Sun Valley Gasoline, Inc. v. Ernst Enterprises, Inc., No. 82-5934

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before BROWNING, Chief Judge, and CHOY and FERGUSON; CHOY
• Citation: 711 F.2d 138
• Parties: SUN VALLEY GASOLINE, INC., Plaintiff-Appellant, v. ERNST ENTERPRISES, INC., Richard H. Ernst and Eunice R. Ernst, Defendants-Appellees.
• Docket Number: No. 82-5934
• Decision Date: 22 July 1983

Page 138

711 F.2d 138 SUN VALLEY GASOLINE, INC., Plaintiff-Appellant,
v.
ERNST ENTERPRISES, INC., Richard H. Ernst and Eunice R.
Ernst, Defendants-Appellees. No. 82-5934. United States Court of Appeals,
Ninth Circuit. Argued and Submitted June 9, 1983.
Decided July 22, 1983.

Page 139

Gary B. Lovell, Newport Beach, Cal., for defendants-appellees.

Kenneth P. Roberts, Shapiro, Laufer, Posell & Close, Los Angeles, Cal., for plaintiff-appellant.

Appeal from the United States District Court for the Central District of California.

Before BROWNING, Chief Judge, and CHOY and FERGUSON, Circuit Judges.

CHOY, Circuit Judge:

This appeal grows out of a dispute over the operation of a North Hollywood, California, service station. Sun Valley Gasoline, Inc. ("Sun Valley"), the station operator, filed an action against its corporate landlord and that corporation's two stockholders (collectively "Ernst") alleging 12 separate causes of action. Ten of these counts were premised upon Title I of the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. §§ 2801-2806 (Supp. V 1981). Title I of the PMPA imposes procedural and substantive restraints on the termination of, or failure to renew, a motor fuel-distribution franchise. The purpose of the statute is to prevent petroleum franchisors from dealing unfairly with their franchisees.

Upon Ernst's suggestion pursuant to Fed.R.Civ.P. 12(h)(3), the court below dismissed the 10 PMPA counts for lack of subject-matter jurisdiction. Following a certification of this partial judgment under Fed.R.Civ.P. 54(b), Sun Valley appeals dismissal of its PMPA claims.

The lower court's basis for dismissal was that Sun Valley and Ernst are not in a "franchise relationship" as defined by relevant portions of 15 U.S.C. § 2801. This conclusion was based on a factual finding by the court that Ernst was not authorized to permit the use of a refiner's trademark. Such authorization is commonly referred to as "branding authority." The court decided that in the absence of branding authority Ernst could not be in a franchise relationship with Sun Valley. This, in the court's view, took the relationship between Sun Valley and Ernst outside the scope of the PMPA and defeated subject-matter jurisdiction.

Since the district court's decision was not made under the standards applicable to motions for summary judgment under Fed.R.Civ.P. 56, it is unclear whether the court was deciding factual matters in genuine dispute. A court may, in certain instances, decide genuinely disputed factual issues relating to jurisdiction prior to trial. Land v. Dollar, 330 U.S. 731, 735 n. 4, 67 S.Ct. 1009, 1011 n. 4, 91 L.Ed. 1209 (1947); Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983); Thornhill Publishing Co. v. General Telephone & Electronics Corp., 594 F.2d 730, 733 (9th Cir.1979). However, because jurisdictional fact-finding by the court deprives litigants of the protections otherwise afforded by Rule 56, we have defined certain limits upon this power of the court.

Jurisdictional finding of genuinely disputed facts is inappropriate when "the jurisdictional issue and substantive issues are so intertwined that the question of jurisdiction is dependent on the resolution of factual issues going to the merits" of an action. Augustine, 704 F.2d at 1077. See Thornhill, 594 F.2d at 733-35; Berardinelli v. Castle & Cooke, Inc., 587 F.2d 37, 39 (9th Cir.1978). Normally, the question of jurisdiction and the merits of an action will be considered intertwined where, as here, ¹ "a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiff's substantive claim for relief." Timberlane Lumber Co. v. Bank of

Page 140

America, 549 F.2d 597, 602 (9th Cir.1976). See Black v. Payne, 591 F.2d 83, 86 n. 1...