United States District Court, N.D. Illinois, Eastern Division
CATCH 26, LLC, an Illinois Limited Liability Company, GAS CAP FUELS, LLC, an Illinois Limited Liability Company, and GRAYSLAKE STOP & SHOP, LLC, an Illinois Limited Liability Company, Plaintiffs,
LGP REALTY HOLDINGS, LP, a Delaware Limited Partnership, as successor by assignment from PT, LLC, BAPA, LLC and STATE OIL COMPANY and LEHIGH GAS WHOLESALE, LLC, a Delaware Limited Liability Company, Defendants.
MEMORANDUM OPINION AND ORDER
JOHNSON COLEMAN, UNITED STATES DISTRICT COURT JUDGE.
plaintiffs' motion for a preliminary injunction and
expedited discovery  is granted in part and denied in
part. A preliminary injunction is issued with respect to the
Ingleside location, but denied with respect to the Grayslake
and Woodstock locations. The terms of the injunction are set
forth in a separate order.
following are the general facts of this case, as established
by the evidence and testimony presently before this Court.
Plaintiff Grayslake Stop & Shop LLC has operated a gas
station and convenience store in Grayslake, Illinois since
2003 (“the Grayslake location”). Plaintiff Gas
Cap Fuels, LLC has operated a gas station and convenience
store in Ingleside, Illinois since 2013 (“the Ingleside
location”). Plaintiff Catch 26, LLC has operated a gas
station and convenience store in Woodstock, Illinois since
2014 (“the Woodstock location”). Defendant LGP
Realty Holdings, LP leases the Woodstock and Grayslake
locations to the plaintiffs and is the title holder to the
Ingleside location, which is being purchased through an
installment agreement. At the times relevant to this suit,
the Woodstock and Grayslake locations sold unbranded fuel and
the Ingleside location sold Marathon branded fuel, all of
which was exclusively supplied by Lehigh Gas Wholesale, LP
pursuant to supply agreements executed with each location.
5, 2017, the Woodstock location had an open balance of $6,
564.80 for rent, real estate taxes, and repair charges. It is
disputed whether the repair charges were properly included in
that balance. On July 5, 2017, the Woodstock location's
pre-authorized account was debited for that balance, but
there were insufficient funds to satisfy the draft and it was
returned. As a result, Lehigh Gas Wholesale, LP placed the
Woodstock location on a delivery hold. While the hold was in
effect, the Woodstock location purchased fuel from another
supplier. At the time of the default, LGP owed a credit of
approximately $16, 405.29 to the plaintiffs for excess escrow
August 4, 2017, the Grayslake location had an open balance
for motor fuel receivables totaling $40, 562.44. The
location's pre-authorized account was debited for the
amount of $33, 736.24, but there were insufficient funds and
the draft bounced. Accordingly, the Grayslake location was
placed on a delivery hold on August 8, 2017. While the hold
was in effect, the Grayslake location purchased fuel from
another supplier. At the time of the default, LGP owed a
credit of approximately $11, 384.72 to the plaintiffs for
excess escrow payments.
August 5, 2017, the Ingleside location had an open balance of
$17, 208.90, which included real estate taxes, a monthly
installment payment, and a new POS system required by
Marathon. The Ingleside location's pre-authorized account
was debited for the then-outstanding balance, but the
transaction was rejected due to a dispute over the cost of
the POS system (which the parties seem to agree was a valid
dispute). On August 10, 2017, the Ingleside location was
placed on a delivery hold. While that hold was in effect, the
Ingleside location purchased fuel from another supplier. At
the time of the default, LGP owed a credit of approximately
$12, 441.58 to the plaintiffs for excess escrow payments.
the plaintiff gas stations were placed on hold, the
defendants continued to make EFT transfers out of their bank
accounts. The plaintiffs accordingly directed their banks to
no longer permit such transfers. On August 14, 2017, the
plaintiffs were provided with a written notice that the
defendants were terminating the Ingleside, Woodstock, and
Grayslake Supply Agreements, the Woodstock and Grayslake
Leases, and the Ingleside Installment Agreement, effective
August 25, 2017. The plaintiffs subsequently filed this
action, and moved this Court for injunctive relief under the
Petroleum Marketing Practices Act (PMPA). The Court ordered
that the parties maintain the status quo while the pending
motion was briefed, argued, and taken under advisement.
prior to the preliminary injunction hearing, the defendants
filed a motion to dismiss. Because that motion questions the
applicability of the PMPA in this action, this Court provided
the parties with the opportunity to file supplemental
briefing on that issue prior to ruling on the plaintiffs'
motion for a preliminary injunction under the PMPA.
PMPA provides that a court must grant a preliminary
injunction upon a showing that the franchise has been
terminated or not renewed, there is a sufficiently serious
question going to the merits as to make the question a fair
ground for litigation, and the balance of hardships favors
granted the injunction. 15 U.S.C. § 2805(b)(2).
Accordingly, a franchisee need only establish a reasonable
chance of success on the merits, not a “strong or
reasonable likelihood” of success. Moody v. Amoco
Oil Co., 734 F.2d 1200, 1216 (7th Cir. 1984).
defendants contend, in their motion to dismiss, that the PMPA
does not apply to the Grayslake and Woodstock locations.
Because the plaintiffs are seeking statutory relief under the
PMPA, this Court must address the threshold issue of whether
the PMPA applies before it can proceed to consider the
relevant factors under section 2805.
speaking, the PMPA protects the interests of franchisees by
regulating when and how gas station franchises can be
terminated. Under section ...