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October 31, 1994

CECIL L. PERSAUD, Plaintiff,

The opinion of the court was delivered by: JOANNA SEYBERT

 SEYBERT, District Judge:

 This is an action brought against a franchisor under the Petroleum Marketing Practices Act, 15 U.S.C. §§ 2801-2841 ["PMPA"], by an alleged franchisee of an automotive service station. Plaintiff Cecil L. Persaud, the franchisee in question, seeks to rescind a mutual termination and release agreement that he executed with Exxon Corporation ["Exxon"] on June 7, 1994 in exchange for approximately $ 9,600 in consideration. This agreement, among other things, provided for the termination of the subject franchise on June 30, 1994 at 12:00 noon, and, pursuant to the PMPA, accorded the plaintiff a seven-day window to repudiate. Plaintiff failed to cancel this agreement within the prescribed time period, and subsequently commenced this action seeking, inter alia, a preliminary injunction enjoining the agreement's enforcement. *fn1" Exxon, in turn, has cross-moved for a preliminary injunction to enforce the subject agreement, and to dismiss the complaint for lack of standing and lack of subject matter jurisdiction.

 This matter was heard before the Court on July 19, 1994, and the record has been supplemented by the prior and subsequent submissions of the parties. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the Court enters the following findings of fact and conclusions of law.


 1. Plaintiff Cecil L. Persaud is engaged in the business of operating an automotive service station and selling at retail Exxon's petroleum and automobile-related products. His principal place of business is located at 140 Vanderbilt Avenue, Brooklyn, New York. Persaud Aff. P 2, at 1.

 2. Defendant Exxon is a foreign corporation doing business and authorized to do business in the State of New York with a place of business at 1400 Old Country Road, Westbury, New York. Exxon has good title to the real property located at 140 Vanderbilt Avenue, Brooklyn, New York, and owns all improvements and petroleum marketing equipment situated thereon. Harriton Aff. P 4, at 4.

 3. Defendant Exxon is engaged in the marketing and distribution of petroleum products in the State of New York and throughout the United States. Among its activities, Exxon sells automotive gasoline and other products to service station dealers and leases service station premises to dealers under retail-service-station leases and sales agreements. Id. P 5, at 4.

 4. For a period commencing in or about April 1983 and continuing until approximately January 1, 1987, plaintiff Persaud was employed as a salesperson and supervisor at various gasoline service stations, including the Exxon service station located at 140 Vanderbilt Avenue, Brooklyn, New York ("the service station"). Tr. 4-6; Harriton Aff. P 10, at 5.

 5. For a period commencing in 1987 and running through and including June 30, 1994, South Lake Corporation was a retailer authorized or permitted, under a franchise agreement, to use the Exxon trademark in connection with the sale, consignment, or distribution of motor fuel at the service station. Tr. 20; Harriton Aff. P 11, at 5.

 6. Plaintiff Cecil L. Persaud was the president and sole shareholder of South Lake Corporation, a New York State corporation, incorporated on July 24, 1987. Tr. 20, 21; Letter from State of New York Department of State to Keith S. Harriton P.C., dated July 6, 1994 (94-CV-3089 July 26, 1994, docket entry #15) (hereinafter "NYS Corporation Letter").

 8. On October 7, 1992, South Lake Corporation and Exxon Company, U.S.A., a division of Exxon Corporation, entered into a lease of the service station in question for a term beginning on January 1, 1993 at 12:00 noon and ending on January 1, 1996 at 12:00 noon. The initial rental amount under the lease was $ 4,000 per month. This rental amount was subject to an $ 800 escalation by Exxon, upon sixty-days written notice. Harriton Aff., Ex. A, at 8. In addition, the lease incorporated by reference the rights accorded to the parties under the PMPA, including the right of Exxon, the lessor, to terminate the lease where "termination of a PMPA 'franchise' is permitted under the provisions of the Petroleum Marketing Practices Act (15 U.S.C. § 2801 et seq.)." Id. Ex. A, at 18.

 9. The franchise agreement between South Lake Corporation and Exxon required South Lake Corporation to purchase certain amounts of gasoline on a monthly basis. South Lake Corporation, and the plaintiff, as its successor in interest, failed to purchase the required minimum monthly gallonage during each month from January 1993 through June 1994. Tr. 22; Harriton Aff. PP 24-25, at 7-8.

 10. The parties have stipulated, for purposes of the applications pending before the Court, that the foregoing allegations of nonperformance by South Lake Corporation and Persaud constitute a valid basis for terminating the franchise in question pursuant to the PMPA. Tr. 22-23. Insofar as the termination provisions of the PMPA are incorporated by reference into the lease of the premises in question, see supra P 8, Persaud therefore committed such acts as to accord Exxon the right to terminate the subject lease.

 11. Persaud experienced financial difficulties and subsequently notified Richard A. Debree, a district manager for Exxon, and Gerard Rafferty, a territorial manager for Exxon, of his intention to bring on a partner. Rafferty informed Persaud that certain paperwork would be required, and that any proposed partner would have to take a reading and mathematics examination, and attend an Exxon training school. Tr. 7, 8, 61.

 12. By letter dated April 13, 1994, Persaud notified Rafferty of his intention to bring on an individual named Neeranjan Naraine as a 25% shareholder of South Lake Corporation. Tr. 29, Ex. This letter is dated subsequent to South Lake Corporation's dissolution by proclamation.

 13. Notwithstanding Persaud's letter dated April 13, 1994, on April 27, 1994, an individual who identified himself as Nahindranath Deonauth took the reading and mathematics examination required by Exxon. Tr. 33.

 14. Notwithstanding the foregoing representations, an individual purporting the name of Maminder Singh was indicated as the proposed joint operator of the franchise in question on a subsequent application submitted by Persaud to Exxon during May 1994. Tr. 34.

 15. The Court, in view of plaintiff's failure to submit documentary evidence or to call as witnesses the named individuals to corroborate his testimony that Naraine, Deonauth and Singh were the same person, Tr. 33-36, declines to credit this testimony, and finds that the three individuals in question were not one and the same. The Court further finds that Persaud misrepresented this fact to Exxon, and that this conduct constitutes an act of bad faith.

 16. On or about June 5, 1994, Persaud, accompanied by his attorney, Marvin E. Kramer, Esq., met with Mr. Singh to discuss the terms of a joint venture agreement. At that meeting, a subsequent meeting was scheduled for the evening of June 7, 1994, at which time Persaud anticipated that the joint venture agreement would be executed. Persaud Aff. P 8, at 2.

 17. A meeting had been scheduled between Persaud, Rafferty and Debree on June 6, 1994 to discuss the subject franchise. Tr. 36, 66, 92-93. Persaud was unable to attend this meeting, however, and called the Exxon office to inform the other individuals of the same. This meeting was rescheduled to the following day. Tr. 93-94.

 18. The June 7, 1994 meeting between Persaud, Rafferty and Debree was held at an Exxon service station located near the corner of Pennsylvania and Pitkin Avenues in Brooklyn, New York. Tr. 38, 94. At this meeting, Debree spoke with Persaud about the deficiencies in the franchise's operations including such matters as unattained minimum gasoline purchase volumes, unpaid rent on the premises, and unpaid drafts drawn by Persaud which had been returned to Persaud for insufficient funds. Tr. 39, 94. Debree further indicated that Exxon would commence termination proceedings. Tr. 39, 96.

 19. In response to Debree's assertions, Persaud displayed a bank deposit slip showing a recent bank deposit of $ 42,500. Persaud further displayed a copy of a check, drawn by an individual identified as Maminder Singh, in the amount of $ 35,000. Tr. 40, 94.

 20. Debree then told Persaud that he should return to Singh his portion of the money. Tr. 41, 95-96. He further told Persaud that his business was failing, and that he should give back the money back before he spent it. Tr. 41. As of July 19, 1994, Persaud had not returned any monies to Singh. Tr. 41.

 21. At that point, Debree produced an unexecuted document entitled "Mutual Termination Agreement and General Release Agreement" (hereinafter "Mutual Termination Agreement"). As an inducement for Persaud to sign the agreement, Debree offered to credit Persaud's account with two months rent, Tr. 41, an amount that, upon application of the escalation provisions of the subject lease, totalled $ 9,600. Tr. Ex. N.

 22. The document referenced in the preceding paragraph provided in pertinent part:


 In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Exxon Company, U.S.A., a division of Exxon Corporation, (herein called "EXXON") and SOUTH LAKE CORPORATION (herein called "DEALER") agree as follows:

 1. To terminate and nonrenew, effective 12 o'clock noon June 30th, 1994, the franchise and franchise relationship (as those terms are used and defined in the Petroleum Marketing Practices Act, 15 U.S.C. 2801 et seq) existing between them and all instruments between them, including but not limited to: (a) Retail Service Station Lease; (b) Sales Agreement; (c) Automotive Credit Card Guide, and; (d) Credit Card Sale Imprinter Agreement, relating to retail auto store number 37890 located at 140 Vanderbilt Avenue, Brooklyn, NY 11205.

 2. To release each other, as of the effective date of this Agreement, from any and all claims or causes of action which each now has against the other (whether or not known to either), including but not limited to those arising directly or indirectly under, out of or in connection with each terminated instrument, or any sales or deliveries of petroleum products, tires, batteries, and/or accessories by EXXON to DEALER, EXCEPTING, HOWEVER, claims of each party against the other for trade accounts, rental payments, reimbursement, indemnification, and obligations arising under promissory notes or security agreements, and FURTHER EXCEPTING any claims of EXXON relating to real or personal property now or heretofore in DEALER'S possession.

 3. DEALER acknowledges that EXXON has made no representations, oral or otherwise, with respect to DEALER'S ability to secure another source of supply of motor fuel after the effective date of this Agreement or the terms of any such supply arrangement.

 4. DEALER shall be responsible for, and shall indemnify and hold EXXON harmless from and against any and all claims, demands, liabilities, or causes of action whatsoever related to any Bulk Sales Act or any claim arising thereunder.

 5. EXXON hereby confirms to and notifies DEALER of the termination and nonrenewal of the franchise and/or franchise relationship in effect between them, effective on the effective date of this Mutual Termination and General Release, based on this mutual agreement.

 6. This writing contains the entire agreement and understanding between DEALER and EXXON pertaining to this Mutual Termination and General Release Agreement and there are no oral representations, stipulations, warranties or understandings relating thereto which are not fully set forth therein. No amendment, addition to or alteration, modification or waiver or any provision of this Mutual Termination and General Release Agreement shall be of any force or effect unless in writing and signed by DEALER and an authorized representative of EXXON.

 7. This writing in no way modifies, affects, or conditions any Notice of Nonrenewal or Termination which EXXON has previously given DEALER or which it may give to DEALER in regard to the referenced agreements and relationship.

 8. DEALER hereby warrants that he has carefully read this instrument, understands all of its terms, and has voluntarily executed this instrument with full knowledge of its significance.

 9. This agreement is executed in duplicate originals.


 (a division of Exxon Corporation)

 G.R. Rafferty (signed)


 By: Richard Debree ...

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