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ISAAC JOHNSON v. MOBIL OIL CORPORATION AND D.G. HOTSENPILLER (05/08/87)

filed: May 8, 1987.

ISAAC JOHNSON, APPELLANT,
v.
MOBIL OIL CORPORATION AND D.G. HOTSENPILLER



Appeal from the Orders May 5, 1986 & December 9, 1985 in the Court of Common Pleas of Chester County, No. 118 August Term, 1982.

COUNSEL

John L. Lachall, West Chester, for appellant.

Michael K. Tillery, Philadelphia, for appellees.

Cirillo, President Judge, and Rowley, and Beck, JJ.

Author: Cirillo

[ 364 Pa. Super. Page 277]

Isaac Johnson filed a three count complaint in the Court of Common Pleas, Chester County, against Mobil Oil Corporation (Mobil) and D.G. Hotsenpiller (Hotsenpiller), an employee of Mobil. This is an appeal from an order granting summary judgment and partial summary judgment*fn1 against appellant on Counts I and II, and from dismissal of Count III for lack of subject matter jurisdiction based on the Federal Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801-2806.*fn2

In July, 1981, appellee Mobil Oil was solicited by appellant Johnson to become an independent dealer-operator for Mobil Oil. Mobil urged him to sign a trial franchise agreement,*fn3

[ 364 Pa. Super. Page 278]

    a special type of lease created under the PMPA, which would run for a period of one year. Mr. Johnson claims that he was assured by appellee's agents that if he increased gallonage to 50,000 and otherwise performed his duties, his lease would be renewed for at least three years. One month later, he was again assured that if he performed satisfactorily his agreement would be renewed for three additional years. In response to his questions as to whether Mobil would in fact exercise its right to non-renewal, Mr. Johnson was told by Mobil representatives that "there was a one year lease with provisions for continuing the three years," and that "[i]f you do a good job, you know, you're in. We don't throw people out who are doing a good job."

Appellant also asserts that he was told by Mobil's representatives that the underlying lease gave Mobil a right of first refusal in the event the owner decided to sell, and that Mobil would exercise this right if given the opportunity.

[ 364 Pa. Super. Page 279]

However, appellant contends that he was not notified nor could he have discovered that: (1) the lease between Mobil and Mr. Pilotti contained a provision whereby either party could terminate upon one year's notice; (2) Mobil knew Mr. Pilotti was attempting to sell the property; (3) Mobil had refused Mr. Pilotti's offer of sale three months earlier; (4) Mobil had been notified of an offer by Exxon to purchase the property and (5) Mobil had already decided not to exercise their option to buy before executing the agreement with appellant.

Mr. Johnson executed what was purportedly a trial franchise agreement with Mobil on August 18, 1981 for a period of one year. At that time he was told that a third party, Mr. Pilotti, owned the property where the service station was located and that Mobil's lease with Mr. Pilotti (the underlying lease) would not expire until May 31, 1986. Appellant claims his agreement with Mobil confirmed the May 31, 1986 expiration date. Based on the representations, Mr. Johnson claims he was promised a certain future as a Mobil dealer.

On March 24, 1982, appellant was notified of the non-renewal of his trial franchise agreement and that his lease would expire as of August 28, 1982. The reason given for the termination was the expiration of Mobil's underlying lease as of September 30, 1982. Both parties agree that appellant increased sales and performed his other duties in an exceptional way.

Count I of appellant's complaint alleged that Mobil breached the trial franchise agreement. Count II alleged that both appellees fraudulently induced appellant to enter into the agreement.

Appellant claims he was the victim of fraud and misrepresentation in that he was induced to sign an agreement which misstated the expiration date of the underlying lease as May 31, 1986, rather than September of 1982. The trial court granted summary judgment in favor of Mobil on these state law claims, finding them to be preempted by the PMPA. Count III alleged that appellees violated the PMPA

[ 364 Pa. Super. Page 280]

    by failing to renew the franchise agreement. The trial court dismissed Count III for lack of subject matter jurisdiction, holding that Congress vested exclusive jurisdiction in the federal courts over claims brought under the PMPA. This appeal followed.

Mr. Johnson raises two issues on appeal: (1) did the trial court err when it concluded that his state law claims are preempted by federal law -- namely the Petroleum Marketing Practices Act -- and when it further concluded that these claims must be presented under the Petroleum Marketing Practices Act rather than under the pure state law counts of his complaint; and (2) did the trial court err when it concluded that Count III of the complaint must be dismissed for lack of subject-matter jurisdiction because the United States Congress intended that the jurisdiction of claims brought under the Petroleum Marketing Practices Act rests exclusively with the federal courts.*fn4

I

Mobil filed a motion for summary judgment averring that all of Mr. Johnson's state law claims as set forth in Counts I and II were preempted by the specific provisions of the PMPA. The motion was granted. As a result, the hearing judge never reached the merits of the state law issues.

The PMPA is a complex piece of legislation which was enacted in 1978 in recognitition of the disparity of bargaining power between franchisor and franchisee in the motor fuel industry. The Act was intended by Congress to protect independent gasoline marketers who lacked the bargaining position to override distributor decisions to discontinue franchise agreements. In addition, the Act was intended to provide a uniform set of rules. See Bellmore v. Mobil Oil Corp., 524 F.Supp. 850 (D.Conn.1981); Munno v. Amoco Oil Corp., 488 F.Supp. 1114 (D.Conn.1980); Marini v. Atlantic Richfield Co., 475 F.Supp. 142 (D.N.J.1979).

[ 364 Pa. Super. Page 281]

"Title I of the PMPA prohibits termination or non-renewal of any franchise relationship except on the basis of specifically enumerated grounds and upon compliance with certain notification requirements." Esso Standard Oil Co. v. Dep't of Consumer Affairs, 793 F.2d 431, 432 (1st Cir.1986); 15 U.S.C. §§ 2802-2804. The PMPA defines "franchise relationship" as "the respective motor fuel marketing or distribution obligations and responsibilities of a franchisor and a franchisee which result from the marketing of motor fuel under a franchise." 15 U.S.C. § 2801(2). There is no dispute that a franchise relationship was created between appellant and Mobil. However, Mr. Johnson contends that his suit does not involve termination and non-renewal of a franchise relationship. He contends it deals only with the common law claims of fraud and misrepresentation. Specifically, he asserts that he was fraudulently induced to enter into the agreement and that Mobil ...


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