Arnott v. American Oil Co.

George Arnott (plaintiff) was an American Oil Co. (Amoco) (defendant) service-station dealer in Minneapolis. At the request of an Amoco sales manager, Arnott agreed to operate an Amoco station in South Dakota. Arnott entered into a one-year lease with Amoco. The policy statement Amoco gave dealers provided that dealers would have the right to operate their stations without coercion or pressure from Amoco, would not be pressured if they chose to carry competitive brands, could set their own prices, and would not be pressured into participating in Amoco promotional programs. Amoco nevertheless exerted pressure on Arnott by, for example, instructing Arnott to remove competitive brands that Arnott had placed on display. To obtain renewal of the lease, Arnott agreed to charge the prices Amoco set and participate in Amoco’s promotional programs. During a gasoline shortage, Arnott ran out of gas most evenings and advised Amoco that the station would be closed from 10:00 p.m. to 6:00 a.m. Amoco responded that Arnott’s failure to keep the station open 24 hours violated the lease. Amoco took over the station and canceled Arnott’s lease. Arnott sued Amoco, claiming that Amoco’s termination of his lease without cause and failure to deal with Arnott in good faith during the lease term was a breach of the fiduciary duty Amoco owed to Arnott. The jury found for Arnott. On appeal, Amoco argued that (1) the court erred in instructing the jury that a fiduciary relationship existed between Arnott and Amoco as a matter of law and (2) the evidence did not support the jury’s finding that Amoco breached its fiduciary duty to Arnott.