Budget Rent a Car of Washington, Inc. v. Raab

Digges, J., delivered the opinion of the Court. The appellant, Budget Rent A Car of Washington, Inc., filed its bill of complaint in the Circuit Court for Montgomery County against the appellee, Hans Raab, seeking to enjoin him from renting automobiles in Bethesda, Maryland in alleged violation of a provision contained in a sub-franchise license agreement. In addition to the injunction, Budget sought monetary damages. The bill alleged that Raab, who formerly operated a Budget Rent A Car franchise under the agreement, was in violation of a non-competition clause contained in that instrument which required him “to refrain from engaging in any other vehicle, automobile, or truck rental or leasing business of motor vehicles in the city of Bethesda, 1 Maryland, during the term of this agreement or any renewal thereof, or for two (2) years after its termination or cancellation, without the express written authorization of BUDGET.” Following a hearing, Judge James H. Pugh denied the requested injunction and dismissed the complaint.

From that order this appeal was noted. The facts disclose that the appellee is the sole proprietor of Raab’s Service Center, a BP gas station locáted at 7535 Old Georgetown Road, Bethesda, Maryland. On July 21, 1967, Raab entered into a sub-franchise license agreement with the appellant whereby he agreed to rent a fleet of vehicles from Budget for a period of one year. These were in turn leased to the general public from his service station.

Though at times there was friction between the parties and apparent deviations from the ⁴⁸⁰ agreement, for the four succeeding years Raab annually renewed his contract with the appellant. During this period, a separate telephone listed in the directory under Budget’s name, as its Bethesda office, was maintained at the gas station. On March 8, 1972, Raab, who was then 71 years old, notified Budget, by letter, that because of his failing eyesight and generally poor health he could no longer continue operating under the franchise agreement and would, therefore, terminate it within thirty days. Budget waived a 90 day notice provision contained in the agreement and, as of April 1, 1972, the arrangement was ended by mutual consent.

As of that date, Raab ceased renting automobiles and returned all of the vehicles leased from Budget. However, appellee continued to operate his gas station and to rent Ryder trucks, a business he had started with Budget's consent before the termination of their contract. Shortly after Raab concluded his arrangement with Budget, his wife, Charlotte C. Raab, began what she claimed to be her own automobile leasing business. Mrs. Raab conducted her business from her husband’s gas station with a fleet of about 50 Volkswagens and a few Chevrolet vans and cars.

These same vehicles, as well as 45 cars rented from Budget, had been used by Mr. Raab when he was in the car rental business. However, the vehicles not leased from Budget were not owned by Mr. Raab. Rather, they were all titled in Mrs. Raab’s name and had been purchased by her because her husband could not obtain financing on account of his advanced age and poor health. Mrs. Raab, although she did not pay a rental for the space provided her, maintained separate books from those of her husband and obtained a phone separate from that of the service center.

When Mrs. Raab began her business, Budget had the phone listed in its name removed and connected to its Silver Spring office so that all incoming calls were directly transferred there. Although now Mr. Raab, through a manager, continues to operate his service center, occasionally visits the gas station him ⁴⁸¹ self and may sometimes offer advice to his wife, he claims he is not involved in any way in the operation of Mrs. Raab’s “BP Auto Rentals.” 2 Because of the operation of this automobile rental business, Budget seeks this injunction. It claims that Raab is impermissibly competing against Budget by the use of his employees and