Dealer obstacles U.S. Restaurant Properties Inc. wants to sell about 24 Arco and 7-Eleven gas stations on Oahu to Lex Brodie's Tire Co., according to sources who have knowledge of the situation. But a couple of Arco gas dealers are blocking the deal in court, saying they are being evicted unfairly.
block Arco sale
to Lex Brodie
2 gas retailers sue to stop the deal,
saying their eviction is unfairBy Tim Ruel
truel@starbulletin.comOn Friday, U.S. Restaurant and Lex Brodie hired off-duty police officers to assist the companies in disabling the pumps of gas stations run by dealers Amgad Wahba and Riyad B. Khoury. U.S. Restaurant sued last year to evict Wahba and Khoury from the 10 stations.
But the companies were only able to dismantle eight of the 10 stations before Wahba and Khoury got a temporary restraining order about 8 p.m. Friday.
The protracted eviction of the dealers is delaying the sale of the properties to Lex Brodie, sources said.
A U.S. Restaurant spokesman confirmed that the stations were being sold, but would not comment on whether Lex Brodie was the buyer. A spokesman for Lex Brodie declined comment.
In November, Lex Brodie said it was negotiating to lease two Arco stations in Kaneohe and Waipahu from Dallas-based U.S. Restaurant, and that it was looking for more stations.
U.S. Restaurant will dispute the restraining order in a hearing scheduled for Friday before state Circuit Judge Gary W.B. Chang, who approved the order, said Richard S. Wilensky, general counsel for U.S. Restaurant. Wahba and Khoury are being represented by Honolulu attorney Mark S. Kawata, who could not be reached for comment yesterday.
The two gas dealers also filed a complaint Monday with the Internal Affairs Division of the Honolulu Police Department, saying that the police officers hired by Lex Brodie and U.S. Restaurant operated under the false guise of fixing the gas pumps, according to a representative of Kawata who did not wish to be identified. Plus, Wahba and Khoury have filed felony charges of theft against Lex Brodie and U.S. Restaurant, Kawata's representative said.
An HPD spokeswoman confirmed today that the reports were filed, and had no further comment.
Wilensky confirmed the officers were paid for by Lex Brodie. Wilensky said it was possible that dealers at some stations were told the officers were there to make repairs.
"I can't say it didn't happen," Wilensky said.
Lex Brodie paid the officers because U.S. Restaurant did not have its own checks at the time, Wilensky said.
Wilensky said that the police officers were not told to say they were fixing the pumps.
U.S. Restaurant, a publicly held real estate investment trust that has holdings in 49 states, bought the Oahu gas stations in 1999 for $38 million from Texaco, records show. The firm leased the stations to BC Oil Ventures LLC in Southern California, but BC Oil went bankrupt in 2000.
U.S. Restaurant had taken a $12 million charge against its 1999 earnings because of financial trouble with BC Oil, which was one of U.S. Restaurant's largest tenants.
In December 2000, BC Oil President Hani Baskaron subleased 10 of the Arco stations to Wahba and Khoury, California residents who moved to Hawaii to run the stations, according to court filings. Wahba and Khoury sued in November 2001 in 1st Circuit Court to block their eviction in District Court. A trial on the eviction is scheduled for next month. Wahba said in court he has spent $50,000 to improve the properties and that he could lose his life savings.
U.S. Restaurant said it has the right to evict Wahba and Khoury because they never received U.S. Restaurant's permission to sublease the properties.
Wahba and Khoury said they did get permission to sublease the properties, through a telephone call with Wilensky.
Wilensky denies that there was ever such a phone conversation. Even so, he had no authority to agree to the leases, which were too cheap anyway, he said.
"I'm the lawyer. I would have to go to the businesspeople there (at U.S. Restaurant) and get it OK'd. And I would guarantee you that we would never agree to $1,500 a month leases," Wilensky said.
Los Angeles attorney James Joseph, the trustee appointed to oversee BC Oil's bankruptcy, filed a sworn statement in Circuit Court today saying that U.S. Restaurant did not receive permission to disable the gas stations. U.S. Restaurant basically removed the computer circuitry that enables pumps to pour gasoline.
U.S. Restaurant says it owns the equipment because it was not listed among BC Oil's assets when it filed for bankruptcy.
"I don't know where Jim Joseph is coming from," Wilensky said.
U.S. Restaurant fined for health rule violations
The state Health Department said yesterday that it issued $15,150 in penalties against U.S. Restaurant Properties Inc. in December for failing to notify the department that it had acquired ownership of gas storage tanks on Oahu.The department said it has also issued penalties since November to eight service stations owned by U.S. Restaurant for violations that included failure to check leak detection equipment on piping and failure to monitor tanks and piping for release of gasoline.
Star-Bulletin staff