Shukla v. BP Exploration & Oil, Inc., No. 95-3656

CourtU.S. Court of Appeals — Eleventh Circuit
Writing for the CourtBefore TJOFLAT, DUBINA and CARNES; DUBINA
Citation115 F.3d 849
Decision Date20 June 1997
Docket NumberNo. 95-3656
Parties11 Fla. L. Weekly Fed. C 57 Jeetendra L. SHUKLA, Individually, Plaintiff-Appellant, v. BP EXPLORATION & OIL, INC., a.k.a. BP Oil Company, Petro Distributing, Inc., Defendants-Appellees.

Page 849

115 F.3d 849
11 Fla. L. Weekly Fed. C 57
Jeetendra L. SHUKLA, Individually, Plaintiff-Appellant,
v.
BP EXPLORATION & OIL, INC., a.k.a. BP Oil Company, Petro
Distributing, Inc., Defendants-Appellees.
No. 95-3656.
United States Court of Appeals,
Eleventh Circuit.
June 20, 1997.
Rehearing Denied Aug. 11, 1997.

Page 851

Albert H. Mickler, Jacksonvile, FL, for Plaintiff-Appellant.

Karl J. Brandes, Stacy D. Blank, John E. Phillips, Holland & Knight, Tampa, FL, for BP Exploration & Oil.

Allen R. Lieser, Petro Distributing, Inc, Jacksonville, FL, for Petro Dist.

Appeals from the United States District Court for the Middle District of Florida.

Before TJOFLAT, DUBINA and CARNES, Circuit Judges.

DUBINA, Circuit Judge:

Plaintiff/Appellant Jeetendra Shukla ("Shukla") appeals (1) the district court's grant of summary judgment in favor of Defendant/Appellant BP Exploration & Oil, Inc. ("BP") on Shukla's claim for constructive termination of his franchise in violation of the Petroleum Marketing Practices Act ("PMPA" or "the Act") 1; and (2) the district court's grant of judgment as a matter of law in favor of BP on Shukla's Florida law fraud claim. We conclude that Shukla's allegations fail to support a constructive termination claim and that the PMPA preempts his fraud claim. Accordingly, we affirm the judgment of the district court.

I. Background

This case arises from the refusal of Petro Distributing, Inc. ("Petro") to renew Shukla's gasoline service station franchise agreement. Shukla entered into a Dealer Lease and Supply Agreement ("DLSA") with BP in June, 1993, in which he agreed to lease a BP station in Jacksonville, Florida, and sell BP products. Shukla's franchise was subject to a one-year trial period, after which BP had the option to renew. Six months after Shukla signed the DLSA, BP sold all of its Jacksonville-area service stations to Petro and assigned its franchise agreements--including Shukla's DLSA--to Petro. Petro operated the Jacksonville stations as a jobber, continuing to use BP's trade name and products. At the expiration of Shukla's one-year trial period, Petro refused to renew the DLSA. Shukla filed suit against BP, alleging (1) that BP's assignment to Petro constructively terminated his franchise agreement, in violation of the PMPA; and (2) that BP fraudulently induced him to enter into the DLSA. 2 The district court granted BP's motion for summary judgment as to Shukla's PMPA claim and denied it as to Shukla's fraud claim. The court then set the fraud claim for trial. During a pretrial conference, however, the district judge granted BP's oral motion for judgment as a matter of law. The judge stated that, upon reconsideration, he was "convinced ... that [Shukla did not have] a case for fraud in the inducement." R8-1, Transcript of Pretrial Proceedings, at 19. Shukla then perfected this appeal.

II. Issues Presented

Shukla presents two issues on appeal: (1) whether BP's assignment to Petro constituted a constructive termination of Shukla's franchise agreement, thereby triggering the protections of the PMPA; and (2) whether Shukla's fraudulent inducement claim should have proceeded to trial.

III. Standard of Review

We review a district court's grant of summary judgment or judgment as a matter of law de novo, applying the same legal standard used by the district court. Morisky v. Broward County, 80 F.3d 445 (11th Cir.1996) (summary judgment); United States Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 993 (11th Cir.1993) (judgment as a matter of law). Summary judgment is appropriate when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Jaques v. Kendrick, 43 F.3d 628, 630 (11th Cir.1995). Judgment as a matter of law is appropriate when, under the governing law and the evidence presented, there can be but one reasonable conclusion as to the verdict. Vulcan

Page 852

Painters, Inc. v. MCI Constructors, Inc., 41 F.3d 1457, 1461 (11th Cir.1995).

IV. Discussion

A. PMPA Claim

Congress enacted the PMPA in 1978 to protect motor fuel franchisees from arbitrary or discriminatory termination or nonrenewal of their franchise agreements. Jones v. Crew Distributing Co., 984 F.2d 405, 407-08 (11th Cir.1993); Farm Stores, Inc. v. Texaco, Inc., 763 F.2d 1335, 1339 (11th Cir.1985). The PMPA "sets forth the circumstances under which a supplier may terminate or decide not to renew a franchise and imposes certain notice requirements." Freeman v. BP Oil, Inc., Gulf Products Division, 855 F.2d 801, 802 (11th Cir.1988). In general, franchises may only be nonrenewed for one of several enumerated statutory reasons. See 15 U.S.C. § 2802(b). However, trial franchises 3 like Shukla's may be nonrenewed without cause, so long as the supplier satisfies the notice requirements set forth in § 2804 of the PMPA. See 15 U.S.C. § 2803(a)(1), (c)(1). Section 2804 provides that, in the absence of extenuating circumstances, the franchisor must provide the franchisee with written notice of its intention not to renew at least 90 days prior to the effective date of termination of the franchise. See 15 U.S.C. § 2804.

Shukla contends that BP's assignment of his franchise agreement to Petro constructively terminated the agreement in December of 1993 and that BP failed to give notice of the termination under § 2804. Shukla acknowledges that Petro sent him a termination letter in February of 1994 which conformed to § 2804. However, he maintains that this termination notice was ineffective. He argues that because the assignment was invalid, Petro never became the franchisor and Petro could not have delivered the requisite notice. BP argues that the assignment to Petro was valid and did not constitute a constructive termination. We agree with BP.

The PMPA does not prohibit the assignment of franchises if assignment is "authorized by the provisions of such franchise or by any applicable provision of state law which permits such transfer or assignment without regard to any provision of the franchise." 15 U.S.C. § 2806(b). Although we have not yet addressed the validity of an assignment under the PMPA, several of our sister circuits have done so. These courts have concluded that assignment does not automatically constitute constructive termination of a franchise agreement, thereby implicating the PMPA; however, assignment may result in constructive termination, depending on the circumstances. See Chestnut Hill Gulf, Inc. v. Cumberland Farms, Inc., 940 F.2d 744, 750-51 (1st Cir.1991); Cedar Brook Service Station, Inc. v. Chevron U.S.A., Inc., 930 F.2d 908 (2d Cir.1991), aff'g without op. 746 F.Supp. 278 (E.D.N.Y.1990), cert. denied, 502 U.S. 819, 112 S.Ct. 77, 116 L.Ed.2d 50 (1991); Ackley v. Gulf Oil Corp., 889 F.2d 1280, 1281 (2d Cir.1989) (affirming district court opinion, 726 F.Supp. 353 (D.Conn.1989), "substantially for the reasons given in that opinion"); May-Som Gulf, Inc. v. Chevron U.S.A., Inc., 869 F.2d 917, 922-25 (6th Cir.1989); Barnes v. Gulf Oil Corp., 795 F.2d 358 (4th Cir.1986) ("Barnes I "), on appeal after remand, 824 F.2d 300 (4th Cir.1987) ("Barnes II "). Cf. April Marketing & Distributing Corp. v. Diamond Shamrock Refining and Marketing Co., 103 F.3d 28 (5th Cir.1997) (declining to decide, in case not involving assignment, whether PMPA permits claims for constructive termination); Little Oil Co., Inc. v. Atlantic Richfield Co., 852 F.2d 441, 444-45 (9th Cir.1988) (same).

The Sixth Circuit's well-reasoned opinion in May-Som Gulf is instructive. In that case, twelve Ohio service station franchisees alleged that defendant Chevron, U.S.A., Inc.'s ("Chevron") sale of its Ohio assets to Cumberland Farms, Inc. ("Cumberland") constructively terminated their franchises in violation of the PMPA. The court first noted that the PMPA defines a franchise in terms of three elements: "a contract to use the refiner's trademark, a contract for the supply

Page 853

of motor fuel to be sold under the trademark, and a lease of the premises at which motor fuel is sold." May-Som Gulf, 869 F.2d at 917 (quoting Barnes I, 795 F.2d at 360); see 15 U.S.C. § 2801(1). The court reasoned that a constructive termination could occur if an assignment resulted in a breach of one of the three statutory components of the franchise agreement. May-Som Gulf, 869 F.2d at 922. Noting that state law governs the validity of a franchise assignment, the court reasoned that a constructive termination could also occur if the assignment violated state law. Id. at 923. Thus, the court held that

to sustain a claim, under the PMPA, that a franchisor assigned and thereby constructively terminated a franchise agreement, the franchisee must prove either: (1) that by making the assignment, the franchisor breached one of the three statutory components of the franchise agreement ...; or (2) that the franchisor made the assignment in violation of state law and thus, the PMPA was invoked.

Id. at 922; see also Chestnut Hill Gulf, 940 F.2d at 750-51 (quoting May-Som Gulf ).

Shukla charges that after the assignment, Petro engaged in direct price competition with Shukla by selling gasoline at a nearby Petro company station at retail prices lower than Shukla could afford to charge. Shukla alleges that his business dropped off as a result of Petro's underselling. Moreover, Petro discontinued BP's supply pricing structure, which had protected BP's franchised dealers from being undersold by BP company stations or other major brand gasoline retailers in the same market area. Finally, according to Shukla, Petro implemented a less...

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    ...a party to this case. See Fed.R.Civ.P. 10. 10. Although nondisclosure is an element of fraud, see Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849, 855 n. 7 (11th Cir.1997), there does not appear to be a separate action for "nondisclosure" under Florida state law in this particular contex......
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    ...they are preempted by the PMPA.'” Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299 (3d Cir. 2008); Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849 (11th Cir.1997). F. Takings Clause[[2]] The Fifth Amendment of the United States provides, in its relevant part, that “private property [shall......
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    • United States
    • U.S. District Court — District of Puerto Rico
    • September 22, 2021
    ...they are preempted by the PMPA.'” Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299 (3d Cir. 2008); Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849 (11th Cir.1997). F. Takings Clause[25] The Fifth Amendment of the United States provides, in its relevant part, that “private property [shall ......
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32 cases
  • Grills v. Philip Morris Usa, Inc., Civil Action No. 2:08-CV-15-UA-DNF.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • August 4, 2009
    ...a party to this case. See Fed.R.Civ.P. 10. 10. Although nondisclosure is an element of fraud, see Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849, 855 n. 7 (11th Cir.1997), there does not appear to be a separate action for "nondisclosure" under Florida state law in this particular contex......
  • Dickerson v. Alachua Cty. Comm'n, No. 98-3041
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • January 14, 2000
    ...1380, 1383 (11th Cir.1997), cert. denied, 523 U.S. 1122, 118 S.Ct. 1804, 140 L.Ed.2d 943 (1998); Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849, 851 (11th IV. DISCUSSION After review, we find that only the two main issues raised in the County's direct appeal merit discussion, to wit: (1......
  • Puma Energy Caribe LLC v. P.R., CIVIL 20-1591 (DRD)
    • United States
    • United States District Courts. 1st Circuit. District of Puerto Rico
    • September 22, 2021
    ...they are preempted by the PMPA.'” Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299 (3d Cir. 2008); Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849 (11th Cir.1997). F. Takings Clause[[2]] The Fifth Amendment of the United States provides, in its relevant part, that “private property [shall......
  • Puma Energy Caribe, LLC v. Puerto Rico, Civil 20-1725 (DRD)
    • United States
    • U.S. District Court — District of Puerto Rico
    • September 22, 2021
    ...they are preempted by the PMPA.'” Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299 (3d Cir. 2008); Shukla v. BP Exploration & Oil, Inc., 115 F.3d 849 (11th Cir.1997). F. Takings Clause[25] The Fifth Amendment of the United States provides, in its relevant part, that “private property [shall ......
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