period the franchise is in effect and the franchisor first acquired actual or constructive knowledge of such occurrence . . . [less than 61 days] prior to the date on which notification of termination . . . is given." 15 U.S.C. § 2802(b)(2)(C)(ii).
Decisional authority further supports the conclusion that a termination of a franchise relationship on significantly less than 90 days notice, pursuant to a mutual agreement, may be reasonable under the PMPA. See Wisser Co. v. Mobil Oil Corp., 730 F.2d 54, 56, 60 (2d Cir. 1984) (upholding forthwith notice of termination in accordance with franchise agreement, pursuant to both 15 U.S.C. §§ 2802(b)(2)(A)(ii) and 2802(b)(2)(C)(ii)); see also, Rowe v. Amoco Oil Co., 723 F.2d 911 (6th Cir. 1983) (Table), 1983-2 Trade Cases (CCH) P 65,739, at 69,776 (upholding mutual termination agreement providing for 30 days notice). Plaintiff fails to bring any authority to the Court's attention that contradicts the appropriateness of this determination.
Turning to the instant case, in light of the Court's factual findings, including Persaud's substantially deceptive conduct towards Exxon throughout the sixty-day period leading up to his notice of termination on June 7, 1994 in connection with his execution of the Mutual Termination Agreement, the Court holds that it was reasonable under the circumstances for Exxon to provide Persaud with 23 days notice of the termination of his franchise. 15 U.S.C. § 2804(b)(1). The Court moreover finds that the foregoing conduct constituted (i) a failure to comply with a provision of the franchise that was "reasonable and of material significance to the franchise relationship," within the meaning of § 2802(b)(2)(A), and (ii) an "event which is relevant to the franchise relationship" justifying termination, within the meaning of § 2802(b)(2)(C). Accordingly, in light of the Court's prior determination within this Opinion and Order that Persaud may not rescind the Mutual Termination Agreement on equitable grounds, in addition to the statutory notice grounds herein addressed, the Court concludes that the franchisee is unable to make the requisite showing that "there exist sufficiently serious questions going to the merits to make such questions a fair ground for litigation." 15 U.S.C. § 2805(b)(2)(A)(ii). Consequently, plaintiff's application for a preliminary injunction must be denied.
2. Relative Balance of Hardships
The third prong of the preliminary injunction analysis under § 2805(b)(2) requires the court to "determine that, on balance, the hardships imposed upon the franchisor by the issuance of such preliminary injunctive relief will be less than the hardship which would be imposed upon such franchisee if such preliminary injunctive relief were not granted." 15 U.S.C. § 2805(b)(2)(B). For purposes of completing the record, the Court holds that Persaud fails to establish a balance of hardships in his favor in view, among other things, of his stipulation that grounds exist for Exxon to conduct successful termination proceedings against him. Consequently, it is likely that Persaud would remain a franchisee of Exxon for only a minimal period of time. In addition, it is highly likely that Exxon would sustain injury during any additional period that Persaud remained on the premises. Such injury would manifest, at the very least, in the form of lost profits derived from the sale of gasoline. A further hardship to Exxon exists through the potential erosion of its goodwill on account of public perception of an ineffectively-managed service station. In sum, therefore, the relative balance of hardships among the parties provides an independent basis to deny Persaud's application for preliminary injunctive relief.
B. Applications by Exxon
Defendant Exxon Corporation cross-moves for a preliminary injunction to enjoin the plaintiff from holding over on the premises in question, and to prevent the plaintiff from obstructing Exxon's entry onto said premises to remove Exxon equipment and all items bearing Exxon insignia.
As a threshold matter, the Court notes that the Second Circuit Court of Appeals has rejected the use of a per se approach with respect to cross-motions brought by the franchisor after the franchisee's application for preliminary injunctive relief has been denied. Recognizing that it is not impossible for a franchisee who has failed to satisfy the requirements of section 2805 to prevail after a full trial on the merits, the Second Circuit has held that the relief requested by the franchisor "should not be granted 'automatically' at a preliminary stage if the franchisor does not meet the traditional requirements for a preliminary injunction." Nassau Blvd. Shell Serv. Station, Inc. v. Shell Oil Co., 875 F.2d 359, 364 (2d Cir. 1989).
Further, the relaxed preliminary injunction standard that is available to franchisees under the PMPA may not be used by Exxon in its capacity as a franchisor. As the Second Circuit Court of Appeals has stated, "although 'it is easier for a franchisee to obtain a preliminary injunction under section 2805 than in the usual case,' the PMPA contains no comparable provisions which lessen the burdens on franchisors." Id. (quoting Wisser, 730 F.2d at 56). Accordingly, the traditional standard of the Second Circuit must be employed to determine whether Exxon is entitled to preliminary injunctive relief.
"To obtain a preliminary injunction, a [movant] must demonstrate: (1) either a likelihood that he will succeed on the merits of his claim, or that the merits present serious questions for litigation and the balance of hardships tips decidedly toward the [movant]; and (2) that without the injunction, he will likely suffer irreparable harm before the court can rule upon his claim." Fisher-Price, Inc. v. Well-Made Toy Mfg. Corp., 25 F.3d 119, 122 (2d Cir. 1994) (citing Laureyssens v. Idea Group, Inc., 964 F.2d 131, 135-36 (2d Cir. 1992); Citibank, N.A. v. Citytrust, 756 F.2d 273, 275 (2d Cir. 1985)).
The Court holds that Exxon is entitled to preliminary injunctive relief with respect to both its cross-motion to enjoin the plaintiff from holding over on the premises in question, and its cross-motion to prevent the plaintiff from obstructing Exxon's entry onto such premises to remove Exxon equipment and all items bearing Exxon insignia. For many of the same reasons explicated within the Court's discussion of Persaud's application for a preliminary injunction, the Court finds that Exxon is likely to prevail on the merits of its cross-claim that the mutual termination of plaintiff's franchise was proper under the PMPA. Concomitantly, the Court finds that Exxon is likely to prevail on the merits of its cross-claim that Persaud is required to surrender the premises pursuant to the subject lease. See supra Findings of Fact PP 8, 10.
The Court further finds that, without a preliminary injunction, Exxon will suffer irreparable harm before the Court can rule on its claim. Plaintiff's continued occupation of Exxon's property and use of its equipment deprives Exxon of the ability to make productive use of this site. In addition, in the absence of a court order, Exxon would face substantial risks through its immediate inability to exercise control and supervision over the gasoline tanks, pumps and related equipment located at the service station. Further, a denial of injunctive relief would expose Exxon to liability resulting from plaintiff's continued use of its equipment and property. Accordingly, Exxon's request for preliminary injunctive relief is granted.
In accordance with the foregoing, the Court enters the following orders in this action:
(1) South Lake Corporation is substituted as party plaintiff for Cecil L. Persaud.
(2) Exxon's motion to dismiss the complaint for lack of standing is DENIED as moot.
(3) Exxon's motion to dismiss the complaint for lack of subject matter jurisdiction is DENIED.
(4) Plaintiff's application for preliminary injunctive relief is DENIED in its entirety.
(5) Exxon's cross-motion for preliminary injunctive relief to enjoin the plaintiff from holding over on the premises in question, and to enjoin the plaintiff from obstructing Exxon's entry onto said premises to remove Exxon equipment and all items bearing Exxon insignia, is GRANTED.
(6) Plaintiff is ordered to vacate the premises in question by November 4, 1994 at 12:00 noon.
(7) Exxon's cross-motion for an order requiring the plaintiff to remit certain rental payments is held in abeyance pending a subsequent application to the Court documenting the specific pecuniary relief requested.
(8) The parties are directed to appear before the Court for a status conference on November 18, 1994 at 4:30 P.M. in Courtroom 12 of the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
Joanna Seybert, U.S.D.J.
Dated: Brooklyn, New York
October 31, 1994