Drabbant Enterprises, Inc. v. Great Atlantic & Pacific Tea Co.

688 F. Supp. 1567, 1988 U.S. Dist. LEXIS 7236, 1988 WL 67302
CourtDistrict Court, D. Delaware
DecidedJune 27, 1988
DocketCiv. A. 88-215 LON
StatusPublished
Cited by7 cases

This text of 688 F. Supp. 1567 (Drabbant Enterprises, Inc. v. Great Atlantic & Pacific Tea Co.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Drabbant Enterprises, Inc. v. Great Atlantic & Pacific Tea Co., 688 F. Supp. 1567, 1988 U.S. Dist. LEXIS 7236, 1988 WL 67302 (D. Del. 1988).

Opinion

OPINION

LONGOBARDI, District Judge.

I. NATURE OF THE PROCEEDINGS

On April 21, 1988, Front Street Properties, a New York general partnership, (“Front Street”) and Drabbant Enterprises, Inc. (“Drabbant”) filed a lawsuit against the Great Atlantic & Pacific Tea Company (“A & P”) seeking a preliminary injunction and declaratory relief. Plaintiffs seek to enjoin A & P from enforcing a restrictive covenant in its lease. In addition, Plaintiffs are also seeking a declaration that the restrictive covenant is unenforceable and that Defendant is in breach of its lease due to its abandonment of the leased premises. On May 23, 1988, the Court granted a motion by the Attorney General of the State of Delaware to intervene on behalf of the citizens of Milford.

Briefing on Plaintiffs’ motion for a preliminary injunction has been completed on an accelerated basis and oral argument *1569 was heard on June 9, 1988. What follows is the Court’s decision on Plaintiffs' motion.

II. BACKGROUND

The Milford Shopping Center was built in 1961. Safeway Stores, Inc. (“Safeway”) was the first supermarket tenant in the shopping center. Approximately two months after Safeway entered into its lease, A & P entered into the lease at issue for other space in the shopping center. This lease contained, among other covenants, the following restrictive covenant:

The lessor obligates himself not to lease, rent or permit to be occupied as a supermarket, grocery store, meat market, produce store or dairy store, except bakery and Safeway Food Market of 14,845 square feet, any property owned or to be owned by him within 2,000 feet of the demised premises herein described during the term of this lease or any extension thereof. This shall be taken as a covenant running with the land that is or may be owned by the lessor within 2,000 feet of the demised premises, not merely a personal obligation of the lessor,

(hereinafter the “Restrictive Covenant”). The A & P lease was amended several times over the life of its term. One of the amendments that impacts upon this litigation extended the term an additional fifteen years, granted A & P the right to renew for four additional five year periods and reflected the subsequent enlargement of the leased premises.

In 1977, Safeway chose not to continue its lease. It moved to a new location in the Milford Village Shopping Center (“Milford Village”) approximately two miles from the Milford Shopping Center.

In October, 1979, the landlord notified A & P that it intended to lease the old Safeway premises to B. Green, Inc. (“B. Green”) in order to place another supermarket in the shopping center. A & P, however, sought to enforce the Restrictive Covenant against B. Green. Although B. Green brought an action in state court seeking to have the Restrictive Covenant declared unenforceable, the suit was subsequently dismissed without prejudice.

The Milford Shopping Center was bought in 1986 by Front Street, a Plaintiff in this action. All of the leases in the shopping center were reviewed by Andrew Kaplan, a general partner of Front Street.

In April, 1987, A & P renewed its lease for five years but began looking for an alternate site for its supermarket. As a result, A & P opened discussions with Safeway for the purchase of three of its stores, including the one in Milford Village. In June of 1987, A & P transferred control of the property in the Milford Shopping Center to its wholly-owned division, Super Fresh. As a result, the store was converted to a Super Fresh store. In July, 1987, A & P completed its purchase of the Safeway property in Milford Village. On August 28, 1987, A & P closed down its Super Fresh operations in the Milford Shopping Center and moved the operations to the newly purchased property in the Milford Village. Since that time, A & P has paid its rent on the leased premises at the Milford Shopping Center but has kept it empty and has insisted on its continued right to enforce the Restrictive Covenant on the premises formerly occupied by the Safeway store.

In the interim, Plaintiff Front Street was able to let the old Safeway property in the Milford Shopping Center to an auto parts store. In February of this year, Front Street filed a complaint in the Justice of the Peace Court of the State of Delaware, in and for Kent County, against A & P for summary possession of the property. Plaintiff voluntarily dismissed the action. At the same time, Front Street has been searching for a new supermarket tenant for the old Safeway premises in the Milford Shopping Center and has successfully negotiated with its auto parts tenant to move the auto parts store to an alternate location in the shopping center at Plaintiff’s option. On April 28, 1988, Plaintiffs filed this action seeking relief from A & P’s actions based upon federal and state claims.

III. CONTENTIONS OF THE PARTIES

A. State Law Claims

Plaintiffs set forth a number of arguments in support of their claim that De *1570 fendant A & P is unreasonably and illegally enforcing its Restrictive Covenant. Plaintiffs first argue that the Restrictive Covenant applies to any “property” within 2,000 square feet of the A & P premises except the 16,275 square feet formerly occupied by Safeway Food Market. Docket Item (“D.I.)” 21, at 50-51. Plaintiffs contend that the plain meaning of the words used in the covenant require such a reading and that it is illogical to argue, as does the Defendant, that the exemption from the use restriction would only apply to the Safeway business rather than the property itself. Moreover, even if the language could be construed as ambiguous, it is settled law in Delaware that any ambiguity in a restrictive covenant is to be resolved in favor of unrestricted land use.

Plaintiffs alternatively argue that the Restrictive Covenant as interpreted by Defendant is unenforceable as a matter of Delaware law. Covenants to restrict land use are enforced only if reasonable and equitable. No one disputes that under certain circumstances restrictive covenants which protect the grantee from competition from competitors will be upheld so long as they are reasonable in both scope and geography. However, the Restrictive Covenant in question, if it is interpreted to exempt only the now defunct Safeway store, would be unreasonable and inequitable. Plaintiffs contend that A & P can claim no legitimate purpose for continuing to enforce the Restrictive Covenant under the present circumstances. Because A & P has vacated the Milford Shopping Center without any intention of ever returning or subleasing its premises to another supermarket, Plaintiffs contend A & P cannot now be heard to enforce the Restrictive Covenant because the covenant cannot possibly compromise A & P’s now defunct operation in the Milford Shopping Center. Id. In all other respects, Plaintiffs contend, the Restrictive Covenant is unreasonable.

Plaintiffs next contend that they are entitled to summary possession because A & P is in breach of its lease. D.I. 21 at 59.

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688 F. Supp. 1567, 1988 U.S. Dist. LEXIS 7236, 1988 WL 67302, Counsel Stack Legal Research, https://law.counselstack.com/opinion/drabbant-enterprises-inc-v-great-atlantic-pacific-tea-co-ded-1988.