Mobil Oil Corp. v. Karbowski

• Decision Date: 04 September 1987
• Docket Number: Civ. No. H-86-1316 (AHN).
• Court: U.S. District Court — District of Connecticut
• Parties: MOBIL OIL CORPORATION v. Theadeous S. KARBOWSKI d/b/a Ted's Mobil Service Station.

667 F. Supp. 927

MOBIL OIL CORPORATION v. Theadeous S. KARBOWSKI d/b/a Ted's Mobil Service Station.

Civ. No. H-86-1316 (AHN).

United States District Court, D. Connecticut.

September 4, 1987.

Scott Moser, Day, Berry & Howard, Hartford, Conn., for plaintiff.

Richard W. Farrell, Farrell & Barr, Stamford, Conn., for defendant.

RULING ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

NEVAS, District Judge.

This is an action for injunctive, declaratory, and monetary relief brought by Mobil Oil Corporation ("Mobil") a franchisor against Theadeous S. Karbowski a franchisee of a Mobil gasoline service station located in Branford, Connecticut. Mobil seeks to enforce its purportedly proper termination of the parties' pertroleum marketing franchise relationship. This action arises under the Petroleum Marketing Practices Act, 15 U.S.C. Sections 2801-2806 ("PMPA"), and the court has jurisdiction under 28 U.S.C. Sections 1331, 1332, 1337, 2201, and 2202. The defendant Karbowski has filed a counterclaim seeking, inter alia, to enjoin the termination of the franchise relationship on the basis of Mobil's alleged violations of the PMPA and the Connecticut Gasoline Dealers Act, Conn. Gen.Stat. Sections 42-133j through 42-133n, which regulates various aspects of petroleum product franchises. Jurisdiction to entertain this compulsory counterclaim is under Rule 13(a), Fed.R.Civ.P.

By verified complaint, Mobil asserts two causes of action. In the first cause of action, Mobil seeks a declaratory judgment that its franchise relationship with Karbowski has been properly terminated in accordance with the PMPA and injunctive relief requiring Karbowski to vacate the Mobil service station. Mobil maintains that it is entitled to terminate the franchise on two independent grounds: (1) Karbowski's failure to comply with reasonable and materially significant provisions in the franchise agreement pursuant to PMPA Section 2802(b)(2)(A), Verified Complaint paras. 13-15; and (2) Karbowski's failure to make good faith efforts to comply with provisions of the franchise agreement, pursuant to PMPA Section 2802(b)(2)(B), id. paras. 13-14, 19. The two franchise provisions in issue require Karbowski to operate the gas station 24 hours a day, seven days a week, and to purchase a minimum gallonage of gasoline each month. Mobil's second cause of action, which is not at issue now, is a state law claim alleging Karbowski's breach of the franchise contract and lease.¹

Presently before the court is the defendant Karbowski's motion for summary judgment on Mobil's first cause of action brought under the PMPA. Karbowski asserts that the Connecticut Gasoline Dealers Act prohibits Mobil from terminating the franchise relationship and, therefore, he is entitled to judgment in his favor. This motion squarely places before the court the legal issue of whether the PMPA preempts portions of the Connecticut Gasoline Dealers Act prohibiting a franchisor from terminating or not renewing a petroleum franchise relationship due to the franchisee's conduct. One part of the Connecticut Act prohibits termination or nonrenewal because of a franchisee's failure to meet sales quotas suggested by the franchisor. Section 42-133l(a) and (e)(2), Conn.Gen. Stat. The second part prohibits a franchisor from terminating or not renewing a franchise because of a franchisee's refusal to operate the station beyond hours he documents to be unprofitable to him or beyond the hours of 6:00 a.m. and 10:00 p.m. Section 42-133l(a) and (e)(4), Conn. Gen.Stat.

Procedural History

Mobil filed its complaint with supporting papers for injunctive relief on October 1, 1986. The court then issued an Order to Show Cause directing the defendant to show cause on October 14, 1986, why Mobil's motion for preliminary injunction should not issue (Filing no. 5, filed October 2, 1986). In response, the defendant Karbowski filed a counterclaim and moved for temporary and preliminary injunctive relief. (Filing nos. 9-12, filed October 7, 1986). The court entered an order pursuant to PMPA Section 2805(b), temporarily enjoining Mobil from terminating Karbowski's franchise and maintaining the status quo pending a final hearing on October 15, 1986, the purpose of which was to resolve the merits of Karbowski's and Mobil's cross-motions for a preliminary injunction. Temporary Restraining Order filed October 8, 1986 (filing no. 13).

At a status conference on October 14, 1986, the court, with the agreement and input of counsel, fashioned an order which outlined a discovery schedule and set a jury trial date for December. Expedited Trial Scheduling Order filed October 16, 1986 (filing no. 16). By order dated October 17 and entered absent the parties objection, the terms and conditions of the Temporary Restraining Order were ordered to remain in effect pending a decision of this action by summary judgment or trial. Order (filing no. 17). In November, the parties jointly sought, and the court granted, a modification of the Expedited Trial Scheduling Order by suspending the discovery and trial pending briefing, arguing, and a resolution of the summary judgment motion. Motion to Modify Schedule (filing no. 21). By the parties' agreement, the terms and conditions of the Restraining Order were to remain in effect. Id.

The defendant Karbowski filed his motion for summary judgment on December 11, 1986. He supports the motion with Defendant's Memorandum of Law in Support of: (1) Summary Judgment; (2) Injunctive Relief Pursuant to 15 U.S.C. Section 2805(b) ("Defendant's Memorandum," filing no. 34); Appendix to Defendant's Motion for Summary Judgment ("Defendant's Appendix"); and Defendant's Statement of Material Facts as to which Karbowski Claims there is No Genuine Issue to be Tried ("Defendant's Fact Statement," filing no. 35). Mobil opposes the motion with Mobil's Memorandum in Opposition to Defendant's Motion for Summary Judgment ("Mobil's Memorandum," filing no. 31); Exhibits to Mobil's Memorandum ("Mobil's Exhibits," filing no. 32); Mobil's Statement of Material Facts as to which there Exists a Genuine Issue to be Tried ("Mobil's Fact Statement," filing no. 26); Mobil's Proposed Findings of Fact and Conclusions of Law (filing no. 27). Karbowski replied to Mobil's submissions with Defendant's Reply Brief, Supplemental Statement of Facts (filing no. 38).

The court heard oral argument on December 15, 1986. Hearing Transcript (filing no. 40, filed April 29, 1987). Since the argument, the parties submitted further briefs on the preemption issue. See Defendant's Supplemental Memorandum of Law in Support of Motion for Summary Judgment Regarding Supreme Court Decision CTS Corp. v. Dynamics Corp. of America (filing no. 41); Mobil's Memorandum of Law in Opposition to Defendant's Supplemental Memorandum of Law Regarding CTS Corp. v. Dynamics Corp. of America (filing no. 43); Mobil's Supplemental Statement in Opposition to Defendant's Supplemental Memorandum of Law Regarding CTS Corp. v. Dynamics Corp. of America (filing no. 44).

Facts

A comparison of the Defendant's Fact Statement with Mobil's Fact Statement and Proposed Findings of Fact reveals that the parties agree on those facts material to deciding whether the PMPA preempts section 42-133l(a) and (e)(2) and (4) of the Connecticut Gasoline Dealers Act with respect to the two grounds for termination asserted by Mobil. The relevant facts are as follows.

Theadeous S. Karbowski has been a Mobil franchisee since March 7, 1976, operating a Mobil station named "Ted's Mobil Service Station" located at 48 Leetes Island Road, Branford, Connecticut. Karbowski's Affidavit, Defendant's Appendix Exhibit A. On March 29, 1985, Mobil and Karbowski executed a Service Station Lease ("Lease") and Retail Dealer Contract ("Contract") concerning the operation of the service station for the period from April 1, 1985, through March 31, 1988. Lease and Contract, Defendant's Appendix Exhibit D. Those documents create a petroleum franchise relationship between Mobil and Karbowski within the meaning of the PMPA and the Connecticut Gasoline Dealers Act. PMPA Section 2801(2); Section 42-133k(b), Conn.Gen.Stat.

Paragraph 5 of the Lease provides, in part, that Karbowski will operate the station 24 hours per day, seven days a week.² Paragraph 1 of the Contract provides that Mobil is to sell, and Karbowski is to buy, as much gasoline each month as Karbowski orders, up to a maximum of 62,500 gallons. This paragraph further provides a "minimum gallonage" amount that requires Karbowski to purchase no less than 50% of the 62,500 gallonage maximum Mobil is to supply. The Lease at paragraph 18 and the Contract at paragraph 20 provide that the terms and conditions within the documents are "reasonable and of material significance to the relationship of the parties."

On June 26, 1986, a year after the Lease and Contract became effective, Mobil notified Karbowski by letter that the Lease, Contract, and franchise relationship would be terminated on September 30, 1986, in accordance with the PMPA because of Karbowski's failure to comply with the hours of operation provision and the minimum gallonage provision. Mobil Letter to Karbowski, Defendant's Appendix Exhibit C. Mobil explained to Karbowski that he had consistently failed to operate the station on a 24 hour, seven day a week, basis, despite Mobil's repeated requests to keep the station open. The termination letter also explained that Karbowski had failed to purchase the minimum quantities of gasoline in eleven of the last fourteen months despite the fact that Mobil had provided notice of the failure and an opportunity to cure. Mobil's letter further stated that Karbowski's failure to comply with the two provisions in the Contract and Lease, which provisions were both reasonable and of material significance to the franchise, and his failure to exert good faith efforts in carrying out the two provisions provided grounds for termination of the franchise relationship...