Radecki v. Amoco Oil Co.

• Decision Date: 12 May 1986
• Docket Number: Civ. No. 3-83-487.
• Citation: 634 F. Supp. 1393
• Parties: Ronald J. RADECKI and Radecki's Service, Inc., a Minnesota corporation, Plaintiffs, v. AMOCO OIL COMPANY, a Maryland corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

634 F. Supp. 1393

Ronald J. RADECKI and Radecki's Service, Inc., a Minnesota corporation, Plaintiffs, v. AMOCO OIL COMPANY, a Maryland corporation, Defendant.

Civ. No. 3-83-487.

United States District Court, D. Minnesota, Third Division.

May 12, 1986.

Wayne A. Hergott, and Patrick F. Flaherty, Moss & Barnett, and Randy V. Thompson, and Gary E. Persian, Smith & Persian, Minneapolis, Minn., for plaintiffs Ronald J. Radecki and Radecki's Service Inc.

Rita A. McConnell, and Alfred H. Edwall, Robins, Zelle, Larson & Kaplan, Minneapolis, Minn., and Maurice R. Glover, and Dale M. Iwataki, Amoco Corp., Chicago, Ill., for defendant Amoco Oil Co.

MEMORANDUM AND ORDER

MAGNUSON, District Judge.

Plaintiffs Ronald J. Radecki and Radecki's Service, Inc. (collectively referred to as Radecki) commenced this lawsuit against defendant Amoco Oil Company (Amoco) under the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801-2806, on April 20, 1983. Radecki is a franchisee of Amoco and operates a traditional full-service retail Amoco station at 1099 Grand Avenue in St. Paul, Minnesota. A traditional full-service station is a station which sells not only gasoline, but also provides repair and towing services and sells tires, batteries, and accessories (which are commonly referred to in the trade as TBA). Amoco owns the station and certain equipment, such as the pumps, gasoline tanks, hoist and compressor, as well as the premises and has continuously leased them to Radecki or his father since the 1930s. A series of leases has governed the franchise relationship between Amoco and Radecki with the most recent lease dated April 25, 1980. That lease agreement by its own terms was to have expired on June 30, 1983.

In August 1981, Amoco informed Radecki that it would consider selling its service station and premises at 1099 Grand Avenue to him. Amoco subsequently forwarded various proposed sale documents to Radecki in September 1981 for his review and consideration. Radecki obtained legal counsel to review the documents and made the necessary arrangements for financing the sale. In November 1981, however, Amoco informed Radecki that it was no longer interested in selling the station and premises and the sale was never consummated. In December 1982, Radecki learned that Amoco intended to convert its full-service station at 1099 Grand Avenue into a pumper with demolition of the existing station and construction of the pumper to begin in August 1983. A pumper is a station which sells gasoline and possibly convenience foods and other items and offers a car wash, but provides no auto repair or towing services and no TBA on the premises. At about the same time that Radecki learned of the intended pumper conversion, Amoco offered on December 22, 1982 to renew its franchise relationship with Radecki under a new lease agreement for a period of three years commencing upon expiration of the existing lease on June 30, 1983. The new lease agreement differed most significantly from the existing lease with the deletion of Paragraph 17¹ and the addition of a rider relating to conversion of the premises (the pumper rider).² After considerable analysis and investigation on Radecki's part and discussions with Amoco, Radecki concluded that he could not enter into the new lease agreement with the pumper rider, though he could enter into the new lease agreement without the pumper rider. On March 30, 1983, Amoco informed Radecki by letter that it was terminating and nonrenewing the lease agreement and franchise relationship with Radecki effective June 30, 1983. The stated reason for termination and nonrenewal as required under the PMPA was the failure of Amoco, as franchisor, and Radecki, as franchisee, to agree to changes or additions to the provisions of the franchise.

Radecki subsequently commenced this lawsuit under the PMPA seeking injunctive relief to require Amoco to make a bona fide offer to sell the station and premises to him or to renew the existing franchise without the pumper rider, and seeking actual and punitive damages. The lawsuit was assigned to this court which, on June 7, 1983, issued a preliminary injunction pursuant to § 105(b)(2) of the PMPA, 15 U.S.C. § 2805(b)(2), enjoining Amoco from nonrenewing and terminating Radecki's franchise and from converting the station and premises at 1099 Grand Avenue into a pumper pending trial of this lawsuit on the merits. On January 5, 1984, the court denied the Cross-Motions for Summary Judgment of Amoco and Radecki and declined at that time to determine whether § 102(b)(3)(A) or § 102(b)(3)(D) of the PMPA, 15 U.S.C. § 2802(b)(3)(A) and § 2802(b)(3)(D) (hereinafter referred to as § 2802(b)(3)(A) and § 2802(b)(3)(D)), applies to this case preferring to have the facts more fully developed before making such a determination. The matters now before the court are the renewed Cross-Motions for Summary Judgment of Amoco and Radecki to determine whether § 2802(b)(3)(A) or § 2802(b)(3)(D) applies to this case and, depending which section applies, whether judgment can be entered as a matter of law.

Radecki contends that § 2802(b)(3)(D) applies to this case because Amoco seeks to nonrenew its franchise relationship with him as a result of a determination "to materially alter, add to, or replace" its station and premises at 1099 Grand Avenue. Radecki concedes that the attempt of Amoco to nonrenew their franchise relationship arose in the context of a purported "failure ... to agree to changes or additions to the provisions of the franchise" involving the new lease agreement with the pumper rider (which Amoco seizes upon to argue that § 2802(b)(3)(A) applies to this case). Radecki believes, however, that when Amoco approached him with the new lease agreement with the pumper rider the decision to convert the full-service station and premises at 1099 Grand Avenue to a pumper was but a fait accompli. That is, the decision "to materially alter, add to, or replace" the station and premises at 1099 Grand Avenue was made before "the failure ... to agree to changes or additions to the provisions of the franchise." Consequently, Radecki believes that the determination of Amoco to materially alter and convert the station and premises to a pumper, not the failure of Amoco and himself to agree to changes and additions in the new lease agreement with the pumper rider, motivated Amoco to nonrenew their franchise relationship and § 2802(b)(3)(D) should therefore apply.

Radecki asks the court to focus not on the attempt of Amoco to create a failure to agree in these circumstances, but on the determination of Amoco to materially alter the station and premises to a pumper. Radecki contends that Amoco offered him renewal under the terms and conditions of the new lease agreement with the pumper rider, which were to him so onerous as to make acceptance personally and economically impossible, in order to create an apparent failure to agree between Amoco and himself which would provide Amoco with a basis to nonrenew under § 2802(b)(3)(A). Radecki contends that Amoco structured its dealings with him in this way in a transparent attempt to circumvent § 2802(b)(3)(D) and the rights which he would be accorded under that provision, including the right in the case of a material alteration to purchase the station and premises from Amoco. Radecki concludes that Amoco should not be allowed to vitiate the rights which the PMPA provides to him, the franchisee, vis-a-vis Amoco, the franchisor. Radecki asks the court to find that § 2802(b)(3)(D) applies to this case and that Amoco has violated § 2802(b)(3)(D) as a matter of law, and to order injunctive relief requiring Amoco to comply with § 2802(b)(3)(D).

Amoco contends that § 2802(b)(3)(A) applies to this case because Amoco and Radecki failed "to agree to changes or additions to the provisions of the franchise." Amoco contends that it conducted extensive market studies in the Twin Cities in the late 1970s and early 1980s which indicated that, in order to meet changing retail gasoline market conditions and satisfy consumer preferences, it would have to convert a number of traditional full-service stations and premises to pumpers, including the station and premises Radecki operates. Having decided to convert some of its full-service stations and premises in the Twin Cities to pumpers, Amoco believes that it could deal with its franchisees in the context of renewal in one of two ways under the PMPA. Amoco could work within the framework of the franchise and offer the franchisee renewal under the terms of changes or additions to the provisions of the franchise which authorize the conversion of the station and premises to a pumper. Alternatively, Amoco could decide not to renew the franchise because of its determination to materially alter the station and premises by conversion to a pumper and offer to sell the station and premises to the franchisee. Amoco believes that if it offers to renew the franchise under changed or additional provisions, then § 2802(b)(3)(A) applies and the franchisee can either accept the franchise with the changed or additional provisions and continue the franchise relationship or reject the franchise and risk nonrenewal. Amoco further believes that if it decides not to renew the franchise because of a determination to materially alter the station and premises by conversion to a pumper, then § 2802(b)(3)(D) applies and Amoco must make the franchisee a bona fide offer to sell the station and premises which the franchisee may accept but which will cause the franchisee to lose the franchise. Amoco contends that because it offered to renew the franchise with Radecki, albeit with changes and additions to provisions of the franchise including the new lease agreement with the pumper rider, and Amoco and Radecki failed to agree to those changes and additions, § 2802(b)(3)(A) applies to this case. Amoco asks the court to find that § 2802(b)(3)(A) applies to this...