The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
Presently before the Court is a motion for summary judgment by
the defendant 1677 Ridge Road Realty Corp. ("1677 Ridge" or the
"Defendant") to enforce a liquidated-damages clause against the
plaintiff Koylum, Inc. ("Koylum" or the "Plaintiff") and the
additional party defendants Adnan Kiriscioglu ("Kiriscioglu") and
Erol Bayraktar ("Bayraktar"). The plaintiff and the additional
party defendants cross move for summary judgment.
It is assumed that the parties are familiar with the factual
background of this case, as set forth in the Court's two prior
decisions, dated September 30, 2002 ("September 30, 2002 Order")
and March 17, 2004 ("March 17, 2004 Order"). For the purpose of
clarity, the factual background will be repeated in relevant
part. This case involves a gas station located at 1677 Route 25A,
Ridge, New York ("Premises") and a series of transactions with
its landlords and gasoline supply company. The defendant 1677
Ridge is the current owner of the Premises. It is also the
assignee of all the landlord rights pursuant to a lease dated
January 1, 1994 ("Lease") for the Premises originally between
Ridge Petroleum Realty Corp., as landlord, and R.B.P.
Enterprises, Inc., as tenant. The termination of that Lease by
the landlord was a subject of this lawsuit.
Koylum operated a gas station on the Premises between June 21,
1996 and October 31, 2002 as a result of an assignment of the
Lease. The station, which was a Coastal Refining and Marketing,
Inc. ("Coastal") branded station, was previously operated by
Koylum's assignor, R.B.P. Enterprises, pursuant to two
agreements: (1) the Lease under which Koylum's assignor leased
the Premises from the predecessor in interest of the defendant
Peksen Realty Corp. ("Peksen"); and (2) a Supply Agreement that
fixed the terms under which the operator would purchase its
gasoline supplies from Ocean Petroleum, Inc., which distributed
The Lease includes provisions that are material to the issues
in this case. Initially, the Court notes that the Lease expressly
refers to the Supply Agreement, as follows: "Section 2.10.
Purchase Agreement: means the Agreement dated January 1, 1994
between Ocean Petroleum Inc., as Seller, and Tenant, as
Purchaser, under which Tenant has contracted to purchase all of
its requirements of Gasoline to be sold at the Demised Premises."
(Dft. Ex. B).
Also relevant is Section 7.03, entitled "Purchase of Petroleum
Products" and reads as follows:
Section 7.03. Purchase of Petroleum Products:
(a) In order to induce Landlord to enter into this
Lease, Tenant covenants and agrees that during the
term of this Lease, Tenant shall not nor permit
others to store, handle, sell, offer for sale,
advertise for sale, use or permit to be used upon the
Demised Premises or any part thereof or any premises
adjacent thereto over which Tenant has control any
Gasoline, oil or other petroleum product not supplied
by Seller under the Purchase Agreement.
(b) In furtherance of Tenant's covenants contained in
subsection (a), Tenant agrees to enter into the
Purchase Agreement simultaneously with the execution
of this Lease.
(Dft. Ex. B).
In addition to the Supply Agreement, a Rider was executed on
December 1, 1995 that further delineated the relationship of the
parties. In particular, the rider provided that the tenant could
exercise an option to purchase petroleum from suppliers other
than Ocean, but only under certain circumstances and conditions.
Specifically, the Rider provided that if petroleum was to be
purchased from other suppliers, the product should be transported
It is further agreed that the transport of any and
all petroleum products sold by any supplier from all
terminals in the Long Island and Metropolitan area to
450 Neighborhood Rd., Mastic Beach, County of
Suffolk, State of New York and 1677 Route 25, Ridge,
County of Suffolk, State of New York, shall be made
by National Petroleum Transporters, Inc. at a
transportation rate of .0125 cents per gallon.
(Dft. Ex. B)
The relationship between the landlord and the supplier is
relevant in this case. Peksen and Ocean were affiliated with one
another, in that both are closely held corporations owned by
Refik Peksen and Mine Peksen, who are husband and wife. Mine
Peksen was the Vice President of Ocean, which distributed Coastal
petroleum. Mine Peksen and her husband Refik, who were separated
at the time of the trial, operated a family business which
included Ocean, Peksen, and National Petroleum Transporters, Inc.
Ocean supplied gasoline to the Ridge Station. Mine Peksen was
also an officer of Ridge Petroleum Realty Corp., the prior owner
and landlord of the Ridge Station premises. Ocean was an
authorized distributor for Coastal and sold that brand of product
to Koylum for resale at the Premises, pursuant to the Supply
Agreement. The defendant Peksen is the successor to Ridge
Petroleum Realty Corp., as owner of the Ridge Station property
and as the landlord of Koylum.
Sometime in 1998, Koylum began purchasing non-Coastal gasoline
without complying with the Rider or the Supply Agreement.
Specifically, Koylum did not provide documentation to Ocean on
the prices that were paid for the non-Coastal petroleum and the
products were not transported via National Petroleum
Transporters. By letter dated October 2, 1998, Peksen informed
Koylum that it would terminate the Lease as of midnight October
6, 1998. The termination letter accused Koylum of purchasing
unbranded gasoline and selling it under the Coastal trademark in
violation of the Supply Agreement. The next day, Peksen initiated
dispossess proceedings in the Suffolk County District Court to
evict Koylum from the Premises as a holdover tenant. This
proceedings was stayed by a stipulation between the parties.
Koylum continued to operate the gas station on the Premises
without complying with the agreements. On January 29, 1999, Mine
Peksen wrote to Koylum (Plf. Ex. 40) calling to its attention
certain lease provisions, namely, Sections 5.04(b)(i),
5.04(b)(ii) and 7.03(a). The letter also notified Koylum of
alleged violations of the Supply Agreement, as follows:
By reason of you having stored, handled, sold,
marketed and dispensed gasoline that has been
supplied by someone other than Ocean Petroleum, Inc.
under the Purchase Agreement it had with you; to wit:
as recently as January 26, 1999 when a gasoline
delivery truck of Ark Transportation, tractor number
TX6834, trailer number 731891 was observed delivering
gasoline to your station at about 5:30 p.m. This
delivery is not the first. Moreover, on at least
another occasion and on October 7, 1998, you had
8,500 gallons of gasoline delivered by Mystic Bulk
Carriers, Inc. which was purchased from Benit Fuel
Sales and Services which you sold from the premises.
Accordingly, notice is hereby given that on two days
from the date of this letter your lease shall
terminate. You are thereby expected to vacate the
premises and remove all of your personal property.
In the interim, you should be further advised that
the underground storage tanks and related piping, the
gasoline dispensing pumps and signs are not owned by
you and you have no right to use that equipment for
any purpose whatsoever, including the storage,
supply, sale or offering for sale gasoline you
purchase form any source other than Ocean Petroleum,
Moreover, the sign is owned by Ocean Petroleum, Inc. and by
selling gasoline provided by another source as Coastal gasoline
you may be violating Coastal's trademark rights.
Therefore you are required to immediately cease and desist from
any use of the equipment at the premises.
At no time did Koylum request permission from Ocean to sell
gasoline other than Coastal gas. Notwithstanding this failure to
obtain consent, Koylum purchased gas from other distributors,
such as Benit, T. Hutchinson Trading Corp., Ercat Corp. and
Nassau and Suffolk Fuel Oil Corp.; it stored the non-Coastal
gasoline at the Ridge Station when it had Coastal markings; and
then unilaterally removed the Coastal markings. The record is
replete with documents showing Koylum's purchase of gasoline from
distributors other than Ocean. With regard to non-Coastal
purchases, no documents of any kind, as to price or otherwise,
were ever sent by Koylum to Peksen or Ocean, in violation of the
Rider provisions. Further, none of these deliveries were made by
National Petroleum Transporter Inc. Failure to use National
Petroleum Transporters to deliver the non-Coastal gasoline was
also a violation of the Rider provisions.
On May 6, 1999, Peksen Realty Corp. sold the premises to 1677
Ridge, which is the present owner of the premises and the
landlord of Koylum. Frank Mascolo ("Mascolo") is the principal
owner and President of 1677 Ridge. He also operates three other
gasoline stations and is a Coastal brand wholesale petroleum
distributor. At the time of the purchase, Mascolo knew that the