Court Opinion

ID: 6997173
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:35:27.594002+00
Date Added: 2024-06-11T16:09:36.835383
License: Public Domain

Vacated and remanded with instructions. Judge WIDENER delivered the opinion of the court, in which Chief Judge WILKINSON and Judges NIEMEYER, MICHAEL, KING and GREGORY joined. Judge NIEMEYER wrote a concurring opinion. Judge WILKINS wrote a dissenting opinion, in which Judges WILLIAMS, MOTZ, and TRAXLER joined.
OPINION
WIDENER, Circuit Judge:
This appeal arises from judgment on a jury verdict in favor of Interstate Petroleum Corporation (Interstate). Robert C. Morgan and Vickie L. Morgan appeal, asserting that the district court lacked subject matter jurisdiction over the case. In addition, the Morgans contend that Interstate’s claim for money damages should not have been presented to the jury. Interstate cross-appeals the district court’s denial of its motion for attorney’s fees. On September 8, 2000, because it found that the district court lacked subject matter jurisdiction to decide this case, a divided panel of this court decided to vacate the judgment and remand the case for dismissal. Interstate Petroleum v. Morgan, 228 F.3d 331 (4th Cir.2000). The panel decision was vacated and rehearing en banc granted on November 9, 2000. Because the district court did not have subject matter jurisdiction to decide the case, we vacate the judgment of the district court and remand for dismissal. We have jurisdiction pursuant to 28 U.S.C. § 1291 and do not address the Morgans’ damages argument or Interstate’s cross-appeal for attorney’s fees.
I.
On April 29, 1993, Interstate and the Morgans, d/b/a Green Acres Gas and Gro-*218eery, entered a franchise agreement whereby Interstate, as franchisor, agreed to sell British Petroleum (BP) brand gasoline and petroleum products to the Morgans, as franchisees. The terms of the agreement also allowed the Morgans to operate their service station under the BP logo and required the Morgans to obtain a $31,500 irrevocable letter of credit from which Interstate could draw amounts due and unpaid under the contract. Despite nine requests over the next 18 months, the Morgans failed to obtain the required letter of credit, and on December 5, 1994, Interstate notified the Morgans of its intent to terminate the franchise agreement based on their nonperformance. Instead, Interstate apparently gave the Morgans another chance to keep the franchise. This last chance was embodied in a letter contract, dated December 12, 1994,1 in which the Morgans agreed to consent to the termination of the franchise should they fail either to begin making monthly payments to Interstate in satisfaction of an earlier note or fail to deliver a $20,000 letter of credit to Interstate by January 4th, 1995.
After the Morgans failed to comply with the terms of the letter agreement of December 12th, Interstate brought suit in federal court, claiming breach of contract.2 Interstate’s complaint, filed on January 11, 1995, alleged federal question subject matter jurisdiction under 28 U.S.C. § 1331, and the Petroleum Marketing Practices Act (PMPA or the Act), 15 U.S.C. §§ 2801-2841. The Morgans, on January 11, 1995, filed a separate suit in the district court based on state contract law, a suit which they later voluntarily dismissed on May 21, 1996. The district court granted Interstate’s motion for injunctive relief, requiring the Morgans not to display the BP logo. The Morgans, on November 21, 1995, filed a motion to dismiss under Federal Rule of Civil Procedure 12(h)(3),3 asserting that the district court lacked subject matter jurisdiction because the PMPA did not authorize actions brought by a franchisor against & franchisee.4 The district court denied the Morgans’ motion to dismiss and their subsequent motion for partial dismissal, and the case proceeded to trial. Following trial, the jury awarded Interstate $42,901.50 in damages. The Morgans then made several post-trial motions, including another motion to dismiss for want of jurisdiction under Rule 12(h)(3). The district court denied the motion to dismiss, and the Morgans appealed.
II.
Interstate’s complaint alleged that the Act gave the court subject matter jurisdiction pursuant to 28 U.S.C. § 1331.5 The Morgans’ pre-trial motion to dismiss argued that the district court had no federal question jurisdiction over Interstate’s suit *219because the PMPA does not authorize franchisors to maintain a cause of action against franchisees. The Morgans repeated this argument in their post-trial motion to dismiss and repeat it again on appeal.
The Supreme Court has stated that it is the “special obligation” of appellate courts to evaluate not only their own subject matter jurisdiction “but also [the jurisdiction] of the lower courts in a cause under review, even though the parties are prepared to concede it.” Bender v. Williamsport Area School Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) (internal quote omitted). In fact, we must consider questions regarding jurisdiction whenever they are raised, and even sua sponte. Plyler v. Moore, 129 F.3d 728, 731 n. 6 (4th Cir.1997), cert. denied, 524 U.S. 945, 118 S.Ct. 2359, 141 L.Ed.2d 727 (1998). Accordingly, this case must be dismissed if we conclude that the district court lacked subject matter jurisdiction.
Absent diversity, a district court has subject matter jurisdiction in a case such as this only if the action arose under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. The Court’s recent articulation of “arising under” jurisdiction found in Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), controls our inquiry into whether the district court had jurisdiction over Interstate’s claims. Congress has given the lower federal courts jurisdiction to hear “only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd., 463 U.S. at 27, 103 S.Ct. 2841. Interstate has argued throughout the litigation, and the district court agreed, that Interstate’s breach of contract claim and request for injunctive relief state federal questions under the Act.
Interstate contends that “federal subject matter jurisdiction is proper ... pursuant to 28 U.S.C. § 1331 and ... 15 U.S.C. § 2801.” Brief, p. 15. The argument goes that since § 2805(a) provides for a suit by a “franchisee ... against [a] franchisor” who fails to comply with the statute that a “majority of courts presiding over the issue have held that the Act implicitly authorizes the franchisor to maintain the same cause of action and, ... pursue the same remedies against a franchisee in a federal court as a franchisee can maintain against a franchisor.” Br. p. 16. That proposition was accepted by the Morgans, Interstate argues, to sustain jurisdiction. Such position, however, is not well taken for three reasons. First, Coyne & Delany Co. v. Blue Cross & Blue Shield, Inc., 102 F.3d 712, 714 (4th Cir.1996), is controlling in its holding that the grant of jurisdiction by a statute to one party to a transaction does not imply jurisdiction to other parties. So conferring jurisdiction in terms on a franchisee under § 2805(a) does not implicitly confer jurisdiction on a franchisor. Second, Hagans v. Lavine, 415 U.S. 528, 533-535, n. 5, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974), is controlling as to decisions of other courts which, as here, have “presid[ed] over” cases involving similar parties without deciding whether or not they have jurisdiction. These are not holdings by the presiding courts that they have jurisdiction. Third, American Fire & Cas. Co. v. Finn, 341 U.S. 6, 18, 71 S.Ct. 534, 95 L.Ed. 702 (1951), is controlling so that even if a party agrees that a court has subject matter jurisdiction, such agreement is not binding on a court or on the party. In connection with these questions, none of the federal courts of appeals have *220held, under the same or similar facts which exist here, that federal question jurisdiction exists under the Petroleum Marketing Practice Act, 15 U.S.C. § 2801, et seq. The district courts are divided on the subject, with, in our opinion, the better reasoned decisions of those courts denying jurisdiction.
Having concluded that the Petroleum Marketing Practices Act, neither directly nor by implication, confers jurisdiction upon Interstate, the franchisor, the claim of federal question jurisdiction in this case by Interstate then calls for an examination of whether Interstate’s “right to relief necessarily depends on resolution of a substantial question of federal law,” as shown by “a well pleaded complaint.” Franchise Tax Board, 463 U.S. at 13, 103 S.Ct. 2841. The way to ascertain the proper answer to this question is by an examination of the complaint, a copy of which is appended to this opinion as Exhibit A.
The first mention of the Petroleum Marketing Practices Act in the complaint is on the first page thereof under a section called “JURISDICTION AND VENUE,” the pertinent parts of which are quoted as follows: “The court has subject matter jurisdiction under this Act based upon federal question jurisdiction pursuant to 28 U.S.C. § 1331 and the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq.”
The only other mention of the Act in the complaint is on page 3 thereof, paragraph 12, which is, in pertinent part: “Plaintiff advised the defendants of its intent to terminate its contract as a result of defendants’ continued non-performance and breach of the contract pursuant to the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq.”
No other mention by the PMPA is made in the complaint. Neither is there any paraphrase of the statute or of any part of the statute, and the only substantive reference to the statute is in paragraph 12, just mentioned, which paragraph 12 is under COUNT I. — BREACH OF CONTRACT. No claim is made that either the Morgans or Interstate has violated any provision of the statute or is holding the other accountable for such a violation.
A fair reading of the complaint shows only a prayer for damages and injunctive relief because of a claim that the Morgans did not comply with the terms of a contract of April 29, 1993 which had been amended by an agreement to terminate the same, dated December 12, 1994. No terms or provisions of the statute are mentioned in the complaint, except as recited above, and the judgment in this case, filed June 6, 1996, attached to this opinion as Exhibit B, is only for a money judgment in the amount of $42,901.50 plus a stipulated amount of $1,562.05, for certain charges on account of credit cards.
We are of opinion that the complaint states nothing more than a complaint for breach of contract under state law, and, indeed, we are so bold as to suggest that Interstate’s claim of federal question jurisdiction may well be nothing more than an attempt to bring this breach of contract case in a federal, rather than a state, forum when neither the jurisdictional amount ($50,000) nor the citizenship requirements could be met.
Even the prayer of the complaint, as best considered, is only for injunctive relief and for a money judgment for breach of contract, neither having anything to do with the provisions of the statute.6
*221In its brief, Interstate argues that its complaint requests a declaration from the district court that its termination of the franchise was proper. Br. p. 21. Since an examination of the complaint, which was never amended, shows that such is not the fact, any such implicit request would have had to have come under Fed.R.Civ.P. 15(b).7
Rule 15(b) provides, “When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.” Fed.R.Civ.P. 15(b) (emphasis added). It is true that a question of declaratory relief was discussed on occasion during the course of this case; however, it is clear from the record, including the complaint, answer, all the other various motions and orders, the jury instructions, the very form of the special verdict, and the absence of an order by the district court granting or denying declaratory relief, that the question of whether Interstate had complied with the PMPA in terminating the franchise was never tried.
An examination of the entire record reveals only that the case is nothing more or less than a dispute under state law over a claimed breach of contract. That only was claimed by Interstate, and that only was defended by the Morgans. Neither side sought the construction of any federal statute, the plaintiff claimed only that the contract was breached, and the defendants denied that it was. Neither side stated a federal question.
Even though West Virginia contract law created Interstate’s cause of action, the case might still be one “arising *222under” the laws of the United States if Interstate’s well-pleaded complaint established that its right to relief under state law necessarily required “resolution of a substantial question of federal law in dispute between the parties.” Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841. In this regard, Interstate asserted at oral argument that the PMPA was construed at trial because the .jury’s finding of liability against the Morgans also necessarily embodied a finding that Interstate had not violated the PMPA in terminating the franchise. We disagree.
It is clear from the record that Interstate established its right to relief to the satisfaction of the jury by proving its breach of contract claim under state law and without reference to any provision of the PMPA. At trial, neither the pleadings, nor the orders, nor the jury instructions nor the special verdict form made any mention of any provisions of the PMPA. Instead, the jury was merely instructed to find whether the Morgans had breached either the original franchise agreement or the Termination Agreement and, if so, to determine damages. Neither did the district court construe any provision of the PMPA when it granted injunctive relief, nor did the judgment of the district court mention or depend upon any provision of the PMPA, or any other provision of federal law. The Morgans never denied Interstate’s right to terminate the franchise if the contract was breached; they did deny that the contract ivas breached.
Thus, the PMPA did not create Interstate’s cause of action, nor was there a disputed question of federal law that was a necessary element of Interstate’s claim. Even if Interstate intended to rely on the PMPA as a defense to a counterclaim by the Morgans, or if Interstate anticipated that the Morgans would somehow use the PMPA to defend against Interstate’s contract claims, the well-pleaded complaint rule, of course, precludes finding “arising under” jurisdiction on such grounds. See Gully v. First Nat’l Bank, 299 U.S. 109, 112-14, 57 S.Ct. 96, 81 L.Ed. 70 (1936) (discussing well-pleaded complaint rule and explaining that jurisdiction will not be found in an anticipated defense).
In sum, “[a] suit arises under the law that creates the cause of action.” American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 60 L.Ed. 987 (1916). The cause of action in this case was created under the law of West Virginia, so the suit arises under that law, not federal law.8
III.
We are thus of opinion that the district court was without subject matter jurisdiction in Interstate’s action against the Morgans. Accordingly, the judgment of the district court must be vacated, and the case remanded to the district court with directions to dismiss the case without prejudice for lack of subject matter jurisdiction.

VACATED AND REMANDED WITH INSTRUCTIONS.

. The letter agreement is referred to in the Special Verdict as a Termination Agreement.

. Interstate sought injunctive relief to enjoin the Morgans from displaying the BP logo and also sought damages, attorney's fees, and costs.

. Federal Rule of Civil Procedure 12(h)(3) provides that: "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” Fed. R. Civ. Proc. 12(h)(3).

. In relevant part, section 2805(a) of the PMPA provides: "[i]f a franchisor fails to comply with the requirements of section 2802 or 2803 of this title, the franchisee may maintain a civil action against such franchisor." 15 U.S.C. § 2805(a) (emphasis added).

. Neither party contends that the facts of this case support an exercise of the court’s diversity jurisdiction.

. An item-by-item analysis of the complaint reveals nothing to the contrary.
On the first page the paragraph called COMPLAINT states only that the parties are Interstate and the Morgans.
*221The item called JURISDICTION AND VENUE on the first and second pages states only the claim of federal question jurisdiction recited before in the body of this opinion and the claim of venue in the Northern District of West Virginia, with the addition that some of the defendants’ conduct was accomplished by instrumentalities of interstate commerce, including mail, facsimile, telephone, and motor vehicle use or transportation.
The next item called PARTIES, on page 2, is a slightly more detailed description of Interstate and the Morgans.
The next item, called GENERAL AVER-MENTS, on pages 2 and 3, is a recitation of the facts on which Interstate relies with respect to its contract of sale, which it claims was breached. The statute, the PMPA, is nowhere mentioned under GENERAL AVERMENTS.
The next item, COUNT I-BREACH OF CONTRACT, on pages 3, 4, 5 and 6 of the complaint, repeats the averments described above under PARTIES and GENERAL AVERMENTS and continues with a statement of the facts upon which Interstate relies for its sought — for money judgment and injunctive relief. That item contains only additional facts relied on by Interstate as its claim for judgment and injunctive relief and mentions the PMPA only as follows: "Plaintiff advised the Defendants of its intent to terminate its contract as a result of Defendants’ continued nonperformance and breach of the Contract pursuant to the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et sec [sic].”
The next item appearing on pages 6 and 7 of the complaint is called COUNT II-PRAYER FOR INJUNCTIVE RELIEF. This item repeats the matters stated under items PARTIES, GENERAL AVERMENTS, and COUNT I-BREACH OF CONTRACT and states facts claimed upon which injunctive relief is justified and the conclusion that irreparable harm would result unless the Morgans are forbidden from using the BP brand.
Nothing else appears in the complaint.

. Of course, a claim under the Declaratory Judgment Act, even if made, does not confer jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). And the case was not tried as a request for declaratory relief or on account of the construction of a statute. The answer, juiy instructions, and special verdict are attached as Exhibits C, D, and E.

. The dissent does not take issue with the rule of decision in Franchise Tax Board, 463 U.S. at 27, 103 S.Ct. 2841, that “the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law.” In that respect, the dissent does not call attention to any "substantial question of federal law” that was involved in this case. The undisputed fact remains that the Morgans never denied Interstate’s right to terminate the franchise if the contract was breached, but they did deny that the contract was breached. And that question of state law was the only 'question in the case, as Exhibits A through E demonstrate.