Gas Stations Lose Thousands In Fuel Deposits
Dozens of BP and Getty gas station owners in Massachusetts, seven of them in MetroWest, appear to be out more than $600,000 in security deposits after their former fuel distributor went out of business last year.
The gas stations banded together last year to sue Providence-based Green Valley Oil (GVO) in U.S. District Court in Boston, but the distributor has since gone out of business, and as of this month, a judge has dismissed nearly every plaintiff listed in the lawsuit after the group's attorney withdrew.
An Ashland-based Getty owner told MetroWest495 Biz that he hasn't seen a penny of his $28,000 deposit to GVO and feels the deck was stacked against him and his fellow gas station owners from the start.
Cost-Benefit Analysis
George Youssef, owner of Ashland Auto Service Center (a Getty station) on Homer Avenue for the past decade, is resigned to losing his $28,000 deposit, which he once hoped would be returned with interest.
"This is a lot of money," Youssef said. "It's a big game and we lost."
Youssef was one of a number of plaintiffs to file an affidavit in the suit, explaining that contracted fuel deliveries from GVO were interrupted starting in January of 2012. Other MetroWest plaintiffs have fueling stations in Foxborough, Franklin, Framingham, Milford, Northborough and Upton.Youssef said that during the first half of 2012, he went for more than a month without gas, and when it did arrive, the prices were well above local area prices, which also hurt business. He and some of the other plaintiffs said they were forced to close their pumps during shortages. They were contractually obligated not to purchase the gas from other distributors, the suit said.
The Boston-based attorney who represented GVO in the lawsuit didn't return a message seeking comment. The gas station owners' attorney – Boston-based firm LeClairRyan – declined comment. An attorney for the firm officially withdrew from the case in March, saying that many of the plaintiffs were not "fulfilling their duties" to the firm.
Youssef said the owners had grown more skeptical that there would be any money to recover from GVO, and the attorneys were asking for $7,000 from each of them to continue the case. He said he had already paid $2,000 at the beginning and did not want to throw good money after bad.
"I stopped following it," he said. "I knew I lost my money."
Dispute Is Multi-Layered
In the suit filed last year, the gas station owners asked the court to award $1.4 million in damages, which includes interest and penalties.
GVO countered that state law provided more time for it to repay the deposits, and its contracts with the owners did not hold it liable for circumstances beyond its control (such as its sublessor's bankruptcy).
The structure is a bit complicated. GVO was subleasing 254 New England gas station properties from Jericho, N.Y.-based Getty Petroleum Marketing Inc. (GPMI), which filed for Chapter 11 bankruptcy protection in December 2011. GPMI was in turn, subleasing the properties directly from Getty Realty, which is also based in Jericho (but the two have different ownership).
GVO said in a separate lawsuit in New York that, because of its relationship with Getty, the Getty bankruptcy hurt its credit and ability to purchase enough gasoline to meet its clients' needs.
GVO argued in the Massachusetts case that it was within its right to terminate the agreements with gas station owners like Youssef on April 30, 2012, because Getty had informed GVO in March that it was terminating its 254 leases with GVO. The contracts allow that in the event a superior lease or sublease is terminated, GVO said.
GVO also pointed out that the 10 affidavits filed with the lawsuit only listed $378,000 worth of deposits. But a separate court document filed by the gas station owners lists 17 gas stations and their security deposits. Some are as high as $50,000.
Because the gas station owners did not wish to invest more money in chasing their deposits and missed deadlines to find new counsel, the judge dismissed them in batches, the most recent of which was this month and included Youssef's business.
One eastern Massachusetts plaintiff remains in the case and is representing himself.
Youssef is now on a one-year trial contract with a new distributor, which requires a $20,000 deposit. But the distributor is allowing him to pay in increments. He said he paid $5,000 up front and is paying $500 a month until the deposit is paid. After losing his last deposit, that helps, Youssef said.
He may have been right about the lawsuit being a lost cause, but he admits that he doesn't know what could prevent the same thing from happening again. The $28,000 is a lot of money to a small business owner, but the costs of a legal challenge add up quickly.
"I can't be against all the sharks," he said.
Image credit: freedigitalphotos.net
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