Monday, January 23, 2012

Gasoline Franchisor Could Have Violated PMPA’s Notice, Delivery Requirements

This posting was written by Pete Reap, Editor of CCH Business Franchise Guide.

A gasoline station franchisor could have violated the Petroleum Marketing Practices Act (PMPA) by terminating its relationship with a franchisee without delivering the notice in the prescribed manner and 90 days prior to termination, a federal district court in Detroit has ruled. Contrary to the franchisor’s claims, the asserted violations of the PMPA were timely under the Act’s statute of limitations.

Method of Delivery

The PMPA required delivery of a notice of termination via certified mail or personal delivery to the franchisee. The franchisor argued that it provided the required notice and satisfied all delivery requirements, pointing to a letter it sent the franchisee.

Although the letter appeared to satisfy the PMPA’s content requirements and displayed the words "via certified U.S. mail, return receipt requested," this did not establish that the letter was actually delivered to the franchisee personally or sent via certified mail, the court determined.

The franchisee claimed that it never received the termination notice, nor did its receiver. For purposes of the franchisor’s motion to dismiss, the court was required to accept the franchisee’s claim as true.

Because the pleadings did not establish that the franchisee received the notice of termination as required by the Act, the claim for violation of the Act’s 90 days’ notice requirement also could not be dismissed.

Statute of Limitations

The two claims were brought within the PMPA’s one-year statute of limitations, the court held. The statute required a franchisee to bring its claim within one year of the later of: (1) the date of termination or (2) the date the franchisor failed to comply with the statute’s requirements.

The notice of termination was allegedly mailed June 20, 2010, and the franchise was terminated September 30, 2010. The franchisee filed its PMPA claims on June 29, 2011.

The decision is Marathon Petroleum Co. v. Future Fuels of America, CCH Business Franchise Guide ¶14,751.

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