Court Opinion

ID: 9567332
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:52:28.886287+00
Date Added: 2024-06-11T10:00:32.933499
License: Public Domain

Toal, Justice,
dissenting:
I respectfully dissent believing that this matter should have been submitted to a jury. The basis for this dispute is plaintiff’s contention that Creel used illegal gasoline pricing policies to try to drive Adams out of business.
From 1967-1980, when Adams was a Gulf franchisee, Gulf did not operate its own stations in Horry County. As a franchisee, Adams was sold gasoline by Gulf at the “dealer tankwagon” price, which was more favorable than the price Gulf charged the non-franchisee stations it supplied. In 1980, Creel bought the Adams station property and supply contract from Gulf. Although Creel told Mrs. Adams everything would be the same as it was under Gulf, Creel began to sell gasoline to other stations in the same market for 14 cents to 22 cents a gallon lower than the “dealer tankwagon” price it charged adams. Adams claimed that Creel was using a policy of pricing below wholesale to drive them out of business so Creel could obtain control of the station.
1. Breach of Contract
In my view, the plaintiff was entitled to submit to the jury its claim that the systematic price advantage Creel gave its other customers was a breach of the implied covenant of good faith and fair dealing and thus a breach of Creel’s contract with Adams. In Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 110 S.Ct. 2535, 110 L.Ed. (2d) 492 (1990), the United States Supreme Court held that such arrangements are illegal; See *281also Barnes v. Gulf Oil, 795 F. (2d) 358 (4th Cir. 1986) (holding that a franchisor cannot justify illegal pricing by hiding behind the “letter” of its contract); Steven J. Burton, Breach of Contract and the Common Law Duty to Perform in Good Faith, 94 Harv. L. Rev. 368 (1980) (seller’s performance of contractual duties in good faith encompasses more than “letter” of contract, also includes expectations of parties regarding pricing).
2. Violation of UCC Requirements of Seller’s Reasonableness and Good Faith in Open Price Contract, S.C. Code Ann. § 36-2-305
The contract between these parties was an open price contract. A jury should have been allowed to decide whether the “dealer tankwagon” price charged Adams was reasonable in light of the lower prices charged to other dealers by Creel. There is conflicting evidence on this point which the majority simply dismisses on the basis that the other stations were not “similarly situated.” This is for a jury to decide. The South Carolina Reporter’s Comments to § 36-2-305 emphasize that once it is established that an open price contract exists, reasonableness and good faith are each jury questions. The evidence of Creel’s pricing to other customers as well as expert testimony is ignored by the majority opinion.
3. Unfair Trade Practices
We have held that South Carolina’s Unfair Trade Practices Act (UTPA) is applicable to price discrimination claims. Jackson v. Atlantic Soft Drink Co., 286 S.C. 577, 336 S.E. (2d) 13 (1985). Plaintiff claims that the disparate prices Creel charged its various stations constituted illegal pricing under state common law, the state Uniform Commercial Code, the state’s UTPA and under the federal Petroleum Marketing Practices Act. Price fixing is one of the very practices the Unfair Trade Practices Act was intended to address. See Richard E. Day, South Carolina Unfair Trade Practices Act: Sleeping Giant or Illusive Panacea, 33 S.C. L. Rev. 479 (1982). The majority sidesteps the issue of whether an allegation of price fixing is an allegation of an unfair trade practice by using the definition of unfair trade practice found in Young v. Century Lincoln-Mercury, 302 S.C. 320, 396 S.E. (2d) 105 (Ct. App. 1989). This case holds that a claim against an auto *282repair shop for padding repair bills is cognizable under UTPA as a deceitful unfair trade practice. This case does not exclude from the definition of unfair trade practice alleged illegal practices such as price fixing.
The majority contends that the evidence is undisputed that 1) there was no agreement between Creel and Adams as to price, and 2) Adams was charged the “dealer tankwagon” price the same as other similarly situated customers of Creel. I disagree that this is the undisputed evidence, but even if it were, Adam’s claim is based on disparity of pricing between various customers of Creel. As briefly outlined above, in the present status of the law, when franchisor undercuts prices to drive out a franchisee as alleged here, such practice is illegal, is violative of public policy and, thus, claims based thereon are cognizable under the South Carolina Unfair Trade Practices Act. This is the basis of plaintiff’s unfair trade practices claim. I would allow a jury to decide whether plaintiff has proved it.
I would reverse.