OPINION AND ORDER
This mаtter is before the court on motions by plaintiffs from cases 08-1950, OS-1986, and 08-2025 to amend and/or vacate the partial final judgment that was entered on June 30, 2009. (Docket Nos. 288, 289, 291, 292.) Plaintiffs from cases 08-1950 and 2025 filed one of the motions pursuant to Federal Rules of Civil Procedure 52(b), 59(e) and 60(b) on July 13, 2009, and plaintiffs from case 08-1986 filed the other pursuant to the same rules on the same day. Defendant Esso Standard Oil (Puerto Rico), Inc. (“Esso”) filed a timely response in opposition on July 27, 2009. (Docket No. 295.) For the reasons set forth below, plaintiffs’ motion is DENIED.
I. PROCEDURAL AND FACTUAL BACKGROUND
As noted in the opinion and order granting рartial final judgment, the facts of this ease have been recounted multiple times.
See Santiago-Sepúlveda v. Esso Standard Oil Co. (P.R.),
Plaintiffs now advance this motion to amend and/or vacate the judgment. They ask that the court make findings as to additional provisions of the franchise agreement, that it reconsider its finding that the non-compete agreement is valid, that it declare the franchise agreement null and void, and that it set aside the entry of judgment. They also request that the court set a briefing schedule so plaintiffs cаn further elaborate on the issue of contract validity.
Plaintiffs complain that not every contractual provision that they opposed in their complaints has been addressed by the court. Their complaints allege that the proposed franchise agreements are illegal because of the following terms: Total reserves the right to unilaterally change the rent charged to plaintiffs; Total charges a “transfer fee” to recover 60% of the “good will” value of the franchises; Total charges rental fees in excеss of the amount permitted by Puerto Rico law; the franchise agreement allows Total to unilaterally terminate franchises without granting plaintiffs an opportunity to cure any deficiencies; Total requires that plaintiffs assume liability for fuel spills or leaks; Total requires that plaintiffs accept gasoline pumps, dispensers and other equipment as a “comodato,” or gratuitous bailment; Total failed to provide plaintiffs with an “offering circular” required by the Federal Trade Commission; and Total has not offered to compensate Plaintiffs for improvements plaintiffs have made in the leased premises. (Docket No. 2.) Not included in this list or addressed in this opinion and order are those provisions about which plaintiffs complained not because of the provisions’ inherent illegality, but because they were allegedly discriminatory. I have already found that Total’s contract terms are not discriminatory.
Santiago-Sepúlveda v. Esso Standard Oil Co. (P.R.),
II. STANDARD FOR A MOTION TO AMEND OR VACATE JUDGMENT
“No matter how a party titles it, ‘a post-judgment motion made within ten days of the entry of judgment that questions the correctness of a judgment is properly construed as a motion to alter or amend judgment under Fed.R.Civ.P. 59(e).’ ”
Negrón-Almeda v. Santiago,
“Rule 59(e) motions are granted only where the movant shows a manifest error of law or newly discovered evidence.”
Prescott v. Higgins,
In all events, “[district courts enjoy considerable discretion in deciding Rule 59(e) motions, subject to circumstances developed in the case law.”
ACA Fin. Guar. Corp. v. Advest, Inc.,
III. DISCUSSION
A. Severability
The judgment in this case held that severance of the illegal terms of the franchise contract was appropriate under the precedent of the First Circuit, the District Court of Puerto Rico, and at least one other circuit. (Docket No. 288, at 20) (citing
Kristian v. Comcast Corp.,
In support of its argument that the entire franchise agreement should be invalidated, plaintiffs point to a contract clause providing that Total may terminate the franchise for “a breach of any of the ... terms” of the contract. (Docket No. 291, at 12-13 (citing BONJOUR Franchise Contract at Article 18.1, Docket No. 155-4, at 24.)) They argue that “[i]f the breach of just one clause in any of the contracts is sufficient to terminate all the contracts, then the illegality of one clause should have the same effect over the entire contract.” (Docket No. 291, at 13.) Plaintiffs cite no law to support this contention or to distinguish the relied-upon cases of the judgment. The plaintiffs’ belief in what “should” be is distinct from what the law in fact is. This argument does not demonstrate a “manifest error of law.”
Plaintiffs next argue that an alleged lack of good faith by Total should necessitate invalidation of the franchise agreement. They point out that “[a] court may treat only part of a term as unenforceable ... if the party who seeks to enforce the term оbtained it in good faith and in accordance with reasonable standards of fair dealing.”
Broadley v. Mash-
Plaintiffs next contend that the clearly worded severability clause contained in the franchise agreement may not save the agreement if the terms to be severed are “essential” to the agreement. The argument fails on its face because plaintiffs cite no law binding on this court that might demonstrate an error of law. (Docket No. 292, at 10 (citing
In re OCA
Finally, plaintiffs from case 08-1986 argue that the court “has actually rewritten the contracts” in that it “has instructed Total that it must reduce ‘proportionally’ the rent it charges plaintiffs when and if it subleases any part of the service station.” (Civil 08-1950, Docket No. 291, at 16.) Plaintiffs in case 08-1986 should not misquote me. While plaintiffs contend that “the Court is not merely ... severing illegal clauses,” the judgment has in fact done exactly that. It “PROHIBITED ...
B. Legality of Terms
Plaintiffs request that I make findings as to the legality of contract terms not explicitly addressed in the judgment. They also ask for reconsideration of the finding that the non-competition provision is valid. As noted in the judgment, section 2805(f) of the PMPA prohibits the inclusion of any term in the franchise agreement that requires a franchisee to waive any right under state or federal law. 15 U.S.C. § 2805(f).
1. Unilateral Changes in Rent
The judgment held that terms allowing for unilateral changes in rent by Total would not be permitted. (Docket No. 288, at 22) (invalidating Article 4.1 of the Lease Contract to the extent it allowed Total to sublet portions of the station without entitling plaintiffs to discounts or credits, and invalidating Article 4.4 of the Lease Contract to the extent it permitted Total to unilaterally increase the rent to account for additional Total investments made at Total’s sole and absolute discretion). This is because, in the context of lease agreements in Puerto Rico, “[t]he determination of the price can never be left to the judgment of one of the contracting parties.” P.R. Laws Ann. tit. 31, § 3745. Moreover, “[i]n a lease of things, one of the parties thereto binds himself to give to the other the enjoyment or use of a thing for a specified time and a fixed price.” P.R. Laws Ann. tit. 31, § 4012 (emphasis added).
It is evident upon close scrutiny of the franchise agreements that Articles 4.1 and 4.4 of the Lease Contract are not the only provisions that run afoul of Puerto Rico law. Article 5.2 of the Sublease Agreement provides that “[t]he Company [Total] reserves the right to vary, at its еntire discretion ... the rent to be paid .... ” (Docket No. 8-2, at 4). Similarly, Article 4.2 of the Lease Contract provides that “The Company reserves the right to change, entirely at its discretion, upon pri- or notice to the Retailer, the rent to be paid....” (Docket Nos. 108-3, at 4, 108-5, at 4.) As these provisions also impermissibly leave the unfixed rental price “to the judgment of one of the contracting parties,” they are also impermissible and are hereby prohibited from appearing in any franchise agreement between the parties.
2. Non-competition Agreement
The judgment held that the non-compеtition agreement (Docket No. 155-4, at 11, Article 9.3 of the Franchise Agreement) was valid under Puerto Rico law. (Docket No. 288, at 18.) The only source of law cited by plaintiffs to demonstrate a manifest error of law in this decision is
PACIV v. Pérez Rivera,
Even assuming,
arguendo,
that the lack of English translation were not outcome determinative, plaintiffs would still fail here on the merits. It is true that the non-competition agreement in
PACIV v. Pérez Rivera,
This case is better analogized to
Lucas-Insertco Pharm. Printing Co. v. Ronald Salzano,
3. Goodwill Clause
Plaintiffs next contend that the goodwill clause of the Lease Contract is invalid. (Docket No. 291, at 19.) Article 9.4(b) of the Lease Contract provides that “[t]he Retailer expressly acknowledges that the Company [Total] has an interest in the goodwill of the gasoline sales business....” (Docket No. 108-3, at 11.) “Said interest in the goodwill held by the Company is established at sixty percent (60%) of the difference between the price of assigning the right to operate the station proposed by the Retailer and the price paid by the Rеtailer when he acquired said right to operate.” (Docket No. 108-3, at 11, Article 9.4(d).) Thus, if a retailer opts to assign, or sell, its right to operate a retail station, sixty percent of any surplus received in addition to the initial investment is allocated to Total, and the remaining forty percent is remitted to the retailer. The retailer will retain one-hundred percent of its initial investment in the station that it recovers in the sale.
Santiago-Sepúlveda v. Esso Standard Oil Co. (P.R.),
Plaintiffs contend that this provision is illegal under Regulation I (Number 944) of Puerto Rico’s Office of Monopolistic Affairs. The regulation has the force of law pursuant to Law No. 77 of June 25, 1964,
Furthermore, there is reason to believe, based on the context of the Regulation as a whole, that the Office of Monopolistic Affairs’ regulatory provision was intended to control only franchise termination, not the assignment of franchising rights from one franchisee to another. Article 4(a), which immediately precedes the goodwill provision in the text of the Regulation, is dedicated to the proscription of arbitrary franchise
termination,
and says nothing of franchise assignments. In fact, nowhere in the regulation is there any mention of franchise assignment. In this sense, the Regulation appears to parallel the PMPA itself, whose main purpose is to protect the franchisee from being deprived of
all
of its goodwill (not just sixty percent of it) as a result of unfair
termination. Draeger Oil Co. v. Uno-Ven Co.,
Finally, “[g]oodwill ... benefits
both
parties.”
Marcoux v. Shell Oil Prods. Co.,
A Grounds for Franchise Termination
Plaintiffs have also complained that the franchise agreement is Draconian in that the breach or termination of the convenience store contracts will result in the automatic termination of the Supply Agreement. (Docket No. 155, at 4, 13.) Plaintiffs raised this argument prior to the judgment, and it has not been ruled upon, so it is addressed at this time. The term plaintiffs cite provides that the Sale and Supply Contract will be terminated “[f]or any occurrence of noncompliance or violation of the material terms and conditions in the Complementary Contracts or if any of those contracts is cancelled or terminated!.]” (Docket No. 155-5, at 14, Sale and Supply Contract, Article 16.1(g).) Article 16.1 provides, however, that the “Contract may be cancelled and terminated upon the appropriate prior notices required
under the PMPA
----”
(Id.
at 13.) (emphasis
Plaintiffs complain that Article 16.1 would allow Total to terminate their contrаct for something as minor as, for instance, failure to attend a training seminar. This is not so, however, as the provision only applies to violation of
“material
terms.”
(Id.
16.1(b)) (emphasis added). Plaintiffs need not, therefore, fear arbitrary termination for minor offenses. Indeed, the prevention of such terminations is the very premise behind the PMPA, which would shield plaintiffs in the event of such a termination.
Marcoux v. Shell Oil Prods. Co.,
5. Federal Trade Commission ■ Franchisor Disclosure Statement
Plaintiffs next contend that Total failed to furnish them with a copy of a franchisor disclosure statement, or “offering circular,” pursuant to Federal Trade Commission (“FTC”) regulations when it submitted the franchise offer to plaintiffs. This argument also was raised prior to the judgment, so it also merits consideration here. Plaintiffs contend that Total’s omission was in violation of FTC regulations and was therefore also a violation of section 2805(f) of the PMPA because it amounted to Total requiring plaintiffs to waive their right to the disclosure as a prerequisite for entering a franchise agreement. (Docket No. 155, at 17.) The FTC regulation рrovides that it is a “violation of Section 5 of the Federal Trade Commission Act: ... [f]or any franchisor to fail to furnish a prospective franchisee with a copy of the franchisor’s current disclosure document....” 16 C.F.R. § 436.2(a). It also provides, however, that “the provisions of part 436 shall not apply if the franchisor can establish [that] ... [t]he franchise relationship is covered by the Petroleum Marketing Practices Act, 15 U.S.C. [§ ] 2801.” 16 C.F.R. § 436.8(4).
Plaintiffs argue that the PMPA does not apply to the “Bonjour” Franchise Contract, and that the exception to section 436.2(a) therefore does not apply. (Docket No. 155, at 18.) The “franchise relationship” refers to the mutual obligations of the parties “which result from the marketing of motor fuel under a franchise.” 15 U.S.C. § 2801(2). I have already held that the parties’ franchise relationship as a whole is governed by the PMPA. (Docket No. 287, at 10-12.) The Bonjour Franchise Contract is a part of that relationship and it therefore fits the FTC exception to the offering circular requirement. As noted above, the 'Bonjour Franchise Contract is one of the “Complementary Contracts.” It provides that:
As part of the agreements reached in the Complementary Contracts and as an incidental and complementary relationship to the operation of the station, the parties have agreed to enter into a franchise agreement for the opening and operation of a BONJOUR convenience store ....
(Docket No. 155-4, at 1, ¶ C) (emphasis added). It further states:
The purpose of this contract is to create a comprehensive operation of the station and all businesses operating within the premises or land where it is located, and said operations may only be separated in those cases in which the Company [Total] decides that it is convenient....
(Id.
¶6.) Finally, the Bonjour Franchise Contract provides that its termination is to be “under the provisions of the PMPA.” Accordingly, the Bonjour Franchise Contract is part of the franchise relationship that is covered by the PMPA, and Total was exempt from providing a franchisor disclosure statement, or offering circular, under 16 C.F.R. § 436.2(a).
See Millett v.
6. Other Provisions
In their complaints, plaintiffs took issue with assorted contractual provisions not yet addressed by the court. They claimed that “Total imposes rental fees in excess of the maximum allowed under Puerto Rico laws and regulations;” that Total requires that plaintiffs assume liability for fuel spills or leaks; that Total requires that plaintiffs accept gasoline pumps, dispensers and other equipment as a “comodato,” or gratuitous bailment; and that Total has not offered to compensate, and has not compensated, plaintiffs for making improvements in the leased premises.
3
(Docket No. 2, at 4, ¶ f, at 5, ¶¶ h, i, m.) At no point in this litigation, however, have plaintiffs submitted any legal authority or factual support to bolster the contention that any of these provisions are impermissible under section 2805(f) of the PMPA. “A Rule 59(e) motion is not properly used to ‘raise arguments which could, and should, have been made before judgment issued.’”
Yeomalakis v. F.D.I.C.,
C. Request for Briefing Schedule
Plaintiffs have asked that the court set a briefing schedule so that they may somehow further elaborate on the legality of the contracts offered by Total. They have had eleven months, however, to litigate the issue. They have had the opportunity to conduct a three-day trial. They have submitted no less than six different briefs that address the legality of Total’s proffered franchise agreements, not including their complaints. (Docket Nos. 8, 80, 155, 249, 291, 292.) Plaintiffs’ motion for summary judgment and for dismissal of defendants’ countеrclaims in particular set forth a lengthy discussion of contract legality. (Docket No. 155.) Plaintiffs’ contention that they have lacked the opportunity to argue this issue is therefore confounding. “A Rule 59(e) motion is not properly used to ‘raise arguments which could, and should, have been made before judgment issued.’ ”
Yeomalakis v. F.D.I.C.,
IV. CONCLUSION
In light of the above, plaintiffs’ motion to amend the judgment is DENIED. Total is reminded, however, that any contrac
SO ORDERED.
Notes
. The franchise agreements consist of three separate contracts: a Lease Contract, a Sale and Supply Contract, and a Franchise Contract for Total's convenience store enterprise known as "Bonjour” (the "Complimentary Contracts”). (Docket Nos. 155, at 3, 155-4.)
. Translation from Spanish to English supplied by plaintiffs. (Docket No. 291, at 20.)
. Plaintiffs also complained that Total required them to maintain insurance policies and offer personal guarantees that were more onerous than plaintiffs' arrangements under their previous franchises with Esso. (Docket No. 2, at 5, HVj, k.) Total is not, however, legally obligated to offer terms similar to those available to plaintiffs under their previous franchises. Total need only offer terms that are legal and nondiscriminatory. Here, plaintiffs do not argue that these two terms are illegal, and as noted,
supra,
I have already held that Total’s offers are not discriminatory.
Santiago-Sepúlveda v. Esso Standard Oil Co. (P.R.),
