Riverdale Enterprises, Inc. v. Shell Oil Co., Civ.A. 97-30281-KPN.

• Decision Date: 11 February 1999
• Docket Number: No. Civ.A. 97-30281-KPN.,Civ.A. 97-30281-KPN.
• Citation: 41 F.Supp.2d 56
• Parties: RIVERDALE ENTERPRISES INC., et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

Page 56

41 F.Supp.2d 56

RIVERDALE ENTERPRISES INC., et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants.

No. Civ.A. 97-30281-KPN.

United States District Court, D. Massachusetts.

February 11, 1999.

Myles Jacobson, Jacobson & Thompson, PC, Springfield, MA, Linda J. Thompson, Jacobson & Thompson, P.C., Springfield, MA, for plaintiffs.

John F. Rogers, Cain, Hibbard, Myers & Cook, Pittsfield, MA, for defendants.

John F. Rogers, (See above), for O'Connell Oil Associates, Inc.

MEMORANDUM WITH REGARD TO DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Docket No. 18)

NEIMAN, United States Magistrate Judge.

The instant complaint arises out of a November 25, 1996 sale and assignment of several retail franchise agreements from Shell Oil Company, Inc. ("Shell"), the original franchisor, to O'Connell Oil Associates, Inc. ("O'Connell") (collectively "Defendants"). Five of the twelve franchises that were transferred and assigned — State Street Food Mart, Inc., Sullivan Shell Longmeadow, Inc., W.F.C.S., Inc., Westfield Food Mart, Inc., and the East Longmeadow location owned by Martin Sullivan and Kevin Prior ("East Longmeadow") (collectively "Plaintiffs") — maintain that Defendants' actions were unlawful and pursue various forms of relief.¹

In Count I of their four count complaint, Plaintiffs seek declaratory and injunctive relief under the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2801 et. seq., pursuant to M.G.L. ch. 231A. In Count II, Plaintiffs seek like relief in accord with the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02. In Counts III and IV, Plaintiffs allege that Defendants' actions amount to unfair and deceptive trade practices in contravention of M.G.L. ch. 93A. With the parties' consent, the case has been assigned to the court pursuant to 28 U.S.C. § 636(c) for all purposes, including trial and entry of judgment.

Presently before the court is Defendants' motion for summary judgment in which, interestingly enough, Defendants themselves seek seven declarations in their favor. Defendants ask the court to find as a matter of law that the transactions at issue comport with the requirements of the PMPA, as well as state statutory and common law. In response, Plaintiffs have offered two declarations in their favor. In essence, Plaintiffs assert that, pursuant to the PMPA, any renewal of their franchises must ensure the continued supply of branded gasoline, i.e., motor fuel sold under a refiner's trademark.

I. STANDARD OF REVIEW

Summary judgment is appropriate where the record reveals 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). The facts must be viewed in a light most favorable to the non-moving party. Santiago-Ramirez v. Secretary of Dep't of Defense of United States, 62 F.3d 445, 446 (1st Cir.1995). The non-moving party bears the burden of placing at least one material fact into dispute after the moving party shows the absence of any disputed material fact. Mendes v. Medtronic, Inc., 18 F.3d, 13, 15 (1st Cir.1994) (discussing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The factual dispute claimed by the non-moving party must be "material" and the dispute over it "genuine." A "genuine" issue is one that only a finder of fact can properly resolve because it may reasonably be resolved in favor of either party, and a "material" issue is one that affects the outcome of the suit. Aponte Matos v. Toledo Davila, 135 F.3d 182, 186 (1st Cir.1998); Collins v. Martella, 17 F.3d 1, 3 n. 3 (1st Cir.1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Mere allegations or conjecture unsupported in the record are insufficient to raise a genuine issue of material fact. Santiago v. Canon U.S.A., Inc., 138 F.3d 1, 5 (1st Cir.1998). Absent a genuine dispute of material fact, questions of law are appropriate for resolution on summary judgment. Jimenez v. Peninsular & Oriental Steam Nav. Co., 974 F.2d 221, 223 (1st Cir.1992).

II. FACTUAL BACKGROUND

In the court's opinion, there are no genuine issues of material fact. The contested facts described by Plaintiffs, (see Dealer's Resp. at 7-18), do not alter the court's conclusion in this regard.

On November 25, 1996, Shell sold its rights to twelve retail marketing locations in Hampshire and Hampden counties to O'Connell. O'Connell supplies gasoline to stations which it owns and operates, to other stations which it owns but leases, and to still other stations which it neither owns nor operates. At the time, O'Connell was a distributor of Shell, Mobil and Citgo branded gasoline products.

None of the Plaintiffs whose five locations were assigned by Shell to O'Connell consented to the assignment. In fact, they collectively indicated that they would demand certain assurances were the assignment to take place. Plaintiffs' concerns were raised again when East Longmeadow was offered a franchise renewal on terms which Plaintiffs deemed unacceptable. East Longmeadow's is the first and only franchise to be subject to renewal since the assignment of the franchises from Shell to O'Connell. Despite the failure of O'Connell and East Longmeadow to resolve their dispute to date, O'Connell continues to supply gasoline to East Longmeadow as well as each of the other plaintiffs

Prior to November 25, 1996, each of the twelve marketing locations was leased by Shell pursuant to the terms of a "Motor Fuel Station Lease." In addition, Shell and each of the dealers had a supply contract which provided that Shell would supply them with Shell gasoline products and the right to use the Shell trademark. Together, the lease and supply contract created a franchise instrument known as a Dealer Agreement ("Dealer Agreement"). At the time of the assignment in November of 1996, the Dealer Agreements with the various plaintiffs had different amounts of time left to their current terms.

Each Dealer Agreement is governed by the PMPA. Among the terms included in the Dealer Agreement is Shell's right to transfer or assign its interests. Specifically, the Dealer Agreement provides that "Shell shall have the right to sell, transfer or assign its interest in this Agreement. Following any assignment of this Agreement by Shell, Shell's assignee shall be substituted for Shell with respect to the rights and obligations of Shell provided herein." (Def. Exhibit C ¶ 17.4.) The Dealer Agreement also includes a Variable Rent Program ("VRP") which enables dealers to pay less rent upon the sale of gasoline exceeding a certain prescribed volume. The VRP, which evidently continues in effect at the twelve retail locations, is a voluntary program offered on terms unilaterally determined by the gasoline supplier.

Several documents were necessary to effectuate the sale and assignment to O'Connell of Shell's varying interests in the franchise locations. First, Shell and O'Connell executed a purchase agreement entitled Offer to Purchase Real Property and Other Real Property from Shell ("Purchase Agreement") with respect to those locations which Shell owned in November of 1996. An addendum to the Purchase Agreement requires that, "for a period of ten years beginning on May 1, 1997 (Amortization Period), [O'Connell] covenants, warrants and agrees that it shall purchase from Shell a minimum of Thirty One Million (31,000,000) gallons of Shell branded motor fuel per year, except that the minimum in year one shall be twenty Four Million (24,000,000) gallons." (Def. Exhibit F.) The Purchase Agreement further provides for the payment of liquidated damages in the event that O'Connell fails to purchase the specified minimum. The Purchase Agreement also states that it "shall remain an executory contract separate and apart from any other obligations and provisions in the Jobber contract in effect between the parties."

The Jobber Contract between Shell and O'Connell, which was executed on July 18, 1997, addresses the sale of Shell products to and the right to use the Shell trademark by O'Connell. In applicable part, the Jobber Contract provides that "Shell shall sell and deliver to [O'Connell] and [O'Connell] shall purchase and accept from Shell, the Products for which quantities are specified in [accord with an established] schedule in such quantities as [O'Connell] shall order from time to time, but as to each Product during each month not less than half nor more (except at Shell's option) than all of the quantity specified in the Schedule for such Product and month." The five year term specified in the Jobber Contract began on July 1, 1997, and is due to end on June 30, 2002.

Quitclaim deeds were also executed between Shell and O'Connell, parts of which include a ten year deed restriction during which O'Connell is required to use only Shell products at the twelve locations. Specifically, O'Connell agrees "that during a period of ten years from the date of execution of th[e] deed, no non-Shell Oil Company motor gasolines shall be stored on, sold or distributed from the premises herein conveyed or any part thereof. This restriction is for the benefit of [Shell], its successors and assigns."

All but one of the assigned Dealer Agreements pertaining to the instant litigation have expiration dates in the years 1999, 2000 and 2001. As indicated, only the franchise instrument pertaining to East Longmeadow has already expired. O'Connell has and expects to tender renewals of the franchise instruments, upon expiration, to each of the Plaintiffs. One particular modification in the franchise renewal tendered to East Longmeadow has created the present controversy, namely, O'Connell's reservation under certain circumstances to supply "O'Connell Approved Products" rather than Shell products to the dealer. (Pl.Docs. in Supp. of Summ. Judg. (Docket No. 31) Exhibit A.) To date, East Longmeadow has refused to agree to this modification.²

III. DECLARATIONS SOUGHT

Plaintiffs...