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Bp Products North America, Inc v. Hillsideservice

September 14, 2011


The opinion of the court was delivered by: William J. Martini, U.S.D.J.



These matters come before the Court on motions for summary judgment filed in both of the above-captioned cases. Although the cases have not been formally consolidated, they are factually related, and all of the motions for summary judgment ask this Court to resolve the same legal question: whether a franchisor violates the New Jersey Franchise Practices Act, N.J.S.A. § 56:10-1, et seq., ("NJFPA" or the "Act") by failing to renew a franchise agreement that contains no express right of renewal. For the reasons stated below, this Court answers that question in the affirmative. The Court will therefore grant summary judgment for the plaintiffs in Civil Action Number 9-5143 (the "Alboyacian Case") and the defendants in Civil Action Number 9-4210 (the "Hillside Case") (collectively, the "Franchisees").

I.Factual and Procedural Background

BP Products North America, Inc. ("BP") is a refiner and marketer of gasoline and other petroleum products. The Franchisees operate BP service stations throughout New Jersey pursuant to the Commissioner Marketer Agreement ("CMA"). This Court has previously recognized that the CMA creates a legal franchise under the NJFPA between BP and the signatory, see, e.g., Sarwari v. BP Products North America, Inc., 2007 WL 1118344 (D.N.J. Apr. 9, 2007), and that issue is not contended in either of the above-captioned cases. Under the CMA, a franchisee does not purchase the BP fuel they dispense; rather, BP provides the fuel and the franchisee earns a commission on each gallon sold. In the present cases, the Franchisees also leased their respective service stations from BP pursuant to Lease Agreements. The CMA at issue in this case explicitly provides that the agreement lasts for a term of four years, and also explicitly provides that the franchisee shall have the option of renewing the agreement for two additional terms of four years each.

In August 2009, BP informed the Franchisees that it intended to withdraw from the CMAs at the expiration of the term of each individual agreement. As an alternative, BP offered all of the Franchisees the opportunity to purchase their service stations and act as dealers who purchased fuel products directly from BP and then sold them to customers -- an arrangement BP refers to as Dealer Owned Dealer Operated stations. BP also offered all of the Franchisees the alternative of becoming Company Owned Dealer Operated stations, where BP would still own the service station property. Under either alternative, the Franchisees and BP would likely no longer be operating under a franchise for the purposes of the NJFPA. See Sarwari v. BP Products North America, Inc., No. 06-2976, slip op. (D.N.J. filed Sept. 15, 2006) (preliminarily enjoining BP from changing nature of business arrangement with New Jersey franchisees).

On August 18, 2009, BP filed a complaint against Hillside Service, Inc., Mike Yigitkuri, and Vinod Oberoi (the "Hillside Defendants"), seeking a declaration from this Court that it has no obligation to continue business with the Hillside Defendants, that it is not obligated to renew the underlying CMAs, and that it is not responsible for any claimed lost value of the Hillside Defendants' business (the "Hillside Action"). On October 7, 2009, Ara Alboyacian, Mike Agolia, Ared Anac, Hagop Baga, Edward Balloutine, David Chong, Sevan Curukcu, Alfred Deppe, Joseph Klein, Raffi Korogluyan, Paul Lopes, Mary Lou Lopes, Abraham Manjikian, Imad Saleh, Walter Steele, Jayed Suddal, Aret Tokatlioglu, Richard Walter, Gregory Yigitkurt, Mike Yigitkurt, and Sahin Yigitkurt, (the "Alboyacian Plaintiffs") filed a complaint against BP seeking, among other relief, a declaration that BP's failure to renew the underlying CMAs would constitute a violation of the NJFPA (the "Alboyacian Action"). The parties subsequently moved for summary judgment on the issue in both cases.

II.Legal Analysis

None of the parties have challenged this Court's subject matter jurisdiction over these actions, which is proper under 28 U.S.C. § 1332.

A. Summary Judgment Standard

Summary judgment is appropriate "if the pleadings, the discovery [including, depositions, answers to interrogatories, and admissions on file] and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court considers all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Andreoli v. Gates, 482 F.2d 641, 647 (3d Cir. 2007). Where there are no genuine issues of material fact, the Court may properly resolve any remaining questions of law on summary judgment. See, e.g., Ingram v. County of Bucks, 144 F.3d 265, 267 (3d Cir. 1998).


There are no genuine issues of material fact regarding the questions of law raised in the motions for summary judgment. Rather, the motions hinge entirely on this Court's interpretation of whether BP's proposed non-renewal violates the NJFPA. The NJFPA, by its plain terms, prohibits a franchisor from failing to renew a franchise agreement without good cause:

It shall be a violation of this act for a franchisor to terminate, cancel or fail to renew a franchise without good cause. For the purposes of this act, good cause for terminating, canceling, or failing to renew a franchise shall be limited to failure by the franchisee to ...

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