Dealers may fight Chevron's withdrawal Dozens organize, consider lawsuit

February 13, 1993|By Michael Dresser | Michael Dresser,Staff Writer

Several dozen Chevron dealers in the mid-Atlantic region have organized and are considering a legal challenge to the oil company's plans to leave the market, their attorney said yesterday.

Gerald M. Bowen, a lawyer in McLean, Va., said a group of Chevron dealers have retained him to protect their interests in the wake of Chevron's decision, announced in December, to turn over 63 stations to Exxon Corp. and sell or close another 30.

Mr. Bowen said his "preliminary determination" was that the conduct of Exxon and Chevron was "legally insufficient" under the federal law governing an oil company's withdrawal from a market. "At this point we are exploring options, one of which, of course, could be litigation," he said.

Spokesmen for both Exxon and Chevron said they had not heard any talk of a lawsuit and that they planned to comply with all applicable laws.

The potential for a lawsuit arose out of Chevron's plan to cede the mid-Atlantic market to Exxon while consolidating its position as the dominant dealer in south Florida, where Exxon is bailing out.

Under that plan, Chevron U.S.A. Products Co. would turn over 30 stations in Maryland, five in Washington and 28 in Tidewater Virginia to Exxon. In return, Chevron would take over 59 Exxon stations in the South Florida counties of Dade, Palm Beach and Broward. An additional 30 Chevron stations in this region -- 11 of them in Maryland -- would be closed or sold.

Some of the Chevron dealers whose stations are being taken over by Exxon are upset about what they consider outrageous rent increases being imposed by the oil company. Other Chevron dealers, who are not being taken over by Exxon, are awaiting word from Chevron on how much it would cost them to buy their stations.

Ben Simpson, who has operated Capitol Hill Chevron in Washington for 28 years, said he received his new lease from Exxon this week and found the company planned to double his rent. Infuriated, he is helping to organize a group called Mid-Atlantic Chevron Dealers Task Force, which hired Mr. Bowen. Mr. Simpson is expecting about 50 dealers at an organizational meeting Monday in Greenbelt.

Mr. Simpson said the Exxon leases, which were sent to dealers this week, could be ruinous to many of the Chevron dealers. "Some of these people have been in business a good many years, and they don't like what's being done to them."

Some of the dealers whose stations aren't being picked up by Exxon are equally irate toward Chevron.

"They've sucked us dry and they're leaving town," said Tom Harvey, a task force organizer who operates Hollin Hall Chevron in Alexandria, Va. Like many Chevron dealers, Mr. Harvey is waiting to see what the appraisal on his station would be if it isn't sold to another company. He'd like to buy it but is afraid the price would be too high.

Bonny Chaikind, a spokeswoman for Chevron, said the company wasnow soliciting offers for the stations not being traded to Exxon and expects to send good-faith offers to the dealers whose stations aren't sold within the next two months. She said Chevron would arrange financing for dealers.

Anger isn't universal among the Chevron dealers traded to Exxon.

"I can't really say whether I'm going to like or dislike Exxon," said Bud Kuczinski, operator of Bud's Chevron at 7506 Eastern Ave.

In either case, he said he's likely to sign before the May deadline. "I have no choice in the matter whether I stay or go," he said.

John Allred, Exxon's retail business manager for the Northeast, said he didn't know how his company's station's rent compared with Chevron's. He said the lease offers were consistent with those paid by current Exxon dealers.

Chuck Warns, president of the Greater Washington-Maryland Service Station and Auto Repair Association, said Exxon has a "well-deserved reputation" for charging higher rents than other refiners in the market. But he cautioned that some Chevron dealers might be focusing on Exxon's base rent without considering the company's rebates and incentives.

Mr. Warns, who operates an Exxon station at White Marsh, said the switch from Chevron to Exxon has some dealers excited because they would be affiliated with the company with the strongest market share in a region where Exxon credit cards outnumber Chevron cards.

"This is not one of those deals where everybody is going to be happy," he said. "Some people are going to be hurt badly. Some people are going to think they've died and gone to heaven."

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