Bernard Court, LLC v. Walmart, Inc.
| Decision Date | 09 December 2020 |
| Docket Number | No. CV-19-536,CV-19-536 |
| Citation | 2020 Ark. App. 563 |
| Parties | BERNARD COURT, LLC APPELLANT v. WALMART, INC. APPELLEE |
| Court | Arkansas Court of Appeals |
APPEAL FROM THE BENTON COUNTY CIRCUIT COURT
Appellant Bernard Court, LLC ("Bernard"), appeals from an order of the Benton County Circuit Court denying its motion for summary judgment against appellee Walmart, Inc. ("Walmart"), and dismissing its complaint for declaratory judgment with prejudice.1 We affirm in part and reverse and remand in part.
This case began when Bernard sought a declaratory judgment concerning the interpretation of a restrictive covenant contained in a deed from Walmart to Bernard's predecessor in title. In May 1997, Walmart conveyed a parcel of property consisting of three lots on East Highland Drive in Jonesboro to Belz Burrow II. Walmart issued a deed that reflected the property was sold pursuant to a restrictive covenant. In particular, the deed declared that the property would "not be used as a grocery store/supermarket or discount department store or wholesale club, such as or similar to Target, Price Club or K-Mart," that "the land and all improvements erected or constructed thereon shall be maintained in good condition and repair," and that "such restriction shall run with and bind said land and shall inure to the benefit and be enforceable by Grantor, or an affiliated company or its successors." Through a series of transactions, Bernard became the owner of the property in 2007.2
Bernard subsequently developed an opportunity to lease a portion of the property to a chain store called Dirt Cheap. Because of the restrictive covenant in the deed, Bernard filed a complaint for declaratory judgment. Specifically, Bernard asked the court to determine whether the restrictive covenant would apply and prevent it from leasing the property to Dirt Cheap. Bernard urged that the restrictive covenant did not apply for two reasons: (1) the restriction was valid for only a twenty-year period of time that had already expired; and (2) Dirt Cheap was not a "discount department store or wholesale club"; thus, by its terms, the restrictive covenant did not apply. Walmart responded by claiming that the language of the restrictive covenant was clear and unambiguous; that the restriction was valid for a fifty-year term; and that Dirt Cheap was a discount department store contemplated by the plain language of the restriction.
Bernard thereafter moved for summary judgment, which Walmart opposed. Essentially, the parties reargued their previously stated positions in the declaratory-judgment proceeding.3 In its reply to Walmart's response, however, Bernard raised for the first time an argument that the restrictive covenant did not run with the land because it was personal to Walmart and did not benefit the land itself. Walmart filed a surreply to Bernard's reply for the limited purpose of addressing Bernard's new argument, contending that the restrictive covenant did, in fact, run with the land. Moreover, Walmart asserted, even if the covenant did not run with the land, it would still be enforceable as an equitable servitude.
After a hearing on Bernard's summary-judgment motion, the circuit court first found that the deed contained a restriction on land use and that the restriction was subject to the fifty-year term. The court next determined that Dirt Cheap was, in fact, a discount department store within the meaning of the restriction and that the restriction thus applied to it. On the issue of whether the restrictive covenant ran with the land, the court found that it did not because the restriction did not "touch and concern" the land itself. Nevertheless, because the court found that the covenant ultimately worked to the detriment of Walmart by reducing the value of the land when it was sold, the court concluded that the covenant was enforceable as an equitable servitude. A written order reflecting the circuit court's findings was entered on March 18, 2019, and Bernard filed a timely notice of appeal.
Bernard's primary argument on appeal is that the circuit court erred in denying its motion for summary judgment. Although an order denying a motion for summary judgment is generally not appealable because it is an interlocutory order, we will review certain interlocutory orders in conjunction with the appeal of a final judgment. Nichols v. Culotches Bay Navigation Rights Comm., L.L.C., 2009 Ark. App. 365, at 6, 309 S.W.3d 218, 221; see also Gammill v. Provident Life & Acc. Ins. Co., 346 Ark. 161, 165, 55 S.W.3d 763, 765 (2001) (). Because the circuit court's order dismissing Bernard's complaint for declaratory judgment with prejudice was a final order dismissing on the merits and terminating the proceeding below, we may review the court's denial of Bernard's motion for summary judgment. We review an order denying a motion for summary judgment for abuse of discretion. Ozarks Unlimited Res. Coop., Inc. v. Daniels, 333 Ark. 214, 221, 969 S.W.2d 169, 172 (1998); Welsh v. Mid-South Bulk Servs., Inc., 2011 Ark. App. 728, at 3; Karnes v. Trumbo, 28 Ark. App. 34, 41, 770 S.W.2d 199, 202-03 (1989).
Bernard's appeal is also taken from the circuit court's dismissal with prejudice of its complaint for declaratory relief. A declaratory-judgment action seeks to avoid uncertainty and insecurity with respect to rights, status, and other legal relations. City of Fort Smith v. Didicom Towers, Inc., 362 Ark. 469, 474, 209 S.W.3d 344, 348 (2005). Here, Bernard sought a declaration from the circuit court that the restrictive covenant was time-barred by its plain terms and, alternatively, that the restrictive covenant was legally inapplicable to Bernard's lease of the subject property to Dirt Cheap or a similar retailer. Whether relief under the Declaratory Judgment Act should be granted is a matter resting in the sound discretion of the circuit court. Id.; see also O'Dell v. Peck, 2017 Ark. App. 532, at 2 ().
In this appeal, we must determine whether the terms of the restrictive covenant contained in the deed from Walmart to Bernard's predecessor in interest are enforceable. We begin by noting that generally, restrictions on the use of land are not favored in the law, and if there is any restriction on land, it must be clearly apparent. See Royal Oaks Vista, L.L.C. v. Maddox, 372 Ark. 119, 123, 271 S.W.3d 479, 482 (2008); Hutchens v. Bella Vista Vill. Prop. Owners' Ass'n, 82 Ark. App. 28, 110 S.W.3d 325 (2003). Further, our supreme court has held that a restrictive covenant will be strictly construed against limitations on the free use of land and that all doubts are resolved in favor of the unfettered use of land. Royal Oaks, supra.
Here, Bernard challenges three aspects of the restrictive covenant: (1) the length of the term of the restriction, (2) the type of store to which the restriction applies, and (3) whether the restrictive covenant runs with the land. In each challenge, Bernard asks us to interpret the restrictive covenants and the language of the deed itself. In doing so, we must determine the parties' intent as shown by the covenant, for it is the intention of the parties that governs. McGuire v. Bell, 297 Ark. 282, 761 S.W.2d 904 (1988). We gather the intention of the parties not from some particular clause, but from the context of the whole agreement. Evans v. SEECO, Inc., 2011 Ark. App. 739. The language of a contract as a whole should be so construed as to make apparently conflicting provisions reasonable and consistent and so as not to give one of the parties an unfair and unreasonable advantage over the other. Schnitt v. McKellar, 244 Ark. 377, 386, 427 S.W.2d 202, 208 (1968). When the language of the restrictive covenant is clear and unambiguous, the parties will be confined to the meaning of the language employed, and it is improper to inquire into the surrounding circumstances of the objects and purposes of the restriction to aid in its construction. Mountain Crest, LLC v. Kimbro, 2018 Ark. App. 626, 567 S.W.3d 888.
With these principles in mind, we now address each of Bernard's three points in turn.
For purposes of our discussion of this point on appeal, we set out the entirety of the restrictive covenant as contained in the deed conveyed by Walmart:
subject to the following conditions and restrictions: (i) Grantee covenants that the land will not be used as a grocery store/supermarket or discount department store or wholesale club, such as or similar to Target, Price Club or K-Mart, such restriction shall run with and bind said land and shall inure to the benefit and be enforceable by Grantor, or an affiliated company or its successors, by any appropriate proceedings at law or in equity to prevent violations of such aforesaid covenants, conditions and restrictions to recover damages for such violations; such conditions and restrictions shall remain in effect to said land for fifty (50) years; (ii) the land and all improvements erected or constructed thereon shall be maintained in good condition and repair. The aforesaid conditions shall run with and bind said Land and shall inure to the benefit of and be enforceable by Grantor, or an affiliated company or its successors, by any appropriate proceedings at law or in equity to prevent violations of such aforesaid covenants, conditions and restrictions to recover damages for such violations; however, such conditions shall remain in effect to...
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