are also the initial reasons specified by Getty in answer to the plaintiff's interrogatory seeking Getty's grounds for termination. Id., Ex. 1; Answer to Interrogatory 8, at 4.
Nearly four years later, Palombi filed this action. Palombi's sole surviving claim at this stage of the litigation is that the gasoline station lease involved here constituted a franchise agreement and that Getty's termination of Palombi's franchise did not comply with the principles established by the Supreme Court of Pennsylvania in Atlantic Richfield Co. v. Razumic, 480 Pa. 366, 390 A.2d 736 (1978).
Like the instant case, Razumic involved the termination of a service station "lease" by the leasing oil company. The parties had signed what was captioned a "DEALER LEASE," authorizing the lessee to operate a service station for a term of three years, subject to the right of the lessee to terminate the lease on any anniversary date by giving 60 days' advance written notice to the lessor. Id. at 377, 390 A.2d at 741. The agreement in Razumic, much like the agreement here, determined rent by monthly volume of gasoline sold and required the dealer to provide a certified statement containing all the information necessary to calculate the monthly rental. The agreement also did not allow the dealer to "make any additions, alterations or improvement to the leased premises nor place, alter, remove, deface, or obliterate any signs, trademarks or color arrangements appearing thereon" without the lessor's consent. Further, one of several standardized riders accompanying the "DEALER LEASE" required that the service station be operated "in such a manner as to reflect favorably on (the lessor supplier's) goodwill, trademarks and trade names." Finally, the same rider required the dealer to operate the service station 24-hours-a-day/7-days-a-week; stock a sufficient inventory of tires, batteries and accessories; provide adequate lighting; and, "maintain adequate and sufficient attendants." Id. at 374-376, 390 A.2d at 740-741.
The Razumic court held that such an agreement established a franchise relationship between the parties. Id. at 374, 390 A.2d at 740. That court noted that in such a relationship the franchisee benefits from the goodwill associated with the franchisor's trademark and products. However, as the court also noted, the continued value of that goodwill is heavily dependent upon the quality of the franchisee's service delivered in the name of the franchisor. The court reasoned that the investments necessarily undertaken justify the franchisee's expectation that those investments "will not be destroyed as a result of (the franchisor's) arbitrary decision to terminate their franchise relationship." Id. at 378, 390 A.2d at 742. Therefore, the Pennsylvania Supreme Court held that, ["consistent] with these reasonable expectations, and (a franchisor's) obligation to deal with its franchisees in good faith and in a commercially reasonable manner, (a franchisor) cannot arbitrarily sever its franchise relationship." Id. (emphasis added).
The agreement involved in this case clearly contemplates a franchise relationship. As our recitation of the facts should indicate, the agreement here contains substantially the same provisions as the agreement involved in Razumic.
Getty argues, however, that Palombi's termination was not arbitrary but was based, at least in part, upon Palombi's price-gouging conviction. In answer, Palombi contends that under Razumic a termination must be found to be reasonable under all the circumstances. Since the Court must be apprised of all the facts, Palombi argues, summary judgment is inappropriate.
The Court rejects Palombi's interpretation of Razumic. The significant language in Razumic, quoted earlier, declares only that there is a duty upon the franchisor not to act arbitrarily.
The Court interprets this language to mean that, if the franchisor can show at least one legally sufficient reason to terminate, the termination is valid under Razumic.
The law could not reasonably be otherwise. A rule to the contrary would require courts to reexamine the reasonableness of an exercise of business judgment. Razumic seeks only to ensure that some sufficient reason exists for the termination. It does not guarantee every dealer a right to what would amount to de novo review.
The Court turns then to the legal sufficiency of Getty's proffered ground for termination. Certainly there can be few more compelling justifications for terminating a service station franchise than the indictment and conviction of the franchisee for price-gouging. Through trademarks and advertising, the consumer comes to link supplier and dealer. When the dealer is convicted of price-gouging, the suggestion of fraud necessarily taints the supplier's reputation. That such a charge and conviction would support a dealer's termination seems indisputable.
The Court finds additional support for this holding in the Pennsylvania Gasoline Act, Pa.Stat.Ann. tit. 73, §§ 202-1 et seq. (Purdon Supp.1980). In doing so, the court follows the example of the court in Razumic. Although the provisions of the Act were not expressly applicable to the agreement in Razumic,
the Razumic court relied upon it as an embodiment of "sound and beneficial legislative judgments which reflect both the expectations and obligations inherent in this franchise relationship." 480 Pa. at 380, 390 A.2d at 743. Since the Act prohibits suppliers of petroleum products from terminating service station operators unless the supplier acts for "one of" nine specified reasons, the Razumic court concluded that the Act supported the view that a franchise termination could not be arbitrary.
The parties agree, and this Court concurs, that the Act is also not directly applicable here. Nevertheless, the Act lends support for this Court's decision.
First, the Act does not require that the termination be found to be reasonable under all the circumstances. It is enough that the termination be based upon "one of" the enumerated reasons. Thus, the Act supports this Court's view of Razumic that a termination is permissible if there is one commercially reasonable basis for it.
Further, the Act's enumerated reasons include two which comprehend the facts of this case:
(8) Failure by the lessee dealer to comply with Federal, State or local laws or regulations which are related to the operation of the gasoline service station business and which may affect the relationship between the lessor supplier and the lessee dealer and such failure to comply therewith has or may have an adverse effect on the lessor supplier.