United States District Court, W.D. Washington, Seattle
KENNETH J. SMITH dba LANDER STREET SHELL, Plaintiff,
PACWEST ENERGY, LLC, et al., Defendants.
following Minute Order is made by direction of the Court, the
Honorable Thomas S. Zilly, United States District Judge:
Defendant PacWest Energy, LLC's motion for summary
judgment, docket no. 14, is DENIED in part and GRANTED in
part, as follows.
(a) With regard to plaintiff's claims under the Petroleum
Marketing Practices Act (“PMPA”), defendant's
motion for summary judgment is DENIED. Under the PMPA, a
franchisor “engaged in the sale, consignment, or
distribution of motor fuel in commerce” may not
“fail to renew any franchise relationship” except
as allowed by 15 U.S.C. §§ 2802(b) & 2803.
See 15 U.S.C. § 2802(a)(2). Section 2802(b)
permits nonrenewal of a franchise relationship if (A) the
notification requirements are met, and (B) the nonrenewal is
based on a statutorily enumerated grounds. Id. at
§ 2802(b)(1). As the franchisee, plaintiff bears the
burden of proving the “nonrenewal” of the
franchise relationship; however, the burden of proving as an
affirmative defense that any nonrenewal was authorized by the
PMPA rests on defendant PacWest Energy, LLC
(“PacWest”), as the franchisor. See id.
at § 2805(c). In connection with its motion for summary
judgment, PacWest also bears the burden of demonstrating the
absence of any genuine dispute of material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
PacWest has failed to do so. The terms “fail to
renew” and “nonrenewal” are statutorily
defined, and for purposes of this matter, mean “a
failure to reinstate, continue, or extend the franchise
relationship . . . at the conclusion of the term, or on the
expiration date, stated in the relevant franchise.”
See id. at § 2801(14). In light of
PacWest's state court lawsuit against plaintiff, alleging
that the lease has expired and not been renewed, and seeking
a monthly rental rate more than double the amount set forth
in the lease, see Ex. D to VanDerhoef Decl. (docket
no. 15-4), whether a nonrenewal occurred at least constitutes
a question of fact. See Meyer v. Amerada Hess Corp.,
541 F.Supp. 321 (D.N.J. 1982); Daniels v. Dilmar Oil
Co., 502 F.Supp. 178 (D.S.C. 1980).
(b) With regard to plaintiff's claim under
Washington's Gasoline Dealer Bill of Rights Act
(“GDBRA”), defendant's motion for summary
judgment on the basis of federal preemption is DENIED. The
GDBRA has no provision governing the termination or
nonrenewal of a petroleum-products franchise, and no portion
of the state statute is preempted by the PMPA. See
RCW 19.120.010-.906; see also 15 U.S.C. §
2806(a); O'Shea v. Amoco Oil Co., 886 F.2d 584,
592 (3d Cir. 1989); Bellmore v. Mobil Oil Corp., 783
F.2d 300, 304-06 (2d Cir. 1986); Lasko v. Consumers
Petroleum of Conn., Inc., 547 F.Supp. 211, 216 (D. Conn.
(c) With regard to plaintiff's claims under
Washington's Franchise Investment Protection Act
(“FIPA”) and Washington's Consumer Protection
Act (“CPA”), defendant's motion for summary
judgment is GRANTED to the extent that such claims are
premised on provisions of FIPA that are preempted.
See RCW 19.100.180(2)(i)&(j); see also
Millett v. Union Oil Co. of Cal., 24 F.3d 10 (9th Cir.
1994). To the extent, however, that plaintiff's FIPA and
CPA claims are based on “good faith” or other
non-preempted provisions, defendant's motion for summary
judgment is DENIED.
parties are DIRECTED to file a Joint Status Report within
fourteen (14) days of the date of this Minute Order
indicating when they will be prepared for trial.
Clerk is directed to send a copy of this Minute Order to all
counsel of record.
 In addition, PacWest has not
established as a matter of law that any nonrenewal was
authorized by § 2802(b). The only statutorily enumerated
ground for nonrenewal that might apply in this matter is the
parties' failure to agree to changes or additions to the
provisions of the franchise, but a franchisor may rely on
such basis only if (i) the changes or additions are
“the result of determinations made by the franchisor in
good faith and in the normal course of business, ” and
(ii) the failure to reach agreement is not the result of
“the franchisor's insistence upon such changes or
additions for the purpose of converting the leased marketing
premises to operation by employees or agents of the
franchisor for the benefit of the franchisor or otherwise
preventing the renewal of the franchise relationship.”
15 U.S.C. § 2802(b)(3)(A). To support its demand for
increased rent, PacWest asserts that the property has a fair
market value of $3.0 million, that an 8% return is standard,
and that the annual rental value is therefore $240, 000 per
year (or $20, 000 per month). Bock Decl. at ¶ 9 (docket
no. 16). PacWest has presented no evidence, however, that
this methodology for calculating rental rates has been
applied to all, or even some, other franchisees. See
Palmieri v. Mobil Oil Corp., 682 F.2d 295, 296 (2d Cir.
1982) (the PMPA “prohibits a franchisor from applying a
rental formula in a discriminatory manner”); see
also Esso Standard Oil Co. v. Dep't of Consumer
Affairs, 793 F.2d 431, 432 (1st Cir. 1986) (rent
increases must be made “in accord with established
rental formulas applied to all franchisees and not for the
purpose of selectively terminating a particular
franchisee”). In contrast, plaintiff has offered a
chain of emails involving officers and employees of PacWest,
its parent company (Jacksons Food Stores, Inc.), and its
affiliate (Jackson Energy Co., also known as Jackson Oil
Company), evidencing an intent, formulated long before the
lease expired, to take over operation of the Lander Street
Station. See Ex. D to Bleau Decl. (docket no. 18-4).
Drawing all inferences in favor of plaintiff, as the
nonmoving party, see Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986), the Court concludes that
whether the proposed rent increase was in “good
faith” and “the normal course of business”
or for purposes of “converting the leased marketing
premises to operation” by PacWest or its parent company
or affiliates constitutes a factual question precluding
summary judgment. In light of this ruling, plaintiff's
related objections to the evidence submitted by PacWest,
docket no. 21, are STRICKEN as moot.
 PacWest's reliance on
Mac's Shell Serv., Inc. v. Shell Oil Prods. Co.,
559 U.S. 175 (2010), and Al's Serv. Ctr. v. BP Prods.
N. Am., Inc., 599 F.3d 720 (7th Cir. 2010), is
misplaced. In Mac's Shell, the Supreme Court
defined constructive termination, not constructive
nonrenewal, of a franchise relationship; the
franchisees in Mac's Shell were not allowed to
proceed on their constructive nonrenewal claim
because they had accepted and executed renewal agreements.
See 559 U.S. at 182-95. In contrast, plaintiff in
this litigation has persistently refused to enter into a new
lease or franchise containing the terms proposed by PacWest.
Al's Serv. similarly involves constructive
termination, not nonrenewal, of a franchise
relationship, and it is factually ...