Dive Brief:
- Mountain Express Oil Company has agreed to dismiss its defamation and disgorgement lawsuit against its former broker, The Kase Group, in the U.S. District Court for the Northern District of Georgia Atlanta Division.
- In the lawsuit filed in March 2023, Mountain Express claimed that Kase made false and damaging statements to potential c-store buyers about the retailer’s poor financial standing. Additionally, Mountain Express accused Kase of lying about its status as a licensed broker in the states in which it worked with Mountain Express.
- Mountain Express had requested punitive damages for the alleged false statements, as well as the repayment of all real estate broker commissions it paid Kase over the course of their partnership. However, the parties agreed to dismiss the case with prejudice, officially closing it in December.
Dive Insight:
During 2021 and 2022, Mountain Express paid Kase over $835,000 for its brokerage services through at least six sales transactions for properties in Arkansas, Alabama, Indiana, Wyoming and Missouri, according to the lawsuit.
The partnership between the two companies imploded in January 2023 when Jeffery Gates, director of The Kase Group at the time, emailed information pertaining to Mountain Express’ financial situation to an interested party of another location.
In the email, Gates noted that Mountain Express “may not be paying rent on certain of its company-operated units and that the company may be in discussion with its lenders regarding the terms of its debt.”
Gates also said that until Kase had a clearer picture of Mountain Express’ finances and plans for future operations, it would stop marketing Mountain Express’ properties. Beyond that, he cautioned future parties looking to buy from Mountain Express to conduct due diligence into the company’s financial condition.
Upon learning of the email, Mountain Express claimed these statements had “no basis in fact,” according to court documents.
The retailer then undertook an investigation into Kase. It claimed that it discovered Kase had never held any type of real estate license in any of the aforementioned states, as well as Georgia, where the companies’ partnership was formed.
About eight weeks after Gates’ email, Mountain Express filed for Chapter 11 bankruptcy protection, beginning a tumultuous process that saw its leaders fail to sell the company and eventually terminate all employees and operations.
Mountain Express’ lawsuit against Kase was dismissed on Dec. 13. The retailer’s bankruptcy case continues, with its trustee continuing the liquidation of its assets.
