WHERE'S THE GAS? - A SHELL GAME EXPOSED (PART II): Back in November About Town told you how both Shell gas stations in Stoughton - the one on Central St. near Route 24 and the one in Cobbs Corner - were out of gas.
They still are.
Their owner, Ghazi Saab, who operates a number of Shell stations in the area, tells his side of the story.
Saab came to the United States in August of 1986 from his native Lebanon. There was a war taking place in his homeland, and he was looking for a safer place that offered him an opportunity for success. He moved first to New Bedford, and then to an apartment in Stoughton, and began working at the Mobil gas station at Cobbs Corner.
In 1992, Ghazi made an offer to buy the station, but the owner opted to keep it. So, he ended up purchasing a closed Gulf station in Hingham, and from 1992-1995 he took courses on real estate, and made some real estate investments. Saab tells About Town that he was the top-selling real estate agent at Papagno Real Estate in Brockton, out of a selling staff of 60, from 1993 and 1994. Shortly after, he moved to Sharon.
He purchased his second service station in 1995 (a Texaco in Brockton), and his third in 1997 (a Shell station in Brockton.) By 2003, Ghazi Saab was a self-made success, running 27 gas stations, with nearly 150 employees in the South Shore area, northwest of Boston, and in Rhode Island. He said, “When they had a gas station that was not doing well, they would ask me to take it over and make it work. I collected lots of customer service and performance awards.”
In 2003, he was one of six multi-site operators for Shell, running 13 sites, including the two in Stoughton. He spent $800,000 in 2003 for locations.
At the time, Shell Oil subsidized the markets, providing healthier margins for their dealers, according to Saab. “They controlled the prices in all 13 sites. Area managers would come in and ask us to adjust the price. But, they left enough room for us to make a living.”
Enter Colbea Enterprises, LLC out of Rhode Island. In December, 2007, they bought their first “cluster” from Shell. According to Saab, Colbea would charge dealers wholesale prices that were sometimes 20 cents over the retail price of their competition. They purchased the real estate assets, on a 50-50 split with Motiva Enterprises (Shell). In Cranston and Kingston, RI, they effectively priced Saab out of business.
He said they also had “bad business practices,” alleging that “they made me throw all of the products out of my stores. Take your stuff and leave they told me. They wouldn’t purchase any of my existing stock.” This effectively closed the two Waltham locations and the Lexington one he had since 2003.
Saab says that after 2007, Shell Oil’s company-owned stations competed with local station owners to effectively drive them out of business.
“They would sell gas at their retail stations for a lower price than they were wholesaling the gas to me," he said. "In effect, that put us all out of business. I was paying $15,000 rent plus credit card fees for my Shell location in Cobbs Corner. They were selling gas cheaper at the Shell-owned station on Washington Street in Canton than they were charging me wholesale. Same with my Central Street location in Stoughton. Their company-owned Mazzeo Drive location a couple miles away in Randolph was doing the same thing. Colbea was doing it, but Shell was a 50-50 partner. They want owners of individual stations to be a dying breed. I went from selling 200,000 gallons per month before 2007, to 50,000 gallons in this situation. Meanwhile, the rent goes up and the profits go down.”
In addition, in September of 2012 Colbea notified Saab that he needed to prepay all his gas orders. “I couldn’t find financing, and they stopped delivering to me on September 9, 2012. They sent termination letters to all my locations via email on September 19. I walked into their office in Cranston with $100,000 in checks. It was a Friday. They wouldn’t take the check. Said come in on Monday. I did. They were looking for my keys, not my money.”
His lawyer, Michael Kelley of R.I., said “It’s David and Goliath. A huge oil company controls gas prices, and they are seeking to force out independent dealers by pricing their gas so high that they can’t compete with company owned (Colbea-Motiva) sites. They are wholesaling to dealers the same price that they are retailing at their company dealers. He was told that he can sell at a loss. That’s really not an option for a businessman. They have to pay rent, too. I want to know why Massachusetts authorities aren’t doing anything about this. They have told Mr. Saab that they intend to remove independent dealers. This squashes competition, and forces prices up.”
Colbea Enterprises LLC and Motiva Enterprises LLC (Shell Oil’s company) both took Saab to court on Thursday morning, Feb. 7, to try to evict him from his Shell gas stations (including the Cobbs Corner Stoughton location and the Central Street Stoughton location), so they could take them over. The stations are currently closed.
However, the Judge in Stoughton District Court ruled that the lease agreement prevented an eviction before an arbitration meeting is held between the parties. So, both companies will be forced to have an arbitrator meet with them on the issue of Saab’s eviction.
We asked for a response to this story from Colbea. Bill McLellan, Wholesale Area Manager for Colbea, called and said that Andy Dellicarpini, the owner of Colbea, would have to respond to the allegations outlined in this story. But, it didn’t appear that call would be coming soon, as he added, “We’re tied up in litigation and I wouldn’t expect him to call until it is adjudicated.”
But, he did offer to try to get his legal counsel to respond. But, seriously, how can they respond? Nor did they.
Shell Oil has done the same thing before. The United States Circuit Court of Appeals upheld the findings of a jury in the case of Marcoux vs. Shell Oil Products Co LLC on April 18, 2008. The exact same allegations were made regarding violations of the Petroleum Marketing Practices Act.
Previous to that, Massachusetts District Court Judge Rya W. Zobel had dismissed Shell’s motion for judgment on the pleadings in 2002. A jury found in favor of the remaining franchisees in District Court in 2005.
David, a spokesperson from the office of Shell Oil president Marvin Odum, had said that “Colbea and Motiva (Shell) are making a legal attempt to take possession of numerous stations from an indebted proprietor. The legal procedures are contributing to the untimely outage of fuel at these sites.”
Saab Enterprises, Inc. will be suing Colbea Enterprises, LLC for Breach of Contract, Breach of Covenant of Good Faith and Fair Dealing, Conversion, and other causes of action.
Saab admits to About Town that he was four days late in his rent payment, adding, “I have paid Colbea Enterprises and Shell over five MILLION dollars in rent the past four and a half years, ending December 31, 2013. I came in with checks for the full amount, four days after the due date. They refused to take my check. They want my stations for nothing.”
The proposed suits covers stations in Stoughton (2), Brockton (2), Waltham, Dorchester, and two in Rhode Island.
It’s hard to believe that these giant companies can just gobble up the little guys with no consequences. But, the politicians all get donations from Big Oil, and the little guy has no one standing up for him. Well, About Town feels an injustice was done, and people should know about it.
Hopefully, Saab will have his day in court, and will be reimbursed for the huge personal losses he has suffered. He still owns the Saab gas station on Oak Street in Brockton, and the Shell on Crescent Street in Brockton, and another in Quincy. That is all that is left from the original 27 he started with in 2003.