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Nevada West Petroleum, LLC v. BP West Coast Products, LLC

United States District Court, D. Nevada

September 20, 2017

NEVADA WEST PETROLEUM, LLC, et al., Plaintiffs,
v.
BP WEST COAST PRODUCTS, LLC, et al., Defendants.

          ORDER (1) GRANTING THE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON LIABILITY, (2) DENYING THE DEFENDANTS' MOTION ON DAMAGES AS MOOT, AND (3) DENYING PLAINTIFF NEVADA WEST PETROLEUM, LLC'S MOTION FOR SUMMARY JUDGMENT (ECF NOS. 72, 73, 76)

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE.

         The plaintiffs are franchisees operating ARCO “ampm” brand gas stations at various locations in Las Vegas. The plaintiffs allege the defendants (the franchisors) engaged in various acts to undermine the franchise relationship, ultimately resulting in the plaintiffs selling their gas stations and terminating the construction of a proposed gas station. The plaintiffs assert the defendants (1) violated the Petroleum Marketing Practices Act (PMPA) by constructively terminating the franchises, (2) breached the franchise agreements, (3) breached the covenant of good faith and fair dealing implied in the franchise agreements, and (4) engaged in a civil conspiracy to force the plaintiffs out of business.

         The defendants move for summary judgment on each of the plaintiffs' claims, arguing the plaintiffs cannot show liability or damages. The plaintiffs oppose, and plaintiff Nevada West Petroleum, LLC (Nevada West) moves for summary judgment in its favor on its PMPA claim regarding the termination of the planned gas station. The parties are familiar with, and generally agree on, the facts in this case so I will not repeat them here except where necessary. I grant the defendants' motion on liability, deny their motion on damages as moot, and deny Nevada West's motion.

         I. ANALYSIS

         Summary judgment is appropriate if the movant shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). I view the evidence and reasonable inferences in the light most favorable to the non-moving party. James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008).

         A. PMPA

         The PMPA “establishes minimum federal standards governing the termination and nonrenewal of petroleum franchises.” Mac's Shell Serv., Inc. v. Shell Oil Prod. Co. LLC, 559 U.S. 175, 178 (2010). Under the PMPA, “a franchisor may terminate a franchise during the term stated in the franchise agreement . . . only if the franchisor provides written notice and takes the action in question for a reason specifically recognized in the statute.” Id. (internal quotation marks omitted, citing 15 U.S.C. §§ 2802, 2804). “If a franchisor fails to comply with the requirements of section 2802, 2803, or 2807 of [the Act], the franchisee may maintain a civil action against such franchisor.” 15 U.S.C. § 2805(a).

         Here, the defendants did not terminate the franchises. Rather, the plaintiffs assigned their operating gas stations to third parties and plaintiff Nevada West abandoned the proposed gas station on Boulder Highway. See ECF Nos. 44-47, 50. The plaintiffs thus rely on a constructive termination theory, arguing that the defendants took various actions to force them out of business.

         Neither the Supreme Court nor the Court of Appeals for the Ninth Circuit have held that a PMPA claim can be based on a constructive termination theory. See Mac's Shell Serv., Inc., 559 U.S. at 182 n.4 (leaving the question “for another day”); Portland 76 Auto/Truck Plaza, Inc. v. Union Oil Co. of Cal., 153 F.3d 938, 948 (9th Cir. 1998) (assuming without deciding “that constructive termination may give rise to a claim under the Act”) (citing Little Oil Co. v. Atl. Richfield Co., 852 F.2d 441, 445 (9th Cir. 1988)). However, if such a claim exists, the franchisee must show the franchisor's conduct “forced an end to the franchise.” Mac's Shell Serv., Inc., 559 U.S. at 182; 15 U.S.C. § 2805(c) (providing that in a civil suit the “franchisee shall have the burden of proving the termination of the franchise or the nonrenewal of the franchise relationship”). Further, the franchisee must show the franchisor's conduct either breached the “franchise obligations” or violated state law. Portland 76 Auto/Truck Plaza, Inc., 153 F.3d at 948; see also Apr. Mktg. & Distrib. Corp. v. Diamond Shamrock Ref. & Mktg. Co., 103 F.3d 28, 30 (5th Cir. 1997) (“Those courts that have recognized constructive termination under the PMPA have indicated that there is no constructive termination absent a breach of the franchise.”).

         Even assuming a constructive termination claim exists under the PMPA, and viewing the facts in the light most favorable to the plaintiffs, no reasonable jury could find in favor of the plaintiffs. The plaintiffs have not identified a breach of the franchise agreements and they concede the defendants literally complied with the franchise agreements' terms. See ECF Nos. 72-2 at 13, 18-20, 27-29, 59; 72-2 at 16; 82 at 23 (“It may be true that the Defendants did not violate any particular term of the franchise agreements.”). As discussed in more detail below, the plaintiffs also have not raised an issue of fact that the defendants violated the covenant of good faith and fair dealing implied in the franchise agreements. Nor have they asserted or shown a violation of state law. Consequently, I grant the defendants' summary judgment motion and deny Nevada West's motion on this claim.

         B. Breach of Contract[1]

         Under Nevada law, a plaintiff asserting a breach of contract claim must “show (1) the existence of a valid contract, (2) a breach by the defendant, and (3) damage as a result of the breach.” Saini v. Int'l Game Tech., 434 F.Supp.2d 913, 920-21 (D. Nev. 2006) (citing Richardson v. Jones, 1 Nev. 405, 405 (1865)).

         The defendants are entitled to summary judgment on this claim because, as discussed above, the plaintiffs have not identified a breach and they concede the defendants literally complied with the terms of the franchise agreements. To the extent this claim is based on the alleged modification of the Retalix Agreements to reduce the price and allow for monthly payments for the point-of-sale system and related equipment, the defendants assert the claim is barred by the statute of frauds. There is no evidence of a writing memorializing this alleged modification of the purchase price, which was at least $18, 000 (by the plaintiffs' allegation of a reduced price). See Nev. Rev. Stat. ยง 104.2201; ECF Nos. 72-2 at 50, 62-63; ...


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