Van Houten Service, Inc. v. Shell Oil Co.

• Decision Date: 17 December 1975
• Docket Number: Civ. A. No. 74-261.
• Citation: 417 F. Supp. 523
• Parties: VAN HOUTEN SERVICE, INC., Plaintiff, v. SHELL OIL COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

417 F. Supp. 523

VAN HOUTEN SERVICE, INC., Plaintiff, v. SHELL OIL COMPANY, Defendant.

Civ. A. No. 74-261.

United States District Court, D. New Jersey.

December 17, 1975.

Stephen Schnitzer and Michael N. Gordon, Schnitzer & Schnitzer, Newark, N.J., for plaintiff.

William Simon and Harry E. Jennings, Jr., Howrey & Simon, Washington, D.C., Andrew S. Polito and Thomas V. Hildner, Mattson, Madden, Polito & Loprete, Newark, N.J., for defendant.

OPINION

LACEY, District Judge.

This matter is before the court on defendant's motion for summary judgment pursuant to Rule 56(b), Fed.R.Civ.P. The court, having heard oral argument and having considered the said motion together with the points and authorities, affidavits, depositions and other documents filed with respect to the motion, renders this opinion.

Plaintiff commenced the action in Superior Court in New Jersey on February 1, 1974 and defendant removed it to federal court pursuant to 28 U.S.C. § 1441. This court has jurisdiction under 28 U.S.C. § 1332.

Plaintiff Van Houten Service, Inc. ("Company") charges defendant Shell Oil Co., in its amended complaint, with violations of N.J.Stat.Ann. §§ 56:10-1 et seq., the Franchise Practices Act, in that it allegedly terminated plaintiff's franchise without explanation, coerced Raymond Van Houten ("Van Houten"), plaintiff's principal owner and president,¹ into signing, on plaintiff's behalf, "a purported acquiescence in a release of the franchise agreement" and imposed improper restraints against the alienation of plaintiff's franchise. Counts 2 and 3 charge defendant with unlawful restraints in violation of N.J.Stat. Ann. §§ 56:9-1 et seq., § 1 of the Sherman Act, and §§ 1 and 3 of the Clayton Act. Count 4 claims that defendant has discriminated in price in violation of § 13 of the Robinson-Patman Act. Defendant is charged with violating the New Jersey Unfair Motor Fuels Practices Act, N.J.Stat. Ann. 56:6-22 in Count 5, and the Economic Stabilization Regulations, Title 6, Chapter 3, Part 301 of Phase III Regulations. Plaintiff requests compensatory and punitive damages, attorneys' fees and costs of suit.

For the purposes of this motion, the following facts are pertinent. In July, 1970 plaintiff first became a Shell dealer after previously operating as a franchised Esso dealer for several years. In November, 1970 it became the dealer of a larger Shell station, the lease for which ended on November 30, 1973.

In November, 1971, in association with Martin Grossbarth, plaintiff's and Van Houten's personal accountant, and Harold Hirsh, Van Houten acquired a Wynn's automotive products distributorship for central Jersey.

On June 1, 1973 Shell instituted an allocation program to all its customers, whereby the dealer was permitted to purchase during each month of 1973 a percentage of the actual purchases made by the dealer at that location during the same month of 1972. Van Houten was not satisfied with the amount of gasoline purchases to which he was limited under the allocation program.

Van Houten had one other business interest during the period of plaintiff's Shell franchise — the field of private investigation.

In early November, 1973, plaintiff owed approximately $2,835 to Shell on its Tires, Batteries and Accessories (TBA) account. Van Houten met with Jack Vaughn, Shell's sales manager, Frank Dunst, Shell's territory manager for Elizabeth, New Jersey and Bill Lucas (whom Van Houten considered a good friend), Shell's dealer representative, and a "lease package" was discussed. Then on November 12, 1973, Dunst told Van Houten that his delinquent TBA account must be made current before his lease would be renewed. Shell and Van Houten could not agree on a form of repayment.

Several days later Lucas informed Van Houten that the company's lease would not be renewed. Van Houten asked for an extension of time. Lucas, after conferring with Vaughn, obtained a 15-day extension for Van Houten's lease until December 15, 1973. Plaintiff then states that in response to his pleas to Lucas to do what he could to reverse the decision of Shell, Lucas replied, "I am going to see what I can do and see if I can find out for you why you are being terminated." Van Houten Deposition at 408.

On November 20, 1973 Lucas went to plaintiff's station with the necessary papers which included two copies of an earlier lease package, a 15-day lease agreement and a mutual termination agreement. Van Houten read and signed the 15-day lease agreement. He then read the caption and signed the termination agreement which contained a general release. The release stated:

THIS IS AN AGREEMENT, dated November 15, 1973, between SHELL OIL COMPANY, a Delaware corporation (herein called "Shell"), and Raymond Van Houten of 44 Lenhome Dr. South in Cranford, New Jersey (herein called "Dealer"):

1. TERMINATING, effective as of December 15, 1973, each of the following instruments between them:

Dealer Lease

Dealer Agreement

relating to the automobile service station located at Newark and Fairmount in Elizabeth, New Jersey; and

2. RELEASING each other, as of the date of this Agreement, from all claims which each now has against the other (whether or not known to either) arising directly or indirectly under, out of or in connection with each terminated instrument, or any consignments, sales or deliveries of petroleum products by Shell to Dealer, excepting, however, claims of Shell against Dealer for indebtedness, reimbursement or indemnification, or relating to personal property of Shell heretofore or now in Dealer's possession.

EXECUTED as of the date first herein specified.

Van Houten had signed a document similar to the termination agreement and release in connection with his first Shell franchise. Lucas then tore up one of the two copies of the earlier lease package. Van Houten grabbed the other lease package and refused to surrender it. Plaintiff's franchise with Shell was terminated on December 17, 1973 when a new dealer took over the operation of the service station.

Defendant, in support of its motion for summary judgment, argues that the general release which plaintiff signed bars this action, including all the claims within it. It submits that Van Houten's execution of the release is binding upon the company and Shell is thus released from all claims within it.

Plaintiff asserts, on the other hand, that there are material issues of fact which are in dispute which should defeat defendant's motion. It also argues that the general release which was signed was fraudulently induced and is not, therefore, binding.

Rule 56(c) provides that summary judgment shall be granted only if the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The movant has the burden of proof, Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); and the evidence presented to the court is construed in a light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). The facts asserted by the party opposing the motion, if supported by affidavits or other evidentiary material, must be regarded as true. First National Bank of Cincinnati v. Pepper, 454 F.2d 626 (2d Cir. 1972); Janek v. Celebrezze, 336 F.2d 828 (3d Cir. 1964).

Both parties have submitted affidavits, depositions and exhibits which must be considered by the court. These include the depositions of Mr. and Ms. Van Houten, Messrs. Dunst, Vaughn, Lucas and Grossbarth, and a copy of the release. For the purposes of this motion, the court will consider as true the facts as stated in the depositions of Mr. and Ms. Van Houten.

The initial question presented by this motion is whether the release, signed by Van Houten, bars the present action. The decision in Three River Motor Co. v. The Ford Motor Co., 522 F.2d 885 (3d Cir. 1975) is partially dispositive of this issue. An interlocutory appeal from the refusal of the district court to apply a general release to bar a pending antitrust action by the plaintiff, the court reversed the lower court decision, finding that, notwithstanding the antitrust implications, state law governed the construction of the release, that the release was not executed under duress, as defined by Pennsylvania law, and that the language contained in the release was unambiguous and included the antitrust action subsequently brought. Thus guided, we look to the law of New Jersey to resolve the issues relating to the release in question in this case.

It is the general rule in this state that where a party affixes his signature to a written instrument, such as a release, a conclusive presumption arises that he or she read, understood and assented to its terms and will not be heard to complain that the effect of the act of signing was not comprehended. Peter W. Kero, Inc. v. Terminal Construction Corp., 6 N.J. 361, 368, 78 A.2d 814 (1951); Kearney v. National Grain Yeast Corp., 126 N.J.L. 307, 19 A.2d 19, 21 (Ct.Err. & App.1941). There is an exception, however, where there is a showing of fraud, misrepresentation or over-reaching by the releasee, or a showing that the releasor was suffering from an incapacity affecting his ability to understand the meaning of the release or on any other equitable ground. Raroha v. Earle Finance Corp., Inc., 47 N.J. 229, 234, 220 A.2d 107 (1966); Wojcik v. Pollock, 97 N.J.Super. 319, 324, 235 A.2d 58 (L.Div.1967).

Plaintiff asserts in its brief that the termination agreement containing the release was procured by fraud and that the validity of a release is a question for the jury. The fraud alleged by plaintiff is fraud in the inducement and, in support of this, plaintiff states:

The facts set forth above these facts are set forth earlier in this opinion as plaintiff stated them in its deposition should

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