that notice was voided when the company allegedly promised to extend the franchise indefinitely during the course of the negotiations for the sale of the U Street property. Consequently, plaintiff argues, he is entitled to a second 90 day notice before BP may terminate his franchise.
Plaintiff does not claim that the notice BP issued was defective in any other way,
and he does not dispute BP's compliance with all of the Act's other prerequisites, such as that there were proper grounds for the termination.
See 15 U.S.C. § 2802. There is every indication the materials submitted to the Court, in fact, that defendant has complied in full with every requirement the Act imposes upon a franchisor to accomplish a proper termination. Thus, unless the plaintiff is able to establish that the negotiations between the parties for the sale of the leasehold and BP's alleged agreement to extend the franchise did in fact void the May 29 notice, BP is clearly entitled to terminate the franchise and to close the service station. See Escobar v. Mobil Oil Corp., 678 F.2d 398, 400 (2d Cir. 1982).
At the center of this legal issue is the factual question of whether any new agreement was ever made and, if it did, what kind of agreement was made. Plaintiff claims that during the course of the negotiations for the sale of the U Street lease, BP assured plaintiff's representative in the negotiations, James Trimm, that BP would extend plaintiff's franchise "indefinitely." As support for this assertion, he provides only his own affidavit, although he was not present when BP representatives allegedly made this promise.12
BP, Inc., denies ever agreeing to extend the franchise indefinitely, claiming that its intent has always been to leave the franchising business at the U Street site and to sell its interest in the property. Defendant does acknowledge that it promised plaintiff's attorney, James Trimm, that BP would not close the station until the conclusion of the negotiations between plaintiff and defendant, in the event the negotiations continued past the August 31 closing date, and it offers the affidavits of the two BP officials who actually negotiated with plaintiff's attorney in support of the more limited promise.
Even ignoring the technical evidentiary problems of plaintiff's affidavit,
the great weight of the evidence submitted to the Court clearly points to the conclusion that, while there was some agreement, it was only an agreement not to close the station pending negotiations. This conclusion is supported not only by the sworn statements of the two individuals directly involved in the negotiations, but also circumstantially, by defendant's negotiations both with plaintiff and with other parties to sell the property.
Given this purpose to sell, it is highly improbable that BP would have agreed to continue the franchise at all, much less indefinitely. On the other hand, given the proximity of the negotiations to the August 31 expiration date, it is probable that plaintiff and defendant made provision only as to what would happen to the U Street station should the negotiations continue past the termination date.
On this basis, the Court finds that the parties agreed merely not to close the station pending negotiations. What needs to be resolved next is the issue as to whether such an agreement invalidates the otherwise effective notice of termination BP issued on May 29. The PMPA clearly grants franchisees the right to a 90 day notice period, subject to a franchisor's right to a shorter period under certain circumstances.
15 U.S.C. § 2804(a); Pugh v. Mobil Oil Corp., 533 F. Supp. 169, 175-65 (S.D. Tex. 1982). In giving the franchise a 90 day notice period, the PMPA grants to the franchisee time to preserve the franchise or to wind up his affairs. See California Petroleum District v. Chevron U.S.A., Inc., 589 F. Supp. 282, 285 (E.D.N.Y. 1984). The Act is silent, however, on the question whether a valid notice can subsequently become invalidated by circumstances such as those presented by this case.
Plaintiff supports his claim that BP's prior notice is invalid by citing Ferriola v. Gulf Oil Corp., 496 F. Supp. 158 (E.D. Pa. 1980). In that case, the court held that, where a franchisor and franchisee enter into negotiations for renewal of a franchise after the franchise has expired and then reach an impasse in negotiations, the franchisee is entitled to a 90 day notice before the franchise may be terminated. But Ferriola is no help to plaintiff here simply because the franchisor in that case had never given the franchisee any valid notice of intent to terminate. In fact, the franchisor there clearly intended to continue the franchise but was unable to reach an agreement on the conditions of renewal with the franchisee. Consequently, the franchisee had not yet had the benefit of a 90 day period to wind up his affairs or to try and preserve the franchise through some other method. Here, plaintiff had the benefit of a valid 90 day notice period and knew all along that BP intended to sell the station.
Not only does there not appear to be any other precedential support for the proposition that a deferral of a closing date pending negotiations invalidates prior valid notice, but the statute, in fact, clearly contemplates in section 2802(b)(3)(D)(iii)(I)
that negotiations such as those which took place here -- i.e., negotiations for the sale of the property -- will occur during the 90 day notice period and that they do not invalidate the notice. The Act nowhere provides or implies that such negotiations or an agreement to suspend closure pending negotiations would in any way invalidate the notice period. Indeed, an invalidation consequence would defeat the very purpose of the bona fide offer provision because it would discourage franchisors from negotiating actively to sell their interests or, at the least, it would discourage negotiations beyond the 90 day period. This type of disincentive would, of course, interfere with the ability of franchisees to buy franchises.
It is relevant also that, while the broader purpose of the Act is to protect franchisees from arbitrary and discriminatory termination, BP's actions in this case have not been of such character. Plaintiff does not challenge defendant's reasons for terminating the franchise or the bona fide quality of its offer to sell the station for $325,000. In addition, while the Court recognizes the disadvantaged position a small service station operator such as plaintiff vis-a-vis a large corporation such as BP Oil, the PMPA is designed to rectify that disadvantage and restore a fairer balance between the two parties.
But under the balance struck by the Act, the franchisor has a right not to renew a franchise if it complies with the requirements of the Act in so doing. See Roberts v. Amoco Oil Co., 740 F.2d 602, 606 (8th Cir. 1984); Bellmore v. Mobil Oil Corp., 524 F. Supp. 850 (D. Conn. 1981).
It follows from what has been said that even under the relaxed standard for issuing injunctive relief pursuant to section 2805(b)(2) of the PMPA,
the Court must deny plaintiff's motion.
Plaintiff has not shown the existence of a sufficiently serious question going to the merits so as to provide a fair ground for litigation. Furthermore, although it is undisputed that the plaintiff's franchise has not been renewed, thereby satisfying the first requirement for relief, it is not even clear that plaintiff could prevail on the third requirement, balance of hardships, even if the Court did find a sufficient question on the merits. Plaintiff's successful purchase of the Rhode Island Avenue station establishes that his operation of the U Street station is not his sole livelihood.
See Cantrell v. Exxon Co., U.S.A., 574 F. Supp. 313 (M.D. Tex. 1983). In the meantime, the defendant would bear the daily operating loss of the station during an additional 90 day notice period, and more importantly, would be hampered in its current effort to sell the leasehold interest to a third party. If plaintiff had been able to establish, or even to adduce credible evidence, that he had some hopeful prospect of negotiating the sale with BP during any additional notice period, the result might conceivably be different. In the absence of such evidence, any additional notice period creates no more than pointless delay and unnecessary expense to the defendant.
For the reasons stated above, it is this 7th day of October, 1985
ORDERED that plaintiff's request for a preliminary injunction be and it is hereby denied; and it is further
ORDERED that this action be and it is hereby dismissed.