Transbay Auto Service v. Chevron USA

Transbay Auto Service, Inc. (Transbay) (plaintiff) was a corporation solely owned by Mike Tsachres. Chevron USA Inc. (Chevron) (defendant) owned a gasoline service station and wanted to sell the station to Transbay. Under the Petroleum Marketing Practices Act (PMPA), Chevron was required to provide Transbay with a price for the station that approximated the fair market value. Chevron offered the station to Transbay for $2.375 million. Tsachres applied for a loan at American Pacific Bank (American Pacific) to finance the purchase of the station. American Pacific commissioned Property Sciences Group (Property) to appraise the station. In its appraisal report, Property stated that the fair market value of the station was $2.52 million. American Pacific did not approve the loan but provided Tsachres with a copy of Property’s appraisal report. Tsachres then applied for a loan at California Pacific Bank (California Pacific) and submitted Property’s appraisal report to California Pacific. California Pacific approved the loan. Tsachres, on behalf of Transbay, purchased the station from Chevron for $2.375 million. Later, Transbay brought suit against Chevron, contending that Chevron violated the PMPA because the $2.375 million price exceeded the fair market value. At the trial, Chevron introduced Property’s appraisal report. Specifically, Chevron sought to admit Property’s statement that the fair market value of the station was $2.52 million. The statement was offered to prove that Transbay agreed with Property regarding the fair market value of the station. Tsachres testified that he never reviewed the contents of Property’s appraisal report. The district-court judge ruled that Property’s out-of-court statement was inadmissible. Subsequently, the jury ruled in favor of Transbay. Chevron appealed.