Free Declaration in Support - District Court of California - California

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