Author: LegalEase Solutions 

STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION

 The Plaintiffs-Appellees concur, in part, and dissent, in part, with the Defendant-Appellant’s Statement of Subject Matter and Appellate Jurisdiction.  Plaintiffs-Appellees agree that this Court has jurisdiction to consider Defendant-Appellant’s challenge to those portions of the district court’s March 17, 2005 Order, which have not been rendered moot by the district court’s subsequent April 7, 2005 Order.  28 U.S.C. 1292(a); see Church of Scientology v. United States, 506 U.S. 9, 12, (1992).

The Plaintiffs-Appellees disagree that the March 17, 2005 order is a criminal contempt order as the district court clearly identified the order as a civil contempt order. (Memorandum Opinion and Order, 3/17/2005, 9).

STATEMENT OF ISSUES PRESENTED FOR REVIEW

1. WHETHER THE DISTRICT COURT PROPERLY IMPOSED A $7,000 FINE ON MARCH 17, 2005 UPON FINDING THAT APPELLANT FUSION OIL ACTED IN CONTEMPT OF THE COURT’S JANUARY 4, 2005 ORDER BY REFUSING TO DELIVER PETROLEUM FUEL TO PLAINTIFFS?

 WHETHER APPELLANT FUSION OIL’S APPEAL IS MOOT REGARDING TWO OF THE CONTEMPT SANCTIONS IMPOSED ON MARCH 17, 2005 AS THOSE SANCTIONS HAVE BEEN SET AISE BY THE COURT’S APRIL 7, 2005 ORDER?

 STATEMENT OF THE CASE

On December 14, 2004, Plaintiffs-Appellees Joy and Middlebelt Sunoco, Inc. and Maroun Fawaz (hereinafter referred to as “Plaintiffs”) filed a suit against the Defendant-Appellant Fusion Oil, Inc. (hereinafter referred to as “Fusion Oil”) and Defendant Sunoco, Inc. (hereinafter referred to as “Sunoco”) along with an Emergency Ex-Parte Motion for Preliminary Injunction.  United States District Court Judge Denise Page Hood of the Eastern District of Michigan treated the Ex-Parte Motion as a Motion for Temporary Restraining Order and granted the motion on December 15, 2004.  Specifically, the ordered the Fusion Oil and Sunoco to resume distributing petroleum fuel products to Plaintiffs until the court ordered otherwise, and set a hearing on the order for January 11, 2005.

In their Complaint, Plaintiffs claimed that Fusion Oil had violated the Petroleum Marketing Practices Act (“PMPA”), 15 U.S.C. § 2801 et seq, by failing to act in good faith to negotiate and renew the Dealer Franchise Agreement, which expired on February 4, 2004; by unilaterally increasing rent and fuel prices after the Agreement’s expiration; by opening a competing station within a half-mile radius of Plaintiffs’ gas station; and by failing to give sufficient notice of terminating the Franchise Agreement.  Plaintiffs also claimed Defendant Sunoco had violated the PMPA by assignment of its interest in the Dealer Franchise Agreement to Fusion Oil.

On December 21, 2004, Fusion Oil filed an emergency motion to dissolve and/or modify the temporary restraining order. On December 27, 2004, District Judge Bernard Friedman dissolved the temporary restraining order.  On December 30, 2004, Plaintiffs then filed an Ex-Parte Emergency Motion to Order Defendants to Continue Distributing.  The District Court set a hearing for this motion as well as the Motion for a Preliminary Injunction on January 4, 2005.

After the hearing, Judge Page Hood issued a Memorandum Opinion and Order finding that Plaintiffs established a basis for preliminary injunctive relief under the PMPA, 15 U.S.C. § 2805(b).  (Mem. Op and Order, 10)  Judge Page Hood specifically observed that the district court had the authority to impose the relief in order to maintain the status quo  between the parties to preserve the Court’s ability to make a meaningful decision after a trial on the merits. (Mem. Op and Order, 4-5).  Judge Page Hood granted Plaintiffs’ motion for a preliminary injuction and specifically ordered Fusion Oil to immediately resume delivery of petroleum fuel to Plaintiffs at reasonable market rates.  (Mem. Op and Order, 12)

On January 26, 2005, Plaintiffs filed an Emergency Motion for Finding Defendant Fusion Oil, Inc., in Contempt of Court for Refusing to Deliver Fuel as Ordered.  After a hearing on the matter, Judge Page Hood issued a Memorandum Opinion and Order on March 17, 2005, finding Fusion Oil in contempt of the court’s January 4, 2005 order.  (Mem Op and Order, 6).  Upon reviewing evidence submitted by both parties, the district court found that Fusion Oil’s refusal to deliver fuel to Plaintiffs resulted in damages in the amount of $1,000 per day for a period of seven (7) days from January 21, 2005 to January 28, 2005.  (Mem Op and Order, 6-7).  The court ordered Fusion Oil to pay $7,000 to Plaintiffs.  (Mem Op and Order, 9).  To ensure Fusion Oil’s compliance during the pendency of this matter, the court also ordered an ongoing obligation for Fusion Oil to pay Plaintiffs $1,000.00 per day from the date of the order until Fusion Oil made arrangements to deliver fuel to Plaintiffs and further set the reasonable market rate at three cents over rack.  (Mem Op and Order, 9).

On April 7, 2005, the parties’ stipulated to the entry of a court order regarding this action.  This order, entitled “Order Pertaining to Preliminary Injunction, Contempt Order, and Other Matters”, provides, in pertinent part, that the preliminary injunction is dissolved and also set aside, as moot, the ongoing sanction of $1,000 per day against Fusion Oil.  (Order, 2)  The original $7,000 fine remained unaffected by this Order. (Order, 2)  The Order also reflected the parties’ agreement for Plaintiffs’ to convey the gas station property to Fusion Oil.  (Order, 2)

Fusion Oil has appealed this March 17, 2005 order by filing a notice of appeal on April 13, 2005.

STATEMENT OF FACTS

Defendant Sunoco, Inc. franchises gas stations to dealers across the country. On February 4, 2001, Sunoco entered into a three-year Dealer Franchise Agreement with Plaintiffs for a Sunoco Station at 8775 Middle Belt Road, Westland, Michigan (hereafter referred to as the “Westland Station”).  (Complaint ¶ 6) The Dealer Franchise Agreement governed the relationship between Plaintiffs and Sunoco.  Plaintiffs successfully operated the Westland Station as a franchisee of Sunoco.

On December 1, 2003, Sunoco notified plaintiffs that it had assigned its interest in the Dealer Franchise Agreement to Fusion Oil, Inc., whereby Sunoco promised to plaintiffs that defendant Fusion is “committed to perform and comply with all the provisions of your existing Dealer Franchise Agreement and to service the specific requirements and needs”.  (Complaint ¶ 8)

On February 4, 2004, the three-year term of the Dealer Franchise Agreement expired.  (Complaint ¶ 10)  For over 10 months despite the repeated requests and issuance of two letters by Plaintiffs, Sunoco and Fusion Oil Inc. failed to negotiate in good faith and/or renew the Franchise Agreement.  (Complaint ¶ 12)

Instead, Fusion Oil unilaterally imposed its own terms and conditions upon Plaintiffs.  The terms and conditions included, among others, a unilateral increase in fuel price by approximately two cents per gallon.  This unilateral increase was contrary to the established price and practice that had existed between Plaintiffs and Sunoco.  Fusion Oil also increased the established rent that Plaintiffs were required to pay for the property.  (Complaint ¶ 12)

Also, Fusion Oil’s owner, Ahmad Harajli, with the support of Sunoco, purchased an existing Mobil gas station within a half-mile from the Westland Station.  Fusion Oil converted this station to a Sunoco gas station, and posted prices below Plaintiffs’ prices, resulting in diverting gasoline sales from Plaintiffs.  (Complaint ¶ 13)  Plaintiffs withheld rent to offset the substantial overpayments made to Fusion Oil during 2004.  (Complaint ¶ 15)

On December 4, 2004, Fusion Oil wrote to Plaintiffs indicating that it would no longer supply the Westland Station with petroleum fuel, claiming that the suspension would continue until Plaintiffs paid rent that was due and reopened its credit card system.  (Complaint ¶ 16)(Ex. E of Plaintiffs’ Brief) (Memorandum Opinion and Order, 1/4/05, 6).  The letter referenced a section 3.03(b) of a Dealer Supply Franchise Agreement as authority for Fusion Oil’s actions. (Ex. E of Plaintiffs’ Brief)  Shortly afterwards, Fusion Oil sent a letter on December 9, 2004 claiming that it was providing Plaintiffs with notice that the Franchise Agreement would not be renewed, effective within 90 days of Plaintiffs’ receipt of the letter. Fusion Oil’s actions resulted in economic loss to Plaintiffs.

On December 14, 2004, Plaintiffs filed the present action against Fusion Oil and Sunoco along with an Emergency Ex-Parte Motion for Preliminary Injunction.  United States District Court Judge Denise Page Hood of the Eastern District of Michigan treated the Ex-Parte Motion as a Motion for Temporary Restraining Order and granted the motion on December 15, 2004.  Specifically, the ordered the Fusion Oil and Sunoco to resume distributing petroleum fuel products to Plaintiffs until the court ordered otherwise, and set a hearing on the order for January 11, 2005.  Fusion Oil refused to comply with the December 15, 2004 order and supply Plaintiffs with petroleum fuel until Fusion Oil was advised that Plaintiffs could move for contempt.

The Plaintiffs’ two-count complaint alleged (1) a violation of the Petroleum Marketing Practices Act (“PMPA”), 15 U.S.C. § 2801 et seq.; and (2) a third party beneficiary claim under M.C.L. § 600.1405.  In their Complaint, Plaintiffs claimed that Fusion Oil had violated the PMPA by failing to act in good faith to negotiate and renew the Dealer Franchise Agreement, which expired on February 4, 2004; by unilaterally increasing rent and fuel prices after the Agreement’s expiration; by opening a competing station within a half-mile radius of Plaintiffs’ gas station; and by failing to give sufficient notice of terminating the Franchise Agreement.  Plaintiffs also claimed Defendant Sunoco had violated the PMPA by assignment of its interest in the Dealer Franchise Agreement to Fusion Oil.

On December 21, 2004, Fusion Oil filed an emergency motion to dissolve and/or modify the temporary restraining order.  On December 27, 2004, District Court Judge Bernard Friedman dissolved the temporary restraining order.  On December 30, 2004, Plaintiffs filed an Ex-Parte Emergency Motion to Order Defendants to Continue Distributing Fuel.  The District Court set a hearing for this motion as well as the Motion for a Preliminary Injunction on January 4, 2005.

After the hearing, Judge Page Hood issued a Memorandum Opinion and Order finding that Plaintiffs established a basis for preliminary injunctive relief under the PMPA, per 15 U.S.C. § 2805(b).  (Mem. Op and Order, 10)  To determine the whether Plaintiffs had met their burden, the district court specifically considered the prerequisites for injunctive relief enumerated in the statute.  See 15 U.S.C. § 2805(b)(2).

First, the district court considered whether Plaintiffs had established that the franchisee relationship had been terminated.  15 U.S.C. § 2805(b)(2)(A)(i).  The court held that Plaintiffs met this showing with the initial December 4, 2004 letter from defendant Fusion Oil, announcing the termination of fuel supply delivery, along with the December 9, 2004, announcing the non-renewal of the franchise agreement.  (Mem. Op and Order, 5)

Second, the district court considered whether Plaintiffs demonstrated the existence of serious questions going to the merits of this action, which provided a fair ground for litigation.  15 U.S.C. § 2805(b)(2)(A)(ii).  Plaintiffs claimed that Fusion Oil had violated the PMPA’S by not providing the required 90-day notice for termination when it announced non-renewal of the franchise agreement and refused to continue supplying fuel to Plaintiffs.  The court agreed.  (Memorandum Opinion and Order, 6).

Defendants countered that the non-renewal letter of December 9, 2004 expressly provided that termination was effective 90 days from the letter’s receipt, and furthermore, contended that the letter terminating supply on December 4, 2004 was simply an exercise of its existing authority under section 3.03b of the Dealer Supply Franchise Agreement.  (Memorandum Opinion and Order, 6-7)

Judge Page Hood questioned the validity of Fusion Oil’s position regarding section 3.03b of the Dealer Supply Franchise Agreement.  (Memorandum Opinion and Order, 6)  Judge Page Hood stated that the Dealer Franchise Agreement, entered into between Plaintiffs and Sunoco and submitted to the court by Plaintiffs, did not contain a section 3.03b.  (Memorandum Opinion and Order, 6)   Judge Page Hood further observed that the only part of the Dealer Supply Franchise Agreement that Fusion Oil supplied the court was section 3.03b, making it impossible for the court to determine whether this was, in fact, the agreement between Fusion Oil and Plaintiffs.  (Memorandum Opinion and Order, 6-7)

The district court reasoned alternatively that even if the agreement between the parties allowed the franchisor to exercise this authority, the provision would allow the franchisor to circumvent the 90-day notice of termination provision and “use the suspension of fuel delivery to enforce a lease or any other agreement tied to the fuel distribution agreement.  This argument appears to thwart the purpose of the PMPA.”  (Memorandum Opinion and Order, 7)

Lastly, the court also held that there were serious questions of fact, which go to the merits of the question of Fusion Oil’s good faith in negotiating a renewal of the Dealer Franchise Agreement.  (Memorandum Opinion and Order, 7-8)  Speciffically, the court cited Plaintiffs’ attempts to contact Fusion Oil regarding negotitating a renewal, which were ignored by Fusion Oil.  Also, Fusion Oil unilaterally modified the amount that Plaintiffs were required to pay for rent, fuel delivery, and shifted responsibility for the cost of certain repairs.  (Memorandum Opinion and Order, 8).  The court further noted that Fusion Oil opened a competing gas station within a half-mile from Plaintiffs’ station. (Memorandum Opinion and Order, 8)  Fusion Oil argued that it had been in oral negotiations with Plaintiffs and a draft agreement had been presented to Plaintiffs in October 2004, which Fusion Oil claimed that Plaintiffs failed to respond to.  (Memorandum Opinion and Order, 9)

Even though the parties had not entered into a new agreement, the court reasoned that Fusion Oil had admitted to being governed the terms of the original February 2001 Dealer Franchise Agreement.  The court observed that Fusion Oil relied upon and cited the provisions of the agreement in its letters to Plaintiffs and in arguments to the court.  (Memorandum Opinion and Order, 9)

Therefore, the court concluded that Fusion Oil’s unilateral changes in the rent and other terms, contravening that agreement, raised questions of fact regarding whether Fusion Oil was acting in good faith.  (Memorandum Opinion and Order, 9).  The court further observed that the termination of fuel delivery in the December 4, 2004 letter came after Fusion Oil received Plaintiffs’ December 1, 2004 letter.  Plaintiffs’ letter advised Defendants that the unilateral increase of rent since February 4, 2004 resulted in an overpayment of $9,900 in rent in 2004.  Plaintiffs also announced that the rent payment for December 2004 would be discontinued due to this overpayment.  (Memorandum Opinion and Order, 9).  The court surmised that Fusion Oil’s response to this letter could be viewed by a trier of fact as an act of retaliation against Plaintiffs.  (Memorandum Opinion and Order, 9-10).

Lastly, the court balanced the hardship that would be imposed upon Fusion Oil by issuing a preliminary injunction against the hardship that would be suffered by Plaintiffs if no injunction issued.  The court reasoned that Plaintiffs’ livelihood was in jeopardy due to their inability to operate the station without fuel delivery.  (Memorandum Opinion and Order, 10)  By contrast, the court found that Defendants would primarily suffer monetary damages. (Memorandum Opinion and Order, 10).

After finding that Plaintiffs established their burden under 15 U.S.C. § 2805(b)(2), Judge Page Hood issued the preliminary injunction enjoining Defendants from terminating any agreements and specifically ordering Fusion Oil to immediately resume delivering petroleum fuel to the [Westland Station] at reasonable market rates.”  (Memorandum Opinion and Order, 12)

On January 26, 2005, filed an Emergency Motion for Finding Defendant Fusion Oil, Inc., in Contempt of Court for Refusing to Deliver Fuel as Ordered.  Plaintiffs alleged that Fusion Oil failed to comply with the Court’s preliminary injunction and January 4, 2005 order by refusing to deliver petroleum fuel.

Plaintiffs alleged that Fusion Oil ceased delivery on January 21, 2005.  (Fawaz Affidavit, ¶ 8).  Fusion Oil told Plaintiffs that there was an arrearage on their account and refused to take their order on January 21, 2005.  (Memorandum Opinion and Order, 3)

The court held a hearing on March 17, 2005 regarding the contempt motion.

Plaintiffs introduced evidence that it attempted to pay for certain invoices by cash and the credit he had earned from the credit card sales, the latter which was already collected by defendant Fusion Oil.  Nevertheless, Fusion Oil refused to apply the credit from the credit card sales and instead demanded full cash payment of the invoice amount.  Fusion Oil also claimed that Plaintiff had discontinued its credit card operations and did not pay its November rent. Plaintiff established at the hearing that its credit card operations were not discontinued and that rent amount had been automatically withdrawn from the bank on November 1, 2004.

Plaintiffs argued that due to Fusion Oil’s withholding of fuel delivery, it was without fuel for nine days.  Plaintiffs’ claimed that it had incurred losses of approximately $1,000.00 per day.  Accordingly, plaintiff requested the court to find Fusion in contempt of court, and award plaintiff for its loss of $1,000.00 per day.

Fusion Oil responded that after the January 4, 2005 order from the court, it applied Plaintiffs’ then existing credit to unpaid rent.  Later, when it debited Plaintiffs’ account for fuel deliveries, the charge was bounced as an overdraft of Plaintiffs’ account.  Fusion Oil claimed that it was confused by the court’s order. Once it noted its error in crediting unpaid rent versus fuel deliveries, it corrected the problem and resumed deliveries.  Fusion Oil further claimed that Plaintiffs had outstanding arrearages for fuel deliveries in January and February of 2005 and that Plaintiffs did not make a rent payment for February.

Plaintiffs countered that Fusion Oil had also failed to comply with the court’s requirement that Fusion Oil supply the fuel at reasonable market rates.  Plaintiffs submitted evidence that Fusion Oil charging Plaintiff $1.882 per gallon of fuel even though Fusion Oil’s other station was selling fuel directly to the consumer for only $1.869 per gallon of fuel.  Plaintiffs further explained that it was unable to make the rent payment because they were unable to earn sufficient funds due to Fusion Oil’s refusal to deliver fuel supplies to the station.  Plaintiffs indicated that they sought to mitigate their damages by asking Sunoco for assistance in obtaining fuel from another supplier.

After a hearing on the matter, Judge Page Hood issued a Memorandum Opinion and Order on March 17, 2005, finding Fusion Oil in contempt of the court’s January 4, 2005 order.  (Mem Op and Order, 6).  The court rejected Fusion Oil’s claim that it was confused by the court’s order of January 4, 2005.  Specifically, the court stated:

Fusion Oil should have been put on notice that any suspension of fuel delivery could constitute termination of the agreement which the Court clearly enjoined Defendants from terminating pending resolution of this case.  (Memorandum Opinion and Order, 6).

Upon reviewing evidence submitted by both parties, the district court found that Fusion Oil’s refusal to deliver fuel to Plaintiffs resulted in damages in the amount of $1,000 per day for a period of seven (7) days from January 21, 2005 to January 28, 2005.  (Mem Op and Order, 6-7).  The court ordered Fusion Oil to pay $7,000 to Plaintiffs.  (Mem Op and Order, 9).  To ensure Fusion Oil’s compliance during the pendency of this matter, the court also ordered an ongoing obligation for Fusion Oil to pay Plaintiffs $1,000.00 per day from the date of the order until Fusion Oil made arrangements to deliver fuel to Plaintiffs and further set the reasonable market rate at three cents over rack.  (Mem Op and Order, 9).

On April 7, 2005, the parties’ stipulated to the entry of a court order regarding this action.  This order, entitled, “Order Pertaining to Preliminary Injunction, Contempt Order, and Other Matters” provides, in summary, that:

1. Fusion Oil would be permitted to file a counter-complaint.
2. The Preliminary Injunction of January 4, 2005 was dissolved.
3. Plaintiffs’ agreed to convey of the gas station property to Fusion Oil.
4. The court and set aside the March 17, 2005 ongoing order to pay Plaintiffs $1000.00 per day. The portion of the March 17,2005 order, pertaining to the finding of contempt and direction to Fusion to pay $ 7000.00 to the Plaintiff, was unaffected.

Fusion Oil has since appealed the March 17, 2005 order of this court by filing a notice of Appeal on April 13, 2005.

SUMMARY OF THE ARGUMENT

Fusion Oil appeals the district court’s March 17, 2005 order finding that Fusion Oil was in contempt of the court’s prior order obligating Fusion Oil to resume petroleum fuel deliveries to Plaintiffs.  The March 17, 2005 Order was a civil contempt order that was rendered after finding that Fusion Oil’s actions in refusing to deliver fuel to Plaintiffs from January 21, 2005 to January 30, 2005 was a violation of the preliminary injunction order of January 4, 2005.

The district court’s findings were based on a sound review of the evidence submitted and the imposition of sanctions was consistent with the court’s authority under the PMPA and its general authority to ensure compliance with its orders.  After carefully considering the evidence presented by both parties, the district court imposed sanctions on Fusion Oil that partially compensated Plaintiffs’ stated losses due to Fusion Oil’s actions and further ensured compliance with the preliminary injunction as the matter remained pending.

Specifically, the district court found that Fusion Oil’s actions resulted in damages of $1,000 per day to Plaintiffs that, in fact, impacted Plaintiffs’ from January 21, 2005 to January 28, 2005-totalling $7,000.00.  To ensure Fusion Oil’s compliance with the preliminary injunction, the district court ordered Fusion Oil to pay an ongoing sanction of $1,000 per day for failure to comply with the order and to immediately resume selling fuel supplies to Plaintiffs at the rate of three cents over rack.

Nevertheless, Fusion Oil’s appeal has now been rendered moot because the parties stipulated to the entry of an order on April 7, 2005 that provided for the dissolution of the preliminary injunction and set aside the $1,000 per day ongoing sanction.  Since the Order also provides that the parties have agreed that Plaintiffs would convey the Westland Station to Fusion Oil, this also renders moot Fusion Oil’s challenge to that portion of the March 17, 2005 that required the sale of fuel at three cents above rack.

Lastly, the April 7, 2005 Order allowed Fusion Oil to file a counter-complaint against Plaintiffs in this action.  Given this development, there would be no need for this Court to address Fusion Oil’s arguments that the district court failed to adequately address its allegations of arrearages and non-payment by Plaintiffs as these matters can be adequately addressed by the parties in the district court.

ARGUMENT

1. THE DISTRICT COURT PROPERLY IMPOSED A $7,000 FINE ON MARCH 17, 2005 UPON FINDING THAT APPELLANT FUSION OIL ACTED IN CONTEMPT OF THE COURT’S JANUARY 4, 2005 ORDER BY REFUSING TO DELIVER PETROLEUM FUEL TO PLAINTIFFS.

• STANDARD OF REVIEW:

This Court reviews a district court’s finding of civil contempt for an abuse of discretion.  Harrison v. Metropolitan Gov’t of Nashville, 80 F.3d 1107, 1112 (6th Cir. 1996). An abuse of discretion may be found when the district court relied upon clearly erroneous findings of fact Southward v. South Central Ready Mix Supply Corp., 7 F.3d 487, 492 (6th Cir. 1993)). In examining findings of fact, this Court may reverse only if after a review of all the evidence the Court is left with a firm and definite conviction that a mistake has been made. Id. (citing Anderson v. City of Bessemer, 470 U.S. 564, 573, 84 L. Ed. 2d 518, 105 S. Ct. 1504 (1985)).   If the fact finder chooses one view where two views are permissible in light of the evidence, the fact finder’s choice between them cannot be clearly erroneous. Id. (citing Anderson, 470 U.S. at 574).

• LEGAL ARGUMENT

Fusion Oil’s claim that the district court’s contempt order was in fact a finding of criminal contempt is simply without merit.  A criminal finding of the contempt occurs when the purpose of the order is to vindicate the court’s authority by using “punitive” measures or punishing the wrongdoer, which are essential for criminal contempt. Garrison v. Cassens Transport Co., 334 F.3d 528 at 543.

In this case, the district court clearly had the authority to review whether Fusion Oil acted in compliance with the court’s January 4, 2005 Order and Preliminary Injunction.   Adopting Fusion Oil’s argument would, in essence, be adopting the position that the district court could only enforce its orders under extraordinary circumstances.  As the district court stated, civil contempt findings and sanctions serve to ensure that parties act in compliance with the court’s orders and remedy the losses suffered by those damaged by a party’s noncompliance with these orders.  United States v Bayshores Associates, Inc., 934 F.2d 1391, 1400 (6th Cir. 1991).  Remedial or compensatory action are essentially backward looking seeking to compensate the complainant through payment of money for damages cause by past acts of disobedience. Garrison, Id at 543.

The evidence in the record clearly supports Plaintiffs’ position that Judge Page Hood did not abuse her discretion when finding that Fusion Oil acted in contempt of the January 4, 2005 Preliminary Injunction and Order.

Significantly, Fusion Oil openly admitted that it declined to take Plaintiffs order on January 21, 2005 and refused to deliver fuel to Plaintiffs.  (Memorandum Opinon and Order, 3).  Secondly, Fusion Oil admitted that it did not resume fuel delivery on January 30, 2005.  (Memorandum Opinon and Order, 3).  As the court stated:

Fusion Oil should have been put on notice that any suspension of fuel delivery could constitute termination of the agreement which the Court clearly enjoined Defendants from terminating pending resolution of this case.  (Memorandum Opinion and Order, 6)(Emphasis added).

Further, Judge Page Hood did not compensate Plaintiffs beyond the relief that was appropriately demonstrated by the evidence.  Even though Plaintiffs were without fuel deliveries for nine days from January 21, 2005 through January 30, 2005, Judge Page Hood fairly considered the evidence from Fusion Oil that Plaintiffs refused delivery on January 28, 2005.  As such, Judge Page Hood limited the compensatory award to $7,000.00 to fairly reflect the amount of time Fusion Oil’s non-delivery affected Plaintiffs, rather than the Plaintiffs’ actual loss during that time period.  (Memorandum Opinion and Order, 6)  Moreover, even though the court heard evidence that Fusion Oil had also refused delivery to the Plaintiffs on February 14, 2005, she did not impose sanctions for that time period as Plaintiffs did not seek compensation for that time period.  (Memorandum Opinion and Order, 7)

Fusion Oil further claims that Judge Page Hood failed to recognize that Plaintiff was not in compliance with the preliminary injunction and order of January 4, 2005.  Specifically, Fusion Oil claims that Plaintiff had outstanding arrearages for fuel deliveries and had not paid February’s rent.  (Appellant’s Brief on Appeal, pp 21-22).  Fusion Oil argues that Judge Page Hood’s rationale that the PMPA was designed solely to protect the franchisee is in error and that Judge Page Hood’s holdings would mean that franchisor’s had no protections or remedies when a franchisee breaches its obligations to the franchisor.  (Appellant’s Brief on Appeal, pp 22-23).

Fusion Oil’s argument ignores two fundamental facts: 1) the preliminary injunction was granted in a lawsuit brought by the Plaintiffs against Fusion Oil; and 2) the preliminary injunction was entered under 15 U.S.C. § 2805(b)(2), a section of the PMPA specifically enacted to protect the franchisee.

Judge Page Hood directly addressed Fusion Oil’s claims in her opinion:

[A]ny “damages” suffered by Defendants are not relevant to this case at this juncture since this action involves a lawsuit by Plaintiffs seeking injunctive relief from Defendants.  Defendants have not filed any counterclaim against the Plaintiffs.  In any event, if there should eventually be a counterclaim filed by Defendants, any “damages” Defendants may suffer, such as loss, rent, etc., could be off set against any damages recovered by Plaintiffs at trial.  Even if Defendants have filed a counterclaim against Plaintiffs for breach of contract, including non-payment of rent, such an injury is monetary damages and Defendants have not shown that they are entitled to injunctive relief, such as payment of rent, under the PMPA or under Fed.R.Civ.P. 65(a).  (Memorandum Opinion and Order, 6)(Empasis in original).

As the district court explained, Fusion Oil has an avenue to redress its claim for damages.  A hearing addressing Plaintiffs’ Motion for a Preliminary Injunction and Plaintiffs’ Motion to Hold Defendant in Contempt was not that avenue.  The fact that Judge Page Hood only addressed and decided issues germane to those motions does not constitute an abuse of discretion.

Also, Judge Page Hood did not hold that the entire PMPA protects franchisees only.  Rather, she specifically stated that “the injunctive provision under the PMPA [15 U.S.C. § 2805(b)(2)]” was enacted by Congress to protect franchisees.   (Memorandum Opinion and Order, 7).  This provision is specifically designed to protect the franchisee.  Massey v. Exxon Corp., 942 F.2d 340, 342 (6th Cir. 1991).  As the district court observed, there is no PMPA provision for “preliminary injunctive relief” for a franchisor. (Memorandum Opinion and Order, 8).

In conclusion, the district court’s order of contempt was based on well- established principles of law and precedent and took into consideration only losses incurred by Fusion Oil’s noncompliance with the preliminary injunction when ordering a remedy for Plaintiffs’ losses.   Plaintiffs respectfully requests that this Honorable Court affirm the District Court’s holding and order of March 17, 2005 that ordered Fusion Oil to pay $7,000.00 for noncompliance with the preliminary injunction.

1. APPELLANT FUSION OIL’S APPEAL IS MOOT REGARDING TWO OF THE CONTEMPT SANCTIONS IMPOSED ON MARCH 17, 2005 AS THOSE SANCTIONS HAVE BEEN SET ASIDE BY THE COURT’S APRIL 7, 2005 ORDER.

• STANDARD OF REVIEW

A federal court has no authority to render a decision upon moot questions or to declare rules of law that cannot affect the matter at issue.  Church of Scientology v. United States, 506 U.S. 9, 12, (1992). A case becomes moot “‘when the issues presented are no longer ‘live’ or parties lack a  legally cognizable interest in the outcome.'” County of Los Angeles v. Davis, 440 U.S. 625, 631, (1979) (quoting Powell v. McCormack, 395 U.S. 486 (1969)).  In other words, a case becomes moot when subsequent events make it absolutely clear that the allegedly wrongful  behavior cannot reasonably be expected to recur and “interim relief or events have completely and irrevocably eradicated the effects of  the alleged violation.” Id

• LEGAL ARGUMENT

On April 7, 2005, the parties’ stipulated to the entry of a court order regarding this action.  This order, entitled “Order Pertaining to Preliminary Injunction, Contempt Order, and Other Matters”, provides, in pertinent part, that the preliminary injunction is dissolved and also set aside, as moot, the ongoing sanction of $1,000 per day against Fusion Oil.  (Order, 2)  The original $7,000 fine remained unaffected by this Order. (Order, 2)  The Order also reflected the parties’ agreement for Plaintiffs’ to convey the gas station property to Fusion Oil.  (Order, 2)

Fusion Oil’s appeal has now been rendered moot because the parties stipulated to the entry of an order on April 7, 2005 that provided for the dissolution of the preliminary injunction and set aside the $1,000 per day ongoing sanction.  Since the Order also provides that the parties have agreed that Plaintiffs would convey the Westland Station to Fusion Oil, this also renders moot Fusion Oil’s challenge to that portion of the March 17, 2005 that required the sale of fuel at three cents above rack.

Lastly, the April 7, 2005 Order allowed Fusion Oil to file a counter-complaint against Plaintiffs in this action.  Given this development, there would be no need for this Court to address Fusion Oil’s arguments that the district court failed to adequately address its allegations of arrearages and non-payment by Plaintiffs as these matters can be adequately addressed by the parties in the district court.

In conclusion, this Court could not render any relief that would remedy Fusion’s challenge to those portions of the March 17, 2005 order concerning the $1,000 per day ongoing sanction or the requirement that Fusion Oil sell fuel to Plaintiffs at three cents above the rack rate.  Plaintiffs respectfully requests that this Honorable Court find that these questions have been rendered moot by the order of April 7, 2005.

CONCLUSION

The trial Court was justified in finding the defendant Fusion Oil in contempt of the January 4,  2005 order.  Fusion Oil admitted to being in clear violation of the order by its failure to supply fuel to Plaintiffs.  Plaintiffs’ suffered economic loss as a result of such  failure to supply fuel and the trial court rightly quantified the damage suffered on the basis of  actual loss suffered by the plaintiffs and was justified in awarding $ 7000.00 to compensate the  plaintiffs for such loss.  Furthermore, the defendant’s appeal regarding other portions of the March 17, 2005 contempt order have been rendered moot by the entry of the parties’ stipulated order on April 7, 2005.