Amigo Gift Ass'n v. Executive Properties, Ltd., 84-0007-CV-W-0-5.
| Decision Date | 20 April 1984 |
| Docket Number | No. 84-0007-CV-W-0-5.,84-0007-CV-W-0-5. |
| Citation | 588 F. Supp. 654 |
| Court | U.S. District Court — Western District of Missouri |
| Parties | AMIGO GIFT ASSOCIATION, Robert L. Phillips, d/b/a R.L. Phillips & Associates, Herbert Lane, d/b/a Herbert Lane & Associates, Virginia Tonsing, d/b/a Tonsing Associates, Plaintiffs, v. EXECUTIVE PROPERTIES, LTD., Universal Properties, Inc., and Connecticut Mutual Life Insurance Company, Defendants. |
J. Daniel Stewart, Brown, Koralchik & Fingersh, Kansas City, Mo., Robert J. Vancrum, Robert K. Campbell, Overland Park, Kan., for plaintiffs.
Donald W. Giffin, Gail M. Schroeger, Spencer, Fane, Britt & Browne, Kansas City, Mo., for defendants.
This case is before the Court on transfer from the Honorable Ross T. Roberts for the purpose of conducting a hearing on plaintiffs' motion, pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26, for a preliminary injunction. An evidentiary hearing was held on April 5, 1984, and at the close of plaintiffs' evidence, the defendants moved for summary denial of plaintiffs' request for preliminary injunctive relief. For the following reasons, the Court concludes that the plaintiffs have failed to meet their burden of demonstrating entitlement to a preliminary injunction. Accordingly, plaintiffs' motion for injunctive relief will be denied.
Plaintiff Amigo Gift Association (Amigo) is a Missouri not-for-profit corporation now located at Executive Park, a commercial and industrial park in Kansas City, Missouri. Amigo is a trade organization whose members engage in the sale of giftware and decorative accessories to retail dealers of such items. There are approximately 104 members of Amigo consisting of independent businessmen and manufacturer representatives who sell their products to retailers.
Defendant Executive Properties, Ltd. (Executive Properties) is a Missouri limited partnership consisting of Universal Properties, Inc. (Universal), a Delaware corporation, as the general partner thereof, and Connecticut Mutual Life Insurance Company (Connecticut Mutual), a Connecticut corporation, as the limited partner thereof. Executive Properties owns and operates the building that houses the Amigo Gift Mart at Executive Park.
Plaintiffs' second amended complaint makes the following allegations and requests for relief. Amigo has agreed to lease from Universal an exhibition hall for two four-day periods per year beginning January 1, 1979. Section 10.12 of this lease provides in part that Amigo will not permit its members to participate or form in the future any competitive giftware marts within a radius of 75 miles of the current location for a period of ten years.
Amigo and Universal also have entered into a "Supplemental Agreement" by which Universal agreed to lease permanent showroom space in the building which would be leased to Amigo members through a form lease, entitled "Amigo Member Lease," for various terms of between three and ten years. Under the terms of this Agreement, Universal agreed to lease space in the Gift Mart exclusively to Amigo members; to expand the building as membership increased; to grant Amigo substantial control over the operation of the Gift Mart; and to pay $30,000 in buy-out of existing leases of Amigo members in other locations. Paragraph four of the Supplemental Agreement provides that each individual tenant is not to participate in any competing gift marts in the "Greater Kansas City Metropolitan Area" during the term of the lease.
Plaintiffs allege that the effect of variable expiration dates of the individual leases combined with the restrictive covenants prevents individual members, who are dependent on one another, from leaving their current location at Executive Park. Plaintiffs request the Court to declare the restrictive covenants invalid as unreasonable and unlawful restraints on trade (Counts I-III). In addition, plaintiffs request that the Court declare that the individual member leases which expired on December 31, 1983, and which were renewed for three-year terms be reformed and modified to a one-year term (Count IV). Plaintiffs request that the Court order the defendants to prepare an accounting of all operating costs charged to Amigo and its members (Count V). Plaintiffs also claim that the restrictive covenants are in violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2), and request a preliminary and permanent injunction pursuant to 15 U.S.C. § 26 (Count VI). A hearing was held on April 5, 1984 pursuant to plaintiffs' request for preliminary injunction. The Court has reviewed the evidence in the form of testimony and exhibits presented at that hearing, and makes the following findings of fact.
Prior to 1977, Amigo's individual members had permanent showroom facilities in several locations. Amigo's leadership concluded, however, that Amigo members should continue all of their business in a single location. In 1974, Amigo entered into negotiations with Universal Properties (Executive Properties' predecessor in interest), for construction of a special-purpose gift mart at Executive Park. Universal agreed to construct a gift mart building specially designed to meet Amigo's specifications and to bear the necessary financial investment.
The individual leases have provided for staggered expiration dates so that all of the leases do not expire on a common termination date. The lease terms have generally varied between three to ten years, with a small number of leases for only one year.
Amigo's members each carry various lines of merchandise and together they offer a large selection of items. In order to offer their customers a broad selection of items, Amigo's members prefer to maintain their permanent showroom space together in one location. Amigo believes that if its business operations were not together in one location, it would not be able to attract the number of customers now served with the broad selection of items sold by Amigo members.
Amigo presently occupies both the first and second floors of the Amigo Gift Mart and there is no other space available, either for individual members to expand their showrooms or to add new members to the Amigo Association. Amigo has been looking for other space for both its exhibition hall and permanent showroom facilities for over a year. Amigo contends that it has outgrown its present facilities and needs additional space for its individual members to expand and for adding new members who wish to join Amigo.
In November of 1983, the Board of Directors of Amigo decided that Amigo should take all steps necessary to move its existing location to a proposed new facility to be built at Executive Hills, located at 95th and Metcalf in Overland Park, Kansas, while continuing to honor all its obligations to pay rent on existing leases at Executive Park until the leases expired or to pay the owners a lump sum to buy out all existing leases of Amigo members. On December 2, 1983, the full membership of Amigo voted in favor of this proposed move. Subsequently, on December 19, 1983, Amigo signed a letter of intent with the developers of Executive Hills, and also on the same date the same parties entered into an extension agreement requiring Amigo's members to sign leases on or before April 22, 1984.
Executive Properties, however, has refused to permit Amigo and its members to continue to pay rent and buy out the existing leases. By letter dated December 21, 1983, Executive Properties indicated its intent to enforce the restrictive covenants in the various agreements.
The testimony of various Amigo members established that if Amigo is not permitted to transfer to Executive Hills, Amigo may lose substantial revenues as a result of its lost opportunity to expand. The Amigo members testified that each individual Amigo member would lose business profits and moving allowances if not permitted to move to Executive Hills.
Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109, 114 (8th Cir.1981). A reading of 15 U.S.C. § 26 reveals that a showing of immediate danger of irreparable loss or damage is necessary in order for the issuance of preliminary injunctive relief. This statutory requirement is consistent with the Dataphase analysis, as the Eighth Circuit has indicated that "under any test the movant is required to show the threat of irreparable harm." Dataphase, supra, 640 F.2d at 114 n. 9. The absence of a finding of irreparable harm alone is sufficient ground for vacating a preliminary injunction. Id.
Injunctions are "extraordinary legal...
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