Koylum, Inc. v. Peksen Realty Corp. (223 F. Supp. 2d 405, 2002)

Citations

223 F. Supp. 2d 405

Full opinion text

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

The Petroleum Marketing Practices Act (“PMPA”) is remedial legislation that “must be given a liberal construction consistent with its overriding purpose to protect franchisees.” Brach v. Amoco Oil Co., 677 F.2d 1213, 1221 (7th Cir.1982). In enacting the PMPA, Congress intended to establish minimum federal standards for the termination and non-renewal of franchise agreements between small businesses and large oil companies. Riverdale Enterprises, Inc. v. Shell Oil Co., 41 F.Supp.2d 56, 61 (D.Mass.1999), see MaySom Gulf, Inc. v. Chevron U.S.A., Inc., 869 F.2d 917, 921 (6th Cir.1989) (citing S.Rep. No. 731, 95th Cong., 2d Sess. 15, reprinted in 1978 U.S.Code Cong. & Admin.News 873, 877). A primary reason for its passage was to alleviate the potential use by large oil companies of threats and coercion to force adherence to their corporate marketing policies. Id. Congress therefore passed the PMPA to ensure that franchisees would not suffer arbitrary or discriminatory treatment at the hands of the more powerful franchisor. Id.

However, the PMPA’s reach should be limited because its provisions may also cause a diminution of franchisor property rights. Chestnut Hill Gulf, Inc. v. Cumberland Farms, Inc., 940 F.2d 744, 750 (1st Cir.1991). Thus the PMPA should not be interpreted to reach beyond its original language and purpose. Id. One court has described the PMPA as a “product of compromise.” Valentine v. Mobil Oil Corp., 789 F.2d 1388, 1390 (9th Cir.1986). See also Sawhney v. Mobil Oil Corp., 970 F.Supp. 366, 371 (D.N.J.1997) (Courts have taken care not to interpret the Act beyond its original language and purpose); Russo v. Texaco, Inc., 630 F.Supp. 682, 687 (E.D.N.Y.) aff'd 808 F.2d 221 (2d Cir.1986) (PMPA’s remedial'provision should not be unduly extended beyond the statute’s express language and purpose).

This case involves a gas station located at 1677 Route 25A, Ridge, New York (the “Ridge Station”) and a series of transactions with its landlords and gasoline supply company. Many of the facts set forth in the “Background” are taken from the detailed factual recitation in the Second Circuit opinion which affirmed the issuance of a preliminary injunction, Koylum Inc. v. Peksen Realty Corp., 272 F.3d 138 (2d Cir.2001) and will, in part, be repeated for the purpose of clarity.

I. BACKGROUND

The plaintiff Koylum, Inc. (“plaintiff’ or “Koylum”) has operated the Ridge Station since June 21, 1996 as a result of an assignment of a lease. The prior operator of the Ridge Station was RBP Enterprises (“RBP”). The Ridge Station, which was a Coastal Refining and Marketing, Inc. (“Coastal”) branded station, was operated under two agreements: (1) the Lease Agreement dated January 1, 1994, (the “Lease Agreement”) between Koylum’s assignor and defendant Peksen Realty Corp. (“Peksen”); and (2) the Supply Agreement, also dated January 1, 1994, (the “Supply Agreement”) between Koylum’s assignor and its gasoline supplier, Ocean Petroleum Inc. (“Ocean”). Coastal is a gasoline refiner. Ocean is not a party to this lawsuit. Both agreements expire on December 31, 2011. The Supply Agreement permitted Ocean to designate a substitute supplier. It also authorized Koy-ium’s assignor to use the brand names and trademarks designated by Ocean in connection with the sale of fuel.

Peksen and Ocean are affiliated with one another, in that both are closely held corporations owned by Refik Peksen and Mine Peksen, who are husband and wife. Ocean was an authorized distributor for Coastal and sold that brand of product to Koylum for resale at the Ridge Station.

On December 1, 1995, in a Rider (“the Rider”), Ocean and Koylum’s assignor agreed to a revision of the Supply Agreement. Among other things, the Rider required Ocean to advise Koylum’s assignor by fax on or before 7:00 p.m. of every weekday of the next day’s prices for the gasoline being sold by Ocean to RBP. The Rider further permitted Koylum’s assignor to purchase gasoline from any other open market supplier if Ocean’s quoted prices exceeded the prices specified by a stated formula. The Rider further provided (1) that Koylum’s assignor document its calculations justifying its exercise of the option to purchase from another supplier, and (2) that the transport of fuel by any other supplier from terminals in the Long Island and Metropolitan area to the Ridge Station be made by a firm called National Petroleum Transporters, Inc. at a specified rate.

On June 21, 1996, by assignment, Koy-lum became the lessee of the Ridge Station under the Lease Agreement. Also, in August 1996, with Ocean’s consent, the Supply Agreement was assigned to Koylum. At that time, Erol Bayraktar and Adnan Kiriscioglu, purchased the stock of Koy-lum. After the assignment of the Lease and the Supply Agreement, Ocean permitted Koylum to use the Coastal brand name, and the gas station continued to operate as a Coastal gas station.

In 1997 the relationship between Koy-lum and Oeean/Peksen developed problems ultimately resulting in letters of termination by Peksen and Ocean, both dated October 2, 1998. The termination letters stated that both the Lease Agreement and Supply Agreement would end on October 6, 1998. The termination letters accused Koylum of purchasing unbranded gasoline from unauthorized suppliers and selling it under the Coastal trademark and brand name; causing gasoline from an unauthorized source to be mixed in the station’s underground tanks with gasoline supplied by Ocean; and using and occupying the station for the sale of gasoline not approved by Ocean and Peksen. The termination letters also stated that Koylum’s purchases of unbranded gasoline for sale under the Coastal brand name constituted trademark infringement, unfair competition under the Federal Lanham Act, and false advertising and trademark dilution under New York law.

Following these termination letters flowed a series of eviction petitions brought by Peksen and 1677 Ridge Road Realty Corp., (“1677 Ridge”), its successor in the ownership of the Ridge Station. On October 7,1998, Peksen commenced a proceeding in the District Court of Suffolk County to evict Koylum, as a holdover tenant. This eviction proceeding was stayed, and remains so stayed by stipulation of the parties, pending the disposition of this lawsuit.

On October 29, 1998, Coastal canceled Ocean’s right to use its trademarks and terminated its agreement to sell petroleum products to Ocean, effective February 3, 1999. Ocean did not advise Koylum of this cancellation by its petroleum producer. On November 20, 1998, Ocean filed a Chapter 11 bankruptcy petition. In January 1999, in the Bankruptcy Court, Ocean rejected the executory Supply Agreement with Koylum. On February 25, 1999, Koy-lum filed a claim against Ocean in Bankruptcy Court for damages based on the rejection of the Supply Agreement. On June 18, 1999, Ocean converted its bankruptcy petition to a Chapter 7 liquidation proceeding and ceased operating.

On January 29, 1999, Peksen sent a second lease termination letter to Koylum, also based on the ground that Koylum sold non-Coastal gasoline purchased from another supplier. Peksen followed this second termination letter with another holdover proceeding in the Suffolk County District Court. This petition was dismissed in March 1999, due to the stay of the first petition.

On May 6, 1999, Peksen sold the Ridge Station to 1677 Ridge. The new owner of the station then filed another holdover eviction proceeding in District Court, followed by a non-payment eviction petition. This holdover proceeding was dismissed in July 1999.

II. THE PRESENT ACTION

A. The Complaint and Preliminary Injunction

On July 7, 1999, Koylum commenced this federal lawsuit under PMPA, 15 U.S.C. § 2801 et. seq. The complaint seeks declaratory relief that Peksen improperly terminated Koylum’s franchise because the terms of the Rider to the Supply Agreement allowed Koylum to purchase gasoline from suppliers other than Ocean. Koylum also seeks to compel Pek-sen to rescind the sale of the Ridge Station to 1677 Ridge and to permit Koylum to exercise the right of first refusal with regard to the purchase of the property. According to Koylum, Peksen’s sale of the Ridge Station violated the PMPA in that Peksen was required to give Koylum prior notice of the sale and the right of first refusal to purchase the premises, as stated in 15 U.S.C. § 2802(b)(3)(D)(iii). To stabilize its position, Koylum moved for a preliminary injunction, pursuant to 15 U.S.C. § 7805(b)(2), to enjoin 1677 Ridge/Peksen from continuing their eviction proceeding in the Suffolk County District Court.

After a hearing, United States Magistrate Judge Viktor V. Pohorelsky found that (1) the relationship between Koylum, Peksen and Ocean constituted a franchise relationship, within the provisions of the PMPA; (2) it was undisputed that Ocean orally authorized Koylum to use the Coastal brand name in connection with sale of gasoline products at the Ridge Station; and (3) the parties expressly agreed in the Supply Agreement that theirs was a franchise relationship within the provisions of the PMPA.

Judge Pohorelsky recommended that a preliminary injunction be issued. He found that there were serious questions as to the propriety of the termination of Koy-lum with regard to both the Lease Agreement and the Supply Agreement. Citing the provisions of the Rider to the Supply Agreement, which he found to be ambiguous, Judge Pohorelsky determined that it was not unreasonable for Koylum to believe that it was authorized to purchase and sell unbranded gasoline.

In a decision dated August 28, 1999, this Court adopted Judge Pohorelsky’s Report and Recommendation in its entirety and granted Koylum’s motion for a preliminary injunction (1) prohibiting 1677 Ridge and Peksen from pursuing any proceedings in any forum except for the instant proceeding until this case is finally determined, or until further order of this Court; and (2) permitting Koylum to continue in possession of the Ridge Station under and subject to the provisions of the Lease Agreement dated January 1,1994.

B. The Second Circuit Opinion

In an opinion dated November 21, 2001, the Second Circuit affirmed the grant of the preliminary injunction under the PMPA. Koylum v. Peksen, 272 F.3d 138 (2d Cir.2001). The Second Circuit held that this Court had subject matter jurisdiction under the PMPA because “[t]he relationship created by the Supply Agreement falls under the statute’s definition of a franchise.” Id. at 144-45. The Court also held that “[a] franchise relationship also arose under the PMPA from the Lease Agreement.” Id. at 145-46.

The Second Circuit rejected Peksen’s argument that “even if there was at one time a franchise relationship, no such relationship — and therefore no subject matter jurisdiction — existed at the time of the suit because of Ocean’s bankruptcy and rejection of the Supply Agreement in January 1999.” Id. at 146. In particular, the Court held that whether a franchise relationship existed when Ocean rejected the Supply Agreement was not relevant to the existence of subject matter jurisdiction because Koylum asserted the existence of a franchise and the violations of the PMPA months before Ocean’s rejection of the Supply Agreement. As the Second Circuit aptly pointed out, “What matters is whether the complaint alleges a violation of the Act.” Id. at 146. However, the Court noted, that its holding, “should not be understood to suggest that plaintiff is necessarily entitled to the relief it seeks if it proves the facts alleged. The district court might ultimately conclude, if Koylum is seeking to perpetuate only a lease and not a franchise involving the use of any franchised mark, that it is not entitled to take advantage of the Act’s provision for a right of first refusal to acquire the premises.” Id. at 146.

The Second Circuit then addressed the propriety of the issuance of the preliminary injunction. The Court found that Peksen/1677 Ridge were not prejudiced by the timing of the request for preliminary relief under the PMPA because they had notice that Koylum contested the attempted termination of the lease, and that 1677 Ridge purchased the station with “full awareness of the ongoing dispute between Peksen and Koylum concerning the sale of unbranded gasoline.”

Further, the Second Circuit concluded that the “alleged misbranding” by Koylum could not preclude the granting of preliminary injunction for the following reasons:

First, the Rider to the Supply Agreement arguably contemplated that Koy-lum might purchase unbranded gasoline. Second, Ocean itself had delivered unbranded gasoline to Koylum for sale under the Coastal mark. Third, Koylum claims that Ocean’s failure to perform its own obligations under the Supply Agreement and Rider further freed Koylum to acquire gasoline from independent sources.... Here, it is undisputed that Koylum sold unbranded gasoline, but the issue is whether such sales violated its agreements.

Id. at 148.

The Court concluded its comprehensive opinion by raising the question of whether Koylum’s actions constituted “willful adulteration, mislabeling or misbranding” within the meaning of § 2802(c)(10):

Here, as noted above, Koylum advances respectable arguments that its purchases of unbranded gasoline were permitted by the franchise agreement. Therefore, there are serious questions going to the merits of Koylum’s contention that its actions violated neither the franchise agreements, nor the provisions of the Act.

Id. at 149.

C. The Trial

The plaintiff filed a motion in limine for an order pursuant to 15 U.S.C. § 2805(c), directing that the defendant Peksen/1677 Ridge bear the burden of going forward with evidence to establish its affirmative defense that the termination of the plaintiffs franchise was permitted under Section 2802(b) or 2803 of the PMPA. The pertinént portion of Section 2805(c) provides:

In any action under subsection (a) of this section [a civil action by the franchisee against the franchisor], the franchisee shall have the burden of proving the termination of the franchise or the non-renewal of the franchise relationship. The franchisor shall bear the burden of going forward with the evidence to establish as an affirmative defense that such termination or nonrenewal was permitted under section 2802(b) and 2808 of this title, and, if applicable, that such franchisor complied with the requirements of section 2802(d) of this title.

This burden of proof rule is explained in Lippo v. Mobil Oil Corp., 776 F.2d 706, 720 (7th Cir.1985), as follows:

In an action brought under section 285(a), the franchisee has the burden of proving termination of the franchise. (This must really mean attempted termination if the injunctive relief is to be of any use). The franchisor then bears the burden of going forward with evidence to establish as an affirmative defense that the termination is permitted under section 2802(b).

In the plaintiffs case, Koylum offered the three notices of termination, Plaintiffs Exhibits 22 and 23 dated October 2, 1998 and Plaintiffs Exhibit 28, the January 29, 1999 Notice of Termination. Thus, the Court found that the plaintiff met the requirements of Section 2805(c), namely, it proved the termination of the franchise. See 15 U.S.C. § 2805(c). Accordingly, the Court granted the plaintiffs motion in regard to the burden of going forward, and the burden shifted to the defendants to establish an affirmative defense that such termination was permitted under Section 2802(b) or 2803 of the PMPA rested with the defendant franchisor, Peksen/1677 Ridge. See 15 U.S.C. § 2805. As will be discussed more thoroughly, Section 2802(b) sets forth the grounds for termination, and they include: (1) “A failure by the franchisee to comply with any provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship” and (2) “The occurrence of an event which is relevant to the franchise relationship and as a result of which termination of the franchise or non-renewal of the franchise relationship is reasonable.”

The plaintiff also moved in limine for an order to establish that Section 2802(b)(2)(A) limited the defendants’ burden of the occurrence of events relevant to the termination of a franchise relationship to a period of not more than 60 days prior to the date on which notice of termination was given, namely, October 2, 1998. The Court also granted this motion.

The defendants offered invoices from Benit Fuel Sales and Service Inc. (“Benit”) to Koylum Inc. from August 29, 1997 to June 23, 1999. Some of these sales of gasoline to the plaintiff were made prior to the October 2, 1998 Notices of Termination. Defendants’ Exhibit P is a chart which all parties agree is a true and accurate summary of all gasoline deliveries from Benit to Koylum at the Ridge Station between August 1997 to June 1999. The defendants then offered documents showing gasoline deliveries to Koylum from T. Hutchinson Trading Corp. (Dft. Exs. Q and R), from Ercat Corp. (Dft. Exs. U and V), and from Nassau and Suffolk Fuel Oil Corp. (Dft. Exs. S and T).

By deposition, Erol Bayraktar testified that he owns fifty percent of the stock in Koylum. He has an interest in nine gasoline stations with different brands, including the Ridge Station, which, he stated, is unbranded. Bayraktar conceded that, between August 1997 and July 1999, Koylum purchased gasoline from suppliers other than Ocean. He stated that he made these purchases because Ocean did not meet the requirements of the Rider. In particular, Bayraktar testified that Ocean did not fax the prices as provided for in the Rider, or if faxed, the prices did not meet the formula set forth in that document.

The Rider is a crucial document in this case. In this vigorously contested lawsuit, each side relies on the Rider provisions to support claims of a breach of the Supply Agreement. The Rider reads as follows:

RIDER TO RESELLER’S AGREEMENT BETWEEN OCEAN PETROLEUM, INC., AS SELLER AND R.B.P. ENTERPRISES, INC., AS PURCHASER DATED JANUARY 1,1994

DATED: DECEMBER 1,1995

It is agreed that the average price for all petroleum products sold by the supplier (Ocean Petroleum, Inc.) To the purchaser (R.B.P. Enterprises, Inc) by supplier shall not exceed a price greater than .005 cents above the average market price for all petroleum products sold by other legitimate and legally licensed suppliers in the open market. The average market price shall mean the sum of the price of regular unleaded gasoline plus the price of premium unleaded gasoline divided by TWO (2). Should the average market price of the supplier for all petroleum products sold to Purchaser exceed the aforesaid average market price of legally licensed and legitimate suppliers in the open market, then the purchaser may purchase any and all petroleum products from any other open market supplier.

It is further agreed that the supplier shall advise purchaser by facsimile transmission on or before 7 P.M. of each and every week day of the next day’s prices for all petroleum products being sold by supplier to purchaser. In addition, Purchaser agrees to provide documentation of prices supporting its claim of excessive prices in the event purchaser exercises its option to purchase from any other supplier other than Ocean Petroleum, Inc.

It is further agreed that the transport of any and all petroleum products sold by any supplier from all terminals in the Long Island and Metropolitan area to 450 Neighborhood Rd., Mastic Beach, County of Suffolk, State of New York and 1677 Route 25, Ridge, County of Suffolk, State of New York, shall be made by National Petroleum Transporters, Inc. at a transportation rate of .0125 cents per gallon.

Bayraktar also testified that if Ocean had timely faxed the prices and they were within the formula set forth in the Rider, Koylum would have purchased the gasoline from Ocean and not from another supplier. However, he stated that he did buy gas from Coastal even when the price did not meet the Rider formula. He further conceded that he purchased non-Coastal gasoline from Benit and Hutchinson Trading at the same time he purchased from Ocean.

Bayraktar had one conversation with Frank Mascolo, the owner of 1677 Ridge, in which he told Mascolo that he would purchase gasoline from his Coastal distribution company at the formula price and Mascolo said “No”. Bayraktar also had a telephone conversation with Refik Peksen in which he told Peksen that he was buying gasoline from other sources “because they were not ... faxing the prices daily so we can compare the prices. ([A]lso) when they faxed it, the price ... was not within the formula.”

The testimony of Bayraktar at the preliminary injunction hearing was also read into the record. Prior to late January 1999, the Ridge Station had a Coastal sign on the pumps. Significantly, Bayraktar conceded that the Ridge Station Coastal sign was covered over with a black bag toward the end of January 1999. Also, all the Coastal signs were physically removed on March 2, 1999. In evidence are three photographs of the Ridge Station taken on July 23, 1999, which show the absence of any Coastal signs. There was no change in the appearance of the station between March 2, 1999 when the Coastal signs were removed and July 23, 1999 when the photographs in evidence were taken, except for a Food Mart sign that was erected during that time period. Further, Bayrak-tar testified at the preliminary injunction hearing that from January 1999 until the date of the hearing, Koylum did not contact any Coastal distributor to request gas delivery or to ask for Coastal signs to be erected.

Mine Peksen was the Vice President of Ocean, which company was a distributor of Coastal petroleum. Mine Peksen and her husband Refik, who are now separated, operated a family business which included Ocean, Peksen and National Petroleum Transporters, Inc. Ocean supplied gasoline to the Ridge Station. Mine Peksen was also an officer of Ridge Petroleum Realty Corp., the prior owner and landlord of the Ridge Station premises. The defendant Peksen is the successor to Ridge Petroleum Realty Corp., as owner of the Ridge Station property and as the landlord of Koylum. On May 6, 1999, Peksen Realty Corp. sold the premises to 1677 Ridge, which is the present owner of the premises and the landlord of Koylum. Frank Mas-colo is the principal of 1677 Ridge. He is also a Coastal brand wholesale petroleum distributor.

Mine Peksen testified that from the date of the Supply Agreement on January 1, 1994, the brand of gasoline delivered to and sold at the Ridge Station was Coastal. On October 2, 1998, a Notice of Termination was sent to Koylum “based on information that we had received that they were purchasing fuel other than Ocean Petroleum” and selling the fuel under the Coastal trademark. After the notices of termination were served, Koylum continued to purchase fuel from other sources. However, during that period, Ocean continued to offer to sell Coastal gasoline to Koylum and it “sporadically” purchased Coastal gasoline.

In or about October 1998, Koylum commenced an action in Supreme Court Suffolk County, requesting a declaration, among other things, that the Supply Agreement had been canceled by reason of Ocean’s conduct; that Koylum is not restricted to purchasing exclusively Coastal brand gasoline; and that the Lease Agreement is in full force and effect.

On November 20, 1998, Ocean filed for bankruptcy under Chapter 11. On January 27, 1999, the Bankruptcy Court issued an order rejecting the Supply Agreement between Ocean and Koylum, affording Koy-lum the opportunity to file a claim for damages in the Bankruptcy Court.

With regard to the Rider provisions, Mine Peksen testified that there was an employee designated to fax the next day prices to Koylum. She also stated that she didn’t know if it was done each day. However, Mine Peksen testified that she did not ever “receive from Koylum documentation of prices supporting its claim of excessive prices”. Further, she stated that Koylum never asked National Petroleum Transporters Inc. to transport gasoline purchased from other sources to the Ridge Station. Mine Peksen is the Vice President of National Petroleum Transporters, which is the trucking company Ocean used to transport their fuel.

Mine Peksen conceded that, on several occasions, Ocean delivered non-Coastal gasoline to Coastal branded stations. In fact, that was one of the reasons that Coastal terminated Ocean’s franchise on February 3, 1999. Mine Peksen testified that Ocean purchased gasoline from Rad Oil, which was not a Coastal distributor, and sold that non-Coastal gas to Koylum. She also conceded that, within 90 days of October 2, 1998, there might have been such deliveries of non-Coastal gas from Ocean to Koylum. However, she explained that she sold non-branded gasoline not drawn from the Coastal account only with the consent of Coastal.

THE COURT: When you sold non-branded gasoline, was that with the consent of Coastal?

THE WITNESS: Yes.

THE COURT: Only with the consent of Coastal?

THE WITNESS: Yes.

THE COURT: Did you ever sell non-branded gasoline without the consent of Coastal from Koylum?

THE WITNESS: Not to a Coastal station, no.

‡ ‡ ❖ ❖ ❖

Q. Well, how did Ocean determine to go to a terminal that didn’t have Coastal product?

A. That would be Coastal telling us where the product was available, and if they had no product available at any of the three terminals that we used, Oceanside, Oyster Bay, Commander’s terminal and the Inwood terminal, then they would tell us to try to find the product.

Q. And then you would buy the product?

A. Yes.

Q. But you knew it was non-Coastal product when you bought it?

A. We knew and they knew.

Tr. at 110,125.

Mine Peksen also testified that Ocean trucks delivered non-Coastal gas to Koy-lum, while it was bearing the Coastal signs. She again explained that Ocean was authorized by Coastal to supply non-Coastal gas to Koylum.

Q. And did you authorize National Transporters to pull 5800 gallons of unleaded gasoline and 1600 gallons of premium gasoline from the RAD Oil terminal in Oceanside?

A. Yes.

Q. And in fact, wasn’t that Gulf gasoline?

A. Yes. It was out of Gulfs account at RAD’s terminal.

Q. So that on this occasion, June 19th, you pulled out of the Gulf account gasoline that you knew was designated as Gulf gasoline and transported it to the Coastal station at Ridge, which at the time was, I’ll say, flying the Coastal flag, if you understand it?

A. Yes.

Q. And when you pulled gas from a terminal that was not out of Coastal’s account, you knew that that was not Coastal branded gasoline?

A. It was not out of Coastal’s account.

Q. Well, what does that mean to you, if it was not out of Coastal’s account?

A. Because on several occasions we were authorized by Coastal to pull out of accounts that were not theirs and provide to station.

Tr. at 130,132.

Further, Mine Peksen stated that this delivery of non-Coastal gas was not “mis-branding”.

Q. Well, did you know that .if you pulled Gulf gas, had it delivered in one of your delivery trucks to a Coastal branded station, Ridge, that you were misbranding?

A. No.

Q. You didn’t know that?

A. No.

Q. That as an experienced distributor, that that would not be misbranding?

A. No.

Q. Did you know that you were mixing gas if you drew Gulf gas and had it delivered to a Coastal branded station like Koylum?

A. You’re not mixing gas, sir. It’s the account from which it’s drawn. All the gas is in the same tank in the terminals. It’s the account from which it is drawn from that makes a difference.

Q. So that as an experienced distributor, you ran your business, Ocean, Pek-sen, and the transportation company, under the assumption that you could pull gas from a Gulf account, deliver it to any of your Coastal branded stations, including Koylum, and that would not be mis-branding?

A. Not if it was done with their permission, no, meaning Coastal.

íjí ^5 í]*

THE COURT: It’s your testimony that they did not object to this?

THE WITNESS: Yes, up until the October '98 letter.

Tr. at 134-36 (emphasis added).

After the bankruptcy petition was filed, the Ocean records were placed in the possession of the Bankruptcy Trustee who allowed Mine Peksen to go to her office with her attorney and obtain a single fax document, dated September 8, 1998. The single document set forth the prices for the sale of gas from Ocean to Koylum, and was faxed by Ocean to Koylum, in accordance with the terms of the Rider. (Plf.Ex. 60). Mine Peksen conceded that she located only one fax that was sent to Koylum, pursuant to the terms of the Rider.

According to Peksen, when the deliveries of fuel were paid for, the faxes were discarded. In addition, and importantly, counsel for 1677 Ridge Road did offer in evidence a number of price faxes dating from June 28, 1997 to December 10, 1998. (Dft.Ex.F). These faxes were obtained from Koylum in discovery. There were 132 faxes in Defendants’ Exhibit F. The Court notes that there are three faxes in October 1998 and no faxes in January 1999. The testimony of Peksen in regard to the faxes is of importance. In this regard, the Court finds her testimony to be candid, credible and believable.

Q. What are these documents? (Dft.Ex.F).

A. These are the faxes that were sent from Ocean Petroleum to the Coastal Ridge station indicating the prices for the fuel.

Q. And did we receive these from Koy-lum in discovery in this action?

A. I believe so, yes.

Q. And is each one of these pages a document that originated from Ocean Petroleum?

A. Yes.

Q. And do you recognize the handwriting on these documents?

A. Well, there’s different handwriting, but for the most part, yes.

Q. Are these the handwritings, the handwriting of persons that were employed from time to time by Ocean Petroleum?

A. Yes, they are.

Q. And each of these faxes or each of these pages was intended to reflect the price of gasoline on a particular date; is that correct?

A. Yes.

Q. And they were faxed, were they not, by Ocean Petroleum to Koylum; is that correct?

A. That’s what it appears to be, yes.

Q. And were there other faxes, other than are contained in Defendants’ Exhibit F, for the dates that are not covered by the dates indicated?

A. I don’t know.

Q. Was it part of your regular course of business to fax a price to Koylum each day?

A. There were individuals designated to do that in the office, yes.

❖ sK # # #

Q. Was there a procedure in place by Ocean Petroleum between 1997 and 1999 to fax pricing to Koylum?

A. Yes.

Q. Was that procedure a procedure to fax prices to them on a daily basis? A. Yes.

Q. And by daily, we’re talking about weekdays, Monday through Friday?

A. Yes.

Q. And was there a person assigned the responsibility of faxing prices on a daily basis?

A. There was one individual, different individuals over that period of time, but one individual. Yes.

Q. These are — the faxes that you have before you are the only faxes that you’ve been able to locate to evidence the faxing of prices by Ocean to Koylum; isn’t that correct?

A. Other than the one we found at the trustee’s office.

Tr. at 244^7.

It was conceded by counsel for the defendant 1677 Ridge that there was no fax dated September 30, 1998 and October 1, 1998. In addition, there were only five faxes for the entire month of September 1998. However, Mine Peksen stated, that “Sir, this is not a complete set of records from that time. There may be other faxes that are not included in this package, ... probably in the trash. We did not hold on to these.” (Tr. at 324). The Court credits this testimony.

Mine Peksen testified that Koylum violated the terms of the Rider in (1) not providing documentation to Ocean of the prices they paid for the non-branded gas and from whom they purchased the gas, and (2) not transporting the non-branded fuel by National Petroleum Transporters. The Rider stated that Koylum should use National Petroleum Transporters Inc. to deliver all non-Coastal gas. Koylum concedes that it did not do so.

Mine Peksen attempted to excuse the failure to send the faxes required by the Rider by stating that, if no fax was received, Koylum could have called on the phone to obtain the prices. The Court finds there was no such obligation on the part of Koylum in the Rider. The obligation was on Ocean to fax the prices “each and every weekday”. Ocean was reminded of this obligation in a letter written by Koylum to Ocean on August 27, 1997.

This letter, sent by certified mail, (Plf.Ex.ll) stated:

8/27/97

Ocean Petroleum 4129 Middle Country Road Calverton N.Y. 11933 To Whom It May Concern This letter is to remind you that according to the “Supply Agreement” we have with you, you are required to fax next day’s gasoline cost prices to us before 7:00 p.m. every day.

Our new office fax number is: (516)462-6642

Thank you in advance for your cooperation.

With regard to the termination notice, which gave Koylum only four days notice, Peksen stated that she relied on the termination provisions in the lease rather than the notice provisions in the PMPA. The Court will discuss the termination notice later in the opinion.

Peksen went out of business in 1999, “probably in the third quarter of 1999,” because of personal creditors and personal guarantees. All three Peksen properties were sold on or about May 6, 1999, to a company in which Frank Mascolo is the principal. The sale included the Ridge Station property. The Koylum lease was assigned to 1677 Ridge, the present owner of the Ridge Station property.

The lease agreement (Dft.Ex.A) includes provisions that are material to the issues in this case. Initially, the Court notes that the Lease expressly refers to the Supply Agreement, as follows:

Section 2.10. Purchase Agreement: means the Agreement dated January 1, 1994 between Ocean Petroleum Inc., as Seller, and Tenant, as Purchaser, under which Tenant has contracted to purchase all of its requirements of Gasoline to be sold at the Demised Premises.

Section 5.04 of the Lease is entitled “Signs”. Subdivision (b) of that section provides as follows:

(b) (i) It shall be considered a material breach of this Lease if Tenant sells, markets or dispenses any brand of Gasoline other than the brand supplied under the Purchase Agreement and other than the brand indicated by the signs approved by landlord.

(ii) Notwithstanding the provisions of Article XIII in the event Tenant sells, markets or dispenses any brand of Gasoline other than the brand supplied under the Purchase Agreement, Landlord shall have the right to terminate this Lease on two (2) days written notice. The provisions of Article XIII which apply to recapture, renting or repossession of the Demised Premises shall apply if this Lease is terminated as set forth in part (i) of this subsection 5.04(b). (Emphasis added).

Also relevant is Section 7.03, entitled “Purchase of Petroleum Products” and reads as follows:

Section 7.03. Purchase of Petroleum Products:

(a) In order to induce Landlord to enter into this Lease, Tenant covenants and agrees that during the term of this Lease, Tenant shall not nor permit others to store, handle, sell, offer for sale, advertise for sale, use or permit to be used upon the Demised Premises or any part thereof or any premises adjacent thereto over which Tenant has control any Gasoline, oil or other petroleum product not supplied by Seller under the Purchase Agreement.

(b) In furtherance of Tenant’s covenants contained in subsection (a), Tenant agrees to enter into the Purchase Agreement simultaneously with the execution of this Lease.

(c) Landlord shall not be hable by any failure of Seller under the Purchase Agreement (“Seller”) because of (i) any rationing provisions imposed upon Seller or upon such company as Seller has designated (ii) by reason of reduction in supply (hi) failure of Seller or such company as Seller may designate to supply such products (iv) from disturbance or interruption of any means of transportation customarily used in making deliveries to Tenant of (v) through acts of God, strikes, lockouts, or other labor disturbances, fires, explosions, accidents, riots, civil commotions, acts of war- or restrictions, provisions of preventions imposed by governmental authorities.

In testimony concerning the main thrust of the defendants’ defense in this case, Mine Peksen stated their position that the plaintiff Koylum had itself breached the provisions of the Rider.

Q. Now, during the period of time after Mr. Kiriscioglu and Mr. Bayraktar were purchasing fuel oil from sources other than Ocean, did they ever advise you that they were purchasing fuel from any other sources?

A. No.

Q. Did they ever provide to you documents indicating the prices for fuel that they were purchasing from other sources?

A. Not to my knowledge, no.

Q. Did they ever provide you with any of the trucking manifests for other fuel that they were buying from other sources?

A. No.

Q. And did they ever contact National Petroleum Transportation to arrange for delivery of fuel from other sources?

A. No. Tr. at 238.

Also, paragraph 8 in the Supply Agreement (Dft.Ex.B) states the following:

Seller’s designated brand names, trademarks, logos, insignias or other identifying symbols shall be maintained by purchaser on said products and on all facilities on or in which they are handled, unless seller gives permission to purchaser in writing to sell such products on an unbranded basis.

There was never any consent given by Coastal or Ocean to operate under any other mark or under no mark.

In addition, paragraph 9 of the Supply Agreement provided that the Ridge Station operator would not use any gasoline products other than supplied by Coastal. No consent by Coastal or Ocean was ever given to Koylum to use unbranded gasoline, except of course, as delivered by Ocean or under the terms of the Rider.

Erol Bayraktar conceded that Koylum received all these faxes and paid for each delivery of gasoline. These faxes were kept in his office and “are all the faxes that I received within that period.” As stated above, Koylum sent a reminder letter to Ocean on August 27, 1997 (Plf.Ex.ll) with regard to the requirement to fax daily prices. The letter also gave Ocean the new Koylum fax number. Although Koy-lum contends that, after August 27, 1997 to October 1998, a period of 13 months, it did not get a fax every day, it never sent another such letter to Ocean. Nor did Koylum ever send a letter to Ocean complaining that no faxes were received. In fact, there is no evidence that Koylum ever orally complained of failing to receive the daily faxes.

Mine Peksen also described the method by which Coastal obtained its gas from terminals it shared with other oil companies. Apparently, the oil companies all store their product in the same terminal. Frequently Coastal did not have fuel in a particular terminal and, in that situation, Coastal gave Ocean permission to obtain gas from other terminals.

On January 29,1999, Mine Peksen wrote to Koylum (Plf.Ex.40) calling to its attention certain lease provisions, namely, Sections 5.04(b)(i), 5.04(b)(ii) and 7.03(a). The letter also notified Koylum of alleged violations of the Supply Agreement, as follows:

By reason of you having stored, handled, sold, marketed and dispensed gasoline that has been supplied by someone other than Ocean Petroleum, Inc. under the Purchase Agreement it had with you; to wit: as recently as January 26, 1999 when a gasoline delivery truck of Ark Transportation, tractor number TX6834, trailer number 731891 was observed delivering gasoline to your station at about 5:30 p.m. This delivery is not the first. Moreover, on at least another occasion and on October 7,1998, you had 8,500 gallons of gasoline delivered by Mystic Bulk Carriers, Inc. which was purchased from Benit Fuel Sales and Services which you sold from the premises.

Accordingly, notice is hereby given that on two days from the date of this letter your lease shall terminate. You are thereby expected to vacate the premises and remove all of your personal property.

In the interim, you should be further advised that the underground storage tanks and related piping, the gasoline dispensing pumps and signs are not owned by you and you have no right to use that equipment for any purpose whatsoever, including the storage, supply, sale or offering for sale gasoline you purchase form any source other than Ocean Petroleum, Inc.

Moreover, the sign is owned by Ocean Petroleum, Inc. and by selling gasoline provided by another source as Coastal gasoline you may be violating Coastal’s trademark rights.

Therefore you are required to immediately cease and desist from any use of the equipment at the premises.

At no time did Koylum request permission from Ocean to sell gasoline other than Coastal gas. Notwithstanding this failure to obtain consent, Koylum purchased gas from other distributors, such as Benit, T. Hutchinson Trading Corp., Ercat Corp. and Nassau and Suffolk Fuel Oil Corp.; it stored the non-Coastal gasoline at the Ridge Station when it had Coastal markings; and then unilaterally removed the Coastal markings. The record is replete with documents showing Koylum’s purchase of gasoline from distributors other than Ocean. With regard to non-Coastal purchases, no documents of any kind, as to price or otherwise, were ever sent by Koy-lum to Peksen or Ocean, in violation of the Rider provisions. Further, none of these deliveries were made by National Petroleum Transporter Inc. Ocean wanted the provision inserted in the Rider with regard to National Petroleum Transporters to “insure the integrity of the product that was picked up.” (Tr. at 234). Failure to use National Petroleum Transporters to deliver the non-Coastal gasoline was also a violation of the Rider provisions.

Erol Bayraktar also testified in person. The Ridge Station sells gasoline from underground storage tanks. It also has a small convenience store, and a repair facility which is leased to a third party. Koy-lum operates the gas station and the convenience store.

On August 2, 1996, Bayraktar and Kir-iscioglu purchased the stock of Koylum, including ownership of the Ridge Gas Station. He stated that he and Adnan Kiris-cioglu are equal shareholders and officers in Koylum Inc. When they purchased the Ridge Station it was exhibiting Coastal gas signs. He was shown the Lease (Dft.Ex.A) and, in particular, directed to Section 5.04 subparagraph (b) which reads as follows:

Bayraktar testified that the first Koylum purchase of gasoline from a source other than Ocean was on August 29, 1997. He conceded that between August 1997 and “today,” he sold gasoline other than Coastal product:

Q. Okay. And, sir, did you sell and dispense gasoline from the station at 1677 Route 25, Ridge, other than that which was supplied to you by Ocean Petroleum?

A. Yes.

Q. And did you sell that gasoline under a brand other than that which whs approved by the landlord?

A. Would you repeat the question?

Q. Did you sell that gasoline that you purchased from a source other than Ocean Petroleum from the station under a brand other than that approved by the landlord?

A. Yes.

Q. And, sir, did you understand that that activity was a breach of this lease agreement?

MR. AZAROW: Objection, your Honor. THE COURT: Overruled.

A. I didn’t think it was a breach of the agreement.

Tr. at 10-11.

Bayraktar’s attention was also drawn to Section 7.03 of the Lease, which provides:

Section 7.03. Purchase of Petroleum Products:

(a) in order to induce Landlord to enter into this Lease, Tenant covenants and agrees that during the term of this Lease, Tenant shall not nor permit others to store, handle, sell, offer for sale, advertise for sale, use or permit to be used upon the Demised Premises or any part thereof or any premises adjacent thereto over which Tenant has control any Gasoline, oil or other petroleum product not supplied by Seller under the Purchase Agreement.

He also conceded selling gasoline at the Ridge Station “which gasoline was not supplied under the Purchase Agreement.”

Q. And have you in fact caused gasoline to be used at 1677 Route 25, Ridge, New York, and sold from 1677 Route 25, Ridge, New York, to motorists, and which gasoline was not supplied under the purchase agreement?

A. I can’t answer yes or no.

Q. And why can’t you answer yes or no?

A. For the same reason. The purchase agreement allowed me to buy gasoline other than supplied by Ocean Petroleum.

Q. Well, was that gasoline—

A. Under certain conditions.

Q. Was that gasoline supplied by Ocean Petroleum?

A. No.

Tr. at 12.

Bayraktar also conceded that Koylum purchased gas from Benit Fuel Sales & Service Inc. and resold it at the station to motorists between August of 1997 and June of 1999, as reflected in Defendants’ Exhibit P. Koylum also purchased gas from T. Hutchinson Trading Corp., which gas was delivered to the station and sold to motorists from November 1998 to January 1999, as reflected in Defendants’ Exhibit R; from Nassau Suffolk Fuel Oil in July 1999, as reflected in Defendants’ Exhibit T; and 9200 gallons from Ercat Corp. on June 17, 1999, as reflected in Defendants’ Ex. V. In all of these purchases by Koylum the non-Coastal gasoline was delivered to the Ridge Station and sold to motorists.

Also, since July 1999, Koylum has been buying gasoline from various sources, other than Coastal, and selling to motorists at the Ridge Station. Bayraktar explained that Koylum purchased gasoline from sources other than Ocean because Ocean did not fax the prices or the prices were not in accord with the formula set forth in the Rider.

Interestingly, at the hearing before Magistrate Judge Pohorelsky, Bayraktar testified that his normal procedure for ordering gas from June 1997 through December 1998, if Koylum did not receive a fax from Ocean, was to receive a fax and purchase from Benit Fuel.

THE COURT [Judge Pohorelsky]: And what time did you get there in the morning?

THE WITNESS: Usually around 8 o’clock, 8:00 to 9:00. So our routine is my [sic] 7 p.m., usually most of the time we did not receive any faxes from Ocean Petroleum. So the next thing we do is following morning we — almost every day we receive a fax from Benit Fuel, and when we don’t have any reference to compare Benit’s prices to Ocean, we purchased from Benit.

At this time Bayraktar knew that Benit Fuel was not an authorized Coastal distributor and yet Koylum purchased Benit gasoline and sold it to motorists under the Coastal brand. In evidence are three delivery tickets from Benit Fuel covering deliveries to the Ridge Station on September 11, 1997, October 1, 1998 and October 7, 1998 (Dft. Exs. AR6, AS and AT). In this regard, Bayraktar explained about the timing of the removal of the Coastal signs:

Q. And you knew, sir at some point in time, in January, enough to cover over the Coastal sign; is that not correct.

A. Yes.

Q. And you did also remove the word “Coastal” from the sign on the building itself and put in a sign that says “food mart”; isn’t that correct?

A. Yes.

Q. So when somebody came to the station after January of 1999, they would not know what brand of gasoline was being sold from the station, is that not correct?

A. Yes.

Q. Now when you got a delivery from Benit, Nassau Suffolk, Hutchinson or one of the other suppliers you were buying gasoline from, did you ever put a sign on the dispensing pumps to tell people that this is not a Coastal product?

A. We took the signs off.

Q. Before you took the signs off, before January of '99, did you ever put a sign on the dispensing pumps to tell motorists this is not a Coastal product? A. No, I don’t think so.

Tr. at D26-D27.

After receiving the two October 2, 1998 termination letters on or about October 16, 1998, Koylum commenced an action in Supreme Court, Suffolk County. The complaint in this action, among other demands for relief, seeks a judgment declaring that the Supply Agreement be deemed void or unenforceable by reason of Ocean’s conduct.

Between January 1999 and the present time, Koylum has not taken any action to become a branded station. At the present time Bayraktar operates eight gasoline stations, of which all are branded stations except for the Ridge Station. As to all of his branded stations, he purchased all of his gasoline requirements from the brand supplier. He does not buy gasoline from Benit Fuel because its gasoline is cheaper and “deliver it into a Mobil station or Shell station or an Exxon station.” Bayraktar conceded that he knew the Petroleum Marketing Practices Act prohibited a branded station operator from selling gasoline supplied by someone else other than the refiner of his brand.

Bayraktar was questioned closely about the terms of the Rider. In particular, he was asked about the clause requiring documentation of prices, which provides:

In addition, purchaser agrees to provide documentation of prices supporting its claim of excessive prices in the event purchaser exercises his option to purchase from any other supplier other than Ocean Petroleum, Inc.

Bayraktar conceded that he had not seen any “documentation of prices” supporting Koylum’s claim of excessive prices by Ocean.

Q. Did you ever provide documentation of prices supporting your claim of excessive prices to Ocean at any time between August of 1997 and January 1999?

A. I personally don’t remember.

Q. Have you seen any such documentation that you provided to Ocean in preparation of coming to trial here today? A. No.

Q. Have you discussed with your partner, Adnan Kiriscioglu, if he has any such documentation of prices supporting your claim of excessive prices that you provided to Ocean?

A. He told me that he faxed at least one document and that he spoke to them on the phone.

Q. But you did not?

A. I did not.

Q. Do you have that one document?

A. I think it was one of the faxes that was faxed to them. That was one of the faxes that Mine Peksen found in the trustee’s office.

Q. You agree you made a number of different purchases from sources other than Ocean; is that correct, sir?

A. Yes.

Q. And with respect to each of those purchases, you did not fax to Ocean documentation of the prices supporting your claim that the Ocean price was excessive, did you?

A. I couldn’t.

Q. Did you or did you not?

A. I could not.

Q. You did not?

A. I didn’t have — if I didn’t have Ocean’s fax, how could I prove the difference?

Q. Before you purchased from Benit, did you ever send Benit’s prices to Ocean and say “these are the prices that I received from Benit. If you don’t sell to me at this price, plus the half a penny, then I’m going to buy from Ben-it”?

You never provided that to Ocean, did you?

MR. AZAROW: Objection, your Hon- or.

THE COURT: Overruled.

A. I don’t remember any.

BY MR. DEL GADIO:

Q. And you know you are here in court today for this trial; is that correct?

A. YES.

Q. If you had such documentation, would you have brought it to court today:

A. Yes.

Tr. at D44-D45.

In addition, Bayraktar was queried about the third paragraph in the Rider, which reads:

Bayraktar conceded that Koylum did not attempt to transport the non-Coastal gasoline by National Petroleum Transporters, Inc.:

THE COURT: You understood what that meant, didn’t you?

THE WITNESS: Yes.

THE COURT: You understood it then and you understand it now?

THE WITNESS: Yes.

THE COURT: It means clearly that if you do order any petroleum products sold by any supplier from any terminal, you should use National Petroleum Transporters to transport it. It’s unambiguous and clear, correct?

THE WITNESS: Yes.

MR. DEL GADIO: May I proceed, your Honor?

THE COURT: Yes.

BY MR. DEL GADIO:

Q. Sir, did you, in connection with any of the purchases you made with Benit, before December 1, 1998, use National Petroleum Transporters as the company to transport the gasoline to 1677 Route 25, Ridge, New York? Yes or no?

A. No.

Tr. at D48-D49.

Ocean attempted to enforce the transportation and documentation provisions in the Rider. On September 11, 1997, Refik Peksen, as President of Ocean, wrote a letter to Koylum (Plf.Ex.12), which stated:

Koylum Inc.

1677 Route 25

Ridge, NY

ATT: Adnan Kiriscioglu and Erol Bay-raktar

Dear Sirs:

In furtherance of our discussions earlier this morning, attached please find a copy of the Rider to Reseller’s Agreement which you took assignment of. Please note the highlighted sections of that agreement as attached. As you are well aware, the intent of this rider was to insure that all products delivered to the site would be transported by National Petroleum Transporters, Inc. (“NPT”) at the set forth rates and in the event you exercise your option to purchase elsewhere, in addition to having NPT transport, you must provide documentation supporting your claim to excessive pricing. Please be advised that you have failed to adhere to these requirements and continuance of these actions unll cause a default of your supply agreement as well as your Lease agreement.

Your prompt attention to this matter is requested. (Emphasis added).

Bayraktar explained that he did not violate the provisions of the Rider because (1) the Rider provided that if Ocean did not meet certain criteria “my agreement allowed me to go and buy gasoline from outside,” and (2) “Ocean itself delivered unbranded gasoline to the station.” Further, he stated that in the October 2, 1998 Notices of Termination, there was no reference to Koylum’s failure to use National Petroleum Transporter to deliver gas to the station. Bayraktar offered two reasons for Koylum’s failure to use National Petroleum Transporters, Inc. to deliver the non-Coastal gasoline. First, because Ocean did not fax the prices, “they broke our supply agreement in the first place.” Second, Koylum attempted to use National “but Benit Fuels didn’t want to do it.”

Bayraktar also stated that the reason Koylum purchased gasoline from other sources on September 11, 1997, October 1, 1998, October 7, 1998 and/or January 4, 1999 was because it did not receive a fax indicating the Coastal prices. Koylum relied on the Rider provision when it purchased non-Coastal gasoline. Even though Koylum believed that Ocean violated the Rider provision by not faxing prices on a daily basis, nevertheless it continued to purchase gasoline from Ocean in 1998. Fax or not, Koylum continued to purchase gasoline from Ocean until it no longer wanted to operate under the Coastal brand.

Q. Did you believe because Ocean had not faxed the prices and you considered they broke the supply contract, that you were free from performing under that supply contract?

A. Yes, according to the supply agreement.

Q. But nonetheless, even though they didn’t fax you the prices in '97, in '98, you still bought gasoline from them, did you not?

A. Yes.

Q. And you bought gasoline from them because you wanted that Coastal brand at the station; isn’t that correct?

A. Correct.

Q. But then there came a point in time you didn’t want the Coastal brand at the station anymore; isn’t that correct?

A. Not correct.

‡ $ ‡ ‡ ‡ ‡

Q. You did remove or cover over the sign, didn’t you?

A. Yes, I did.

Q. And you did remove the signs, did you not?

A. Yes.

Q. And in March you removed the signs, in March of 1999?

A. Yes.

Q. And today is December 28th, 2001, more than two and a half years after you removed the signs; isn’t that right?

A. Yes.

Q. And you operated as an unbranded station without a brand; isn’t that correct?

A. Yes.

Q. And you considered yourself relieved of any responsibility for performing under the contract?

A. I don’t know what you mean by that.

Q. You don’t feel that you are bound as of today to any of the terms and conditions of that supply contract, do you? A. I think we are allowed right now by the Court order, anyway.

Q. You are allowed what?

A. We’re allowed to live with the lease without the supply agreement, perform business.

THE COURT: He’s allowed to live with the lease without the supply agreement, he said.

Tr. at D76-D77 (emphasis added).

Adnan Kiriscioglu testified by deposition. He stated that the only reason Koy-lum purchased gasoline from non-Coastal sources was because of Ocean’s failure to fax prices.

Question: With respect to the purchases of gasoline that you made from sources other than Ocean, from some point in time from 1997 until the time that the Coastal sign was covered over, you bought gasoline from sources other than Coastal; is that correct, sir?

Answer: Other than Coastal or other than Ocean:

Question: Other than Ocean.

Answer: Yes.

Question: Sir, why did you do that?

Answer: In the purchase agreement there was a rider which is saying that they should fax us the prices by 7 p.m. for next-day gasoline prices. And there was a formula which it should meet from Ocean. There was times they didn’t fax it and there was times they faxed it late, or even if they faxed it, it wasn’t meeting the formula of the rider.

Question: Sir, were there any reasons other than that which you have just given us, did not fax or the fax came in late or that the price did not meet the formula as described in that, that led you to buy gasoline from a source other than Ocean:

Answer: Yes.

Question: What were the other reasons?

Answer: I am sorry. I didn’t understand the question.

Question: Other than those three things that you told us — one, they did not fax, or two, they faxed late, or three, that the price of Ocean for the gasoline did not meet the formula in that rider— were there any other reasons that you had for going and buying gasoline from some other source?

Answer: Which time frame?

Question: Between 1997 and before the signs were covered over.

Mr. Azarow: March 2, 1999.

Mr. Del Gadio: I think it was December or January when they were covered over.

Answer: Is there any reasons? No.

Question: If you received a fax on time and the price from Ocean to Koy-lum was not in excess of .005 cents above the average market price for all supplies in the open market, would you have purchased all of your requirements for gasoline from Ocean?

Answer: Yes.

Question: You would have sold that gasoline as Coastal branded gasoline; is that correct, sir?

Answer: Yes.

Tr. at D90-D91.

It is undisputed and the Court also finds that at a period in time Koylum sold non-Coastal gasoline, when the Coastal signs were still in place, it did not inform its customers that they were purchasing non-Coastal gasoline. The Court also finds that such activity by Koylum took place in the sixty-day period prior to October 2, 1998.

Koylum first learned that the 1677 Ridge Road property was sold when it received a letter from Peksen on May 6, 1999 (Plf.Ex.30), advising it that the property was sold that day to 1677 Ridge. Koylum was given no right of first refusal to purchase the property.

Frank Mascolo is the owner and President o