David P. Valentine v. Mobil Oil Corp.

789 F.2d 1388
CourtCourt of Appeals for the Ninth Circuit
DecidedMay 30, 1986
Docket85-2029
StatusPublished
Cited by51 cases

This text of 789 F.2d 1388 (David P. Valentine v. Mobil Oil Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
David P. Valentine v. Mobil Oil Corp., 789 F.2d 1388 (9th Cir. 1986).

Opinions

KOZINSKI, Circuit Judge.

We consider whether, under the Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et seq. (the PMPA), an oil company may decline to renew a gas station franchise because the franchisee will not consent to alterations in the structure and operation of the station.

Facts1

For the past ten years David Valentine has operated a gas station in Scottsdale, Arizona, under successive leases and retail-dealer contracts with Mobil. These agreements constitute a franchise relationship as defined by the PMPA. 15 U.S.C. § 2801(2).

Valentine operates what is known as a full-service gas station. In addition to selling gasoline and automobile accessories, he also repairs and services cars. The repair and maintenance operation, known as the back room, generates approximately half of Valentine’s income. He has spent over $50,000 to equip his back room.

Another type of gas station, known as a pumper, is becoming prevalent in the industry. Gasoline is sold only to those motorists willing and able to pump it themselves. No one repairs cars or sells automotive products, so there is no back room. Instead, there is generally a convenience store where groceries and sundries are sold.

Valentine’s most recent franchise ran from September 1, 1980, to August 31, 1983. In April 1983, Mobil offered to renew Valentine’s franchise. The proposed franchise agreement contained changes in rent and hours of operation, as well as a “redevelopment rider” giving Mobil sole discretion to “mak[e] a substantial redevelopment of the premises which may include a change in configuration, and may include the elimination of the service bays.” On April 27, 1983, Valentine rejected the redevelopment rider and suggested alternate hours of operation and a different way to calculate rent. Valentine maintains, however, that if Mobil had deleted the redevelopment rider, he would have accepted the remaining terms.

Mobil’s representatives and Valentine discussed the new franchise but failed to reach agreement. On May 25, 1983, Mobil sent Valentine a nonrenewal notice that complied with the PMPA’s notice requirements. See 15 U.S.C. § 2804.

Valentine sued claiming that the PMPA required Mobil to offer to sell him the station at a fair price before it could end the franchise relationship. Mobil counterclaimed seeking a declaratory judgment that it had complied with the PMPA. On November 9, 1984, 614 F.Supp. 33, the district court granted Mobil’s motion for summary judgment. The court found no issues of material fact in dispute and ruled that Mobil’s failure to renew the franchise did not violate the PMPA.

Appellant’s Contentions

Valentine argues that the PMPA does not allow Mobil to materially restructure the business at the time of renewal. Under appellant’s reading of the statute, if Mobil wishes to make such changes — for example by removing the service bays and turning the station into a pumper — it must first offer to sell him the business pursuant to 15 U.S.C. § 2802(b)(3)(D). This subsection provides that if the franchisor does not wish to renew the franchise because it has determined to materially alter, add to or sell the premises, it may decline to renew only after giving the franchisee an opportunity to buy the station. Valentine argues that the proposed redevelopment rider is tantamount to material alteration of the premises because it gives Mobil the right to do precisely that. Under the district court’s interpretation, Valentine complains, Mobil can short-circuit the protections of the PMPA by forcing a dealer to accept the redevelopment rider on pain of losing the franchise.

[1390]*1390Discussion2

I.

The logic of Valentine’s position stands or falls on his contention that the PMPA entitles him to buy the station if Mobil proposes to materially alter the premises. If the statute affords Valentine this right, Mobil is precluded from ending the franchise relationship in response to Valentine’s refusal to authorize such changes. On the other hand, if the PMPA does not circumscribe Mobil’s right to make substantial alterations, Valentine was not entitled to refuse the redevelopment rider and Mobil was within its rights in declining to renew the franchise relationship.

Our review of the PMPA discloses no provision giving Valentine the right he asserts. The Act, passed in 1978, responded to a widespread perception that the petroleum marketing industry was undergoing drastic changes, with a trend toward fewer stations, many of them pumpers.3 Congress sought to correct what it perceived as an inequality in bargaining power between distributors of petroleum products and their franchisees by giving franchisees certain protections from arbitrary termination or nonrenewal. S.Rep. No. 731, 95th Cong., 2d Sess. 18, reprinted in 1978 U.S.Code Cong. & Ad.News 873, 877 [hereinafter cited as S.Rep.]; see Baldauf v. Amoco Oil Co., 553 F.Supp. 408, 412 (W.D. Mich.1981), aff'd, 700 F.2d 326 (6th Cir. 1983); see generally Humboldt Oil Co. v. Exxon Co., U.S.A., 695 F.2d 386 (9th Cir. 1982). A product of compromise,4 the PMPA affords franchisees important but limited procedural rights, while allowing franchisors significant latitude in responding to changing market conditions. See Brach v. Amoco Oil Co., 677 F.2d 1213, 1223 (7th Cir.1982).

The portion of the PMPA dealing with protection of franchisees is Title I, codified at 15 U.S.C. §§ 2801-2806. Following definitions,. contained in section 2801, section 2802 limits the grounds on which the franchisor may end the franchise relationship. Section 2803 deals with trial and interim franchises, not at issue here. Section 2804 establishes procedures for termination or nonrenewal, giving franchisees an automatic 90 and sometimes 180 days’ notice. Section 2805 gives aggrieved franchisees a right of action in federal district court; if successful, they may obtain actual and exemplary damages, injunctive relief and attorney’s fees. Section 2806 preempts inconsistent state laws dealing with termination and nonrenewal, except in specific, limited areas.

On their face, none of these provisions gives a dealer the right to continue operating a service station in a particular fashion, or precludes a franchisor from altering the scope or operation of the business. Valentine, however, argues that such restrictions can be inferred from the language of section 2802(b)(3)(D).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Untitled Case
D. Puerto Rico, 2026
Santiago-Sepúlveda v. Esso Standard Oil Co.
643 F.3d 1 (First Circuit, 2011)
Rosedale Plaza Group, LLC v. BP West Coast Products LLC
665 F. Supp. 2d 1118 (E.D. California, 2009)
In Re Lemma
393 B.R. 299 (E.D. New York, 2008)
Anand v. BP West Coast Products LLC
484 F. Supp. 2d 1086 (C.D. California, 2007)
Kevorkyan v. Texaco Refining & Marketing, Inc.
185 F. App'x 592 (Ninth Circuit, 2006)
Bp West Coast Produce v. May
Ninth Circuit, 2006
Ervco, Inc. v. Texaco Refining and Marketing, Inc.
422 F. Supp. 2d 1084 (D. Arizona, 2006)
BP West Coast Products LLC v. May
347 F. Supp. 2d 898 (D. Nevada, 2004)
In Re Amoakohene
299 B.R. 196 (N.D. Illinois, 2003)
Coast Village, Inc. v. Equilon Enterprises, LLC
64 F. App'x 36 (Ninth Circuit, 2003)
Koylum, Inc. v. Peksen Realty Corp.
223 F. Supp. 2d 405 (E.D. New York, 2002)
Coast Village, Inc. v. Equilon Enterprises, LLC
163 F. Supp. 2d 1136 (C.D. California, 2001)
L.M.P. Service, Inc. v. Shell Oil Co.
116 F. Supp. 2d 645 (D. Maryland, 2000)
Unocal Corporation Union Oil Company of California, Plaintiffs-Counter-Claimants-Appellees v. Ebrahim Kaabipour, Dba, Sunnyvale Unocal & Dba, Santa Clara Unocal Hassan Khaziri Hossain Khaziri Mohsen Khaziri Evergreen Union Services, Inc., Dba Evergreen Unocal Fariborz Nickbakhsh-Tali, Aka, Nick Ali Raghian, Dba, Al's Unocal Thuy Gia Nguyen Leavesley Rd. Union 76 Inc. Noah Tollison Tom W. Barnum, Dba, Cuperrino Union David J. Joines, Dba, Unocal at North First and Brokaw Ronald Gene Diedrich Dba, La Jolla Tire and Service Center Mark Horne Vu Hadoung, Dba, San Mateo Unocal Tinoosh Eftekharian, Dba, Sunnyside Unocal, Defendants-Counter-Claimants-Appellants. v. Tosco Corporation, Counter-Defendant-Appellee. Charles Simmons Yosuf Homayun Seung K. Choi David Avisrur Mehran Mike Hariri Meir Ben-David Fred Pakzad A.H.B. Properties, Inc. Manasseh Bareh Omid Badakhsh Dalla, Inc. Asghar Kholdi Steven Tedesco Akbar Akrami S.M.B. Corporation Javad S. Taat Sabour Andkhoy Warm Springs Unocal, Inc. Basir Andkhoy Lawrence E. Raether Ata Tajyar Ali Majdi Sagahoh, Inc. Mansor Ghneeian Best Care Unocal Auto Center, Inc. Calabasas Unocal, Inc. Sayed Hashemyar George Benjamin John Otte Toros K. Deurdulian: Kevork Kasbarian v. Unocal Corporation Union Oil Company of California 76 Products Company, Inc. Tosco Corporation, Unocal Corporation Union Oil Company of California v. Robert Cassel, and Mohsen Khaziri Charles Simmons Lawrence E. Raether Meir Ben-David Sabour Andkhoy Basir Andkhoy Omid Badakhsh Akbar Akrami Sayed Hashemyar Ata Tajyar, Steven Tedesco Manasseh Bareh David Avisrur Mehran Mike Hariri Javad S. Taat Farhad Pakzad Ali Majdi Asghar Kholdi Seung K. Choi Mansoor Ghaneeian Yosef Homayun S.M.B. Corporation A.H.B. Properties, Inc. Sagahoh, Inc. Warm Springs Unocal, Inc. Dalla, Inc. Best Care Unocal Auto Center, Inc. Calabasas Unocal, Inc. John Otte George Benjamin, Bassam D. Hindi Behrouz Shirdel Mohamad Shirdel Carpinteria Car Care, Inc. Chi Tai Daniel Lee O'Neal Daniel W. Lentz Faye Fouad Ray Fouad Frank E. Jakel Gregory Mesna Gwendolyn Mesna Harry Perry Hayk Bazik Hovick G. Sadeghi Javad Haghi John Otte Mauro Antenncei Onnik Nick Mathevossian Paul A. Hilles Said Saidati Salim Javahieri Tracy Finnel Van Duong Bradley Deboer Emry Brothers Investments, a General Partnership Dennis Azzarello Vahanek Kupelian M & K Enterprises, Inc., a California Corporation Stephen Ng Country Club Union, Inc. John Hifai Patricia Hilles Saeid Sabour Tommy Gendal v. Tosco Corporation T Northwest Properties Ii, Inc. Clover Trust 1997-1, a Delaware Business Trust Union Oil Company of California, a California Corporation
177 F.3d 755 (First Circuit, 1999)
Unocal Corp. v. Kaabipour
177 F.3d 755 (Ninth Circuit, 1999)
Riverdale Enterprises, Inc. v. Shell Oil Co.
41 F. Supp. 2d 56 (D. Massachusetts, 1999)
Unified Dealer Group v. Tosco Corp.
16 F. Supp. 2d 1137 (N.D. California, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
789 F.2d 1388, Counsel Stack Legal Research, https://law.counselstack.com/opinion/david-p-valentine-v-mobil-oil-corp-ca9-1986.