains the following terms defining the parties' relationship:

1) Miller would receive a monthly commission of five cents per gallon² or $200 per month, whichever is greater (para. 4);

2) Bristow would retain title to the products delivered (paras. 5, 11);

3) Bristow would bear the risk of loss of all consignment fuel, except that resulting from Miller's negligent or criminal conduct (para. 11);

4) Bristow would be responsible for all ad valorem taxes on the fuel, as well as "all privilege and use taxes imposed for the ownership and operation" of the facility (para. 17);

5) Bristow would set the price of all fuel sold on the premises (para. 5).

In July and August, 1989, Bristow and Borders apparently had a dispute over the condition of the roof, each taking the position that the other was legally obligated to repair it. As a result, Borders canceled the lease, followed by Bristow's cancellation of the Sublease with Miller as well as the Agreement. Plaintiff does not dispute that Bristow's cancellation gave the 30 days' notice required by the Sublease and Agreement. Interestingly, Miller then entered into a lease directly with Borders, which was followed by Bristow's reinstatement of the Agreement.³

Miller has brought this suit alleging four causes of action. In his first cause of action, plaintiff invokes the Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et seq., (PMPA) to argue that Bristow did not give the statutorily required 90 days' notice of termination, and that Bristow's termination of the Sublease and Agreement did not occur for one of the narrow reasons allowed by the statute. In his second cause of action, Miller claims that Bristow negligently and recklessly failed to keep the Borders/Bekms lease in existence, and in his third cause of action, Miller alleges breach of contract as a third party beneficiary of the Borders/Bekms lease. Finally, in his fourth cause of action, Miller has alleged a violation of "federal and state antitrust laws." Because the court has determined that there are no triable issues of fact and that the applicable law supports defendants' position on each of the causes of action, defendants' motion for summary judgment is granted. Rule 56, Fed.R.Civ. Proc.

II. Petroleum Marketing Practices Act

Defendants contend that the PMPA does not apply to the parties' relationship, arguing that neither the technical definitions in the statute nor its underlying purposes support its application here. Plaintiff has responded by arguing that the arrangement between the parties was specifically intended to circumvent the protection offered by the PMPA and should not be allowed to do so. In examining the arguments of the parties, it is necessary first to analyze closely several definitions in the statute.

Congress intended the PMPA to apply only to a franchise relationship between a "refiner," "distributor," and "retailer" of motor fuels under a brand name. The statute defines "franchise" as any contract:

(i) between a refiner and a distributor,

(ii) between a refiner and a retailer,

(iii) between a distributor and another distributor, or

(iv) between a distributor and a retailer, under which a refiner or distributor (as the case may be) authorizes or permits a retailer or distributor to use, in connection with the sale, consignment, or distribution of motor fuel, a trademark which is owned or controlled by such refiner or by a refiner which supplies motor fuel to the distributor which authorizes or permits such use.

15 U.S.C. § 2801(1)(A).

The statute goes on to state that the term franchise includes

(i) any contract under which a retailer or distributor (as the case may be) is authorized or permitted to occupy leased marketing premises, which premises are to be employed in connection with the sale, consignment, or distribution of motor fuel under a trademark which is owned or controlled by such refiner or by a refiner which supplies motor fuel to the distributor which authorizes or permits such occupancy;

(ii) any contract pertaining to the supply of motor fuel which is to be sold, consigned or distributed—

(I) under a trademark owned or controlled by a refiner.

15 U.S.C. § 2801(1)(B) (emphasis added).

"Distributor" is defined as follows:

any person, including any affiliate of such person, who—

(A) purchases motor fuel for sale, consignment, or distribution to another, or;

(B) receives motor fuel on consignment for consignment or distribution to his own motor fuel accounts or to accounts of his supplier, but shall not include a person who is an employee of, or merely serves as a common carrier providing transportation service for such supplier.

15 U.S.C. § 2801(6). "Retailer" is defined as "any person who purchases motor fuel for sale to the general public for ultimate consumption." 15 U.S.C. § 2801(7).

Defendants argue that because they retain title to the fuel in the consignment arrangement, Miller is neither a retailer nor a distributor. Defendants cite an Eleventh Circuit case as presenting "virtually identical" facts, and argue that its reasoning should be applied to this case. In Farm Stores, Inc. v. Texaco, Inc., 763 F.2d 1335 (11th Cir.1985), cert. denied, 474 U.S. 1039, 106 S.Ct. 609, 88 L.Ed.2d 586 (1985), the court concluded that the plaintiff was not a retailer or distributor, and therefore did not receive the protection of the PMPA. The court first examined the contractual relationship between the parties and noted that Texaco owned the land, fuel dispensing equipment, and convenience store on the premises. Texaco assumed responsibility for structural maintenance, retained title to the gasoline products, and paid Farm Stores a fixed hourly rate for the station's operation. In addition to this hourly rate, Farm Stores was allowed to keep all proceeds from the food and car wash sales. Farm Stores agreed to perform routine maintenance, hire employees, and collect money from customers purchasing gasoline.

The court first considered whether, under these circumstances, Farm Stores could be considered a "retailer" for purposes of the PMPA. The court recognized that the definition of "retailer" requires that person to purchase fuel, and that Farm Stores had not purchased the fuel, but had instead been paid an hourly rate. The court noted that Farm Stores did not:

(i) pay for the gasoline inventory until it was sold; (ii) take title; (iii) pay ad valorem taxes on the gasoline inventory; (iv) bear the risk of loss of the gasoline (except for its own carelessness); (v) retain any funds from the sale of the gasoline to motorists; (vi) set the price or assume the market risk in fluctuations in gasoline prices; (vii) pay sales taxes or extend credit to motorists on resale; and (viii) hold a gasoline retailers business license.

Id. at 1340. The court concluded by stating: "It seems obvious to us that the consumer is the purchaser of gasoline." Id.

The court then examined whether Farm Stores could be considered a "distributor" as that term is defined in 15 U.S.C. § 2801(6)(B). The court concluded: "We cannot see that Farm Stores can be characterized as a distributor because the public purchases motor fuel at this location for consumption and the distributor definition involves consignment which applies only to wholesale operations." Id. at 1341. The court agreed with a prior district court, which had concluded that "the legislative history makes clear that in defining a "distributor" who operates under a consignment Congress had in mind an independent middleman acting as a jobber, not a dealer selling to the public at retail." Id. (quoting Johnson v. Mobil Oil Corp., 553 F.Supp. 195 (S.D.N.Y.1982)).

The rationale of the Farm Stores court's discussion of the definition of "retailer" applies equally well in the present case, since plaintiff cannot be said to have "purchased" gasoline from defendants. Plaintiff has attempted to create an issue of fact by arguing in response to this motion that the invoices show that defendants did, in fact, sell gasoline to plaintiff. A...