Lesch v. Chevron, U.S.A., Inc.

W. ALBERT MENCHINE, Judge, Specially Assigned. Warren Robert Lesch, M.D. and Margaret Marie Lesch (Dr. Lesch, Mrs. Lesch, or the Lesches) 1 filed an action in the Circuit Court for Harford County against Chevron ⁶⁷² U.S.A., Inc. (Chevron) and others. 2 By amendment, Bay Oil, Inc. (Bay Oil) was made a co-defendant. The several counts of the complaint against Chevron, as amended, alleged: (I) negligence of its actual or apparent agent; (II) strict liability; and (III) breach of warranty. The several counts of the complaint against Bay Oil alleged: (IV) negligence of its actual agents; (V) strict liability; and (VI) breach of warranty.

Loss of consortium against both Chevron and Bay Oil was alleged under count VII. Chevron and Bay Oil filed separate motions for summary judgment. The trial court, by a single order dated August 4, 1987, granted both motions. The order extended final judgments in favor of those two defendants. 3 The Lesches have appealed.

The test for our review in such cases was succinctly stated in Washington Homes v. Inter. Land Dev., 281 Md. 712, 717-18 , 382 A.2d 555, 557-58 (1977): “In reviewing the propriety of the trial court’s action on a motion for summary judgment, the appellate court is concerned with whether there was a dispute as to any material fact, and if not, whether the moving party was entitled to judgment as a matter of law. In considering the matter, the duly shown facts which would be admissible in evidence and all reasonable inferences deducible therefrom must be considered in a light most favorable to the party opposing the motion and against the party making the motion. See Rooney [v. Statewide Plumbing & Heating General Contactors, Inc.], 265 Md. [559] at 563-564 [ 290 A.2d 496 (1972)]; Shatzer [v. Kenilworth Warehouses, Inc.], 261 Md. [88] at 95 [274 A.2d 95 ⁶⁷³ (1971)]; Brown [v. Suburban Cadillac, Inc.], 260 Md. [251] at 255 [ 272 A.2d 42 (1971)].” So viewed, the “pleadings, depositions, answers to interrogatories, admissions and affidavits” (Maryland Rule 2-501) demonstrate the existence of admissible evidence legally sufficient to establish the following: On July 14, 1985 Dr. Lesch had observed “a metal rod lying in the ... highway ... swerved to avoid the rod but obviously did not.

The left rear wheel hit the end of the rod, causing it to elevate, and hit against the gas tank.” He first noted leaking gas after putting the car in the garage that day. The car was pushed from the garage and the driveway and garage hosed down until all luminescence and odor had disappeared. The car was left outside overnight and the garage door left open. On July 15, 1985, Dr. Lesch reported by telephone to co-defendant Walker’s Chevron, Inc. (Walker’s Chevron) that gasoline was leaking from the gas tank of his motor vehicle.

Co-defendant Malcolm Weeks (Weeks) arranged to have the vehicle towed to the service station. Neither Walker’s Chevron nor Weeks are parties to this appeal. Dr. Lesch talked to Weeks and was informed that repairs “would involve usually three things. He could repair it, if it was a small hole; it would require welding, if it was a larger hole; and it would need replacement if it was a big large hole.” Weeks later told Dr. Lesch “I have fixed your gas tank.” He had “fixed” the leak by wrapping air conditioner tape around a wood screw and inserting it into the gas tank.

He then sealed the area with a mixture of epoxy substances. The automobile was returned to Dr. Lesch’s possession on July 16, 1985 and was driven between 50 and 70 miles that day. Checks for gasoline leakage were made on the afternoon and evening of that day at 1:00, 5:00, 5:30, 6:00, 7:30 to 8:00, and 9:30 to 10:00. No leaking had occurred on any of those inspections.

The vehicle then was garaged. ⁶⁷⁴ The home of the Lesches was a ranch-style house, with the garage and basement on the first level, the living quarters above. On the morning of July 17, 1985 Mrs. Lesch noticed an odor, told Dr. Lesch, and both descended to the basement area, then moved through a door into the garage. The basement light switch was already on when the descent was made, but there was no light in the garage itself. Dr. Lesch carried a flashlight because he was “aware of a faint, but definite, maybe a little greater than faint, but a definite odor of gasoline.” He lifted the garage door to get more light, retraced his steps so he “could see better under where the tank was” and saw “a little puddling of gasoline in the gas tank area.” He said that “... at that moment the garage door triggered the light going on, and there was an instantaneous explosion.” Dr. Lesch sustained second degree burns on 45% of his total body surface.

Mrs. Lesch sustained second and third degree burns on 45% of her total body surface. The dwelling and all its contents were destroyed in the ensuing fire. The Case As To Chevron The appellants do not contend that actual agency has been shown as to Chevron. Their claim against Chevron is grounded solely upon apparent agency liability.

In the course of an oral opinion, the trial judge said: “The case appears to me to fall squarely within the facts as presented by BP Oil Company [Corporation] vs. Mabe, decided by the Maryland Court of Appeals, 279 Md. 632 [ 370 A.2d 554 (1977) ]. Based upon all facts that I have before me and taking the inferences drawn therefrom in the light most favorable to the Plaintiff, I do not believe there is any basis to conclude Chevron made any representation to the Plaintiff, and that the Plaintiff did not, in fact, rely upon any representation made by Chevron. A reliance by the Plaintiff upon the facts as presented did not constitute reasonable and justified reliance upon any apparent agency relationship between Chevron and Walker. ⁶⁷⁵ “I therefore conclude that the Motion for Summary Judgment as to Chevron should be granted.” We agree that Mabe fixes the standards by which apparent agency liability may attach in this State. We shall hold, however, that the admissible evidence and the reasonable inferences arising therefrom as shown in the documentary evidence required to be considered under Rule 2-501 would permit a trier of facts reasonably to conclude that apparent agency has been shown.

In short, we conclude that the deficit of evidence delineated by Judge Smith in Mabe has been supplied in this case. In Mabe, supra, Judge Smith said for the Court of Appeals: “One thing upon which the parties here can agree is that the law applicable to such an agency is that stated in Restatement (Second) of Agency § 267 (1958): ‘One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.’ (Emphasis added.) “Restatement of Agency § 267 (1933) is identical to the above. Two Maryland cases are cited in the annotations to it, Pennsylvania R.R. v. Hoover, 142 Md. 251 , 120 A. 526 (1923), and Pugh v. Washington Ry. & Elec., 134 Md. 196 , 106 A. 522 (1919), 279 Md. at 643 , 370 A.2d at 560 .” Judge Smith thereafter in Mabe cited and commented upon 1 F. Mechem, Law of Agency § 245 (2nd ed. 1914): “ ‘Estoppel is always a matter personal to the individual asserting it and he must therefore show that he was misled by the appearances relied upon. It is not enough that he might have been, or that some one else was, so misled.

It must also appear that he had reasonable cause to believe that the authority existed; mere belief without cause, or belief in the face of facts ⁶⁷⁶ that should have put him on his guard is not enough.’ Id. at 177-78. “The cases we have examined seem to be uniformly in agreement with the statements in the Restatement and Mechem to the effect that for there to be liability in a case such as this there must be actual reliance upon the part of the person injured.” 279 Md. at 644-46 , 370 A.2d at 561 . Judge Smith carefully delineated the indicia of authority in Mabe as follows: “The service station in question was painted yellow and green, said to be the BP colors. There was a large BP sign on a pole hanging over the station; BP insignia appeared on the gasoline pumps; there was a tow truck present with a BP sign on it, and the attendant in question wore a uniform with yellow and green BP emblems on his jacket and cap. “The service station building was leased by the owner to Faison. He leased it to BP who in turn leased it back to Faison.

Gasoline tanks, pumps and signs were owned by BP. Under the agreement between Faison and BP, Faison was required to “furnish, install and display continuously on the exterior of the station at a point visible and accessible to the public, a legible sign showing that [he was] occupying said station under a lease and [was] the sole owner of the business.” Mabe was asked by his attorney whether there was “any sign up that said anything about being operated by anybody other than BP,” to which he replied in the negative. The record is otherwise silent as to such a sign.” 279 Md. at 634-35 , 370 A.2d 556 . “Faison was paid no salary or commission by BP. Any employees were hired, fired, and paid by him.

He was required to make no reports to BP relative to his sales and service operation. He paid his own sales and other taxes. BP had no control over the hours of station operation, the hours of operation being fixed by Faison. Faison paid cash on delivery for that which he bought.

If ⁶⁷⁷ he did not have the money to pay, he did not obtain the product. He provided his own uniforms and said that BP never told him that he had to wear a uniform of any kind.” 279 Md. at 635-36 , 370 A.2d 557 . Judge Smith then detailed the evidence relating to reliance by Mabe: “Mabe’s reasons for entering the station in question were set forth in the following testimony on direct examination: ‘Q Why did you choose the BP station? ‘A Because I always buy BP gasoline, always deal with BP. ‘Q Had you dealt with BP before? ‘A Yes, up on 29th Street and Greenmount Avenue. I [sic] was right around the corner from where I lived at. ‘Q How often had you dealt with them? ‘A I had been dealing with them for around about a year at that time. 'Q Was there anything in particular you—attracted you to the BP station on Hilton Street? ‘A Nothing except for the BP station, had BP signs, BP gas, BP pumps.” “Although his brother twice said that reasons for entering this station were “the happy motoring sign” which he said “is a slogan and it means that there’s good service,” it was not actually established that such a sign, the sign of one of BP’s competitors, was on the premises.” 279 Md. at 636 , 370 A.2d 557 (emphasis added).

The Court in Mabe then concluded: “Because there is no evidence of any kind of reliance on the part of Mabe and no evidence of actual agency, Judge Dorf properly granted the motion for judgment N.O.V.” 279 Md. at 649 , 370 A.2d 564 . The procedural history of the appeal in Mabe, supra, demonstrates that the issue whether the evidence would ⁶⁷⁸ have permitted a finding by the trier of. facts that the service station operator was the apparent agent of BP Oil was troublesome and difficult of ascertainment. The Mabe case was first argued before a five judge Court but failed to produce a decision. Reargued before a seven judge Court, the case produced a dissent by the late Judge Levine.

In the subject case, we believe that the evidence in this record leaves no ground for doubt that all elements essential to proof of apparent agency may be found by the trier of facts. We explain. Indicia of Apparent Authority Determination of the issue whether the decision in Mabe, supra, compels affirmance of the judgment below or whether the evidence would reasonably permit the trier of facts to conclude that this is Mabe revisited and deficit supplied, requires careful consideration of the reasonably permissible findings of facts in the two cases. In the subject case there is evidence from which it reasonably may be inferred that Chevron followed a course that was intended to assure that company operated and branded stations would be indistinguishable in the public mind.

This is demonstrated by the following excerpt from Chevron’s Station Acquisition Manual of March 1984. An important factor in the Company’s willingness to brand a retail outlet is the physical appearance it will present. In our industry, a branded station has become a visual statement to the world about our products and services. Hopefully, each branded station enhances our reputation in the community.

Chevron’s retail identification system was conceived and implemented to establish a positive appearance that can be readily associated with the customer good will we enjoy. Consistent application of the system will build on our strengths and enhance our reputation in the sale of our products. Improper or inconsistent application of our identification system will undermine our program and damage our reputation. ⁶⁷⁹ The importance of a coordinated, attractive appearance for all branded retail outlets, wherever they are located, deserves the attention of all Marketing employees. This is equally true whether the station is owned and operated by Chevron or owned or operated by a jobber or dealer.

The public is often unable to distinguish between a jobber station and one of ours. Accordingly, we must be equally concerned with the appearance of all Chevron branded stations. (Emphasis added). Similar indicia of an intentional purpose by Chevron to guide the public mind to the conclusion that the Branded Dealer is Chevron and Chevron is the Branded Dealer is to be found in the Branded Jobber Petroleum Agreement between Chevron and Bay Oil that in part here pertinent reads as follows: “8(c) Jobber recognizes Chevron’s right to use and authorize others to use all trademarks, service marks, tradenames, color schemes and service station designs (collectively “insignia”) utilized by Chevron (and owned by Chevron’s parent company, Standard Oil Company of California (“Standard”)) to identify products and services, and Jobber agrees not to claim any right, title or interest therein.

Jobber acknowledges the need to control Jobber’s use of such insignia in order to maintain the validity of such insignia and to assure the continued recognition of, acceptance by, and high regard of the motoring public and other consumers for the products and services identified by such insignia.” (Emphasis added). Chevron’s Authorization Letter to Bay Oil for Branded Retail Outlets dated 9/11/84 included the following: “1. You shall cause the terms and conditions regarding the use of such insignia set forth in Section B of the Jobber Agreement to be complied with at the premises. ⁶⁸⁰ We observe that Chevron used the imperative "shall” to compel Bay Oil to cause the use of such insignia at branded stations. No other insignia than Chevron’s appeared on the premises of Walker’s Chevron.

During the deposition of the witness Robert George Shurts, identified as a Chevron employee for 36 years who retired as liaison between the company and jobbers in Maryland and other states, it was acknowledged that he had provided Bay Oil with such a document and gave the following testimony concerning it: “Q. Why did Chevron choose to have its jobbers provide a document of this type to service stations rather than providing it to the service stations directly? “A. We don’t have anything to do with the stations. The jobber’s stations—jobbers are our only customer. I don’t have anything to do with dealers. “Q. With respect to the use of the Chevron trade name and service mark, Chevron expects the jobber to police the use of that mark by the branded service station? “A. Correct.” This is an example of facts consciously withheld from public knowledge. The record established beyond cavil that all the insignia Chevron believed assured “continued recognition of, acceptance by and high regard of the motoring public and other consumers for the products and services identified by such insignia” were in place at Walker’s Chevron.

Bay Oil had carried out Chevron’s mandate. The Branded Jobber agreement, supra, included the following: “9. Credit Cards, (a) Chevron may, at its option, authorize the acceptance by Jobber or one or more of Jobber’s customers of credit cards approved by Chevron for retail sales of the types of products and services that Chevron may from time to time designate. The honoring of such credit cards by Jobber or Jobber’s customers and Chevron’s acceptance from Jobber of authorized invoices ⁶⁸¹ or other evidence of debt issued thereon for sales of products and services made to cardholders by Jobber or, at Chevron’s option, one or more of Jobber’s customers, shall be subject to terms and conditions established periodically by Chevron, which shall include, but not be limited to, Chevron’s right to charge back to Jobber or to refuse to accept any invoice pursuant to such terms and conditions.

Chevron reserves the right at any time to terminate any such authorization for the acceptance of credit cards.” (Emphasis added). Except for 12 month warranty periods after new car purchases, all repair work on the two vehicles of the Lesches was performed by Walker’s Chevron, including the ill-fated repair of the gas tank on July 15, 1985. Such repair work of wide ranging character was performed by Walker’s Chevron on 33 separate occasions between May 18, 1982 and July 15, 1985. The cost of such repairs totalled $2,953.66 over that period.

All repair charges were paid by way of a Visa charge account approved by Chevron. Printed charge tickets provided by and bearing the imprint of Chevron, U.S.A., Inc., as shown on the following blank form, typically were used for all purchases and repair charges made by the Lesches at Walker’s Chevron: ⁶⁸² [[Image here]] ⁶⁸³ These billings in total showed payments by the Lesches of many thousands of dollars during the cited period. Chevron’s efforts to prevent the public from distinguishing between branded stations and its own outlets were of long standing and were diligently pursued. On January 23, 1976, a letter from E.A. Pfefferkorn, identified as the wholesale manager of Chevron, addressed to Bay Oil, declared, “We are offering you a new 1976 point-of-sale program incorporating a ‘We Care’ theme.” Although the letter stated that the program was designed for dealers “whose business is gasoline and service oriented rather than a dealer whose business might be repair oriented,” 4 the letter declared that “The ‘We Care’ program concept centers around the dealer’s concern for his customers’ service needs, not just the selling of his products.’’ (Emphasis added).

The letter enclosed the following slogan: “WE CARE ... “—for you, our customer —for your comfort —for your safety —for your economy! “If at any time our service slips, remind us, because we’re working hard to prove to you... “WE CARE! “This station is dedicated to this attitude and we want to take care of your car for you, properly and efficiently, so you are happy, safe and comfortable! Give us a try or tell us when we miss the mark, so we can keep up our promises... ⁶⁸⁴ “WE CARE!” (Emphasis added). The employees of Walker’s Chevron were clothed in uniforms bearing Chevron insignia. The Chevron “Marketeer” disclosed the purpose intended by Chevron by its encouragement of such uses by branded stations.

In an article headed “DRESSED FOR SUCCESS,” the “Marketeer” made the following comment: “The current Chevron uniform program has been in effect for about 10 years, and while it has been successful, the Company believed it was time to make a change. ‘We believed we needed something more fashionable and acceptable to dealers and their employees,’ says Ben Smith, manager of Dealer and Consumer Affairs. ‘We were looking for something that our dealers would want to wear, that would be comfortable and functional, and that would blend in with the Company image. Most of all, we wanted a uniform that would present a neat and professional appearance.’ * # * * * * Smith believes the new uniforms will be a worthwhile dealer investment: ‘Customers will have more confidence in dealers and salespeople who project a sharp, clean, professional image. The image will help build dealers’ business and encourage their recognition as professionals in their communities.’ ” On the basis of the totality of the above admissible evidence, might the trier of facts reasonably conclude that Chevron had adopted Omar Khayyam’s studied purpose to “take the cash and let the credit go, nor heed the rumble of a distant drum,” and in consequence have enmeshed itself in Sir Walter Scott’s epigram: “Oh what a tangled web we weave when first we practice to deceive”? We think so.

Reliance on the Indicia of Authority As to Dr. Lesch Dr. Lesch explained his reliance upon the evidence both in his deposition and in his separate affidavit. ⁶⁸⁵ In the deposition he gave, inter alia, the following testimony: “Q You mentioned earlier that the major organization was one of the reasons why you shopped at a particular service station. “A After the demise of Mr. Walker, it was very important to me to have a gas station that gave fairly complete service that had the back-up or was involved with a national organization, yes. ****** “Q Did [the son, Mr. Benny] Walker, or Mr. Weeks or anyone at that station represent to you that they were being backed up by the major concern of Chevron? “A Inferentially on one rare occasion. “Q What was that? “A * * * I had my son’s old ’67 Valiant out to Walker’s to have some engine problems, that we took it back once or twice, and Mr. Weeks was working on it, and there were some problems that kept recurring. And I asked [Creighton], 5 I said, not knowing that much about Mr. Weeks at the time, and having to adjust to new mechanics, after having years of faith in Mr. Walker, I had mentioned, questioning his ability is he a good mechanic, or does he know what he’s doing. And his answer was, oh, yes, he is sent to courses, or he goes to courses. And by this I assumed or believed that this was a strong implication that he did indeed attend refresher courses or modernization courses, whatever, that were perhaps given by a national organization, most likely the one this gas station was affiliated with by its logo. “Q Did he tell you which organization he went to these courses? “A No. He said, oh, yes, he’s a good mechanic, he regularly is sent to, or has to go to, not as if it was his own volition, as if it was a requirement. ⁶⁸⁶ “So, I felt much more secure at that point in time, knowing that there were requirements or standards to be met by the employees. 6 “Q Approximately when was that conversation? “A I would guess it would be shortly after Mr. Walker died, when Mr. Weeks first started to work there.

Which I would guess would be sometime in ’80, ’81, somewhere in there.” In the course of a separate affidavit, Dr. Lesch said, inter alia: “Before the fire, my wife Margaret and I owned two motor vehicles, a 1977 Buick Regal and a 1973 AMC Hornet. When in Bel Air, Maryland, Margaret and I exclusively bought gasoline products, as well as serviced both of our vehicles at Walker’s Chevron, located at 800 Conowingo Road in Bel Air.” He went on to explain why he did so: “My attorneys have attached to this Memorandum as exhibit 15 copies of my VISA credit card statements for the period July, 1982—July, 1985. Whenever Margaret and I purchased gasoline or had our cars serviced in the Bel Air area, we used our VISA credit cards. We seldom, if ever, purchased gasoline or paid for car services with cash while in Bel Air, and we never used any other credit card besides our VISA card.

As these credit card statements show,