Chevron USA, Inc. v. Baldeep S. Bhullar

This action was filed in federal court in the Central District of California by Chevron, USA Inc. against our defendant client. Essentially, the plaintiff alleged that it was entitled to terminate our client’s Chevron gasoline service station lease and franchise because our client allegedly failed to pay all rent due and owing to plaintiff under the lease, he had defrauded the plaintiff out of the rent money and the plaintiff also contended that it was entitled to back rent in the sum of $7,500, audit fees it incurred which resulted in the finding of the underpayment of rent in the sum of $1,800, its attorney’s fees and costs of suit.

The defendant had paid $650,000 in 1994 for the station. The station has a current value of $1,000,000. The defendant denied these allegations and contended that if there was any underpayment of rent, that underpayment was caused by the plaintiff arising from its breach of its lease and rental agreement with the plaintiff. The defendant also contended that the plaintiff waited more than 120 days from the date it knew or should have known about the underpayment of rent. The defendant paid the $7,500 in back rent but refused to pay the audit fee of $1,800.

Discovery revealed that there were over 30 dealers like the defendant who had underpaid rent due to computer errors in billings for rent that were prepared by plaintiff and that the plaintiff knew about these problems including billing errors on defendant’s station rent bills but that it did nothing to terminate the other dealers and only went after the defendant. The defendant’s station was designated by the plaintiff as a long term station which means it is desirable site.

Chevron offered to settle this case by paying the defendant $250,000. The defendant countered with an offer to settle this case with his purchase of the real property where the station is located and Chevron could supply the fuel under a supply contract or he could obtain a supply contract from another major oil company. This case did not settle but went to trial. The Honorable Gary Fees presided over this jury trial.

The case was presented to a jury of eight persons. They came back with a unanimous special verdict in only 45 minutes that the plaintiff breached its lease contract with the defendant, the defendant never breached its lease with the plaintiff and the plaintiff’s claim was barred by the 120 day rule. The defendant’s cost bill in the sum of $4,850 was granted. The defendant also brought a motion for attorney’s fees in the sum of $102,000. The court granted the motion and ordered the defendant to repay to plaintiff $102,000 of these attorney’s fees that he incurred defending himself in this action. All attorney's fees and costs have been paid in full. The plaintiff never appealed the judgment or moved for new trial.