Genovese Drug Stores, Inc. v. Bercrose Associates

• Decision Date: 23 May 1983
• Docket Number: Civ. No. H-82-1070.
• Parties: GENOVESE DRUG STORES, INC. v. BERCROSE ASSOCIATES; Connecticut Packing Company, Inc.; and Fotomat Corporation.
• Court: U.S. District Court — District of Connecticut

563 F. Supp. 1299

GENOVESE DRUG STORES, INC. v. BERCROSE ASSOCIATES; Connecticut Packing Company, Inc.; and Fotomat Corporation.

Civ. No. H-82-1070.

United States District Court, D. Connecticut.

May 23, 1983.

Martin H. Sokolow, Jr., Barry S. Feigenbaum, Thomas A. Rouse, Byrne, Shechtman & Slater, Hartford, Conn., for plaintiff.

Rolland Castleman, Lessner, Rottner, Karp, Plepler & Castleman, Manchester, Conn., for defendants, Bercrose Associates and Connecticut Packing Co., Inc.

Mark R. Kravitz, Wiggin & Dana, New Haven, Conn., for defendant, Fotomat Corp.

RULING ON MOTION FOR PRELIMINARY INJUNCTION

CLAIRE, Senior District Judge.

Pursuant to Fed.R.Civ.P. 65, the plaintiff has moved for the issuance of a preliminary injunction to restrain the defendants from violating a restrictive covenant contained in the plaintiff's lease, until such time as this case is finally adjudicated. Following a full evidentiary hearing, the Court finds that the plaintiff has met its burden and is entitled to the preliminary injunction requested. Accordingly, the plaintiff's motion for preliminary injunction is granted. In accordance with Fed.R.Civ.P. 52(a), the foregoing shall constitute the findings of fact and conclusions of law.

Findings of Fact

1. The plaintiff, Genovese Drug Stores, Inc. ("Genovese"), is a New York corporation qualified to do business in Connecticut, with its principal offices located at 80 Marcus Drive, Melville, New York. Genovese operates sixty-six (66) full-line drug stores in the Northeastern United States, including twelve (12) stores in Connecticut.

2. The defendant, Bercrose Associates ("Bercrose"), is a Connecticut partnership comprised of Irving Bercowetz, Herman Bercowetz and Israel Rosenthal, all of Bloomfield, Connecticut. Bercrose has an office and principal place of business at 335 Cottage Grove Road, Bloomfield, Connecticut, Bercrose owns and operates a portion of the overall tract that comprises the Copaco Shopping Center ("Shopping Center"), in Bloomfield, Connecticut.

3. The defendant, Connecticut Packing Company, Inc. ("Copaco"), is a Connecticut corporation with four (4) shareholders Irving Bercowetz and Herman Bercowetz each own one-third of the corporation, and the remaining one-third is owned by Israel and Rhoda Rosenthal. It should be noted that all shareholders of Copaco, except the last named individual, are partners in Bercrose. Irving Bercowetz is the president of Copaco. The office and principal place of business for Copaco also is located in the same identical location as Bercrose, i.e., 335 Cottage Grove Road, Bloomfield, Connecticut. Copaco owns and operates the remainder of the Shopping Center not owned by Bercrose, and also operates a food supermarket at the Shopping Center.

4. Philip Johnson is and has been the controller of both Copaco and Bercrose for eighteen years. He has authority to act on behalf of both business entities, and manages both entities from a common office at 335 Cottage Grove Road, Bloomfield, Connecticut.

5. The defendant, Fotomat Corporation ("Fotomat"), is a Delaware corporation, qualified to do business in Connecticut, with its principal office located at 64 Danbury Road, Wilton, Connecticut. Fotomat is engaged in the sale of photographic film and film processing services at various locations throughout the United States. Fotomat's principal method of selling its products and services is through standard drive-in kiosks located in the parking lots of shopping centers, although it does have some in-line store locations.

6. In 1947, Copaco purchased a parcel of land situated on Cottage Grove Road, in Bloomfield, Connecticut, constituting the major part of the property on which the entire Shopping Center is located. In 1970, Copaco conveyed a portion of this parcel to Bercrose by a duly recorded quit-claim deed.

7. On September 22, 1971, Bercrose and Copaco executed an agreement for the joint development of the Shopping Center ("Joint Development Agreement"), whereby each agreed, inter alia, to promote the development of the common areas of the Shopping Center as a fully-integrated facility and provide for certain restrictions on the common use of the respective tracts. On October 12, 1971, the Joint Development Agreement was recorded on the land records of the Town of Bloomfield under the names of both Copaco and Bercrose. This document was recorded in the grantor index of the land records under both names, one to the other, and is thus within the chain of title of each of the two business entities.

8. The third and fourth recitals of the Joint Development Agreement state the purpose of the agreement:

"WHEREAS, the parties, notwithstanding their separate ownership of said portions of the shopping center, desire to develop, construct, operate and manage said shopping center as one, fully-integrated facility so that neither the business establishments located therein nor their customers will be affected, in any practical respect, by the separate ownership of portions thereof; and

WHEREAS, in order to accomplish said objective, the parties have agreed to grant each other certain rights and to restrict their respective portions of the shopping center in certain respects.

9. Paragraph 1 of the Joint Development Agreement, entitled "Prohibition Against Building in Common Areas", states in pertinent part:

"Neither of the parties shall build or erect, or suffer to be built or erected, any building or structure upon any portion of the property owned by it which is shown upon Exhibit 2 as being used or reserved as a common area for the use and benefit of the entire shopping center, including but not limited to those areas shown as parking (including not only the parking spaces but also the lanes between rows of parking spaces), access and egress drives, service drives and areas and landscaped areas, unless the party desiring to erect such additional building(s) or structure(s) shall have first obtained the written consent of the other party." (Emphasis added).

10. On October 6, 1971, Bercrose leased a portion of the property located at the Shopping Center to Genovese for the operation of a retail drug store for an initial term of twenty (20) years (hereinafter the "Bercrose-Genovese Lease"). The Bercrose-Genovese Lease contained a restrictive covenant in which Bercrose agreed that it would not demise any portion of the Shopping Center to any "drive-in operation whose principal business is the receipt and processing of photographic film for development, including, but not limited to, drive-ins known as `Foto-Mat'."

11. Consistent with the terms of the Joint Development Agreement, Irving Bercowetz, in his capacity as president of Copaco, executed a statement entitled "Consent and Agreement" ("Consent"), in which Copaco agreed to be bound by the lease terms with respect to the portions of the Shopping Center owned and operated by Copaco. This Consent was executed on October 6, 1971 and was appended to the Bercrose-Genovese Lease.

12. On March 10, 1972, pursuant to Conn.Gen.Stat. § 47-19, a memorandum of the Bercrose-Genovese Lease ("Memorandum of Lease") was recorded on the Bloomfield Land Records under the name of Bercrose as grantor, and Genovese as grantee. The Memorandum of Lease states that a copy of the entire lease document is on file at the offices of Bercrose's attorneys. The Memorandum of Lease also states the term of the lease and its option of renewal and mortgage provisions, but it contains no mention of the restrictive covenant prohibiting drive-in photo kiosks nor does it refer to the Consent in which Copaco agreed to be bound by the terms of the Bercrose-Genovese Lease.

13. The restrictive covenant contained in the Bercrose-Genovese Lease is specifically limited to drive-in film processing operations and does not restrict film processing sales or service by other tenants of in-line stores within the Shopping Center. Other tenants of the Shopping Center presently do provide film processing sales and service from in-line stores, and nothing in the Bercrose-Genovese Lease would restrict Fotomat from opening and operating an in-line store within the Shopping Center.

14. On May 5, 1982, Philip Johnson, controller of both Bercrose and Copaco and the employee in charge of leasing for both owners of the Shopping Center, wrote to Fotomat on behalf of Bercrose to advise Fotomat of the availability of a 900 square foot store in the Shopping Center that had recently become vacant.

15. Shortly after May 5, 1982, Arthur Johnson, a real estate representative for Fotomat responded to Philip Johnson's offer. After preliminary discussions, on or about May 19, 1982, Fotomat indicated that it did not want to lease the available 900 square foot store, but it would consider other space in the Shopping Center for an in-line store or for a drive-in kiosk. Fotomat was never told of the existence of the restrictive covenant in the Bercrose-Genovese Lease during these communications, nor did Fotomat inquire about the possible existence of such restrictions.

16. Philip Johnson discussed the idea of putting a Fotomat drive-in kiosk in the Shopping Center with Irving Bercowetz, a principal in both Bercrose and Copaco, and the principal partner in Bercrose who originally negotiated and approved the restrictive covenant contained in the Bercrose-Genovese Lease. Despite his direct, personal involvement in the creation of the restriction against photo kiosks, Irving Bercowetz responded favorably to the idea of a Fotomat kiosk. Philip Johnson notified Fotomat that a kiosk was acceptable and met with Arthur Johnson to locate the kiosk on the Shopping Center's parking lot. Initially, they agreed to locate the kiosk on the Bercrose portion of the parking lot. Later, after concluding that such location would interfere with snow removal at the Shopping Center, Philip Johnson notified Fotomat that the kiosk would have to be located on the portion of the Shopping...