40 Dealers Sue to Keep Exxon in Southland
Forty local Exxon dealers Friday filed a lawsuit against Exxon Corp. in U.S. District Court in Santa Ana in an attempt to block the oil company from pulling out of the retail gas business in Southern California.
The Houston-based company announced May 12 that it will cease selling gasoline at 156 stations in Los Angeles, Ventura and Orange counties. Before the announcement, Exxon encouraged its dealers to continue operating its stations and to invest an average of $350,000 each in the stations, the lawsuit said.
The dealers want Exxon to stay in business in Southern California and seek compensation for their potential losses if the company leaves.
Dealers say that while the company has offered them the first right to buy the franchises, the stations are offered at inflated prices, particularly for older properties that have been contaminated by gas seepage.
Exxon responded to the lawsuit with a short statement: “Exxon believes that the complaint is groundless and without merit. Exxon intends to vigorously defend against the lawsuit.”
However, John Boone, an attorney representing the dealers in the lawsuit, said the company “has not been giving the dealers a fair shake.”
Boone tied Exxon’s decision to leave Southern California to a nationwide restructuring of the gasoline industry, in which dealerships were traded among the major companies. “In the process, they’re just cutting out the little gas station dealers,” he said.
One such dealer is Adrian Ruiz, a Exxon operator since 1967, who has operated his station in Cerritos for 20 years. Ruiz said Exxon has offered him the right to buy the station for $796,000--much more than the $578,000 he says the firm appraised it for two years ago.
Ruiz said no bank would grant him a loan for the property at that price, particularly since it had been contaminated by gas overflow that spilled into the land before his equipment was updated in 1967.
The “blue sky” value of the station--the value of operating the franchise--had also evaporated since Exxon announced the pullout.
“I had an offer for $300,000 six months ago,” Ruiz said. “When I called the guy back, he said, ‘No way.’ ”
At 65, Ruiz said he had planned to retire next year. “Now I’m not going to retire till I’m 75, probably.”
Under terms of the Petroleum Marketing Practices Act, oil companies must give their franchise operators the right to buy their stations before the company pulls out of a market. Friday’s lawsuit alleges Exxon violated the law because its inflated prices do not constitute bona fide offers.
