Case 5:07-cv-04808-JF
Document 47
Filed 07/03/2008
Page 1 of 4
1
2
3
4
5
KURT OSENBAUGH (State Bar No. 106132) DEBORAH YOON JONES (State Bar No. 178127) SAYAKA KARITANI (State BarNo. 240122) WESTON, BENSHOOF, ROCHEFORT, RUBALCAVA & MacCUISH LLP 333 South Hope Street, Sixteenth Floor Los Angeles, California 90071
Telephone: (213) 576-1000
6
7
Facsimile: (213) 576-1100 kosenbaugh~wbcounsel.com djones~wbcounsel.com skaritani~wbcounsel.com
Attorneys for Plaintiff and Counter-Defendant
BP WEST COAST PRODUCTS LLC
8
9
10
11
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BP WEST COAST PRODUCTS LLC, a Delaware Limited Liability Company,
Plaintiff,
v.
12
13
Case No.: C07 04808 JF
14
15
DECLARATION OF CECILE MCDONNELL IN SUPPORT OF BP WEST COAST PRODUCTS LLC'S:
(1) MOTION FOR SUMMARY
JUDGMENT, OR IN THE AL TERN
16 17
18
STTN ENTERPRISES, INC., a California Corporation; NAZIM FAQUIRY AN, an individual;
SA YED FAQUIRY AN, an individual; and MAGHUL FAQUIRY AN, an individual; and A V A GLOBAL ENTERPRISE, LLC, a California limite liability company,
A TIVE,
PARTIAL SUMMARY JUDGMENT AS TO THE SECOND AMENDED COMPLAINT;
AND
19
Defendants.
(2) MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT AS TO THE COUNTERCLAIM
(Filed concurently with Notices and Motions; Memoranda of Points and Authorities; Declaration of Brad Christensen, Deborah Y oon J ones, and Thomas Reeder; Appendix of N onFederal Authorities; and (Proposed) Orders.)
20
21
22
23
24
25
Date: August 8, 2008 (reserved) Time: 9:00 a.m.
Crtrm: 3
Honorable Jeremy Fogel
26
Filng Date:
September 17, 2007
27
28
AND RELATED CROSS-ACTION.
DECLARATION OF CECILE MCDONNLL IN SUPPORT OF BP WEST COAST PRODUCTS LLC'S
MOTIONS FOR SUMARY JUDGMENT, OR IN TH ALTERNATIVE,
i 213045. i
PARTIAL SUMARY JUGMENT AS TO TH SECOND AMNDED COMPLAI AND COUNRCLAI
Case 5:07-cv-04808-JF
Document 47
Filed 07/03/2008
Page 2 of 4
1
DECLARATION OF CECILE MCDONNELL
I, Cecile McDonnell, declare and state as follows:
1.
2
3
This declaration is made in support BP West Coast Products LLC's
4
5
("BPWCP"): (1) Motion for Summary Judgment, or in the Alternative, Pai1ial Summary Judgment
as to the Second Amended Complaint; and (2) Motion for Summary Judgment, or in the Alternative,
6
7
8
Partial Summary Judgment as to the Counterclaim, in the matter entitled BP West Coast Products, et
a/., v. STTN Enterprises, Inc. et a/., United States District Court, Case No. C07 04808 JF. BPWCP
is the franchisor for ARCO-branded service stations, including the station at issue in this litigation.
9
10
11
The facts set forth herein are true of my own personal knowledge, and if called upon to testify
thereto, I could and would competently do so under oath.
2.
3,
I am currently in the Fund Control Department of BPWCP.
12
13
As an Analyst for the Fund Control Department, I am responsible for
reviewing loan documentation obtained from franchisee dealers by the Assets/Portfolio Management
14
15
Group of BPWCP. I am also responsible for processing the funding of the loan and disbursing the
loan funds to the franchisee borrowers.
16
17
4.
DEALINGS WITH STTN ENTERPRISES. INC.
I am familiar with defendants and counterclaimants in this case, STTN
18
Enterprises, Inc. ("STTN"), Sayed Faquiryan and Nazim Faquiryan, I was involved in processing
and disbursing funds pertaining to two loan agreements (a Store Loan Agreement and Gasoline Loan
19
20
21
Agreement), whereby BPWCP agreed to loan STTN the total sum of $475,000 to be used toward
BPWCP-approved capital improvements for the former ARCO-branded gasoline station and am/pm
mini market that used to be located at 631 San Felipe Road, Hollister, California 95035 ("Station").
5.
22
23
In March 2007, I received the loan documents and other loan processing
24
25
documents from the Assets/Portfolio Management Group. I immediately started my review of these
documents to begin the process of funding and disbursement of the loan proceeds. Many of these
documents contained erroneous information and had to be corrected:
26
27
28
.
Incomplete Budget Worksheet: BPWCP had requested STTN submit a:
DECLARATION OJ' CECILE MCDONNEI.L IN SUPPORT OF DP WEST
COAST PRODUCTS I.I.C'S
MOTIONS I'OR SUMMARY JUDGM¡¡NT, OR IN Tim ALTERNATIVE, PIIRTIIII. SUMMIIRY JUDGMENT AS TO Tim SECONI) AMENDED COMPI.IIINT AND COUNTERClIIIM
121~f)4.\ I
Case 5:07-cv-04808-JF
Document 47
Filed 07/03/2008
Page 3 of 4
completed budget worksheet detailing the way it would be allocating the funds to different
2
3
contractors and items.
STTN submitted a budget worksheet several times, but the worksheet
continued to contain errors.
As of March 22, 2008, the required budget worksheet was stil
4
5
incorrect, despite my numerous attempts to have Sayed COllect it.
.
Tax and Mechanics Liens: Before BPWCP could fund the loans, the title
6
7
8
on the real property at which the Station was located ("Real Property") had to be clear of all encumbrances. As of April 9, 2007, there was still a mechanics lien for $92,974 and a Franchise Tax
Board lien for $9,429 on the Real Property. As of April 11, 2007, new liens were filed on the
property for $46,400 for the Board of
9
Equalization and a $14,011 mechanics lien. As of April 16,
10
11
2007, there were stil
liens on the Real Propei1y totaling $158,941.51.
.
Incomplete Corporate Documents: In April 2007, issues arose concerning
12
13
the proper corporate designee of STTN - - Sayed Faquiryan had been acting as the representative of
STTN, but as he was only the minority (49%) shareholder, certain documentation needed to be
provided to BPWCP.
14
15
.
Negotiation of Disbursement Agreement Teims: Pursuant to the loan
16 17
18 19
agreements, disbursement of loan proceeds are sent directly to contractors and sub-contractors who
provide proof of completed work. To ensure that all conditions for disbursement are met, STIN,
BPWCP and each of STTN's contractors entered into a Disbursement Agreement that sets forth the
tenns and conditions governing disbursements of funding. Throughout April 2007, I negotiated
various changes to the Disbursement Agreement with STIN's general contractor, who was insisting
that changes be made to BPWCP's fonn Disbursement Agreement.
20
21
22
23
.
Other Missing Documentation: As of May 2, 2007, BPWCP was still
missing a number of documents from STTN, including a signed promissory note, the amended
corporate documents naming Sayed as the corporate designee, and the revised Disbursement
24
25
Agreement from STIN's general contractor.
6.
On or about May 29,2007, conditions allowing the funding of
26 27 28
the Store Loan
Agreement had been met. Typically, it is BPWCP's policy and practice to fund both the Gasoline
2
I)!CLARATION OF CECII.r: MCDONNEI.L IN SUPPORT 01' BP WliST COAST PRODUCTS i.LC'S MOTIONS FOR SUMMARY JUDGMENT, OR IN .rrm ALmRNATIVE. PARTIAL. SUMMARY JUDGMENT AS TO THE SECONI) AMnNDED COMPI'AINT AND COUNTERCI.AlM
121 ~n.IS.1
Case 5:07-cv-04808-JF
Document 47
Filed 07/03/2008
Page 4 of 4
1
Loan and Store Loan at the samc time ifboth loans are offercd to the franchisee dealer, Howevcr, in
2
3
this case, the Gasoline Loan could not be funded as of May 29, 2007.
Under the Gasoline Loan
Agreement, BPWCP is not required to disburse funds if there is a default of the "Loan Documents."
4
5
The Gasoline Agreement is considered to bc one of the "Loan Documents." Under the parties'
Gasoline Agreement, STTN was required to pay for all gasoline deliveries, and failure to pay for all
gasoline deliveries is listed as a default of the Gasoline Agreement. As of
6 7
8
May 29,2007, STTN still
owed over $126,000 in outstanding balances for gasoline that STTN ordered, that BPWCP delivered
to STTN, and that STTN sold (and made a profit). Given that BPWCP could not disburse monies
contemplated in the Gasoline Loan Agreement, in May 2007, BPWCP had to process an "exception
to the policy" in order to fund the Store Loan prior to the Gasoline Loan as it was not a usual
practice to fund only one of
9
10
11
the two loans offered.
Once the "exception to the policy" was approved, I released the funds into'
12 13
7,
escrow in the full amount of $150,000 for STTN's benefit pursuant to the Store Loan Agreement.
14
15
The first check was issued to STTN's general contract on June 5, 2007.
Additional checks were
issued in June, July and August 2007, once proper documents including, but not limited to, detailed
invoices, releases, and lien releases, were provided by STTN. It is my understanding that by August
07, 2007, the full amount of $150,000 was paid out to STTN's various contractors, for STTN's
16 17
18
19
benefit, for work performed at the Station.
8.
No monies were disbursed under the Gasoline Loan Agreement because
20
21
STTN was in default of the Gasoline Loan Agreement terms - - by its failure to pay for over
$126,000 of gasoline dcliveries - - and BPWCP was under no obligation to fund the Gasoline Loan.
22
23
I declare under penalty of perjury under the laws of the State of California that the
24
25
foregoing is true and con'ect.
Executed on July 05, 2008, at La Palma, California.
26 27
28
3
DECI.ARATION OF CECIL.I'. MCDONNEl..IN SUPPORT OF DP WHST COAST PRODUCTS I.tC'S MOTIONS FOR SUMMARY IlJDGMHNT. OR IN TlmALll¡RNATIVH. PARTIAL.
SUMMARY JUDOMHNT AS TO Tim SHCONO AMENDED COMPLAINT ,\ND COUNTER(1.AIM
c.flJt-1~/l_ß~
WILE MCDONNELL
¡2I~O.I.I.1