A legal clash between real estate partners over a deal that also has ensnared a Long Island developer forced Yorktown officials to halt their review of a project that would bring a Costco Wholesale Corp. store and an estimated $750,000 in annual property tax revenue to the northern Westchester community.
One of the feuding owners said his partner”™s late-blooming opposition to the Costco project and the sale of their former motel property is all about gas and greed ”“ and keeping lower-priced competition out of the filling-station market here.
His partner instead claimed in court papers it”™s a case of wholesale fraud on the part of the developer who agreed to buy their 14-acre property beside the Taconic State Parkway with stated plans to bring in a retailer rather than Costco”™s warehouse operation. That partner wants the purchase agreement voided in state Supreme Court.
Long acquainted with each other and their respective extended families in the region”™s gas distribution industry, Majed “Mitch” Nesheiwat and Musa “Sammy” Eljamal in 2006 became equal partners in Best Rent Properties 202 L.L.C. Nesheiwat is president of Gasland Petroleum Inc., a Kingston distributor of oil and gasoline that supplies more than 100 companies in the Hudson Valley region. Eljamal heads Wholesale Fuels Co., a Thornwood distributor that owns and supplies retail gas stations in New York and Connecticut. The Eljamal family also owns Chestnut Petroleum Distributors Energy Corp. in New Paltz, a supplier of wholesale and retail customers in the tristate area and owner-operator of convenience stores whose CEO is Sammy Eljamal”™s uncle.
Best Rent Properties in 2006 paid $3.8 million for the former Yorktown Country Inn property at 3200 Crompond Road, just off the intersection of Route 202 and the Taconic. The abandoned, derelict motel last was operated as a county homeless shelter, said Jerry Gershner, the Ossining real estate broker representing the two partners in the contested deal. Its broken doors and windows are covered in spray-painted graffiti on a plot overgrown with brush below a steep embankment of the Taconic.
The partners”™ plans to flip the property to a developer were stalled by the economic downturn and recession. Gershner said Stanbery Development L.L.C., an Ohio developer of upscale shopping centers, dropped its tentative plans for the site. The broker connected the partners with Wilbur Breslin, president and CEO of Breslin Realty Development Corp. in Garden City, Long Island.
Breslin and the Best Rent partners in February 2009 signed a $7 million purchase agreement for the property, the largest of three adjacent parcels assembled for the approximately 152,000-square-foot Costco warehouse.
The developer in 2010 began the town application process for the project, which Nesheiwat said will cost approximately $52 million and generate at least $750,000 in property taxes, compared with taxes of about $80,000 currently paid on the vacant property.
Breslin, who could not be reached for comment, reportedly has spent about $1.5 million to date on the project.
Eljamal, though, has refused to sign over the property title to the Long Island developer. He recently notified Yorktown officials that the contract with Breslin”™s company, Retail Store Construction Co. Inc., expired at the end of August last year. Attorneys for Nesheiwat and the developer claim the contract has been extended through this June.
Faced with those opposing claims, the Yorktown Planning Board, the project”™s lead review agency, in April voted to halt the Costco application process until the board has evidence of Breslin Realty”™s “undisputed authority” to proceed.
Nesheiwat last fall filed a lawsuit against Eljamal in state Supreme Court in Dutchess County to compel his partner to sign over the title and stop interfering with the project.
Eljamal countered one month later with a lawsuit brought against the Costco developer and Nesheiwat in state Supreme Court in White Plains.
Eljamal”™s attorney, Albert J. Pirro Jr., in the legal complaint claimed his client did not learn the developer proposed to bring Costco to the site until August 2010, nearly 18 months after signing the purchase agreement. Eljamal said he was told at the time of the signing the developer planned to bring in Lowe”™s, the home improvement retailer, as the project”™s prime tenant.
Pirro argued that Costco is a wholesale operation and not a permitted use for the property. The contract should be deemed void, he told the court, because Eljamal was “fraudulently induced” to sign the contract by the developer with his stated plans for a retail tenant.
Nesheiwat, though, said his partner was aware of the developer”™s choice of Costco for the site when the deal was made. “From day one, the gas was part of the site plan” for the Costco operation, he said.
Nesheiwat and Gershner said Eljamal”™s claim he was duped into making the deal masks his true motive: to protect his and his family”™s virtual monopoly on gasoline sales in the Yorktown area following major station acquisitions last year.
Eljamal”™s Wholesale Fuels last June closed on the purchase of 90 Shell gas stations in New York City, Westchester, Rockland and Putnam counties and on Long Island. His family”™s New Paltz company, CPD Energy, in a deal reported in September 2010, purchased 83 Mobil gas stations in Westchester and the lower Hudson Valley from Exxon Mobil Corp.
Nesheiwat said with those acquisitions, Eljamal and his uncles control about 80 percent of the gas volume in the area. “This is kind of a monopoly,” he said.
Gershner said Eljamal owns, operates through family members or supplies six of the 11 gas stations in Yorktown.
Nesheiwat said Costco”™s discounted gas prices could be as much as 40 cents to 45 cents lower than prices charged at Eljamal-controlled stations. “He”™s afraid” of that competition, he said.
“He”™s threatening for the past five or six months to ruin the project for his own self-interest,” Nesheiwat said. “He wants to see Christmas for himself only, and he”™s raping the people of the town” with inflated gas prices at the pumps, he said.
Responding briefly by email to the Business Journal, Eljamal said the issue “really isn”™t just gasoline” but rather a partnership dispute.
He said he has “several” other prospective buyers for the property.
