Opinion ID: 674617
Heading Depth: 1
Heading Rank: 2

Heading: The PMPA Claim

Text: 6 The PMPA regulates the marketing of automotive fuel by establish[ing] minimum federal standards governing the termination and nonrenewal of motor fuel sales franchises. May-Som Gulf, Inc. v. Chevron U.S.A., Inc., 869 F.2d 917, 921 (6th Cir.1989). Geib claims that Amoco's nonrenewal of his Rochester Colonial Amoco franchise violates the provisions of the PMPA which specify the only circumstances under which nonrenewal of such a franchise is permissible. 7 Geib is correct that the PMPA only permits a petroleum distributor like Amoco to refuse to renew a franchise under specifically defined circumstances. Under 15 U.S.C Sec. 2802(b)(1), Amoco may only refuse to renew Geib's motor fuel sales franchise if Amoco complies with the notification requirements of 15 U.S.C. Sec. 2804, and if such nonrenewal is based upon a ground described in 15 U.S.C. Sec. 2802(b)(2) or (3). Amoco contends, and the district court agreed, that Amoco was entitled under the PMPA to refuse to renew Geib's franchise after he failed to pay for the gas in the manner specified by the MMP. See 15 U.S.C. Sec. 2802(b)(2)(A) (grounds for termination of a franchise or nonrenewal of a franchise relationship include, inter alia, [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). 8 Viewing the facts of this case in the light most favorable to Geib, we conclude that summary judgment in favor of Amoco on the PMPA claim was proper as a matter of law. Geib does not dispute Amoco's right not to renew his franchise in the event of a breach of the franchise contract. Geib also does not dispute that he repeatedly engaged in the unorthodox inventory reporting techniques described above. 3 Rather, Geib seeks to avoid summary dismissal primarily by arguing that his method of submitting price change reports was not, in fact, a breach of the MMP. Geib argues that the written contract did not mandate any particular reporting technique, and that Amoco representatives orally instructed him to adjust the timing of his reports to take advantage of price changes. 9 We turn first to Geib's contention that he did not violate any express written provisions of the MMP. Admittedly, the MMP does not specifically instruct Geib when to read his tank meters. However, the inventory reports clearly were designed to enable Amoco to invoice Geib properly for his gasoline purchases. Therefore, the contours of the reporting requirement are defined by the terms of the contract governing Geib's obligation to pay Amoco for the gasoline. The DSA unambiguously and unequivocally provides that Geib will pay for the gas at the price in effect at the time when title to [the gasoline] passes from Amoco to Dealer. To determine at precisely what moment title to the gasoline shifts, we must refer to the MMP, which explains that [t]itle to [the gasoline] shall remain in Amoco until the product is withdrawn from the underground storage tanks by Dealer and registered on the pump meter, at which time title shall pass from Amoco to Dealer. The combined effect of these provisions is to set the price at which Geib purchases gas at the price level in effect at the time the gas is pumped from the tanks into his customers' automobiles. The language of the contract gives rise to no other possible interpretation, and Geib suggests none. In fact, Geib clearly indicated at his deposition that he understood the rationale for requiring accurate and timely reporting: 10 COUNSEL FOR AMOCO: The reason you received a notice from Amoco, of a price change, was to tell you that what you're going to have to pay Amoco for gas, after the effective time of the price change, was going to be X cents a gallon; is that correct? 11 GEIB: Correct. 12 COUNSEL: The reason that you would prepare a price change report under those circumstances is to tell Amoco how much gas you had purchased prior to that price change, and pay for it at the old price; is that correct? 13 GEIB: Basically. 14 COUNSEL: That is fair and proper, correct? 15 GEIB: Yes. 16 COUNSEL: So that you pay for the gas at the price that was in effect when you bought it, correct? 17 GEIB: Pretty much, yes. 18 COUNSEL: And that the gas you buy after the price change, you're going to pay at the new price? 19 GEIB: Correct. 20 Geib Deposition, supra note 3, at 74-75. 21 This deposition testimony reveals Geib's awareness that his inventory reporting technique distorted the amount he paid for gas. By delaying his reports after price increases, and by hurrying his reports before price decreases, Geib often paid less than the agreed upon price for the gas he purchased from Amoco. The following exchange during the deposition confirms that Geib completely understood that the manipulation of the reports worked to his advantage at Amoco's expense: 22 COUNSEL FOR AMOCO: Why would you use the readings from the day before if the price was going down? 23 GEIB: I didn't always. But if I did, it was within the twenty-four hour period, and it would be in my favor. 24 COUNSEL: You would always do it so it would be in your favor, if you did it; is that correct? 25 GEIB: Most likely. I'm not positive. 26 COUNSEL: It would be in your favor, would it not, to use readings from twenty-four hours before the price change if the price was going down? Would you agree with that? 27 GEIB: Yes. I'm sorry. Right. 28 COUNSEL: And that is what you did if you didn't use--if the price was going down and you didn't use the actual readings at the time of the price change, you used them from twenty-four hours before? 29 GEIB: Most likely, yes. 30 COUNSEL: And vice-versa: if the price was going up, you would use later readings? 31 GEIB: Most likely. 32 Geib Deposition at 89. 33 Geib defends his tactics, despite their apparent impermissibility under the written contract, by arguing that Amoco's oral representations authorized him to submit this type of price change report. At the very least, Geib submits that genuine issues of material fact remain unsettled concerning what he was told by Amoco, and that these factual questions should preclude the grant of summary judgment. 34 We note initially that the MMP expressly provides that all modifications must be made in writing. But we need not determine the extent to which oral representations are allowed to contradict the written terms of the MMP, because Geib has not identified any representations made by Amoco which could be understood to authorize his meter reading technique. Geib does not allege anywhere in his complaint that Amoco agents directly instructed him to read his meters up to twenty-four hours before or after price changes. Rather, his argument hinges on his own interpretation of two very different instructions he was given by Amoco concerning the mechanics of reporting. 35 Amoco concedes that Geib was given two oral instructions about reporting. First, he was told that when a price change occurred within twenty-four hours of a regular reporting date, the regular and price change reports could be combined on a single form. To illustrate, recall that Geib's regular reports were submitted on Tuesdays and Fridays. If a price change was announced to take effect on a Monday, and if Geib submitted a proper price change report on Monday, he was not required to complete a regular report on Tuesday, although Tuesday was a regular reporting day. The second oral instruction given to Geib allowed him to read his meters for the regular reports at any time during the day he chose. This rule provides dealers with flexibility in the daily operation of their stations, and has no impact whatsoever on the amount Geib pays for gas as long as the price remains constant. 36 Geib apparently combined these two instructions, ignoring the crucial accounting function performed by the price change reports. When price changes occurred within twenty-four hours of a regular reporting date, Geib frequently submitted a single combined report to Amoco. Then, relying on the rule permitting convenient scheduling of regular reports, he decided not to read the meters at the specified time for price change reports, although the report would function as both a regular report and a price change report. Instead of completing a proper price change report and submitting it in lieu of a regular report, Geib opted to submit an advantageous regular report in lieu of a price change report. This technique enabled Geib to choose when a price change became effective, and thereby shirk his obligation to pay for gas at the price in effect at the time the gas was drawn from his tanks. Geib can not transform his own opportunistic interpretation of the reporting instructions into a binding contractual provision nullifying the agreed upon price term in the written agreement. See Baker v. Amoco Oil Co., 956 F.2d 639, 642 (7th Cir.1992) (dealers cannot vary [the terms of the contract] by establishing an underground network of contrary beliefs and self-serving 'understandings' ). 37 Having determined that Geib breached the price term of the MMP, we are left only to decide if the price term was both reasonable and of material significance to the franchise relationship. 15 U.S.C Sec. 2802(b)(2)(A). Finding the price term to be entirely reasonable, and finding Geib's efforts to cheat Amoco to be a significant breach, we conclude that Amoco was acting entirely within its contractual rights and without violating the PMPA in refusing to renew Geib's gas franchise. Geib argues that the magnitude of his breach was too insignificant to be an objective justification for nonrenewal. But as the court noted in Baker v. Amoco, supra, [i]n the terms of the [PMPA], the requirement of accurate reporting is 'reasonable', and repeated violations are 'of material significance to the franchise relationship'. Cheating by even a small amount on a contract is significant. 956 F.2d at 642. 38 Geib insists that he always believed his actions were permissible, and that if Amoco was displeased it should have given him a chance to cure his breach. Having no statutory 4 or contractual provisions to rely upon in this regard, Geib argues that Amoco's course of dealing with others led him to believe that he would have an opportunity to cure any breaches he committed. To the contrary, Amoco denies ever permitting a dealer who cheated on his account to pay back the disputed amount. We need not resolve this factual dispute, however, because Geib cites no authority converting an unrelated act of forgiveness into a contractual right in Geib's favor obliging Amoco to continue dealing with him against its will. 39 We also reject Geib's contention that the nonrenewal was untimely under 15 U.S.C. Sec. 2802(b)(2)(A)(i), which requires that a decision not to renew be made within 120 days of the date of breach. Section 2802 protects franchisees by preventing a franchisor from using a stale breach as justification for nonrenewal. Geib urges us to construe Sec. 2802 as prohibiting nonrenewals made more than 120 days after the franchisor's first suspicion of breach. But as the district court properly concluded, the PMPA was not intended to induce Amoco to terminate Geib's franchise summarily upon the first suspicion of wrongdoing. Such [a]n interpretation of section 2802 would induce termination based on rumor or suspicion, and thus undermine the protection from arbitrary and discriminatory terminations that Congress intended. Nassau Blvd. Shell Serv. Station, Inc. v. Shell Oil Co., 875 F.2d 359, 362 (2d Cir.1989). Furthermore, Geib repeatedly breached the MMP, and each new breach provided Amoco with 120 days to terminate the franchise. See Chevron U.S.A., Inc. v. Finn, 851 F.2d 1227, 1230 (9th Cir.1988), cert. denied, 489 U.S. 1054, 109 S.Ct. 1315, 103 L.Ed.2d 584 (1989). Geib does not deny that at least one incident of misreporting occurred within 120 days of the nonrenewal. Accordingly, the dismissal of Geib's PMPA claim is AFFIRMED.