New Jersey Franchisees Sue BP Over Lease Agreements

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New Jersey Franchisees Sue BP Over Lease Agreements

NEWARK, N.J. -- A group of approximately 20 BP gas station and convenience store operators recently filed a suit against BP regarding their lease agreements, the same issue they overcame three years ago when BP tried to renegotiate lease deals or push them into becoming owners, reported.

A suit filed in U.S. District Court here claims BP of reneging on the contracts it struck with the operators three years ago. The operators argue BP agreed to continue the operator contracts in place in 2006 for four years, and subsequently pledged to renew them on expiration.

The operators filed suit in 2006 after BP tried to end the contracts and introduce "lease and supply" agreements that would have increased station rents, according to the report. At that time, U.S. District Court Judge Dennis M. Cavanaugh sided with the operators, granting them a temporary injunction. The case was later dismissed after BP agreed to continue with the operating agreements, according to

But the operators stated in new court documents that BP had said it would not renew the deals and wanted to exit the agreements, according to the report. In addition, the company offered to sell the stations to the operators at "inflated" prices that "far exceed market value," the documents state.

It also accuses BP of violating New Jersey's franchise law, fraud and unjust enrichment, the report stated.

Moreover the operators claim BP will come up with requirements for its operators that are "even more onerous than those presently in force," should the court rule that the current contracts must remain in place, according to the court documents cited by the Web site.

The suit claims BP has for years "implemented a strategy of oppressing" the operators in the hope that they will abandon their stations," including shifting responsibility for repair and replacement of underground storage tanks to the operators, as well as manipulating gasoline prices, according to the court documents cited by the Web site. BP also has not increased the price per gallon commission paid to operators from the 12 cents set in 1998, the operators claim.

Ilona I. Khorza, an attorney representing BP, declined to comment on the suit.

"We can hardly make ends meet right now," Raffi Korogluyan, who owns stations in Hasbrouck Heights, Paterson and North Bergen, N.J., said in the report. "How are we going to meet all these costs? There's no way. We will be out of business."

Ara Alboyacian, operator of two BP stations in Fort Lee, said the company offered to sell him one business for $1.2 million, excluding the land, which he called "outrageous."

"The stress is the uncertainty of what the company is going to do," said Alboyacian in the report. "How are they going to price the fuel? Are we going to be unable to compete?"

The owners want the court require BP to stay with the existing agreement with the operators and prevent the gas company from making significant changes, the report stated.

Meanwhile, a federal judge recently sided with Exxon Mobil Corp. in a case where 65 Maryland gas station operators filed a lawsuit to block the oil company from potentially selling their franchises, the Baltimore Sun reported.

The operators lease the stations across Maryland from ExxonMobil, and filed a lawsuit in September to block what they called an imminent sale of their businesses.

The station operators alleged Exxon violated laws that would require the company to give the gas station operators the first right to buy the stations, according to the report.

In the court's ruling, Judge Alexander Williams Jr. said that because Exxon had not yet made moves to sell the gas stations involved in the suit, he could not decide on whether a potential transaction would violate federal law, the newspaper reported.

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