Opinion ID: 781619
Heading Depth: 3
Heading Rank: 1

Heading: Motiva's Failure To Preserve the Image-Violation Ground

Text: 60 In its Posttrial Decision, prior to beginning the discussion section, the district court stated that [t]he only substantive ground for termination ... set forth in defendants' compliance with the Trial Preparation order, ... and thus relied on in the termination of the Lease and Sale Agreement, is a violation of laws or regulations. Posttrial Decision at 6 (emphasis added). This statement indicates that the court did not regard Motiva as urging it to uphold the attempted termination of Ceraso's franchise on the ground of image violations. Given the contents of the parties' Joint Trial Memorandum (JTM), discussed below, we see no error in the view of the district court that it was not being asked to rule that termination was proper on the basis of image violations. 61 The JTM set forth in detail the parties' respective proposed findings of fact and conclusions of law. In that document, the parties stipulated to the contents of the September 18 Letter and of Motiva's Termination Letter. However, Motiva's only proposed finding relating to image stated that 62 [t]he Sales Agreement between Ceraso and Motiva, in section 16(b) and Exhibit A thereto, section 1, sets forth minimum standards for maintaining the premises in an unobstructed and uncluttered state and permits termination for a breach of those standards in section 28(m). These provisions gave Motiva grounds to terminate Ceraso for cluttering the premises with numerous stored cars. 63 (JTM at 59, ¶ 2 (emphasis added).) While stating that the Lease gave Motiva grounds to terminate for image violations, this proposed finding stopped short of requesting a finding that Motiva had in fact terminated Ceraso's franchise on that basis. Ceraso's response to this proposed finding was not only that he disagree[d] with Motiva's characterization of the Lease Terms, but also that in light of Termination Letter, the only relevant issue is Ceraso's compliance with the Regulation. Id. The JTM contained no other proposed finding suggesting that Motiva in fact terminated the franchise on the basis of image violations. 64 Motiva's Claims of Law section provided no indication that Motiva sought to have its attempted termination upheld on the basis of image violations. There were paragraphs in that section dealing with termination for failure to comply with applicable laws. For example, Motiva asked the court to rule that the PMPA allows a franchisor to terminate for the knowing failure of the franchisee to comply with the Federal, State, or local laws or regulations relevant to the operation of the marketing premises (JTM at 69, ¶ 5 (internal quotation marks omitted)), and that 65 [t]he PMPA expressly provides that the franchisor is authorized to terminate a franchisee — and that such termination is conclusively presumed to be reasonable as a matter of law — where: (1) the franchisee is provided notice in accordance with § 2804; and (2) the basis for the termination is the knowing failure of the franchisee to comply with the Federal, State, or local laws or regulations relevant to the operation of the marketing premises 66 (JTM at 70, ¶ 7). There was no similar proposition of law with regard to termination for image violations. 67 In addition, in responding to a number of Ceraso's JTM assertions, to which a Motiva claim of termination on the ground of image violations would have been relevant if Motiva relied on that ground, Motiva's responses made no mention of image violations. For example, in response to Ceraso's assertion that he was making efforts to settle the Town's charges of zoning violations, Motiva stated that those attempts were irrelevant because a franchisee has no right to cure such a violation after it has received notice of termination. (JTM at 72, ¶ 9.) Motiva advanced no argument that Ceraso's attempts to cure zoning violations were irrelevant because his franchise had also been terminated for other reasons, to wit, violation of the image provisions. 68 Similarly, Motiva did not dispute Ceraso's assertion that [t]he principal factual issue in dispute [wa]s whether Ceraso violated Section 27.4.8.5 (JTM at 45, part A6). If Motiva had sought to have the court uphold its termination on the basis of image violations, the claim of image violations plainly would have presented equally important factual issues. 69 In response to Ceraso's proposed conclusion of law that [t]he only allowable ground for termination which could be relevant on these facts is found at 15 U.S.C. § 2802(b)(2)(c)(11) [ sic ], a section that deals with violations of law, Motiva disagree[d], stating that further grounds are found for breach of the sales and lease agreements at § 2802(b)(2)(A). (JTM at 22, ¶ 4.) However, as described in Part I.A. above, those agreements required Ceraso to, inter alia, comply with laws and regulations. Motiva did not cite any specific section or sections of the agreements to which it referred, and there was no indication in this response that Motiva referred to the agreements' image violation provisions. If Motiva sought a ruling that it had properly terminated Ceraso's franchise on the basis of image violations, it was incumbent on Motiva to respond to such Ceraso assertions with specific, informative references to the alleged image violations. There were no such references. 70 Finally, as noted in Part I.C. above, Motiva's Termination Letter, in referring to a prior demand that Ceraso rectify identified image violations, cited only a nonexistent letter of September 27, 2000, and did not cite the letter dated September 18, 2000, which had listed image violations. As discussed in Part II.A.2. below, the PMPA requires that a franchisee be given clear notice of the ground asserted for termination of his franchise. In order to have the court rule that its Termination Letter properly terminated Ceraso's franchise on the basis of image violations, Motiva would have needed a ruling that the Termination Letter's reference to the nonexistent September 27, 2000 letter was a sufficiently clear reference to the letter dated September 18. In response to Ceraso's proposed findings that the Termination Letter referred to a September 27, 2000 letter that Ceraso never received and that never existed, Motiva stated only that the reference to September 27 was a typographical error that was first discovered on October 28, 2001, making it unlikely that it caused Ceraso any real confusion or that he relied on the typo in any way to his detriment (JTM at 20-21, ¶¶ 43, 44, 45). Motiva did not include in its own proposed findings of fact or conclusions of law a request that the court find the reference to September 27 to be a sufficiently clear reference to September 18 to give valid notice to a PMPA franchisee. Indeed, even Motiva's objection, quoted above, referred to the typographical error's discovery in the passive voice and did not actually assert that Ceraso had made or been informed of the discovery or that he so understood the Termination Letter. 71 In sum, one paragraph of Motiva's proposed findings of fact indicates that Motiva could have terminated the franchise on account of image violations; but nothing in the JTM either requested a finding that it did terminate on that ground, or requested a conclusion that such a termination was permissible under the PMPA, or responded to any of Ceraso's challenges to the zoning-related basis for termination by invoking, as an alternative basis for termination, the alleged image violations. We cannot conclude that the district court erred in finding that, in light of the contents of the JTM, the only ground for termination it was asked to adjudicate was Ceraso's alleged violation of laws or regulations. 72