Amoco Oil Co. v. Luehrs

Gilbert, C. J., delivered the opinion of the Court. The parties to this appeal, Amoco Oil Company, appellant, and Julia A. Luehrs, Personal Representative of the Estate of William J. Luehrs, Jr., Jon M. Hannam, and James D. Luehrs, appellees, appeared before two different trial courts in two different systems on two successive days and received two distinctly different results. The first decision was handed down by the United States District Court for the District of Maryland. The second decision flowed from the Circuit Court for Montgomery County.

The former declined to enjoin Amoco from terminating a lease with Luehrs, while the latter issued the injunction. Because we think the United States District Court to be right and the Circuit Court to be wrong, we vacate the injunction. 1 The Facts On June 3, 1981, Amoco Oil Company and William J. Luehrs, Jr., entered into a three year lease in which Amoco leased to Luehrs a gasoline service station known as "Tyson’s Corner Amoco.” In October of the same year the parties entered into another agreement for a service station styled "Potomoc Amoco.” Both agreements contained provisions which conditioned any proposed assignments by Luehrs on the consent of Amoco, which consent by Amoco ⁶⁵⁸ was not to be withheld unreasonably. The terms of the lease allowed Amoco to condition its consent to assignment upon the assignee’s acceptance of one year "trial franchises.” William J. Luehrs, upon learning in April of 1982 that he was terminally ill, decided to retire. Luehrs desired to assign his interests in the Tyson’s Corner station to his son, the appellee James Luehrs, and the Potomac station to his son-in-law, the appellee Jon Hannam.

Luehrs, through his attorney, informed Amoco of his decision to retire and requested its consent to his proposed assignments of the leases to the respective gasoline stations. After reviewing the proposed assignees’ qualifications, Amoco decided to grant each a one year trial franchise, notwithstanding the fact that both parties lacked service station ownership and management experience. The record shows that the one year trial franchise policy is an endeavor by Amoco to assure that three year leases are granted only to those dealers who are competent to contribute to what Amoco believes to be a strong dealership organization. It is represented by Amoco that heretofore all trial franchises in Maryland, Virginia, and the District of Columbia, save for one, have been converted at the end of the trial period into three year leases.

James Luehrs and Hannam both rejected Amoco’s trial lease offer, although each understood that they were virtually assured of extended leases after the trial period. Notwithstanding Amoco’s offer of trial franchises and its refusal to consent to his assignments of the three year leases, William Luehrs proposed to assign his lease interests to James Luehrs and Jon Hannam, respectively. William Luehrs died on December 4, 1982, about one month after he had filed suit in the Circuit Court for Montgomery County. Luehrs, by that suit, sought declaratory relief to the effect that the assignments were valid and that Amoco unreasonably withheld its consent to the transaction.

Amoco filed a counterclaim against William Luehrs, joining Hannam and James Luehrs as third parties defendant. Julia Luehrs, the widow of William Luehrs and ⁶⁵⁹ the personal representative of his estate, was substituted as a party to the action. Md. Rule 220 (c). Amoco, by letter dated January 3, 1983, notified Julia Luehrs that the franchise agreements were terminated effective April 2, 1983.

Each lease embodied a provision authorizing its termination upon the death of the lessee. Julia Luehrs, as personal representative, James Luehrs and Joh Hannam responded to the notification of termination by filing suit in the United States District Court for the - District of Maryland. The immediate objective of the litigation was a temporary restraining order. The longer range target was the obtaining of an injunction so as to prevent Amoco from terminating the leases.

On the same day the appellees filed for an injunction in the Circuit Court-for Montgomery County, thus seeking the same relief that was sought in the federal action. The United States District Court (Ramsey, J.), on April 18, 1983, held that Amoco was entitled to terminate the franchise agreements. He, therefore, denied the request for injunctive relief. The next day the appellees obtained a ten day ex parte injunction in the Circuit Court for Montgomery County.

At the expiration of the ten day period the court granted an interlocutory injunction, notwithstanding Judge Ramsey’s prior refusal to grant that relief. Amoco appealed. Amoco contends in a pentad of complex arguments that the injunction issued by the Circuit Court was improperly granted. We need not consider the five issues because we are of the belief that the hearing judge was clearly erroneous in his assessment of the facts and wrong in his