Hannaford Bros. v. Ames Department Stores, Inc. (In Re Ames Department Stores, Inc.)

316 B.R. 772, 2004 Bankr. LEXIS 1588, 43 Bankr. Ct. Dec. (CRR) 211, 2004 WL 2516188
CourtUnited States Bankruptcy Court, S.D. New York
DecidedOctober 14, 2004
Docket18-01635
StatusPublished
Cited by4 cases

This text of 316 B.R. 772 (Hannaford Bros. v. Ames Department Stores, Inc. (In Re Ames Department Stores, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hannaford Bros. v. Ames Department Stores, Inc. (In Re Ames Department Stores, Inc.), 316 B.R. 772, 2004 Bankr. LEXIS 1588, 43 Bankr. Ct. Dec. (CRR) 211, 2004 WL 2516188 (N.Y. 2004).

Opinion

DECISION ON MOTION FOR SUMMARY JUDGMENT

ROBERT E. GERBER, Bankruptcy Judge.

This adversary proceeding arises under the umbrella of the jointly administered chapter 11 cases of debtor Ames Department Stores and its affiliates (“Ames”), one of the defendants in this action. A second defendant, the Stop & Shop Supermarket Company (“Stop & Shop”) acquired the right, by earlier order of this Court, to take over Ames’s tenant interest in the lease (the “Ames Lease”) of an Ames store in Nashua, New Hampshire (the “Ames Store”), situated on a tract that was developed as part of a “community shopping center.” Plaintiff Hannaford Bros. Co. (“Hannaford”) is the operator of a supermarket on an adjacent tract that likewise was said to be part of that shopping center.

Stop & Shop proposes to operate the former Ames Store as a supermarket on the adjacent tract. But Hannaford points to a “Deed of Declaration” (the “Declaration”), initially executed in 1972 and thereafter amended in 1994 to provide additional protection for Hannaford, which imposes restrictions that, by the Declaration’s terms, run with the land, so long as a shopping center is operated on the land subject to the Declaration. The Declaration expressly prohibits the operation of a competing supermarket on the site of the Ames Store, so long as Hannaford continues to operate a supermarket on its parcel — which Hannaford, without dispute, now does. In its adversary complaint, Hannaford seeks a ruling from this Court enforcing the Declaration, and ruling that a competing supermarket cannot be operated on the site of the Ames Store.

Hannaford now moves for summary judgment in its favor. In opposition, Stop & Shop does not dispute the existence of *779 the Declaration, or what it says. But Stop & Shop, joined by Ames (which supports Stop & Shop in this action), opposes summary judgment, principally contending that the requirement for operating a “shopping center” has not been satisfied. Stop & Shop and Ames contend, as their main argument, that in determining whether what was said to be a “shopping center” is in fact a “shopping center” (and thus whether the Declaration runs with the land), this Court may construe the Declaration only after a factual inquiry. They argue that the Court should not focus on the intent of the Declaration’s signatories when they drafted the Declaration in 1972, as would be appropriate under New Hampshire law. Instead, Stop & Shop and Ames argue that this Court should decide whether the “shopping center” is such only after applying criteria (involving a weighing of factual factors) that evolved in the federal courts after the enactment of the Bankruptcy Code’s 1984 “Shopping Center Amendments” for use in determining whether premises are subject to additional federal requirements that are applicable to premises in a “shopping center” under section 365(b)(3) of the Code. Application of the standards laid out in that federal caselaw, they argue, raises issues of fact.

Then Ames (but not Stop & Shop) makes a number of additional arguments to defeat the enforceability of the Declaration, including contentions that Hannaford lacks standing to protect its interests here; that Hannaford’s claims are untimely; that the Declaration, by reason of its inclusion of an alleged “condition subsequent,” is incapable of running with the land under New Hampshire law; and that under section 365(f) of the Code and caselaw decisions that invalidate so called “anti-assignment clauses,” the Declaration is unenforceable, because it is “tantamount” to an anti-assignment clause.

For reasons set forth more fully below, the Court rules that:

(1) Hannaford has standing here to protect its interests;
(2) Hannaford’s objection was timely;
(3) the Declaration does indeed run with the land and is enforceable under New Hampshire law;
(4) in determining what the Declaration’s signatories intended when it was executed in 1972, federal criteria that were created and applied years later, and for a different purpose, are not applicable, and that, as a matter of law— state law — the requirement for operation of a “shopping center” continues to be satisfied; and
(5) the Declaration is not an unenforceable anti-assignment provision under section 365(f) of the Code.

On none of these matters is there a material disputed issue of fact. Accordingly, Hannaford’s motion is granted.

Facts

Though Stop & Shop and Ames assert that if their legal contentions are accepted, material disputed issues of fact exist, the core facts are undisputed.

Background

Until it became clear, in the course of its chapter 11 case, that Ames could not successfully reorganize as an ongoing business and would have to liquidate, Ames was a discount retailer, operating hundreds of stores in leased premises. Its store leases — -many of which were executed years ago in environments of lower rental rates — had substantial value, and an important aspect of the Ames chapter 11 case has been its efforts to derive value from its store leases by “assume and assign” transactions following the sale of *780 leases or of the rights to designate leases for “assume and assign” transactions.

After Ames’s sale of such “designation rights” was approved by this Court, Ames sought to assume and assign the lease for its store in Nashua, New Hampshire to defendant Stop & Shop. Stop & Shop wishes to develop and operate a “prototypical Stop & Shop superstore” — which means, as a practical matter, a competing supermarket.

Execution of the Declaration in 1972

The Ames store is situated on one of two tracts of land that originally constituted a single tract (then called “Tract # 2”), which, along with still another tract (“Tract # 1”), were developed in 1972, when the Declaration was initially drafted and recorded. On October 20, 1972, the holders of the interests in the real property covered by the Declaration — Vickerry Realty Co. Trust (“Vickerry”), Coliseum Vickerry Realty Co. Trust (“Coliseum”), and Fleurette D. Fournier, as trustee— signed the Declaration in an effort to develop Tracts # 1 and # 2 as an integrated shopping center. 1 The stated purpose of the Declaration was to facilitate the development of Tract # 1 and Tract # 2 as a “community shopping center” by subjecting the tracts to certain easements, restrictions and obligations pursuant to a “general scheme or plan.” 2

The recitals to the Declaration stated that Vickerry was the owner of 33 acres of land on the east side of Coliseum Avenue in Nashua (Tract # l), 3 and that Coliseum was the holder of the lessee interest in real estate (of an unstated size) on the west side of Coliseum Avenue (Tract # 2). 4

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Bluebook (online)
316 B.R. 772, 2004 Bankr. LEXIS 1588, 43 Bankr. Ct. Dec. (CRR) 211, 2004 WL 2516188, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hannaford-bros-v-ames-department-stores-inc-in-re-ames-department-nysb-2004.