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GROTEMEYER v. LAKE SHORE PETRO CORP.

October 12, 1990

RICHARD GROTEMEYER, RICHARD EKSTROM, and MYERSTROM INDUSTRIES, INC., an Illinois Corporation, Plaintiffs,
v.
LAKE SHORE PETRO CORP., an Illinois Corporation, Defendant



The opinion of the court was delivered by: NORGLE

 CHARLES R. NORGLE, UNITED STATES DISTRICT JUDGE

 Before the court is the amended preliminary injunction motion of plaintiffs Richard Grotemeyer, Richard Eckstrom, and Myerstrom Industries, Inc. For the reasons discussed below, the motion is denied.

 FACTS

 On February 1, 1983, Lake Shore Oil Company, the corporate predecessor to defendant Lake Shore Petrocorp. ("Lake Shore"), entered into a Dealer's Lease Agreement (the "Agreement") for a three-year term with options to renew with George Rusik. On August 26, 1985, plaintiffs purchased the rights under the Agreement from Rusik.

 The Agreement authorizes plaintiffs to lease from Lake Shore the premises at 3501 West 95th Street, Evergreen Park, Illinois and to use the premises for the purpose of operating a gasoline service station and automatic car wash. The Agreement has been renewed through September, 1990. For months, in the negotiating a renewal of the Agreement beyond September, 1990, Lake Shore proposed certain changes in the franchise Agreement. Under the proposed new agreement, Lake Shore would build and operate, at its expense, a convenience store on the premises. Although plaintiffs would not share in the profits or losses of the convenience store, Lake Shore points out that the store would benefit plaintiffs indirectly by generating additional business for their service station and car wash. Also under the proposed renewal agreement, plaintiffs would be responsible for all of the real estate taxes for the premises (under the original Agreement, plaintiffs were only responsible for amounts in excess of the 1982 real estate taxes).

 After months of negotiation, plaintiffs did not accept the terms of Lake Shores' renewal proposal. On January 11, 1990, Lake Shore sent plaintiffs a certified letter advising them of its nonrenewal of the Agreement. In this letter, Lake Shore stated that the nonrenewal would take effect on September 31, 1990 (sic), the expiration date of the extended Agreement. The letter also stated the reason for nonrenewal:

 
In compliance with the Petroleum Marketing Practices Act, you are hereby notified that Lake Shore Petrocorp has determined that in the normal course of business the continuation of said lease is likely to be uneconomical to Lake Shore Petrocorp.

 Finally, the letter stated that it conformed to the notice provisions of the Petroleum Marketing Practices Act as stated in the summary of the Act, published by the U.S. Secretary of Energy; however, the letter did not enclose a copy of the summary itself.

 According to oral representations by plaintiffs' counsel, negotiations between the parties continued after the January 11, 1990 notice of nonrenewal. Ultimately, the parties were unable to resolve their differences and Lake Shore negotiated a new franchise agreement with a third party. This agreement provides for a lease of the premises with the convenience store and increased rental. Plaintiffs filed this action on August 23, 1990. On September 12, 1990, plaintiffs filed their motion for preliminary injunction. They filed this amended motion for preliminary injunction later that day.

 DISCUSSION

 Plaintiffs' Complaint is brought under the provisions of the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2801, et seq. The PMPA is intended to protect franchised retailers of motor fuel from "arbitrary or discriminatory termination or nonrenewal of their franchises." S. Rep. No. 731, 95th Cong., 2d Sess. 15, reprinted in 1978 U.S. Code Cong. & Admin. News 873, 874; see Brach v. Amoco Oil Co., 677 F.2d 1213, 1216 (7th Cir. 1982). The PMPA prohibits franchisors from terminating or failing to renew franchises except on the basis of specifically enumerated grounds and upon compliance with certain notification requirements.

 The Complaint alleges that Lake Shore violated the PMPA by failing to renew the Agreement for reasons outside those specifically sanctioned by the Act. Plaintiffs argue that the court must apply the liberal preliminary injunction standard set out in the enforcement provisions of the PMPA. *fn1" However, § 2805 of the Act provides that:

 
. . . the court need not exercise its equity powers to compel continuation or renewal of the franchise relationship if such action was commenced -
 
(A) more than 90 days after the date on which notification pursuant to section 2804(a) of this title was posted or personally delivered to the franchisee.

 15 U.S.C. § 2805(b)(4). Plaintiffs have delayed over seven months after receiving notice of nonrenewal to file this action, and are precluded from benefiting from this statutory injunction standard, provided that Lake Shore's notice of nonrenewal complied with the statutory notice requirements of the PMPA.


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