Walters v. Chevron USA, Inc., Civ. A. No. C79-1644A.

• Decision Date: 13 September 1979
• Docket Number: Civ. A. No. C79-1644A.
• Citation: 476 F. Supp. 353
• Parties: Gene WALTERS, d/b/a Walters Chevron Service Station, Plaintiff, v. CHEVRON U. S. A., INC. (formerly Standard Oil Company), Defendant.
• Court: U.S. District Court — Northern District of Georgia

476 F. Supp. 353

Gene WALTERS, d/b/a Walters Chevron Service Station, Plaintiff, v. CHEVRON U. S. A., INC. (formerly Standard Oil Company), Defendant.

Civ. A. No. C79-1644A.

United States District Court, N. D. of Georgia, Atlanta Division.

September 13, 1979.

David R. Wininger, Wininger & Hughes, P. A., Decatur, for plaintiff.

Jule W. Felton Jr., and John Parker, Hansell, Post, Brandon & Dorsey, Atlanta, Ga., for defendant.

ORDER

EVANS, District Judge.

This matter is before the Court on Motion of the Plaintiff, Gene Walters d/b/a Walters Chevron Service Station, for a preliminary injunction against the Defendant, Chevron U.S.A., Inc. Plaintiff seeks relief under the provisions of the Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et seq. (hereinafter the "Act"), which is legislation designed to protect motor fuel franchisees from arbitrary or discriminatory franchise termination or nonrenewal by their franchisors.

Based on the provisions of the Act and the evidence adduced at an evidentiary hearing held on September 6, 1979, the Court has determined that the Plaintiff's request for a preliminary injunction should be denied.

Plaintiff Walters was lessee under a lease with Defendant Chevron dated November 29, 1973. The lease expired by its own terms on November 30, 1978. Thereafter, the tenancy was continued on a month-to-month basis. On May 24, 1979, Chevron sent Walters a letter notifying him that it did not wish to continue the relationship and further notifying him that it expected him to vacate the subject premises on August 31, 1979. Walters refused to vacate on that date and brought this action, challenging Chevron's threat of dispossessory proceedings.

The Act basically provides that a franchisor may not terminate or decline to renew a franchise, except based upon certain grounds deemed permissible by the Act. When a non-permissible termination or nonrenewal occurs and prompt injunctive relief is sought by the franchisee, injunctive relief is mandatory. Further, the Act provides that the injunction shall issue, not upon the customary finding of probability of success on the merits at the trial, but rather upon a lesser standard defined in the Act. See 15 U.S.C. § 2805(b)(2)(A)(ii); see also Saad v. Shell Oil Co., 460 F.Supp. 114 (E.D.Mich. 1978).

The Act provides that prior to termination or nonrenewal of any franchise relationship, the franchisor must send written notice to the franchisee of the proposed termination or nonrenewal. The notice must normally be furnished not more than 90 days prior to the date on which the termination or nonrenewal takes effect and must comply with certain technical requirements as to form and content. 15 U.S.C. § 2804(a).

In the instant case, the parties agreed that a timely, legally sufficient notice had been sent by Chevron to Walters. Further, the parties stipulated that there had been a "nonrenewal" of the franchise, as that term is defined in the Act.

In opposing the motion for preliminary injunction, Chevron relies upon two independent statutory grounds for permissible nonrenewal of the franchise, as follows:

(1) A failure by the franchisee to comply with any provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship, if the franchisor first acquired actual or constructive knowledge of such failure—

(i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if notification is given pursuant to Section 2804(a) of this title; 15 U.S.C. § 2802(b)(2)(A).

and

(2) A failure by the franchisee to operate the marketing premises in a clean, safe, and healthful manner, if the franchisee failed to do so on two or more previous occasions and the franchisor notified the franchisee of such failures. 15 U.S.C. § 2802(b)(3)(C).

Chevron further argues that even if the evidence does not satisfy the technical grounds for permissible nonrenewal, that the Court should decline to grant injunctive relief, citing § 2805(b)(4) of the Act. That section provides that the Court need not exercise its equity powers to compel continuation or renewal of the franchise relationship if the action was commenced more than 90 days after the date on which the notification of nonrenewal was posted or delivered to the franchisee. In this case, the action was commenced more than 90 days after the date of delivery of the notice to the Plaintiff.

Chevron's evidence showed that from 1974 through the spring of 1979, there were repeated instances in which the service station premises were found to be in unsatisfactory condition when visits were made by marketing representatives. One witness, who stated he had visited the premises approximately twice a month during the years 1974 through 1976, said that on every visit he found the men's room to be dirty. He said no hand towels or toilet tissue was provided. He also testified that on many occasions there were junk vehicles and accumulated refuse on the premises. He stated that all such problems were called to the attention of Mr. Walters with a request that he correct them.

The marketing representative who had been assigned to cover Plaintiff's station during the period from early 1977 through the present time testified that he observed continuing problems with junk vehicles, junk tires and other trash being left on the premises for an extended period of time. At one point, an abandoned refrigerator with the door still left on was found on the site; it was removed at Chevron's request. He said that the problem with cleanliness of the restroom continued too. Numerous written reports and photographs evidencing the foregoing were admitted into evidence by stipulation at the hearing.

Plaintiff's evidence was principally to the effect that conditions at his service station did not vary materially from those prevailing at other service stations. However, Plaintiff did not attempt to refute many of Chevron's specific allegations. The only principal...