Naph-Sol Refining Co. v. Murphy Oil Corp.

• Decision Date: 01 October 1982
• Docket Number: No. G79-14 CA6.,G79-14 CA6.
• Citation: 550 F. Supp. 297
• Parties: NAPH-SOL REFINING COMPANY, Plaintiff, v. MURPHY OIL CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Michigan

550 F. Supp. 297

NAPH-SOL REFINING COMPANY, Plaintiff, v. MURPHY OIL CORPORATION, Defendant.

No. G79-14 CA6.

United States District Court, W.D. Michigan, S.D.

September 17, 1982.

On Motion for Summary Judgment October 1, 1982.

COPYRIGHT MATERIAL OMITTED

John E. Varnum, Batzell, Nunn & Bode, Washington, D.C., Foster D. Potter, O'Toole, Stevens, Johnson, Knowlton, Potter & Rolf, Muskegon, Mich., for plaintiff.

William K. Holmes, Warner, Norcross & Judd, Grand Rapids, Mich., R. Bruce McLean, Akin, Gump, Hauer & Feld, Washington, D.C., for defendant.

OPINION

HILLMAN, District Judge.

Plaintiff Naph-Sol Refining Co. has brought this action against defendant Murphy Oil Corporation to recover alleged overcharges with respect to purchases of certain petroleum products. Plaintiff's eight-count¹ complaint and jury demand claims that defendant Murphy Oil sold plaintiff petroleum products at prices in excess of those permitted by regulations promulgated pursuant to the Economic Stabilization Act of 1970 and its amendments, 12 U.S.C.A. § 1904, and the Emergency Petroleum Allocation Act of 1973 (EPAA), 15 U.S.C. § 751 et seq., 6 C.F.R. Part 150, Subpart L (1973); 10 C.F.R. Parts 210, 211, 212 (1974). Plaintiff also claims that the prices charged by defendant were in breach of supply contracts existing between the parties. Plaintiff seeks to recover, among other things, alleged overcharges, compensatory damages, treble damages, and attorney fees.

Currently before the court are defendant's motions for partial summary judgment under Rule 56(b) of the Federal Rules of Civil Procedure on Counts I, II, III and IV, and motions to dismiss Counts VII and VIII under Rule 12(b).² Defendant has also moved, pursuant to Fed.R.Civ.P. 39(a)(2), to strike plaintiff's demand for jury on the grounds that no right to a jury trial exists under section 210(b)³ of the Economic Stabilization Act.

I. STATEMENT OF THE CASE

Plaintiff Naph-Sol Refining Co., located in Muskegon, Michigan, is a non-branded independent marketer of petroleum products. Defendant Murphy Oil of El Dorado, Arkansas, is a refiner of petroleum products. On December 7, 1970, the parties entered into two supply contracts for the purchase of motor gasoline and fuel oils. One contract governed purchases of petroleum products by Naph-Sol from Murphy's terminal at Ferrysburg, Michigan. The second contract governed purchases by Naph-Sol from Murphy's terminal at Marquette, Michigan. Both agreements were to remain in effect from April 1, 1971 to March 31, 1973, and thereafter from year to year; provided that either party could terminate the agreement by giving written notice at least thirty days prior to March 31 of any year.

The Marquette Contract required Naph-Sol to purchase a minimum of one million gallons of gasoline and one-half million gallons of fuel oil. Murphy agreed to supply up to a maximum of three million gallons of gasoline and two million gallons of fuel oil.

The Ferrysburg Contract required Naph-Sol to purchase a minimum of seven million, five hundred thousand gallons of gasoline and a minimum of twelve million gallons of fuel oils. The Ferrysburg Contract established a maximum of ten million gallons of gasoline and fifteen million gallons of fuel oils.

Under the supply agreements, Murphy agreed to sell petroleum products at prices determined by reference to "Platts Chicago Postings" plus .25 cents per gallon at Marquette, and minus .25 cents per gallon at Ferrysburg. Both supply contracts provided that prices were to escalate with "Platts Chicago Postings."

In addition to the above provisions, both supply contracts provided that the agreements were subject to specified minimum and maximum prices. Furthermore, both contracts contained the following price adjustment provision:

"Price Adjustment. MURPHY reserves the right at any time during the period of this agreement to increase or decrease the agreement price provided for herein. In the event any such increase or decrease in price is unacceptable to Purchaser, Purchaser shall have the right to cancel the agreement on written notice insofar as the particular product or products involved are concerned, said cancellation to be effective at the time stated in said notice. On the failure of Purchaser to exercise this right of cancellation, the increase or decrease in prices shall become automatically effective."

From August 19, 1973 to January 28, 1981, supply agreements for petroleum products were governed by various federal regulations. These regulations established among other things, the maximum allowable price which a supplier could charge for his products. At all times relevant to the present action the transactions between the instant parties were governed by these regulations.

Until early 1973, Murphy supplied plaintiff Naph-Sol with petroleum products pursuant to the two supply contracts. On or shortly before May 15, 1973, defendant Murphy Oil began to charge plaintiff Naph-Sol prices which were based on Murphy's prevailing terminal wholesale postings ("rack prices") rather than charging the prices stated within the supply contracts. Naph-Sol accepted the fuel shipments and paid the rack price charged by defendant Murphy Oil.

Plaintiff Naph-Sol purchased petroleum products from Murphy Oil at least until the filing of the instant complaint. In June of 1978, Naph-Sol filed a claim for a refund with Murphy Oil based on Naph-Sol's estimates of overcharges of 2.5 cents per gallon on the quantity of petroleum products that Naph-Sol purchased from Murphy Oil. On January 9, 1979, plaintiff filed the instant complaint alleging that defendant Murphy Oil had used an improper May 15, 1973, base price in computing allowable prices during the entire regulatory period. On March 21, 1982, defendant Murphy Oil moved for partial summary judgment on Counts I, II, III, IV and VII of plaintiff's complaint. The parties and the Department of Energy⁴ have submitted extensive briefs on the pending motions.

II. STANDARD FOR SUMMARY JUDGMENT

On a motion for summary judgment, the movant has the burden of showing conclusively that there exists no genuine issue as to material fact and that the moving party is entitled to summary judgment as a matter of law. Smith v. Hudson, 600 F.2d 60 (6th Cir.1979); Tee-Pak, Inc. v. St. Regis Paper Co., 491 F.2d 1193 (6th Cir.1974).

In determining whether there are issues of fact requiring a trial, "the inferences to be drawn from the underlying facts contained in the affidavits, attached exhibits and depositions must be viewed 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, 994, 8 L.Ed.2d 176 (1962). Accord, Bohn Aluminum & Brass Corp. v. Storm King Corp., 303 F.2d 425 (6th Cir.1962). Even if the basic facts are not disputed, summary judgment may be inappropriate when contradictory inferences may be drawn from them. Diebold, supra; EEOC v. United Association of Journeymen & Apprentices of the Plumbing & Pipefitting Industry, Local 189, 427 F.2d 1091, 1093 (6th Cir.1970). In making this determination, the court must make reference to the entire record and all well-pleaded allegations are to be accepted as true. Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d 389 (6th Cir.1975). These guidelines will be adhered to as substantive issues of the various motions are examined.

On August 16, 1982, a hearing on defendant's motions was held before this court. For the reasons that follow, defendant's motions are granted in part and denied in part.

III. COUNT I OF THE COMPLAINT

Count I of plaintiff's complaint alleges that Murphy Oil violated the Mandatory Petroleum Price Regulations, 10 C.F.R. Part 212 (1975) (Price Regulations),⁵ by exceeding the maximum allowable price which Murphy Oil could charge under the regulations. The rule for determining a refiner's maximum allowable price was as follows:

"A refiner may not charge to any class of purchaser a price in excess of the base price of that covered product except to the extent permitted pursuant to the provisions of paragraphs (c) and (d) of this section."

10 C.F.R. § 212.82(a) (1975).

The base price from which a refiner calculated the maximum allowable price under the regulations was defined as follows:

"The base price for sales of an item by a refiner is the weighted average price at which the item was lawfully priced in transactions with the class of purchaser concerned on May 15, 1973 ...."

10 C.F.R. § 212.82(b)(1) (1975).

The critical issue in Count I of plaintiff's complaint is the appropriate May 15, 1973, "base price" from which Murphy Oil should have determined its maximum allowable price for sales of petroleum products to plaintiff Naph-Sol. Naph-Sol alleges that, under the Price Regulations, the proper base price between the parties should have been determined by reference to the minimum and maximum price schedules listed within the supply contracts rather than by reference to the actual rack price charged by Murphy Oil in sales to Naph-Sol on or shortly before May 15, 1973.

Naph-Sol contends that as of May 15, 1973, the supply contracts between the parties were in effect. Naph-Sol alleges that the price schedules contained in the supply contracts constituted the "lawful" base price between the parties on May 15, 1973, on which to calculate the maximum allowable price under the Price Regulations. 10 C.F.R. § 212.82(a). Naph-Sol contends that in calculating the maximum allowable price based on the higher rack price actually charged Naph-Sol, defendant Murphy Oil used an incorrect (illegal) base price during the entire regulatory period. Thus, under plaintiff's theory, Murphy Oil's breach of contract violated the price regulations. Consequently, Naph-Sol seeks to recover alleged overcharges pursuant to section 210(b) of the Economic Stabilization Act. 12 U.S.C. § 1904 (note).

On the other hand, Murphy Oil's motion for summary judgment...