Opposition Brief — Elliott's Enterprises, Inc. v. Flying J, Inc.

FILED

AUC 5 1998

No. 98-96 iaies Hera

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

ELLIOTT’S ENTERPRISES, INC..,

Petitioner.

¥;

FLYING J, INC., et al.,

Respondents.

On Petition For A Wnit Of Certioran

To The United States Court Of Appeals

For The Fourth Circuit

BRIEF FOR RESPONDENTS IN OPPOSITION

F. JOSEPH WARIN

Counsel of Record

DOUGLAS R. COX

MARK A. PERRY

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W

Washington, D.C. 20036

(202) 955-8500

Counsel for Respondents

QUESTION PRESENTED

Whether the courts below correctly applied state-law

doctrines of laches and equitable estoppel to the particular

facts of this case.

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TABLE OF CONTENTS

STATEMENT ...0csssscesssoressssscccscencsosencvssnessencsossses

REASONS FOR DENYING THE PETITION...

CONCLUSION ........ccccecccscsseseccnvrerescsenseseescsonsnes

TABLE OF AUTHORITIES

CASES

Burnham v. James, 42 S.E. 292 (Va. 1902) .......

Dry v. Rice, 137 S.E. 473 (Va. 1927) ......ssss220+

Employers Commercial Union Ins. Co. v.

Great American Ins. Co., 200 S.E.2d 560

Ne: WO snc eaanen

Goodman v. Lukens Steel Co., 482 U.S. 656

CRGB TY esccncsiscssevecncsnesncsrevsoiseaeavetaservnteagesioenss

Huddleston v. Dwyer, 322 U.S. 232 (1944) .......

Johnston v. Standard Mining Co., 148 U.S. 360

(1893) ....cccsveccessrscscoccsesesenserscennsseesnesssesnonsosons

Maksym v. Loesch, 937 F.2d 1237 (7th Cir.

SOT) | avciiis vccinsisivesscsntonhiestcisantssseneliveeeenenninetons

Massachusetts Bonding & Ins. Co. v. Piedmont

Service Station, Inc., 181 S.E. 397 (Va.

VOBSY eves nssecscasevsssasenqucnancaccemareisevenetnteasicrnnteaes

United States v. Doe, 465 U.S. 605 (1984) ........

United States v. Johnston, 268 U.S. 220 (1925)

STATUTE

Va. Code Ann. § 59.1-21.16:2(A) ssssssssscssssnseseee

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

No. 98-96

ELLIOTT’S ENTERPRISES, INC.,

Petitioner,

Ve

FLYING J, INC., et al.,

Respondents.

On Petition For A Wnit Of Certiorari

To The United States Court Of Appeals

For The Fourth Circuit

BRIEF FOR RESPONDENTS IN OPPOSITION

Respondents Flying J, Inc. and CFJ Properties respect-

fully submit this brief in opposition to the petition for a wit

of certiorari filed by petitioner Elliott’s Enterprises, Inc.

STATEMENT

1> Petitioner operates two retail gasoline outlets in Caro-

line County, Virginia. Pet. App. 2. In 1994, respondents

proposed to build a travel plaza, including truck fueling fa-

cilities, near petitioner’s outlets. Jbid. Mr. Elliott, peti-

tioner’s chief executive officer, “wrote a letter to Caroline

County authorities endorsing Flying J’s proposal and urging

its approval.” Jbid. Respondents obtained zoning approval

and building permits, and “[a]fter eight months of construc-

tion costing millions of dollars, Flying J opened for business

in January 1996.” Jd. at 3.

2

“Despite [its] earlier support for Flying J’s efforts,” peti-

tioner filed suit against respondents on December 26, 1996.

Pet. App. 3. Petitioner alleged that respondents were petro-

leum refiners and therefore were prohibited under the Vir-

ginia Petroleum Products Franchise Act from operating a re-

tail gasoline outlet within one and one-half miles of peti-

tioner’s outlets. Jd. at 3-4; see Va. Code Ann. § 59.1-

21.16:2(A).

2. After petitioner’s lawsuit was removed to federal

court, the district court granted summary judgment to re-

spondents on the ground that petitioner’s action was barred

by the doctrine of laches. Pet. App. 9.

3. The court of appeals affirmed. The court first held that

the district court had correctly held that petitioner’s claims

for equitable relief were barred by the doctrine of laches:

“(After the CEO of [petitioner] advocated zoning approval

and publicly supported building the truck stop, and then [sat]

idly by while [respondents] spent 9 million dollars building

it, and then waited to see the effect that the truck stop would

have on his company’s profits .... [petitioner] cannot be

heard to complain that the same ... truck stop violates its

rights under the Petroleum Products Franchise Act.” Pet.

App. 5.

The court of appeals recognized that petitioner had sought

legal damages as well as equitable relief, and that “Te]ven if

laches may not be asserted against claims for legal damages,

the defense of equitable estoppel bars both legal and equita-

ble claims.” Pet. App. 6 (citing Massachusetts Bonding &

Ins. Co. v. Piedmont Service Station, Inc., 181 S.E. 397 (Va.

1935)). Under Virginia law, equitable estoppel is “the con-

sequence worked by operation of law which enjoins one

whose action or inaction has induced reliance by another

from benefiting from a change in his position at the expense

of the other.” Employers Commercial Union Ins. Co. v.

Great American Ins. Co., 200 S.E.2d 560, 562 (Va. 1973)

(quoted at Pet. App. 6-7).

3

The court of appeals thoroughly reviewed the evidentiary

record relating to the elements of equitable estoppel:

Elliott’s CEO Carroll Elliott overtly and publicly rep-

resented to Flying J that he was in favor of Flying J’s

plans to build a travel plaza directly across the street

from an Elliott’s Exxon station. Although Mr. Elliott

was aware that Flying J could sell gas more profitably

than Elliott’s, he actively encouraged Caroline County

officials to approve Flying J’s proposal. Flying J, be-

lieving that Elliott’s acquiesced in its construction

plans and acting with Elliott’s encouragement, invested

$9 million in building a travel plaza, while Mr. Elliott

presumably watched the blocks being laid from across

the street. Elliott’s belated demand that Flying J shut

down its multi-million dollar travel plaza and pay

damages, if granted, would greatly prejudice

[respondents].

Pet. App. 7-8 (record citations omitted). Because “Elliott’s

cannot now be heard to complain about a competing business

that it so actively solicited,” the court of appeals concluded

that all of petitioner’s “claim[s] for relief [are] barred by the

defenses of laches and equitable estoppel.” /d. at 8.

REASONS FOR DENYING THE PETITION

The petition for a writ of certiorari is based entirely on the

premise that the courts below erroneously applied state law

to the particular facts of this case. Petitioner alleges no

conflict of decisions, the questions presented are entirely ~

fact-bound, and petitioner’s contentions, which involve only

state law, are meritless. The petition should be denied be-

cause it meets none of the criteria traditionally considered by

this Court in granting discretionary review. See this Court’s

Rule 10 (“A petition for a writ of certiorari is rarely granted

when the asserted error consists of erroneous factual findings

or the misapplication of a properly stated rule of law”).

4

1. Petitioner first asserts that because it allegedly “did not

know that Flying J was a refiner or affiliated with a refiner

and did not know of the existence of CFJ Properties ... at

the time Mr. Elliott wrote the letter supporting respondents’

endeavor, petitioner was wholly unaware that it would be il-

legal pursuant to Virginia law for respondents to operate the

travel plaza.” Pet. 6. Petitioner’s purely factual contention

regarding its alleged lack of knowledge of respondents’

business operations does not warrant review by this Court.

United States v. Johnston, 268 U.S. 220, 227 (1925) (“We do

not grant certiorari to review evidence and discuss specific

facts”). Moreover, both the district court and the court of

appeals have already rejected petitioner’s contention that it

lacked the requisite knowledge to file suit until 1996. See

Pet. App. 8. Where, as here, both lower courts have resolved

a factual issue against petitioner, further review by this Court

is unwarranted. Goodman v. Lukens Steel Co., 482 U.S. 656,

665 (1987); United States v. Doe, 465 U.S. 605, 614 (1984).

2. Petitioner next complains that the doctrine of laches is

inapplicable because petitioner purportedly filed suit within

the two-year statute of limitations provided by the Virginia

Petroleum Products Franchise Act. Pet. 8-9. That contention

is plainly incorrect as a matter of Virginia law. See, e.g.,

Burnham v. James, 42 S.E. 292, 293 (Va. 1902) (“Equity

will sometimes refuse relief where a shorter term than that

prescribed by the statute of limitations has elapsed without

suit”); Dry v. Rice, 137 S.E. 473, 475 (Va. 1927). The prin-

ciple that laches or other equitable doctrines may preclude

actions that are not statutorily time-barred is uniformly ap-

plied. See, e.g., Maksym v. Loesch, 937 F.2d 1237, 1248

(7th Cir. 1991) (Posner, J.) (courts may “invok[e] laches to

bar suits that had been brought within the statutory period”).

Petitioner cites no contrary authority.

3. Petitioner’s final argument is that the court of appeals

“plainly misapplied the Virginia doctrine of equitable estop-

pel.” Pet. 10. The court of appeals’ construction of state

5

law, however, does not warrant review by this Court. See,

e.g., Huddleston v. Dwyer, 322 U.S. 232, 237 (1944)

(“ordinarily we accept and therefore do not review, save in

exceptional cases, the considered determination of questions

of state law by the intermediate federal appellate courts”). In

any event, the premise for the argument that the court of ap-

peals “misapplied” state law—-petitioner’s factual contention

that respondents did not rely on petitioner’s endorsement of

their travel plaza (see Pet. 10-11)—was specifically rejected

by the court of appeals. Pet. App. 8.

4. This is a textbook case for the application of laches

and equitable estoppel. Petitioner lulled respondents into

spending millions of dollars to construct a travel plaza with

petitioner’s express approval, then sued years later in an ef-

fort to force respondents to cease operations. This Court has

long recognized that “where property has been developed by

the courage and energy and at the expense of the defendants,

courts will look with disfavor upon the claims of those who

have lain idle while awaiting the results of this develop-

ment.” Johnston v. Standard Mining Co., 148 U.S. 360, 371

(1893). Having acquiesced in the construction of respon-

dents’ travel plaza, petitioner cannot now be heard to com-

plain of its operation.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

F. JOSEPH WARIN

Counsel of Record

DOUGLAS R. Cox

MARK A. PERRY

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

August 5, 1998. Counsel for Respondents