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Westfield Centre Service Inc. v. Cities Service Oil Co.

Decided: February 4, 1980.

WESTFIELD CENTRE SERVICE, INC., A CORPORATION OF THE STATE OF NEW JERSEY AND JAMES GALLIGAN, INDIVIDUALLY AND AS PRESIDENT OF WESTFIELD CENTRE SERVICE, INC., PLAINTIFFS-RESPONDENTS,
v.
CITIES SERVICE OIL COMPANY, A CORPORATION OF THE STATE OF DELAWARE AUTHORIZED TO DO BUSINESS IN NEW JERSEY, DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Chancery Division, Union County, whose opinions are reported at 158 N.J. Super. 455 (1978) and 162 N.J. Super. 114 (1978).

Matthews, Ard and Polow.

Per Curiam

Notwithstanding the voluminous trial record and the complex legal and factual issues which generated two reported opinions by the trial judge, we are ultimately concerned on appeal only with the propriety of the award of counsel fees in favor of plaintiff and the amount thereof.

The original controversy involved defendant Cities Service's attempt to terminate the gasoline dealership franchise held by plaintiff Westfield Centre Service Inc. (Westfield)*fn1 on a service station which plaintiff-franchisee leased from defendant-franchisor. The avowed objective sought to be attained by Cities Service in its refusal to renew plaintiff's franchise was the sale of the premises in connection with an alleged general reduction in its overall retail outlet density as part of a new national

marketing strategy. The background and pivotal factual considerations are carefully set forth and analyzed by the trial judge in the reported decisions, Westfield Centre Serv., Inc. v. Cities Serv. Oil Co. , 158 N.J. Super. 455 (Ch.Div.1978), and 162 N.J. Super. 114 (Ch.Div.1978). Hence, the details of the controversy between the parties need not be reiterated here except as essential to development of this opinion.

Westfield purchased the service station in 1973 and operated it continuously until its business was discontinued in July 1977. In June 1975 Cities Service had advised plaintiff, its tenant-franchisee, that the gas station property was going to be sold and that plaintiff could purchase the premises for $259,000. Counsel for Westfield responded that any such sale would violate the New Jersey Franchise Practices Act, N.J.S.A. 56:10-1 et seq. , but on January 22, 1976 plaintiff was notified that the lease and franchise would not be renewed.

On April 13, 1976 Westfield filed a complaint in the Chancery Division under the Franchise Practices Act seeking a restraint against the termination threatened by Cities Service. The matter was removed to the federal court where, on April 28, 1976, a temporary restraining order was issued preventing termination of the lease during pendency of the action. However, on May 24, 1976 the complaint was dismissed without prejudice on a technical pleading error. The Federal District Court judge commented that the matter would be more appropriate for the state court, and an amended complaint was then filed in the Chancery Division on May 26, 1976.

On June 18, 1976 the Chancery Division issued an interlocutory injunction restraining sale of the premises and termination of plaintiff's franchise. Ultimately, plaintiff's demands included not only a permanent injunction against interference with the lease and the operation of its franchise but also damages, counsel fees and costs. However, on or about July 31, 1977, before the matter went to trial, plaintiff's business operations

ceased, according to the findings of the trial judge, "for reasons unrelated to any actions by defendant." Hence, the underlying basis for imposition of interlocutory restraints no longer existed and an order vacating the preliminary injunction was entered on August 5, 1977.

Thereafter the complaint was again amended to demand damages for financial reverses suffered as a result of defendant's allegedly improper behavior. The trial commenced on September 29, 1977 and continued for several weeks thereafter. In a comprehensive reported opinion dated March 6, 1978, 158 N.J. Super. 455, the judge upheld the validity of the Franchise Practices Act but ruled that the business reverses were unrelated to any activity of defendant and that Westfield had recouped its original investment. Hence, damage claims on those grounds were rejected. Demands for injunctive relief and for compensatory damages for unjust enrichment were also dismissed.

Nonetheless, based upon a finding that the attempted termination of the franchise in order to sell the property was a violation of the Franchise Practices Act and that the act would have been violated but for the temporary injunction, there was an award of counsel fees and costs in favor of plaintiff's counsel. The second reported decision, dated June 2, 1978, 162 N.J. Super. 114, deals with the constitutionality of the counsel fee provision of N.J.S.A. 56:10-10 and the award of fees to plaintiff's ...


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