Opinion
Civil Action No. 03-30169-KPN.
August 31, 2005
MEMORANDUM AND ORDER WITH REGARD TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Document No. 82)
O'Connell Oil Associates ("Defendant") has moved for summary judgment on all claims and counterclaims involving the remaining plaintiffs, Home Enterprise, Inc. ("Home"), Riverdale Shell, Inc. ("Riverdale") and its president Jawad Shreidi ("Shreidi") (see n. 2, infra), Sullivan Shell ("Sullivan"), and Westfield Food Mart, Inc. ("Westfield") (together "Plaintiffs"). The parties have consented to the jurisdiction of this court. See 28 U.S.C. § 636(c).
The other two plaintiffs, Bob's Shell, Inc. ("Bob's") and WFCS, Inc. d/b/a Shell Food Mart ("WFCS"), settled their claims before Defendant's motion was ripe.
For the reasons described below, the court will allow Defendant's motion for summary judgment, but in part only. In essence, the court will dismiss Plaintiffs' claims alleging fraud and violations of Massachusetts' consumer protection statute, Mass. Gen. L. ch. 93A ("chapter 93A") and also enter judgment in Defendant's favor on liability with regard to its counterclaims. In all other respects, however, Defendant's motion will be denied.
I. STANDARD OF REVIEW
"Summary judgment is warranted `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Uncle Henry's, Inc. v. Plaut Consulting Co., 399 F.3d 33, 41 (1st Cir. 2005) (quoting Fed.R.Civ.P. 56(c)). "An issue is `genuine' for purposes of summary judgment if the evidence is such that a reasonable jury could return a verdict for the nonmoving party, and a `material fact' is one which might affect the outcome of the suit under the governing law." Carcieri v. Norton, 398 F.3d 22, 29 (1st Cir. 2005) (citations and further internal quotation marks omitted).II. BACKGROUND
For summary judgment purposes the following background, supported by documents and affidavits, is largely undisputed and stated in a light most favorable to Plaintiffs, the non-moving parties. See Uncle Henry's, 399 F.3d at 41. Plaintiffs were gasoline station franchisees of Defendant, who was also Plaintiffs' landlord-supplier. In addition, Defendant independently operates other gas stations in Hampden and Hampshire Counties (a/k/a "the Springfield Market"), including some that allegedly competed with Plaintiffs.
The parties' relationship began on November 26, 1996, when Shell Oil Company ("Shell") assigned its interests as Plaintiffs' landlord-supplier to Defendant. (Document No. 96, "Plaintiffs' Brief" at 3; Document No. 86, Defendant's Mem. Supp. Summ J. "Defendant's Brief" at 6.) After Plaintiffs' individual franchise contracts with Shell expired, they signed new agreements with Defendant which were very similar to the original contracts. (Defendant's Brief at 6.) In February of 2001, however, Defendant "replaced" one discount program with two others. ( Id.) Plaintiffs thereafter consistently lost business and fell behind on payments to Defendant. ( Id. at 11.) Eventually, Plaintiffs each individually forfeited their premises to Defendant.
Riverdale is an exception because its president, Shreidi, personally entered into the contract. This discrepancy formed the basis of Riverdale's motion to correct misjoinder of party. For reasons stated in a separate memorandum and order issued this day, the court has allowed Riverdale's motion in part, i.e., by adding Shreidi as a party plaintiff, but not eliminating Riverdale.
Plaintiffs filed this action on June 27, 2003, and simultaneously moved for a preliminary injunction. Given that the motion had not been fully articulated, the court held it in abeyance and set a discovery schedule. After numerous delays by Plaintiffs, Defendant eventually moved to compel them to produce certain documents and requested sanctions pursuant to Fed.R.Civ.P. 11. After hearing, the court allowed the motion to compel but denied the request for sanctions. The court also denied Plaintiffs' motion for a preliminary injunction, having concluded that they had little likelihood of success on the merits.
In December of 2004, Plaintiffs' counsel moved to withdraw as counsel for WFCS, which the court allowed after a hearing. Subsequently, WFCS settled their action, as did Bob's. In addition, the remaining plaintiffs voluntarily dismissed their federal and state antitrust claims under 15 U.S.C. § 13(a) and Mass. Gen. L. ch. 93, §§ 4- 6. As a result, only four sets of claims presently remain: (1) breach of contract claims under section 2-305 of the Uniform Commercial Code ("UCC"), codified at
Mass. Gen. L. ch. 106, § 2-305 ("section 2-305"); (2) claims alleging breach of the implied covenant of good faith and fair dealing; (3) unfair and deceptive business practices claims arising under section 11 of chapter 93A; and (4) claims of fraud. Defendant also continues to press its counterclaims against Plaintiffs for unpaid gasoline.
The court's subject-matter jurisdiction arose from the federal antitrust claims. Although those claims have been dismissed, the court, mindful of the age of this case, has chosen to retain supplemental jurisdiction over the pendent state claims. See 28 U.S.C. § 1367(a). See also O'Connor v. Commonwealth Gas Co., 251 F.3d 262, 2727-3 (1st Cir. 2001) (noting that "[c]ourts generally decline to exercise supplemental jurisdiction over state claims if the federal predicate is dismissed early in the litigation").
III. DISCUSSION
The court will address Defendant's motion for summary judgment in the context of each of the four remaining state claims. In the end, the court will conclude that Plaintiffs' UCC and implied covenant causes of action should survive, but that Defendant should be granted summary judgment with regard to Plaintiffs' chapter 93A and fraud claims. In addition, the court, without opposition by Plaintiffs, will grant Defendant summary judgment with regard to its counterclaims, against which set-offs might be proven by Plaintiffs at trial. First, however, the court sets forth further factual findings with regard to pricing and discounts, again in a light most favorable to Plaintiffs.
A. Findings of Fact
As provided in the parties' agreements, Defendant was responsible for setting the Dealer Tank Wagon ("DTW") gasoline prices that it charged Plaintiffs. (Plaintiffs' Brief at 6.) From November 25, 1996, through February 1, 2001, Defendant charged Plaintiffs the following amounts per gallon over the "rack" ( i.e., wholesale) price: 12.65 cents for regular gasoline, 13.65 cents for plus grade, and 15.15 cents for premium grade. ( Id.) After February 1, 2001, Defendant discounted these rates by 4.5 cents. ( Id. at 13.) Defendant's profit was the mark-up amount minus transportation costs of 1.22 cents per gallon. ( Id.)
Defendant charged independent dealers different amounts ranging from 2.5 to 5 cents over the rack price, plus approximately 1.50 cents for transportation. ( Id.; Defendant's Brief at 8.) Defendant's President, Mark Sobon, told a former plaintiff that the industry standard was from 3 to 4.5 cents over the rack price. (King Dep. at 110.) Other gasoline suppliers in the Springfield Market charge roughly 1 to 3 cents over rack price, plus transportation costs. (Plaintiffs' Brief at 8, citing Deposition of Charles Shogren, Defendant's Vice-President at 104.)
In contrast, Defendant supplied gasoline to its own dealers at wholesale prices, thereby allowing them to charge lower retail prices than Plaintiffs. Indeed, Defendant's own dealers allegedly charged lower retail prices than the DTW prices Defendant charged Plaintiffs, but usually charged a "minimum" retail of 9 to 10 cents over wholesale. ( Id.) A June 2003 price survey offered by Plaintiffs indicates that Defendant's regular grade retail prices were 1.5 to 2.0 cents more than the DTW prices it charged Plaintiffs and 5.5 to 6.0 cents more for plus and premium grades. ( See Shreidi Aff. ¶¶ 11-19; Whitten Aff. ¶¶ 17-25.)
Since Defendant was Plaintiffs' landlord and supplier, both rent and price discounts affected net expenses. Three discounts provided by Defendant, however, reduced Plaintiffs' gasoline prices. First, the Variable Rent Program ("VRP") reduced Plaintiffs' rent by 4.5 cents for every gallon of gas sold during the previous month. Second, Defendant replaced the VRP in February of 2001 with a 4.5 cent-per-gallon up-front price discount. (Defendant's Brief at 8.) Third, Defendant began a Temporary Volume Allowance ("TVA") sometime later, which reduced prices from 2 to 6 cents if a plaintiff reached 95 or 100 % of sales for that month in prior years. ( Id.; Plaintiffs' Brief at 9.)
In addition, three other discounts reduced Plaintiffs' rent. First, the Twenty-Four Hour Incentive Program reduced rent by $600 if the station remained open twenty-four hours per day. Second, the Image Partnership Program reduced rent by $554 monthly if the station performed certain maintenance tasks. Third, the Temporary Rent Program froze rent at January 1, 2001 rates rather than allowing rents to increase each year as provided in Plaintiffs' leases. (Defendant's Brief at 8; Moriarty Aff. Ex. J.)
B. Analysis of Plaintiffs' Claims
1. Breach of Contract (Section 2-305)
UCC section 2-305 provides that a party setting prices in an open price contract, i.e., an agreement that allows prices to vary, must do so "in good faith." Mass. Gen. L. ch. 106, § 2-305(2). In applicable part, Official Comment 3 to this section of the UCC explains that "good faith" includes "reasonable commercial standards of fair dealing in the trade" but that "in the normal case a `posted price' or a . . . `price in effect,' `market price,' or the like satisfies the good faith requirement." Id., cmt. 3.
Section 2-305 provides, in pertinent part, as follows:
(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
Comment 3 provides in full:
Subsection (2), dealing with the situation where the price is to be fixed by one party rejects the uncommercial idea that an agreement that the seller may fix the price means that he may fix any price he may wish by the express qualification that the price so fixed must be fixed in good faith. Good faith includes observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant. (Section 2-103) But in the normal case a `posted price' or a future seller's or buyer's `given price,' `price in effect,' `market price,' or the like satisfies the good faith requirement.
The parties here agree that the prices at issue were "prices in effect." Thus, if this were a "normal case," Comment 3 presumes that the prices were set in good faith and need not have been the best available prices. See TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542, 548-49 (6th Cir. 1981); Harvey v. Fearless Farris Wholesale, Inc., 589 F.2d 451, 461 (9th Cir. 1979). Plaintiffs contend, however, that Defendant's attempt to drive its dealers out of business creates an "abnormal" situation and, as such, the good faith presumption disappears. Plaintiffs further assert that, even in a normal case, Defendant must abide by the traditional definition of good faith under section 2-103, i.e., "reasonable commercial standards of fair dealing."
Although no First Circuit or Massachusetts federal or state case has addressed good faith pricing in this context, the majority of decisions from outside the circuit appear to hold that section 2-305 only requires sellers to charge a reasonable price, thereby making irrelevant their motivation in setting prices. In this regard, Defendant relies most particularly on Shell Oil Co. v. HRN, Inc., 144 S.W.3d 429 (Tex. 2004), which held that even subjective bad faith on the part of a refiner, such as attempting to force dealers out of business, is irrelevant for purposes of section 2-305. Finding that a majority of decisions followed this view, the HRN court interpreted section 2-305 as requiring only that a seller charge "commercially reasonable" amounts unless it "used pricing to discriminate among its purchasers." Id. at 434. The court explained that the UCC's drafters intended to prevent price discrimination, not provide a remedy for every unhappy buyer which might arise from a refiner's bad faith motives. Id. at 435. The court explicitly criticized Mathis v. Exxon Corp., 302 F.3d 448 (5th Cir. 2002), upon which Plaintiffs here principally rely, which found that an attempt to drive dealers out of business could violate section 2-305 under Texas law. See HRN, 144 S.W.3d at 435.
Notwithstanding HRN, other courts have considered the manner or intent behind alleged price differentials. See, e.g., Nanakuli Paving Rock Co. v. Shell Oil Co., 664 F.2d 772, 779 (9th Cir. 1981); Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1131 (N.J. 2001). One other court indicated that its decision to grant summary judgment to a refiner might have been different "if there was evidence [the defendant] . . . tried to run plaintiffs out of business." Wayman v. Amoco Oil Co., 923 F. Supp. 1322, 1349 aff'd 145 F.3d 1347, 1350 (10th Cir. 1998). And, of course, in Mathis, the Fifth Circuit determined that "circumstantial evidence of `any lack of subjective, honesty-in-fact good faith," is sufficient to create an `abnormal' case in which the posted-price presumption no longer applies." HRN, 144 S.W.3d at 435 (quoting Mathis, 302 F. 3d at 457).
The court finds this latter line of cases persuasive. As such, the court agrees with Plaintiffs' assertion that section 2-305's purpose of preventing price discrimination should bar a supplier from trying to drive its dealers out of business, not merely remove the good faith presumption. See Wayman, 923 F. Supp. at 1349. This would appear to be true in particular where the dealers compete with the supplier's own retailers.
In addition, Comment 3, though somewhat ambiguous in its phrasing, suggests that the traditional definition of good faith applies even in normal cases. First, the comment broadly requires all merchants to set prices in good faith, quoting the UCC's standard definition of good faith (§ 2-103) as "reasonable commercial standards of fair dealing." Second, the comment presumes that prices are set in good faith only in undefined "normal" cases. To be sure, this could mean that, absent extraordinary circumstances, any price is presumed to be set in good faith. However, in the court's view, the explicit discussion of section 2-103 in Comment 3 strongly suggests that sellers must always follow reasonable commercial standards. See Roy Buckner Chevrolet, Inc. v. Cagle, 418 So.2d 878, 880 (Ala. 1982); E.S. Bills, Inc. v. Tzucanow, 700 P.2d 1280, 1286 (Cal. 1985).
Of course, a plaintiff still must show price discrimination, either directly or through improper motive, between similarly situated buyers. Here, Defendant argues, only dealer-lessees are similarly situated, for whom no comparative facts are offered by Plaintiffs, not the gasoline retailers to whom Plaintiffs wish to be compared. See HRN, 144 S.W.3d at 438 ("Evidence that different prices are available to different classes of trade is not evidence of bad faith under section 2-305") (citations omitted)). This circumscribed comparison, Defendant argues, reflects the general principle that contracts with different responsibilities justify different prices. See Tom-Lin Enters. v. Sunoco, Inc., 349 F.3d 277, 285-86 (6th Cir. 2003).
Another court has found that "the relevant comparison . . . is the prices charged by other refiners to their dealers in the relevant market." Austin v. Motiva Enters., LLC, No. 2:03-CV-0451-RDP, at *5 (N.D. Ala. Jun. 13, 2005) (emphasis in original).
Defendant's arguments to the contrary, the court finds the instant matter distinguishable from HRN. First, the case at bar involves a wholesaler supplying gasoline to its own stations, as well as independent dealers and tenant-dealers such as Plaintiffs, not a refiner selling to both wholesalers and dealers. Second, Plaintiffs have provided plausible evidence for summary judgment purposes that Defendant engaged in price discrimination and/or intended to drive them out of business. To be sure, evidence about nearby wholesalers' prices for dealer-lessees would be more persuasive than evidence focusing on Defendant's prices for independent dealers and its own stations. Nonetheless, the court believes that Plaintiffs have presented genuine issues of material fact as to their UCC claims and ought not be precluded from demonstrating at trial that the comparisons they wish to draw are apt and the evidence in support persuasive.
Of course, comparisons cannot be theoretical. In support of a section 2-305 claim, a plaintiff must provide "objective" evidence that a defendant's pricing scheme violated standard commercial practices. See Wayman, 923 F. Supp. at 1322 (D. Kan. 1996). In other words, a plaintiff must show that the defendant breached "well-established custom and usage or other objective standards of which the parties had clear notice." Nanakuli, 664 F.2d at 99 (Kennedy, J., concurring specially). Even Mathis, which supports Plaintiffs here on the law, relied heavily on both documentary evidence that the defendant planned to drive the plaintiffs out of business and expert testimony corroborating the plaintiffs' competitive disadvantage. Mathis, 302 F.3d at 452. Thus, in the least, Plaintiffs "must produce some evidence of improper motive, discriminatory pricing, or [other suppliers'] pricing practices." Yonaty v. Amerada Hess Corp., No. 304CV605FJSDEP, 2005 WL 1460411, at *5 (N.D.N.Y. Jun. 20, 2005).
This has been and may well continue to be a steep hill for Plaintiffs to climb. First, Plaintiffs' only direct evidence of improper motive is the deposition testimony of John Prickett, a former (and perhaps disgruntled) employee who "seem[ed] to remember" that Charles Shogren, Defendant's vice-president, once said "I'd like them all." (Prickett Dep. at 12.) Plaintiffs, however, also point to circumstantial evidence of bad faith, most notably, the very fact that they are out of business and had to forfeit their premises to Defendant. In addition, Plaintiffs cite Shogren's testimony that Defendant initially hired him to help expand into the Springfield Market by purchasing existing stations. (Plaintiffs' Brief at 2.) Plaintiffs maintain that, because Defendant's expansion occurred while it grew as a supplier, a trier of fact could infer that Defendant used its pricing leverage to force Plaintiffs out of business. ( Id.)
Prickett admitted that Shogren's comment was "off the cuff" and potentially a joke. ( Id.)
Although Plaintiffs' evidence is weak, the court believes it appropriate to submit it to a fact finder. The court also believes that there remains at least two other genuine issues of material fact regarding Defendant's practices and its relationship to Defendant's alleged intent to drive Plaintiffs out of business: (1) whether there was a substantial price difference between Plaintiffs and independent or Defendant-owned dealers, and (2) whether Plaintiffs genuinely competed with such independent or Defendant-owned dealers.
Granted, Defendant assert that Plaintiffs are not sufficiently similarly situated to independent or Defendant-owned dealers as to establish price discrimination. Indeed, there is no factual dispute that Defendant charged all of its dealer-lessees, i.e., Plaintiffs, the same prices. Moreover, Defendant argues, it could not "charge" its own stations the same prices it charged Plaintiffs since it supplied its dealers directly. At most, Defendant asserts, it might be obligated to charge similar prices to Plaintiffs as to independent dealers, but that still would need to factor in discounts, transportation costs, and other genuine differences between these two classes of retailers.
With regard to this latter point, it does appear from the record, Defendant's argument to the contrary, that Defendant charged Plaintiffs substantially higher prices than it charged independent dealers. For example, Defendant charged Plaintiffs 12.65, 13.65 and 15.15 cents over wholesale before its 2001 discount shift, when these figures dropped by 4.5 cents to 8.15, 9.15 and 10.65. In contrast, Defendant charged independent dealers 2 to 4.5 cents, plus roughly 1.5 cents transportation costs, similar to the 1.22 cents included in Plaintiffs' prices. To be sure, as Defendant argues, these two situations are arguably distinct because independent dealers might have greater financial risks from ownership than Plaintiffs as lessees. However, the rent paid by Plaintiffs to Defendant might well have offset the independent dealers' ownership risks. These facts are undeveloped and remain at issue.
Defendant's further contention that the discounts it provided Plaintiffs might justify higher base prices is, for present purposes, beside the point. The only relevant discount appears to be the TVA, which reduced prices 2 to 6 cents if Plaintiffs reached 95 or 100% of sales in the same month as in the prior year. Although Plaintiffs qualified for the TVA, they maintain that they often had to slash prices to unprofitable levels in order to satisfy the quota. In any event, the TVA's impact is ambiguous; the parties have cited sample months only and have not shown precise discounts or price reductions for each plaintiff.
The other discounts were less significant than the TVA. For example, the Temporary Rent Program kept Plaintiffs' rents from increasing each year. The parties fail to explain, however, why the rent freeze was implemented, i.e., was it a "charity" discount or was it an implicit admission that the base rent was too high?. The Image Partnership Program, on the other hand, reduced rent by $554 in exchange for certain maintenance not required for independent dealers, which apparently cost more than the discount. The Twenty-Four Hour Incentive Program reduced rent by $600, but cost more money to implement in additional wages.
Plaintiffs have also proffered evidence that they paid higher prices than Defendant's own stations, which received gas at wholesale prices. Defendant's prices ranged from a "minimum" of 9-10 cents over wholesale but never below 6 cents. (Shogren Dep. at 111.) These figures, apparently, would leave Plaintiffs, even with discounts, no leeway to set competitive prices and still cover expenses. Granted, Plaintiffs fail to precisely explain why Defendant's "built-in price advantage" is unlawful per se. In the court's view, however, the evidence proffered by Plaintiffs could demonstrate to a jury that Defendant made it impossible for Plaintiffs to survive and that it set prices in an attempt to drive them out of business. Thus, while there may not be a fiduciary duty to protect one's dealer-lessees, wielding contractual leverage to eliminate competitors surely could violate good faith pricing.
Defendant, on the other hand, cites cases from outside this jurisdiction purportedly justifying its actions. See, e.g., Au Rustproofing Ctr., Inc. v. Gulf Oil Corp., 755 F.2d 1231, 1236 (6th Cir. 1985) (supplier who charged plaintiff more than other stations did not breach section 2-305); Havird Oil Co. v. Marathon Oil Co., 149 F.3d 283, 291 (4th Cir. 1998) (competitor-suppliers who "[sold] gasoline at retail for less than [plaintiff] could obtain gasoline at wholesale" did not violate section 2-305). Defendant also argues that legislative history of the Petroleum Marketing Practices Act ("PMPA") contemplates and approves of built-in supplier advantages. However, the cases Defendant cites are distinguishable and the legislative history is ambiguous, merely observing that the Robinson-Patman Act "does not clearly prohibit" price discrimination between a supplier's own retailers and dealers. S. Rep. No. 95-731, reprinted in 1978 U.S.C.C.A.N. 873, 881.
To sum up, Plaintiffs' evidence with regard to a good faith violation, although weak, is sufficient to get past summary judgment. In effect, a reasonable jury could conclude that Defendant's price scheme violated section 2-305. Accordingly, Defendant's motion with respect to the UCC claims will be denied.
2. Implied Covenant of Good Faith and Fair Dealing
The court reaches the same conclusion with respect to Plaintiffs' other "good faith" claims, i.e., the causes of action alleging breach of the implied covenant of good faith and fair dealing. Every contract contains an implied covenant of good faith and fair dealing to ensure "that neither party shall do anything that . . . destroy[s] or injur[es] the rights of the other party to receive the fruits of the contract." Anthony's Pier Four, Inc., v. HBC Assoc., 583 N.E.2d 808, 820 (Mass. 1991) (citations omitted). Implied covenants may not exceed contract boundaries. Accusoft Corp. v. Palo, 237 F.3d 31, 45 (1st Cir. 2001). Plaintiffs argue that the implied covenants in their contracts with Defendant entitle them "to a price set in good faith and one not so high as to . . . drive them out of business." (Plaintiffs' Brief at 18.)
As discussed above, the court finds Plaintiffs' evidence as to a lack of good faith to be scant. Still, the evidence also raises a genuine issue of material fact as to whether Defendant violated its implied covenants of good faith and fair dealing. For example, a reasonable jury could conclude that Defendant tampered with Plaintiffs' ability to receive the fruits of their Dealer Agreements by charging excessive prices and forcing Plaintiffs out of business. And contrary to Defendant's assertions, Plaintiffs' allegations do not exceed the scope of the contract; Plaintiffs surely did not enter into their agreements expecting Defendant to force them out of business. While, as discussed, there is no implicit guarantee that Defendant would provide low prices, a reasonable jury could conclude that Defendant dealt with Plaintiffs in bad faith. Accordingly, Defendant's motion with respect to the implied covenant claims will be denied.
Defendant also asserts that PMPA's exclusion of price protection implicitly precludes price guarantees. This is speculative at best. The PMPA would not preempt state law claims if Defendant operated its stores in a manner to drive Plaintiffs out of business. Simmons v. Mobil Oil Corp., 29 F.3d 505, 512 (9th Cir. 1994). See also Clark v. BP Oil Co., 137 F.3d 386, 396 (6th Cir. 1998) (PMPA preempts certain state law franchise termination claims).
At oral argument, Defendant asserted that Plaintiffs' chapter 93A claims only address the 2001 discount shift. However, Plaintiffs' brief explicitly discusses chapter 93A claims regarding both pricing and discounts. (See Plaintiffs' Brief at 19.)
Chapter 93A liability, however, is another matter. Section 11 of chapter 93A provides a cause of action against merchants who employ "an unfair method of competition or an unfair or deceptive act or practice." Mass. Gen. L. ch. 93A, § 11. Conduct may violate chapter 93A if it is "within at least the penumbra of some common-law, statutory, or other established concept of unfairness or is immoral, unethical, oppressive, or unscrupulous." Massachusetts Farm Bureau Fed'n, Inc. v. Blue Cross of Mass., Inc., 532 N.E.2d 660, 664 (Mass. 1989) (citations and internal quotation marks omitted).
In the court's view, several legal principles stand in Plaintiffs' way of recovering under chapter 93A. For one thing, breach of contract, in the usual case, does not automatically trigger chapter 93A. See Madan v. Royal Indemnity Co., 532 N.E.2d 1214, 1217 (Mass.App.Ct. 1989). Similarly, "negligence alone, which does not reek of callousness . . ., is not the sort of truly inequitable marketplace behavior" covered by chapter 93A. American Tel. Tel. Co. v. IMR Capital Corp., 888 F. Supp. 221, 256 Finally, and particularly relevant here, price discrimination involving "injury to the plaintiff" — without a broad impact on competition generally — is also usually insufficient to invoke chapter 93A liability. See Whitehall Co. v. Merrimack Valley Distributing Co., 780 N.E.2d 479, 487 (Mass.App.Ct. 2002). At bottom, it is difficult to see how Plaintiffs' allegations involve a broad impact on general competition in the retail gasoline industry.
True, Plaintiffs cite a Massachusetts Supreme Judicial Court case, albeit for another proposition, which found that the trial court's "extensive findings as to [the defendant's] violation of the implied covenant of good faith and fair dealing . . . established as a matter of both fact and law" that the defendant violated chapter 93A. Anthony's Pier Four, 583 N.E.2d at 822. Here, however, Plaintiffs have only barely raised a genuine issue as to whether Defendant violated the implied covenants. As such, their evidence falls far short of the "extensive findings" of a violation that triggered chapter 93A liability in Anthony's Pier Four. Further, while Plaintiffs also contend that Defendant breached the contracts to benefit itself, they have failed to show how this alleged conduct "reeks of callousness" to such a degree that would violate chapter 93A. In short, the court finds insufficient evidence for Plaintiffs' 93A claims to go to a jury and will, therefore, allow Defendant's motion with respect to those claims.
4. Fraud
Summary judgment will also enter in Defendant's favor with regard to Plaintiffs' fraud claims which, Plaintiffs indicate, are tied to the abolition of the VRP. A valid fraud claim requires evidence that the speaker materially misrepresent facts to induce the plaintiff to rely on the statement to his detriment. McEvoy Travel Bureau, Inc. v. Norton Co., 563 N.E.2d 188, 192 (Mass. 1990). Claims for fraudulent statements of future intention require that the speaker misrepresented his true intentions, also resulting in detrimental reliance. Id. As with all fraud claims, the "circumstances constituting fraud . . . shall be stated with particularity." Fed.R.Civ.P. 9(b).
Here, Defendant allegedly promised it would continue the VRP when Plaintiffs renewed their Dealer Agreements. Plaintiffs assert that if they knew the VRP would end, they "would have negotiated a lower base rent." ( See, e.g., Whitten Aff. ¶¶ 33-37.) Both Home and Westfield, however, signed their most recent leases after the VRP ended, which clouds their reliance. Moreover, the VRP, according to its own terms, was a voluntary program and terminable with thirty days' notice, which Defendant provided. (Sobon Aff., Ex. H, I.) And, although the parol evidence rule is not applicable to fraudulent inducements to sign a document, McEvoy Travel, 563 N.E.2d at 193 n. 5, Plaintiffs have not corroborated Shogren's alleged promise in any way, shape or form.
Even if Defendant did promise to continue the VRP, the discount shift itself did not injure Plaintiffs and therefore did not result in detrimental reliance. As indicated, Defendant replaced the VRP with an up-front 4.5 cent price discount, resulting in the same net discount. Plaintiffs only observe that the rent was higher without the VRP, but Defendant's charts show that Plaintiffs' overall expenses decreased after 2001. (Sobon Aff., Ex. P, T, X, EE.) Moreover, the TVA was an additional discount after the 4.5 cent price discount that was unavailable before 2001. Even assuming Defendant's post-2001 pricing scheme continued to place Plaintiffs at a competitive disadvantage, the fraud claim only addresses whether the change itself caused any harm. Finally, Defendant replaced the VRP with a comparable discount and the TVA.
At bottom, Plaintiffs have failed to raise a genuine issue of material fact as to whether they detrimentally relied upon Defendant's alleged promise to continue the VRP. Defendant's motion with respect to the fraud claims, therefore, will be allowed.
C. Analysis of Defendant's Counterclaims
There is almost no dispute on Defendant's counterclaims. Plaintiffs currently owe nearly $700,000 in costs and interest for previously delivered gasoline, which Defendant claims constitute breaches of contract and unjust enrichment. Plaintiffs' main defense to the counterclaims is that damages from their claims should be applied as an offset. They also dispute the amounts, arguing that they are only obligated to pay prices set in good faith. Since Defendant only seeks summary judgment with respect to liability, however, the amounts are not relevant in the context of the present motion. Accordingly, Defendant's motion with respect to counterclaim liability will be allowed.
III. CONCLUSION
For the reasons discussed, Defendant's motion is ALLOWED with respect to the fraud and chapter 93A claims as well as with respect to Plaintiff's liability in counterclaim, but otherwise DENIED. The clerk shall schedule a case management conference to establish further proceedings.
IT IS SO ORDERED.