Swann Oil, Inc. v. Keystone Portland Cement Co.

385 F. Supp. 1299, 1974 U.S. Dist. LEXIS 11721
CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 6, 1974
DocketCiv. A. No. 74-2158
StatusPublished
Cited by1 cases

This text of 385 F. Supp. 1299 (Swann Oil, Inc. v. Keystone Portland Cement Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Swann Oil, Inc. v. Keystone Portland Cement Co., 385 F. Supp. 1299, 1974 U.S. Dist. LEXIS 11721 (E.D. Pa. 1974).

Opinion

MEMORANDUM OPINION AND ORDER

VanARTSDALEN, District Judge.

Plaintiff seeks judgment for an unpaid bill for the sale and delivery in January, 1974 of a large quantity of No. 6 residual fuel oil. There is no diversity jurisdiction. Federal jurisdiction is claimed under the Emergency Petroleum Allocation Act (EPA).1 There are also common-law counts based upon pendent jurisdiction for breach of contract quantum meruit, and fraud. Defendant has moved to dismiss the complaint for lack of subject-matter jurisdiction (Fed.R.Civ.P. 12(b)(1)), and failure to state a cause of action upon which relief can be granted (Fed.R.Civ.P. 12(b)(6)). The motion to dismiss will be granted.

In 1972 plaintiff agreed by written contract to sell defendant “approximately 415,000 gallons of # 6 residual fuel oil per month” commencing February 1, 1972 and continuing through December 31, 1974. Mandatory petroleum allocation regulations promulgated pursuant to the EPA became effective on December 27, 1973. Plaintiff, claiming that the EPA and its regulations constituted a force majeure advised defendant that the contract was no longer in effect.2 [1301]*1301The complaint alleges that on January 4, 1974

defendant agreed that a new contract, effective January 1, 1974, would be executed which would provide, inter alia, for new pricing based on plaintiff’s posted prices.3

The complaint further alleges that at the time defendant agreed to the new pricing

plaintiff [sic — defendant] had decided never to pay any new pricing formula for deliveries on and after December 27, 1973 and during January, 1974. Defendant made these intentionally false and fraudulent misrepresentations in order to induce plaintiff to supply residual fuel oil to defendant.4

Finally, the complaint alleges that in various letters from defendant to plaintiff there was a willful concealment of material facts “concerning defendant’s intention not to pay for residual fuel oil on a new pricing basis.” 5

Under EPA regulations, each supplier was to make pro-rata allocations from its “allocable supplies”6 on a monthly basis to all its customers during the corresponding “base period.” 7 The “base period” was defined as the corresponding month of 1973.8 Residual fuel oil users, not otherwise expressly covered in the regulations, were to receive up to 100% of the “base period” supply.9

The complaint alleges that notwithstanding the terms of the written contract, plaintiff supplied no fuel oil to defendant during the corresponding “base period” months. Thus, according to plaintiff, defendant was not entitled, as of right, to any allocation of fuel oil as an existing “base period” customer. The regulations “required” (10 C.F.R. § 200.14(d), 39 Fed.Reg. 748), or “encouraged” (10 C.F.R. § 200.60(a)) allocations to “new customers.” However, a supplier was not required to sell to a purchaser unless proper credit or payment arrangements were made.10 Regulations also established ceiling prices but did not fix minimum prices.

The heart of plaintiff’s contentions as to federal district court jurisdiction is that plaintiff has suffered a legal wrong because of an act or practice arising out of the EPA and the regulations adopted pursuant thereto. Section 5(a)(1) of the EPA, 15 U.S.C.A. § 754(a)(1) (Supp.1974), adopts by reference Sections 210 and 211 of the Economic Stabilization Act of 1970. 12 U.S.C.A. § 1904 (Supp.1974).

Section 210(a) of the Economic Stabilization Act of 1970 provides:

Any person suffering legal wrong because of any act or practice arising out of this title, or any order or regulation issued pursuant thereto, may bring an action in a district court of the United States, without regard to the amount in controversy, for appropriate relief, including an action for a declaratory judgment, writ of injunction (subject to the limitations in section 211), and/or damages.

Section 211(a) of the same statute provides:

The district courts of the United States shall have exclusive original jurisdiction of cases or controversies arising under this title, or under regulations or orders issued thereunder, [1302]*1302notwithstanding the amount in controversy: except that nothing in this subsection or in subsection (h) of this section affects the power of any court of competent jurisdiction to consider, .hear, and determine any issue by way of defense (other -than a defense based on the constitutionality of this title or the validity of action taken by any agency under this title) raised in any proceeding before such court. If in any such proceeding an issue by way of defense is raised based on the constitutionality of this title or the validity of agency action under this title, the case shall be subject to removal by either party to a district court of the United States .

The complaint refers to but two regulations adopted pursuant to the EPA; namely, 10 C.F.R. §§ 210.82(d) and 210.-83(b), 39 Fed.Reg. 1932. Section 210.-83(b) using almost the identical language of Section 210(a) of the Economic Stabilization Act of 1970 provides that anyone suffering “legal wrong because of any act or practice arising out of the provisions of” the rules and regulations adopted under the EPA shall be entitled to the relief provided under the Economic Stabilization Act.

Section 210.82(d) provides under the heading of Sanctions — Other Penalties:

Willful concealment of material facts, or false or fictitious or fraudulent statements or representations, or willful use of any false writing or document containing false, fictitious or fraudulent statements pertaining to matters within the scope of the Act shall be subject to the criminal penalties provided by 62 Stat. 749, 18 U.S.C. 1001.

The jurisdictional question is primarily whether the alleged facts constitute a “legal wrong because of an act or practice arising out of” the EPA and its regulations. Plaintiff alleges that it was induced to sell defendant fuel oil upon defendant’s false promise to pay the new and higher prices. Specifically, plaintiff contends that regulation 210.82(d), which makes willful concealment of material facts pertaining to matters within the scope of the EPA a criminal offense subject to prosecution under 18 U.S.C. § 1001, creates by inference a civil cause of action for damages, which may be litigated in federal district court.

This litigation in substance is no more than an ordinary breach of contract action.

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

Related

Exxon Corp. v. Jarvis Christian College
746 F. Supp. 652 (E.D. Texas, 1989)

Cite This Page — Counsel Stack

Bluebook (online)
385 F. Supp. 1299, 1974 U.S. Dist. LEXIS 11721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/swann-oil-inc-v-keystone-portland-cement-co-paed-1974.