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Rwj Management Company, Inc. and Joliet Petroleum, LLC et al v. Bp Products North America

January 12, 2011


The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer


Plaintiffs RWJ Management Co. and Nrupesh Desai, and the limited liability companies controlled by them, allege a number of claims against Defendants BP Products North America, Inc. and NRC Realty & Capital Advisors, LLC. The claims arise from Plaintiffs' purchase of seventeen BP franchises between 2006 and 2008 and include the following: common law fraud (Count I); violations of the Illinois Franchise Disclosure Act ("IFDA") (Counts II and III); violations of the Indiana Franchise Act (Count IV); breach of contract (Count V); tortious interference with prospective business relationships (Count VII); and negligent misrepresentation (Count VIII). (Fifth Am. Compl. [106] at 16-26.) Plaintiffs also seek a declaratory judgment that certain deed restrictions imposed by BP are invalid (Count VI). (Id. at 23-34.) A claim for violation of the Robinson-Patman Act, 15 U.S.C. § 13 et seq., was dismissed voluntarily.

Plaintiffs and Defendants have filed cross-motions for summary judgment on nearly every issue in the case. The Desai Plaintiffs seek a partial summary judgment and award of rescission based on Defendants' alleged failure to provide a disclosure statement as required by Illinois law. (Mot. for Partial Summ. J. [248] [hereinafter "Desai Br."].) The RWJ Plaintiffs have filed a similar motion seeking a declaration of liability on the disclosure issue. They also seek a declaration of liability for BP's alleged failure to register its dealer fuel supply agreement as a franchise and for BP and NRC's failure to disclose NRC as a franchise broker. (Mot. for Partial Summ. J. [252] at 1-2 [hereinafter "RWJ Br."].) Defendants have filed motions for summary judgment on Plaintiffs' statutory claims under the IFDA and other franchise-related claims [257], on the fuel pricing claims [258], and on the fraud claims [259].


Summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). In considering a motion for summary judgment, the court views the facts in the light most favorable to the non-moving party and draws all reasonable inferences in its favor. Petts v. Rockledge Furniture, LLC, 534 F.3d 715, 720 (7th Cir. 2008).

Illinois Franchise Disclosure Act Claims

Plaintiffs have alleged violations of the statutory registration requirements imposed by IFDA (Count II). They allege, further, a fraud in violation of IFDA (Count III). Plaintiffs seek summary judgment on Count II. Defendants seek summary judgment on both Counts II and III on statute of limitations grounds. The court addresses that defense first.

A. Statute of Limitations

Defendants argue that Plaintiff's IFDA claims are barred by the statute of limitations. The statute imposes three different limitations periods, depending on whether and what type of notice plaintiff may have of the alleged violation. See 815 ILCS 705/27.*fn1 It is undisputed that the Desai Plaintiffs signed their first Purchase and Sales Agreement ("PSA") on July 5, 2006, and that the RWJ Plaintiffs did so on the following day. (SOF [263] ¶ 56, 57.) RWJ filed suit on July 6, 2009, and Desai on July 23, 2009. (SOF ¶ 131, 132.) NRC was added as a Defendant on Sept. 8, 2009.

(SOF ¶ 133.)

The threshold issue is which of the three statues of limitations applies here. A 90-day limitations period runs from the time when franchisee receives "a written notice disclosing the violation." 815 ILCS 705/27. Defendants contend that Plaintiffs received a document in 2006 with a disclaimer explaining that the failure to receive such disclosures on time could constitute a franchise law violation. (Response [300] at 3.) That disclosure, Defendants contend, triggered the running of the statute. Although case law on this provision is sparse, at least one court has held that the 90-day period did not begin to run where the notice "neither mentioned the IFDA nor admitted any fault on [defendant's] part." H.R.R. Zimmerman Co. v. Tecumseh Products Co., No. 99 C 5437, 2001 WL 289867 at *3 (N.D. Ill. March 15, 2001). This case differs in that Defendants' disclaimer did make reference to legal disclosure requirements. It did not signal the type of "flat-out violation" required to trigger 90-day limitations period, however. See R.N.F. Enterprises, Inc. v. Ecowater Systems, Inc., No. 02 C 2904, 2002 WL 1377860, at *2 (N.D. Ill. June 24, 2002). It also made no express reference to the time limitations imposed by the Illinois statute, and the court therefore declines to find these claims barred by the 90-day limitation.

A one-year limitations period applies when "the franchisee becomes aware of facts or circumstances reasonably indicating that he may have a claim for relief in respect to conduct governed by this Act." 815 ILCS 705/27. Illinois courts give "franchisees a break on the statute of limitations until they have had a chance to consult with an attorney." Pyramid Controls Inc. v. Siemens Indus. Automation, Inc., 172 F.3d 516, 519 (7th Cir. 1999). Plaintiffs have presented evidence that they were not aware of the nature of their claims for at least some months after they entered into the franchise agreements, and they did not meet with an attorney specifically regarding these claims until late spring 2009. (Response [303] at 32.) The court concludes that disputes of material fact preclude enforcement of the one-year limitations period on summary judgment.

The three-year limitations period elapses three years "after the act or transaction constituting the violation upon which it is based." 815 ILCS 705/27. Plaintiffs argue that the "act or transaction" at issue is the signing of the actual franchise agreements, (Response at 35-36), because the alleged violation upon which they are suing is the lack of disclosure prior to the signing of the PSA. The Desai Plaintiffs' claims against BP based on the two Joliet locations are barred because more than three years elapsed after those Plaintiffs signed the PSA but before filing suit. The Desai Plaintiffs' claims as to those two locations are also barred as against NRC. And RWJ's ...

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