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LAVAL, Quebec -- Alimentation Couche-Tard Inc., headquartered here, is being sued by Conway Oil Co. for breach of contract and fraud relating to a four-year-old transaction between the companies, Dow Jones Newswires reported.
In court documents cited by the news agency, Conway claims the sale of 16 of its convenience stores in New Mexico to Couche-Tard's Circle K unit in September 2005 included a "contingent amount" provision, requiring Circle K to pay Conway additional money for three 12-month periods after the deal closed, if fuel gross margins exceeded $3.25 million.
Conway alleges "as measured in the manner discussed and agreed upon by the parties," fuel gross profit exceeded the negotiated threshold, triggering a maximum payment of $1.9 million -- less $450,000 advanced by Circle K at the time of closing, the report stated.
"Despite demand on it to pay the contingent amount due, Circle K has failed and refused to do so, thus entitling Conway Oil to judgment against defendants Circle K and Couche-Tard in the amount of $1.45 million, plus interest, attorneys' fees and costs," the complaint states. A call to Circle K for more information was unreturned by press time.
Conway's lawyer, Spencer Reid of Keleher & McLeod, said the fuel gross profit calculation method isn't written in the actual sale contract, but was explained to Circle K before the deal closed and was "expressly and clearly" stated in e-mail exchanges between the parties, of which Conway has copies, the report stated.
In the complaint, Conway said Circle K "unreasonably increased its fuel costs" by failing to take advantage of discounts, volume incentives and less-expensive alternatives, as well as charging its credit-card expenses against fuel gross profit. In addition, Reid said Conway believes Circle K employs other categories of expenses that further reduce fuel gross profit reported to Conway, but Circle K has so far refused to explain them in any detail, according to the report.
Conway also seeks punitive damages, alleging Circle K reneged on an agreement not to deduct transportation costs in calculating fuel gross profit, according to the complaint cited by the news agency.
The lawsuit was filed recently in the U.S. District Court for the District of New Mexico. None of the allegations have been proven, according to the report. Reid told Dow Jones Newswires there were several attempts to resolve the case, including mediation, but Conway resorted to a lawsuit because Circle K stopped responding to requests for information and efforts to settle.
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