Thompson v. Amoco Oil Co.

705 F. Supp. 1349, 1989 U.S. Dist. LEXIS 1024, 1989 WL 9068
CourtDistrict Court, C.D. Illinois
DecidedFebruary 7, 1989
Docket87-3283
StatusPublished
Cited by4 cases

This text of 705 F. Supp. 1349 (Thompson v. Amoco Oil Co.) is published on Counsel Stack Legal Research, covering District Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thompson v. Amoco Oil Co., 705 F. Supp. 1349, 1989 U.S. Dist. LEXIS 1024, 1989 WL 9068 (C.D. Ill. 1989).

Opinion

OPINION

RICHARD MILLS, District Judge:

This is an action under the Petroleum Marketing Practices Act (hereinafter PMPA), 15 U.S.C. § 2801 et seq.

Plaintiff seeks a judicial determination that the notice sent by Defendant advising Plaintiff that his Amoco oil dealer lease would be terminated and nonrenewed is ineffective for failing to comply with the PMPA. The cause is currently before the Court following a two-day bench trial, and submission of supplemental briefs by the parties.

The Court has previously ruled from the bench in favor of Plaintiff upon Defendant’s affirmative defense under § 2802(b)(2)(A) of the PMPA; we now hold in favor of Plaintiff as well upon Defendant’s affirmative defense under § 2802(b)(2)(C).

Facts

Thompson entered into a franchise relationship with Amoco on November 1, 1984, with respect to Amoco Station Number 5279, at U.S. 51 and Raab Road, in Normal, Illinois. The franchise relationship was evidenced by a lease agreement and Thompson has managed the station ever since that time. Sometime after entering into the relationship, however, Thompson moved away from the Normal area and took up residence in Lake of the Ozarks, Missouri — some 300 miles from Normal.

Amoco officials learned of Thompson’s move sometime before fall of 1986, and they were not pleased. Amoco has had a traditional policy of requiring franchisees to be physically present upon the franchised premises. In fact, Amoco attempted to memorialize this policy by including a clause in the lease contract requiring the franchisee “to devote his personal attention *1352 upon the Premises to managing the business activities of the gasoline sales facility.” Amoco officials met with Thompson to discuss this policy with him; Thompson, however, refused to acknowledge that Clause 15(f) required his physical presence at the station, nor did he recall ever having been told of the policy. Therefore, Thompson refused to return to the Normal area; instead, he stayed in Missouri, where he currently engages in substantial business activities.

Amoco officials remained unsatisfied, and so on June 3, 1987, they sent to Mr. Thompson a letter informing him that Amoco was terminating and nonrenewing the lease in question. The letter was sent to comply with the notice provisions of the PMPA, 15 U.S.C. § 2804. Amoco informed Thompson that it was terminating and non-renewing the contract because Thompson “failed to devote [his] personal attention upon the premises to manage the business activities of the gasoline sales facility as required by [his] Dealer Lease with Amoco, in that [he has] permanently moved out of Illinois,” thereby breaching Clause 15(f) of the contract; in addition, Amoco stated that “[a]n event has occurred which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable.”

In response to the nonrenewal and termination letter, Plaintiff filed the instant complaint on July 22, 1987. The complaint seeks declaratory and injunctive relief, and in addition requests costs, fees, and exemplary damages for willful disregard of PMPA requirements. Plaintiff also sought a preliminary injunction; before a hearing could be held, however, the parties agreed to maintain the status quo pending final resolution of Plaintiff’s cause of action. The present trial followed.

Under the PMPA, the franchisee (here, Thompson) may bring a civil action against the franchisor upon violation of the provisions of the PMPA. 15 U.S.C. § 2805(a). In such an action, the franchisee has the initial burden of proving that the franchise was terminated or nonre-newed. Thereupon the burden shifts to the franchisor to show that it has an affirmative defense that the termination was permitted under § 2802(b) or 2803 of the PMPA. 15 U.S.C. § 2805(c). Here, the parties have stipulated that Plaintiff has made out a prima facie case, and so the burden shifted to Amoco to prove that the letter terminating and nonrenewing the lease in question was permitted under the PMPA. The defenses identified by Amoco are those found in § 2802(b)(2)(A) and (C).

The PMPA

The Petroleum Marketing Practices Act is remedial legislation intended “to strike a balance between the interests of the participants in a petroleum marketing franchise relationship.” Brack v. Amoco Oil Co., 677 F.2d 1213, 1220 (7th Cir.1982). The PMPA was intended to equalize the bargaining power between the franchisor and the franchisee in such relationships; previously, the franchisor, in a far superior bargaining position to that of the franchisee, was often able to win contractual concessions which at times bordered upon the unconscionable. Although PMPA has this as a general purpose, “the one thing the Act is clearly intended to prevent is the appropriation of hard-earned good will which occurs when a franchisor arbitrarily takes over a business that the franchisee has turned into a successful going concern.” Id.

To accomplish these goals, the PMPA establishes as a general rule that termination or nonrenewal of a franchise or franchise relationship is prohibited. § 2802(a). In certain circumstances, however, the franchisor may escape this general prohibition and may terminate or nonre-new the relationship. See generally Annotation, Termination or Nonrenewal of Franchise to Sell Motor Fuel in Commerce Under Petroleum Marketing Practices Act (15 USCS §§ 2801 et seq.), 53 A.L.R.Fed. 348 (1981). The grounds for termination or nonrenewal are set out in § 2802(b)(2), and in pertinent part include a failure of the franchisee to abide by reasonable and materially significant terms of the *1353 franchise agreement, and “[t]he occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reasonable.” § 2802(b)(2)(A) and (C). Furthermore, those events upon the occurrence of which termination or nonrenewal is permitted under § 2802(b)(2)(C) are defined in § 2802(c) by means of a nonexhaustive list. This list includes such franchisee actions as criminal misconduct, declaration of bankruptcy, or continuing severe physical or mental disability; also included are such unavoidable events occurring to the franchisor as loss of the right to grant use of trademarks, condemnation of the property in question, or loss of the franchisor’s right to lease the property.

Finally, even if a permitted reason for nonrenewal or termination exists under § 2802(b)(2), the franchisor must still comply with the PMPA’s notification requirements.

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Bluebook (online)
705 F. Supp. 1349, 1989 U.S. Dist. LEXIS 1024, 1989 WL 9068, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thompson-v-amoco-oil-co-ilcd-1989.