Wayman v. Amoco Oil Co. (923 F. Supp. 1322, 1996)

MEMORANDUM AND ORDER

BELOT, District Judge.

This ease comes before the court on defendant Amoco Oil Company’s Motion for Summary Judgment. (Doc. 126.)

Plaintiffs are current or former Wichita area Amoco service station dealers. They have filed this action against Amoco alleging seven state law causes of action, including two counts of breach of contract, two counts of misrepresentation, breach of lease, breach of fiduciary duties, and violation of the Kansas Consumer Protection Act (“KCPA”), K.S.A. § 50-623, et seq. (Doe. 75, Counts I-VII.) Plaintiffs’ claims are similar to those made by other Amoco dealers in various other parts of the United States. Amoco seeks summary judgment on all seven of plaintiffs’ claims.

Table of Contents

Summary Judgment Standards.

Background

The Nature of the Parties’ Relationship.

The Dealer Supply Agreement (DSA) .

The Lease Agreement.

The Meter Marketing Plan, Dealer Buying Price and Pricing Strategies.

The Discount for Cash Program (DFC).

The Investment Value Rent Program.

Discussion

Count I — Breach of Contracts — DFC.

Plaintiffs’ admissions in deposition.

The U.C.C. parol evidence rule, K.S.A. 84-2-202 and DSA’s terms.

Admissibility of the alleged DFC/DBP offset and the DSA.

Admissibility of the alleged DFC/DBP offset and the credit card contract..

Admissibility of the alleged DFC/DBP offset as “course of dealing”.

Admissibility of the alleged DFC/DBP offset as a subsequent agreement.

Enforceability of integration clauses.

Equitable estoppel.

Count II — Misrepresentation — DFC .

Count III — Breach of Contract — U.C.C. § 2-305(2) .

Count IV — Breach of Lease — IVR Program.

Count V — Misrepresentation — IVR Program.

Count VI — Breach of Duty of Good Faith.

Count VII — Violations of Kansas Consumer Protection Act.

Plaintiffs as “individuals” under K.S.A. § 50-624(b).

“Business purposes” as contemplated by K.S.A. § 50-624(b).

Deceptive and unconscionable practices.

Orders .

SUMMARY JUDGMENT STANDARDS

Rule 56(c) of the Federal Rules of Civil Procedure directs the entry of summary judgment in favor of the party who “show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” A principal purpose “of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The court’s inquiry is to determine “whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

The burden of proof at the summary judgment stage is similar to that at trial. “Entry of summary judgment is mandated, after an adequate time for discovery and upon motion, against a party who ‘fails to make a showing to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.’” Aldrich Enters., Inc. v. United States, 938 F.2d 1134, 1138 (10th Cir.1991) (quoting Celotex, 477 U.S. at 322, 106 S.Ct. at 2552). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact by informing the court of the basis for its motion. Martin v. Nannie and the Newborns, Inc., 3 F.3d 1410, 1414 (10th Cir.1993). This burden, however, does not require the moving party to “support its motion with affidavits or other similar materials negating the opponent’s claim.” Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. (Emphasis in original). Once the moving party properly supports its motion, the nonmoving party “may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Muck v. United States, 3 F.3d 1378, 1380 (10th Cir.1993). The court reviews the evidence in a light most favorable to the non-moving party, e.g., Thrasher v. B & B Chemical Co., Inc., 2 F.3d 995, 996 (10th Cir.1993), under the substantive law and the evidentia-ry burden applicable to the particular claim. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.

BACKGROUND

I. The Nature of the Parties’ Commercial Relationship

Amoco is in the business of selling gasoline and other petroleum products through a network of service station dealers and independent “jobbers” around the United States. Plaintiffs are service station dealers who sell Amoco-branded products in Kansas. Plaintiffs are independent businessmen; they set their own retail prices and make their own purchasing, advertising, and marketing decisions. Plaintiffs have had to invest money in their service stations and, in some cases, they have incurred long-term financial obligations.

Plaintiffs’ relationship with Amoco is two-tiered. First, plaintiffs are franchisees of Amoco, marketing and selling Amoco-branded gasoline and automotive products. Second, plaintiffs are lessees of Amoco, leasing Amoco-owned service station facilities.

Amoco requires plaintiffs and most (if not all) of its other dealers to sign certain pre-printed, standardized form contracts which govern their franchisor-franchisee and lessor-lessee relationships. Most significant among these are the “Dealer Supply Agreement” or DSA, concerning the parties’ franchise relationship, and the “Lease Agreement,” concerning the parties’ lessor-lessee relationship. Over the years, plaintiffs have entered into a series of Dealer Supply Agreements and Lease Agreements with Amoco, signing new contracts as previous ones terminated. The agreements usually ran for three years. In addition, plaintiffs contend that Amoco has implemented various pro-grains and policies which bear significantly upon the relationship between Amoco and the dealers under the written contracts and agreements.

The DSAs, Lease Agreements, and other standardized contracts were presented to plaintiffs by an Amoco territory manager who was familiar with all phases of dealer operations. Pete Christy was the territory manager for Wichita from 1967 to 1991. Christy “deliver[ed] various written contracts such as the [DSA] and Lease Agreement in a package of documents to the dealers at the time they became a dealer and thereafter on their renewal dates.” (Doc. 181, Christy Affidavit, ¶5.) Christy “would answer questions about the contracts, if the dealer had any, but [he] did not routinely go over the contract paragraph by paragraph. [He] was not familiar with all the fine print of the contracts.” Id. at ¶ 6.

II. The Dealer Supply Agreement

Under the DSA, Amoco agrees to “sell and deliver” gasoline and other products to the plaintiffs, and plaintiffs agree to “purchase and receive” the gasoline and other products from Amoco “in such reasonable quantities as [plaintiffs] may order.” (Doe. 128, Ex. 1A, ¶ 1.) The DSA provides that the price for gasoline purchased by plaintiffs shall be “Amoco’s dealer buying price” or DBP:

Prices. The price for motor fuels purchased by Dealer from Amoco hereunder, shall be Amoco’s dealer buying price for each respective grade of said products in effect in Amoeo’s pricing area in which the above-identified motor fuel sales facility is located at the time when title to said products passes from Amoco to Dealer.

Id. at ¶ 4 (underline added). The DSA requires plaintiffs to “offer for sale from the Premises ‘representative amounts’ of Amoco’s trademarked motor fuels” or “Amoco [has] the right to terminate [the DSA] and any franchise relationship between Amoco and Dealer.” Id. at ¶ 19. The DSA does not, however, require that plaintiffs buy these “representative amounts” of Amoco’s trademarked fuels directly from Amoco, as opposed to an Amoco-branded jobber. (See, e.g., Doc. 179, Wayman Depo., p. 10-11; Doc. 174, Howell Depo., p. 27.) Nor does the DSA “preclude [plaintiffs] from selling competitive-brand products” at their service stations. (Doc. 128, Ex. 1A, ¶ 15.)

All of the DSAs between Amoco and plaintiffs contain “merger” or “integration”-type clauses. There are some variations depending upon the date of the agreement. The 1989 and 1991 versions of the DSA state:

Entire Agreement. This Dealer Supply Agreement cancels and supersedes all pri- or written and unwritten agreements and understandings between the parties pertaining to the matters covered in this Agreement. No obligations, agreements or understandings shall be implied from any of the terms and provisions of this Agreement, all obligations, agreements and understandings with respect to the subject matter hereof being expressly set forth herein. No representations or statements, other than those expressly set forth herein, were relied upon by the parties in entering into this Agreement. No modification or waiver of, addition to, or deletion from the terms of the Agreement shall be effective unless reduced to writing and signed by Dealer and a representative of Amoco authorized to execute this Agreement.

(Doc. 128, Ex. 1A, ¶ 23; Doe. 164, Ex. 5,1989 and 1991 Dealer Supply Agreement, ¶23.)

The 1981, 1983, and 1986 versions are slightly different:

Sole Agreement. This Dealer Supply Agreement cancels and supersedes all pri- or agreements and understandings between the parties hereto pertaining to the matters covered herein, and there are no other agreements, written or oral, between the parties pertaining to the subject matter hereof. This agreement does not cancel or supersede any written lease of Premises, written agreement for the loan of equipment, written agreement relating to the honoring of credit cards, trademark agreement, or other written agreement between the parties not directly incompatible herewith or directly covering the same subjects hereof.

(Doe. 164, Ex. 5,1981,1988, and 1986 Dealer Supply Agreements, ¶ 21.)

III. The Lease Agreement

Under the parties’ Lease Agreements, Amoco agrees to “demise and lease” certain service station facilities to plaintiffs, and plaintiffs agree to pay Amoco a stated sum per month during the first year of the lease. (Doc. 128, Ex. IB, ¶¶ 1 — 4.) If the lease is for a term of more than one year (most of the leases are for a three year term), Amoco “reserves the right to modify the monthly rental ... to conform with [Amoco’s] established policy rental in effect” for the particular type of facility being leased. Id. at ¶ 5. Like the DSA, the Lease Agreement gives Amoco the right to terminate the parties’ commercial relationship if the dealer discontinues the sale of representative amounts of Amoco products. Id. at ¶ 25.

Like the DSA, the Lease Agreement contains a merger or integration-type clause. The 1989 and 1991 Lease Agreements provide:

Entire Agreement. This Lease cancels and supersedes all prior written and unwritten agreements and understandings between the parties pertaining to the matters covered in this Lease. No obligations, agreements or understandings shall be implied from any of the terms and provisions of this Lease, all obligations, agreements and understandings with respect to the subject matter hereof being expressly set forth herein. No representations or statements, other than those expressly set forth herein, were relied upon by the parties in entering into this Lease. No modification or waiver of, addition to, or deletion from the terms of this Lease shall be effective unless reduced to writing and signed by Lessee and a representative of Lessor authorized to execute this Lease.

(Doc. 128, Ex. IB, ¶ 30; Doc. 164, Ex. 5,1989 and 1991 Lease Agreements, ¶ 30.)

The 1980, 1983, and 1986 Lease Agreements simply state:

This lease shall not be modified or amended except in writing. No obligation, agreement or understanding shall be implied from any of the terms and provisions of this lease, all obligations, agreements and understandings with respect to the leased premises being expressly set forth herein.

(Doc. 164, Ex. 5, 1980, 1983, and 1986 Lease Agreements, ¶ 28.)

IV. The Meter Marketing Plan, Dealer Buying Price, and Pricing Strategies

Pursuant to the DSA, Amoco delivers fuel to plaintiffs in accordance with the provisions of a “Meter Marketing Plan Agreement,” another of the standardized written contracts entered into by the parties:

Delivery — Motor Fuels.

(a) Amoco shall, during the term hereof, deliver the above-identified motor fuels to Dealer at the above-identified motor fuel sales facility in accordance with the applicable Dealer Delivery Plan Agreement or Meter Marketing Plan Agreement in effect at the time of delivery. Dealer shall abide by the terms of the applicable Agreement in effect at the time....

(Doc. 128, Ex. 1A, ¶5.) Under the Meter Marketing Plan, Amoco delivers gasoline to plaintiffs’ service station’s underground storage tanks on a bailment basis. (Doc. 163, p. 38; Doc. 164, Ex. 3.) Plaintiffs are required to provide Amoco “24 hour-per-day access to [their] motor fuel storage for purposes of delivery.” (Doc. 128, Ex. 1A, ¶ 5(e).) Amoco retains title to the gasoline in plaintiffs’ storage tanks until it is actually pumped from the tank through the dealers’ metered gas pumps, at which time the title passes to the dealer. The “dealer buying price” or DBP (which is not actually mentioned in the Meter Marketing Plan) is thus established at the time the gasoline is purchased by a customer, not when Amoco delivers the fuel to the respective service stations. Plaintiffs periodically record the volume of fuel dispensed through their stations’ pumps and report those amounts to Amoco. Amoco charges plaintiffs’ accounts in accordance with the amounts reported and the applicable DBP.

Plaintiffs have substantial complaints about the manner in which Amoco sets its DBP. Plaintiffs claim that, contrary to Amo-eo’s representations, Amoco’s pricing strategies have been designed to yield one-sided benefits to Amoco at plaintiffs’ expense. According to plaintiffs, the Wichita gasoline market is extremely competitive and driven by independent sellers and jobbers, intermediate distributors who sell gasoline to other dealers rather than directly to consumers. Plaintiffs allege that Amoco’s DBP is higher than the price at which independent marketers buy their fuel, meaning plaintiffs make less margin per gallon. Plaintiffs complain that it is difficult for them, encumbered by the Meter Marketing Plan and forced to pay the DBP established by Amoco, to maintain competitive retail gasoline prices that attract customers and still make a satisfactory profit on gasoline sales.

V. The Discount for Cash Program

Amoco offers its customers credit cards which enable them to purchase fuel and other items and services on credit at Amoco stations. Plaintiffs accept Amoco credit cards at their stations. A “Dealer/Jobber Credit Card Contract,” yet another of the standardized contracts between the parties, currently governs the credit card sales transactions between plaintiffs and Amoco. (Doc. 164, Ex. 4, ¶ 111(B).)

Prior to 1982, Amoco never charged its dealers a fee for the costs of its credit card system. Instead, those costs were built into the cost of gasoline or, in other words, were simply part of the DBP. In 1982, Amoco adopted a “Discount for Cash” (DFC) program purportedly designed to remove the cost of the credit card system from the cost of the gasoline and ensure that only credit card customers, not cash customers, paid for the credit card system. Under the DFC program, Amoco charged plaintiffs a credit card transaction fee of 4% and, according to plaintiffs, promised to reduce the DBP by 2.8