United States Court of Appeals,
Eleventh Circuit.
No. 94-6906.
Troy HOPKINS, individually and on behalf of all BP/Gulf dealers
in Alabama, Herbert Sharpe, individually and on behalf of all
BP/Gulf dealers in Alabama, John Mann, individually and on behalf
of all BP/Gulf dealers in Alabama, Plaintiffs-Appellees,
Robert Shaw, individually and on behalf of all BP/Gulf dealers in
Alabama, Sherry Shaw, individually and on behalf of all BP/Gulf
dealers in Alabama, Tom Pool, individually and on behalf of all
BP/Gulf dealers and Exxon dealers in Alabama, Terry Palamotos,
individually and on behalf of all BP/Gulf dealers and Exxon dealers
in Alabama, Plaintiffs,
v.
BP OIL, INC., Defendant-Appellant,
Exxon Corporation, Chevron USA, Inc., Defendants.
April 26, 1996.
Appeal from the United States District Court for the Middle
District of Alabama. (No. CV-88-V-1055-N), Robert E. Varner, Judge.
Before TJOFLAT, Chief Judge, COX, Circuit Judge, and WELLFORD*,
Senior Circuit Judge.
PER CURIAM:
BP Oil, Inc. ("BP") sells gasoline to gasoline station
operators for them to re-sell to the public. In this diversity
case, three gasoline station operators (the "dealers") sued BP
under Alabama law for breach of contract and breach of statutory
obligation, among other claims. The dealers alleged that, by
billing them based on gross gallons of gasoline rather than based
on temperature-compensated gallons of gasoline, BP breached the
parties' contracts and its obligation under User Regulation 3.5
*
Honorable Harry W. Wellford, Senior U.S. Circuit Judge for
the Sixth Circuit, sitting by designation.
("U.R. 3.5") of National Bureau of Standards Handbook 44. A jury
returned a verdict for the dealers on each of their claims. BP
appeals, and we reverse the judgment entered on those verdicts.
I. FACTS
BP began operating in Alabama on February 1, 1985, when it
acquired certain Gulf facilities in Alabama and assumed Gulf
contracts to supply gasoline to Gulf-brand gas stations in Alabama.
The dealers were operators of Gulf-brand gas stations in Alabama
who began buying gasoline from BP when it assumed Gulf's contracts.
The dealers eventually executed renewal contracts with BP.
Gasoline's volume varies according to its temperature. Volume
expands as temperature rises; volume contracts as temperature
falls. To account for gasoline consistently despite fluctuating
temperatures, the American Petroleum Institute, a private trade
organization, has established a voluntary standard of temperature
compensation. Temperature compensation involves adjusting the
actual volume of gasoline at a particular temperature to what its
volume would be at 60 degrees Fahrenheit.
The Alabama Department of Weights and Measures has adopted
National Bureau of Standards Handbook 44 and it was in effect
during the relevant time period. U.R. 3.5 of Handbook 44 requires
that any written invoice based on a reading of a wholesale
measuring device equipped with an "automatic temperature
compensator" show that the gasoline delivered has been adjusted to
the volume at 60°F.1 An "automatic temperature compensator"
1
During the relevant time period, U.R. 3.5 read:
UR.3.5. TEMPERATURE COMPENSATION-WHOLESALE.
physically adjusts the volume of gasoline dispensed to equal the
gallon amount that would be dispensed if the gasoline's temperature
were 60°F.
Until February 1, 1988, BP billed the dealers and other
Alabama retailers based on the number of gross gallons delivered.
In addition to the number of gross gallons, BP's invoices to the
dealers showed the gasoline's temperature when dispensed at BP's
terminal, as well as its specific gravity. BP was able to record
this information on its invoices because the loading line at its
terminal was equipped with a temperature probe. The gasoline's
temperature was sent automatically by computer to Cleveland, where
BP processed the invoices. The invoices then were printed out at
the selling terminal. 2 The contracts between the dealers and BP
did not define "gallon." However, each dealer testified that he
UR.3.5.1. USE OF AUTOMATIC TEMPERATURE COMPENSATORS.—If
a wholesale device is equipped with an automatic
temperature compensator, this shall be connected,
operable, and in use at all times. Such automatic
temperature compensator may not be removed, nor may a
compensated device be replaced with an uncompensated
device, without the written approval of the weights and
measures authority having jurisdiction over the device.
UR.3.5.2. WRITTEN INVOICES.—Any written invoice based
on a reading of a wholesale device that is equipped
with an automatic temperature compensator shall have
shown thereon that the volume delivered has been
adjusted to the volume at 60°F.
National Bureau of Standards Handbook 44, § 3.30 (1985).
2
The invoices to commercial and industrial accounts and
jobbers showed the number of temperature-compensated gallons as
well. This number is calculated by multiplying the temperature
of the gasoline by its specific gravity, and multiplying that
product by the number of gross gallons. Thus, from the
information on their invoices, the dealers could have calculated
the number of temperature-compensated gallons delivered.
understood that he was receiving gross gallons of gasoline from BP,
just as he had received gross gallons from Gulf.
In July of 1985, dealer Hopkins's accountant discovered an
inventory shortage and informed Hopkins that the shortage probably
was due to variations in temperature and gross billing. Hopkins
wrote to BP requesting billing on a temperature-adjusted basis.
The local BP representative told Hopkins that shortages and
overages even out over the course of a year. After Hopkins wrote
another letter requesting temperature-compensated billing, BP
responded that it did not sell gasoline to dealers on a
temperature-adjusted basis and that it would continue to bill
Hopkins based on gross gallons.
II. PROCEDURAL BACKGROUND
The dealers sued BP for breach of contract, breach of
statutory obligation, and fraudulent suppression under Alabama law.
Dealer Hopkins also sued BP for affirmative misrepresentation under
Alabama law.
In their complaint, the dealers alleged that the dispensing
equipment at BP's terminal was "equipped with automatic temperature
compensating devices to measure the volume of motor fuel sold in an
adjusted volume (as would have been dispensed at 60°F)." (Compl.
at ¶ 13.) In its answer, BP stated: "BP is without sufficient
information, knowledge or belief to admit or deny the allegations
... and, therefore, denies same. BP denies, in any event, that the
dispensing equipment for sales to plaintiff is at the BP terminal."
(Answer at ¶ 13.)
The dealers further alleged in their complaint that BP "had
invoiced ... according to volumes of gasoline measured at the
ambient temperature at the terminal and had refused to temperature
compensate the motor fuel sold." (Compl. at ¶ 16.) These billing
practices allegedly violated Handbook 44. In addition, they
allegedly violated the parties' contract "by charging them for a
gallon of motor fuel when a gallon was not actually delivered when
measured in accordance with said user regulations." (Compl. at ¶
17.) The dealers alleged that they were overcharged from February
1, 1985, to February 1, 1988. (Compl. at ¶ 18.) BP denied these
further allegations. (Answer at ¶ 16.)
The district court entered a scheduling order setting final
deadlines for witness exchange and designation of experts. After
holding a pretrial conference, the district court entered a
pretrial order. Though the pretrial order purported to detail each
party's contentions, the dealers did not explicitly contend in the
order that BP had or used an "automatic temperature compensator,"
nor did BP explicitly contend that it did not have or use an
"automatic temperature compensator."
Before trial, BP filed a motion in limine to preclude the
dealers from introducing extra-contractual evidence as to the
meaning of the term "gallon" in the contracts between BP and the
dealers, contending that "gallon" is unambiguous. The district
court denied BP's motion.
Ten days before trial, BP moved to add a new witness, Steve
Gandee, to its witness list. Conceding that Gandee was identified
after the district court's deadline for witness exchange, BP
represented that Gandee was a substitute for a seriously ill
witness who could not attend trial. Over the dealers' objection,
the district court allowed BP to add Gandee to its witness list.
The dealers deposed Gandee on the Friday before the Monday on
which trial began. They learned at the deposition that BP disputed
that it had "a device equipped with an automatic temperature
compensator" within the meaning of U.R. 3.5. The dealers moved to
exclude Gandee's testimony, contending that BP had not disputed, in
its answer, briefs, or other pretrial contentions, that it had an
"automatic temperature compensator." Thus, they argued, BP was
unfairly changing its theory of the case on the eve of trial. The
district court agreed, refusing to allow Gandee or any other BP
witness to testify at trial that BP did not have an "automatic
temperature compensator."
The Director of the Alabama Department of Weights and Measures
was permitted to testify at trial as to his interpretation of U.R.
3.5. He opined that U.R. 3.5 requires invoices to show the
temperature-compensated amount of gasoline sold if dispensed
through a device equipped with an "automatic temperature
compensator." Presented with hypotheticals purporting to describe
BP's dispensing equipment, he opined that BP had a device equipped
with an "automatic temperature compensator."
At the close of the dealers' evidence, and again at the close
of all the evidence, BP moved for judgment as a matter of law on
all claims. The district court denied the motion both times. The
jury returned a verdict for the dealers on each of their claims.
The jury awarded dealer Hopkins $100,000 in compensatory damages,
dealer Mann $150,000 in compensatory damages, and dealer Sharpe
$50,000 in compensatory damages. In addition, the jury awarded
each dealer $200,000 in punitive damages. The district court
denied BP's renewed motion for judgment as a matter of law. On
BP's motion for a new trial or remittitur, the compensatory damage
awards were reduced to $12,072.66 for Hopkins, $27,941.40 for Mann,
and $2,462.40 for Sharpe. The punitive damage awards, however,
were left intact.
III. ISSUES ON APPEAL
We address four issues on appeal. First, whether the term
"gallons" in the contracts between BP and the dealers is ambiguous.
Second, whether U.R. 3.5 requires billing based on
temperature-compensated gallons when gross gallons are delivered.
Third, whether, for purposes of the dealers' fraudulent suppression
claims, BP had an obligation to disclose the number of
temperature-compensated gallons delivered. Fourth, whether the
evidence was sufficient for a reasonable jury to conclude that
dealer Hopkins reasonably relied to his detriment on BP's alleged
affirmative misrepresentation.
IV. STANDARDS OF REVIEW
Whether contract language is ambiguous is a question of law
reviewed de novo. Dunkin' Donuts of America, Inc. v. Minerva,
Inc., 956 F.2d 1566, 1573 (11th Cir.1992). The interpretation of
U.R. 3.5 is also a question of law reviewed de novo. See Bolam v.
Mobil Oil Corp., 893 F.2d 311, 312 (11th Cir.1990). We review de
novo the district court's denial of a motion for judgment as a
matter of law. Sherrin v. Northwestern Nat'l Life Ins. Co., 2 F.3d
373, 377 (11th Cir.1993). In determining whether the dealers
submitted substantial evidence to present a jury question, we
construe the evidence and permissible inferences in favor of the
dealers. Id.
V. DISCUSSION
A. The Contractual Term "Gallon" Is Not Ambiguous
BP contends that it is entitled to judgment as a matter of
law on the dealers' breach of contract claims. BP argues that the
district court erred in allowing the jury to determine the meaning
of the contractual term "gallons." According to BP, "gallons" is
unambiguous and refers to gross gallons, not
temperature-compensated gallons. Thus, BP contends, it did not
breach its contracts with the dealers by billing for gross gallons.
The dealers respond that "gallons" is ambiguous because BP
itself used the term in two different ways: BP billed certain
customers on a temperature-compensated basis and billed the dealers
based on gross gallons. Moreover, they argue, Handbook 44
addresses temperature-compensated gallons, precluding a finding
that "gallon" unambiguously means a gross gallon. They further
argue that U.R. 3.5 constitutes an implied term of the contracts
and requires temperature-compensated billing. For these reasons,
they argue, the jury properly was allowed to determine whether BP
breached its contracts by billing for gross gallons.
We hold that the district court erred in permitting the jury
to determine the meaning of "gallons" in the contracts between BP
and the dealers. "Gallon" is not ambiguous. "Gallon" refers to a
gross gallon of gasoline. Thus, the contracts unambiguously did
not require BP to bill the dealers based on temperature-compensated
gallons. BP's failure to do so, therefore, was not a breach of
contract. The district court erred in denying BP's motion for
judgment as a matter of law on the breach of contract claims.
B. U.R. 3.5 Did Not Require Temperature-Compensated Billing
BP contends that the district court erred in permitting the
jury to determine the meaning of U.R. 3.5. BP argues that the
meaning of U.R. 3.5 is a question of law. According to BP, the
Eleventh Circuit has interpreted U.R. 3.5, albeit as adopted in
Florida, to require neither temperature-compensated billing nor
disclosure of temperature-compensated gallons when billing is not
based on temperature-compensated gallons. BP further argues that,
even if U.R. 3.5 requires temperature-compensated billing, U.R. 3.5
did not apply to BP because BP did not have a device equipped with
an "automatic temperature compensator." The district court, BP
contends, abused its discretion in excluding BP's evidence that it
did not have an "automatic temperature compensator."
The dealers respond that the testimony of the Director of the
Alabama Department of Weights and Measures is "[t]he official
interpretation of the Alabama regulation during the time period in
question," (Appellee's Br. at 20-21), and is entitled to deference.
They argue that the Eleventh Circuit case interpreting U.R. 3.5 in
Florida is distinguishable because that case did not involve a
company billing some customers on a temperature-compensated basis
while billing others on a gross-gallon basis. Finally, they argue
that the district court properly excluded the testimony of Gandee
and BP's other evidence that BP did not have a device equipped with
an "automatic temperature compensator."
The meaning of U.R. 3.5 is a question of law. Therefore, the
district court erred in allowing the jury to interpret U.R. 3.5.
Interpreting U.R. 3.5 de novo, we hold that U.R. 3.5 did not
require temperature-compensated billing under the undisputed facts
of this case. The district court erred in denying BP's motion for
judgment as a matter of law on the breach of statutory obligation
claims.
U.R. 3.5 requires temperature-compensated billing only if the
customer is billed for a temperature-compensated volume of
gasoline. Bolam, 893 F.2d at 314.3 The purpose of U.R. 3.5 is to
require consistency in billing methods so oil companies do not
change methods when beneficial to them. Id.4 For example, U.R.
3.5 would prohibit a company from billing a customer for 1000 gross
gallons when it delivered 1000 temperature-compensated gallons;
the company would have to disclose that the delivered gallons were
temperature-compensated gallons.
BP did not deliver temperature-compensated gallons yet bill
for gross gallons. To the contrary, it is undisputed that BP
billed the dealers for the gross volume of gasoline delivered.
3
We reject the dealers' contention that the trial testimony
of an agency official constitutes the official interpretation of
a regulation and is entitled to deference from a court.
4
In attempting to distinguish Bolam, the dealers argue that
U.R. 3.5 requires BP to bill the dealers based on
temperature-compensated gallons because it bills certain other
customers on that basis. This argument reflects a fundamental
misunderstanding of the purpose and meaning of U.R. 3.5. U.R.
3.5 is not concerned with billing consistency between different
types of customers. Rather, U.R. 3.5 ensures that each customer
is billed consistently. If a customer receives
temperature-compensated gallons, it must be billed for
temperature-compensated gallons; if it receives gross gallons,
it must be billed for gross gallons.
Thus, U.R. 3.5 did not require BP to show on its invoices the
number of gallons that would have been delivered if they had been
temperature-compensated.5 BP therefore did not breach any
statutory obligation in only showing the number of gross gallons
delivered.6
C. BP Had No Duty To Disclose For Purposes Of The Dealers'
Fraudulent Suppression Claims
BP contends that the district court erred in denying its
motion for judgment as a matter of law on the dealers' fraudulent
5
This conclusion disposes of the dealers' argument in
support of their breach of contract claims that U.R. 3.5 was an
implied term in the contracts between BP and the dealers. Even
if U.R. 3.5 was an implied term, it did not require
temperature-compensated billing.
6
Because we hold that U.R. 3.5 did not require BP to bill
the dealers on a temperature-compensated basis, regardless of
whether BP had an "automatic temperature compensator," we need
not address BP's contention that the district court erred in
excluding BP's evidence that it did not have an "automatic
temperature compensator." Without addressing the merits of this
contention, however, we express our disapproval of the pretrial
conduct of counsel for all parties relative to this issue.
Whether BP had an "automatic temperature compensator"
was a potentially dispositive issue as to all of the
dealers' claims. Nevertheless, the dealers' complaint
failed to explicitly allege that BP had an "automatic
temperature compensator," that is, a device that physically
adjusts the volume of gasoline dispensed to the volume that
would be dispensed at 60°F. BP's answer to the complaint
stated that it was "without sufficient information,
knowledge or belief" to answer as to what type of equipment
it had. (Answer at ¶ 13.) Similarly, the dealers'
contentions as set forth in the pretrial order do not
explicitly include the contention that BP had an "automatic
temperature compensator." Once again, in its statement of
contentions in the pretrial order, BP fails to say that its
equipment was not an "automatic temperature compensator."
The district court's decision to exclude BP's evidence
that its device was not an "automatic temperature
compensator" was based on its belief that BP had waited
until the eve of trial to dispute this issue. We express no
opinion on the propriety of this decision.
suppression claims. BP argues that it had no obligation to
communicate any material fact under Ala.Code § 6-5-102 (1993)
because U.R. 3.5 did not require it to disclose the number of
temperature-compensated gallons delivered to the dealers. The
dealers respond that U.R. 3.5, as well as BP's superior knowledge
of billing methods and requirements, imposed on BP a duty to
disclose temperature-compensated gallons.
A fraudulent suppression claim requires, inter alia, the
existence of an obligation to communicate. Ala.Code § 6-5-102
(1993). The dealers' fraudulent suppression claims are premised on
BP's alleged duty under U.R. 3.5 to bill on a
temperature-compensated basis. We have already held that U.R. 3.5
did not require temperature-compensated billing by BP.7 Therefore,
BP had no obligation to communicate the number of
temperature-compensated gallons delivered to the dealers. The
dealers' fraudulent suppression claims fail as a matter of law.
D. The Evidence Was Insufficient For The Jury To Conclude That
Hopkins Reasonably Relied On BP's Alleged Affirmative
Misrepresentation
BP contends that the district court erred in denying its
motion for judgment as a matter of law on dealer Hopkins's
affirmative fraud claim. According to BP, its representative's
statement to Hopkins that inventory shortages even out over the
course of the year was not a misrepresentation of a material fact;
rather, it was an opinion as to a future event that, BP argues,
7
Nor did BP have an obligation to communicate based on its
superior knowledge of either U.R. 3.5, how other customers were
billed, or the significance of temperature compensation. The
dealers' contention that such knowledge gave rise to a duty to
disclose temperature-adjusted gallons is meritless.
turned out to be true. Moreover, BP argues, Hopkins's reliance on
the statement, if any, was unreasonable, and there was no proof
that Hopkins was injured as a proximate result of the statement.
The dealers respond that the fact that BP internally accounts for
the spread between temperature-compensated gallons and gross
gallons shows that BP knew that shortages did not even out. They
argue that the issue of the reasonableness of any reliance was for
the jury.
An essential element of affirmative misrepresentation under
Alabama law is proof that plaintiff acted on or relied on the
misrepresentation to his detriment. Ala.Code § 6-5-101 (1993);
Taylor v. Moorman Mfg. Co., 475 So.2d 1187, 1189 (Ala.1985). The
reliance must be reasonable under the circumstances. Taylor, 475
So.2d at 1189. Our review of the record reveals that Hopkins did
not present any evidence that he reasonably relied to his detriment
on BP's statement that shortages even out over the course of a
year.8
After BP's statement, Hopkins wrote a second letter to BP
requesting temperature-compensated billing, complaining that his
problem with shortages was continuing. Thus, Hopkins did not
decide, based on BP's statement, that gross billing was
8
We note that the complaint was of no use in our search of
the record for evidence of detrimental reliance, for it does not
allege affirmative misrepresentation at all, much less any
particulars as to how Hopkins relied on the misrepresentation.
Nor does the pretrial order describe how Hopkins relied to his
detriment on BP's statement. Nor do the parties' briefs on
appeal suggest what Hopkins did or decided not to do in reliance
on BP's statement. Nevertheless, we have trudged through this
procedural bog in search of evidence of some kind of detrimental
reliance.
satisfactory and abandon further attempts to receive
temperature-compensated billing. He did not ask his accountant
whether BP's statement was accurate and shortages actually were
evening out. Hopkins did not testify that he renewed his contract
with BP based on his understanding that shortages even out, or that
he would not have renewed his contract if he had known that
shortages do not even out. He did not testify that he would have
changed his orders for gasoline but for BP's statement. Indeed,
Hopkins did not testify that he would have done anything
differently if BP had not made the allegedly false statement.
Because Hopkins presented no evidence from which a reasonable
jury could find that he detrimentally relied on BP's statement, the
district court erred in not granting BP's motion for judgment as a
matter of law on the affirmative misrepresentation claim.
VI. CONCLUSION
Because the district court erred in denying BP's motion for
judgment as a matter of law on all of the dealers' claims,9 we
reverse the district court's judgment.
REVERSED and RENDERED.
9
BP also claims on appeal that the trial judge's conduct at
trial was unfair and prejudicial. In view of our resolution of
the other issues presented by BP on appeal, we need not address
this question.