In re Ames Dept. Stores, Inc.
| Decision Date | 14 October 2004 |
| Docket Number | Bankruptcy No. 01-42217 (REG). Adversary. No. 04-2829. |
| Citation | 316 B.R. 772 |
| Parties | In re AMES DEPARTMENT STORES, INC., et al., Debtor. Hannaford Bros. Co., Plaintiff, v. Ames Department Stores, Inc., Ames Realty II, Inc., The Stop & Shop Supermarket Co. LLC, Vickerry Realty Co. Trust, and Coliseum Vickerry Realty Co. Trust, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Pierce Atwood, by Jacob A. Manheimer, (argued), Portland, ME, for plaintiff.
White & Case, by Felix J. Lopez (argued), Frank L. Eaton, Miami, FL, for defendant.
Weil, Gotshal & Manges LLP, by Timothy Karcher, (argued), New York, NY, for debtor-defendant.
Posternak, Blankstein & Lund LLP, by Robert 0. Resnick, (argued), Boston, MA, for nominal defendants.
Otterbourg, Steindler, Houston & Rosen, P.C., by Todd M. Goren (argued), New York, NY, for the Official Committee of Unsecured Creditors.
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 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:
On none of these matters is there a material disputed issue of fact. Accordingly, Hannaford's motion is granted.
Though Stop & Shop and Ames assert that if their legal contentions are accepted, material disputed issues of fact exist, the core facts are undisputed.
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 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.
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—Viekerry Realty Co. Trust ("Viekerry"), Coliseum Viekerry 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 Viekerry 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 The recitals continued by establishing a defined term: the "Entire Premises," which as thereafter used would refer to Tract # 1 and Tract # 2 jointly.5
The recitals went on to provide that "Viekerry and Coliseum propose to improve the Entire Premises as a community shopping center," and that the declarants desired to create and establish "certain easements, restrictions and obligations, pursuant to such general plan or scheme, with respect to such Entire Premises,"6 i.e., Tracts # 1 and # 2. One of those restrictions, set forth in Paragraph 7 of the Declaration, provided in substance that the owners would not use any portion of the building areas that were portions of the Entire Premises, or lease such or permit their use, for any entity that would violate "an exclusive business right, a limitation on competition or use, or any restriction upon co-tenancy now contained in any lease of the Building Areas, without the prior written consent of the tenant or tenants... under all such leases containing any such limitation or restriction."
And the Declaration further provided, in relevant part:
That the easements, restrictions, benefits and obligations hereunder shall create mutual and reciprocal benefits and servitudes upon the Entire Premises, running with the land thereof, and which shall continue so long as Coliseum and/or Vickerry, their heirs, administrators, executors, successors or assigns shall operate a shopping center upon the Entire Premises.7
In 1972, a shopping mall called the Nashua Mall was built on Tract # l.8 The Ames Store was built in or about 1972, on Tract #2.9
In 1994, Hannaford became interested in acquiring an undeveloped portion of Tract # 2 in order to develop and operate a supermarket.10 Thereafter, Vickerry and Hannaford reached an agreement on this acquisition, and in December 8, 1994, this transaction closed.11 On that date, Vickerry conveyed a portion of Tract # 2—what is now designated as Tract # 2-A—to Hannaford, in fee.12 Hannaford's agreement to purchase this parcel was conditioned upon obtaining assurance from Vickerry that no other entity would be permitted to develop or operate a supermarket business on either Tract # 1 or the remainder of Tract # 2—what is now designated as Tract # 2-B.13
...
To continue reading
Request your trial
-
In re Chi. Invs., LLC
...added). 382.See, In re Adelphia Commc'ns Corp., 359 B.R. at 86;Hannaford Bros. Co. v. In re Ames Dept. Stores, Inc. (In re Ames Dept. Stores, Inc.), 316 B.R. 772, 794–795 (Bankr.S.D.N.Y.2004); Northrop Grumman Tech. Servs., Inc. v. The Shaw Group Inc. (In re IT Group, Inc., Co.), 302 B.R. 4......
-
In re Three a's Holdings, L.L.C.
...explicit prohibitions or restrictions within a lease or related document. See, e.g., Hannaford Bros. Co. v. Ames Dep't Stores, Inc. (In re Ames Dep't Stores, Inc.), 316 B.R. 772, 778 (Bankr.S.D.N.Y.2004) (seeking to enforce a covenant expressly prohibiting the operation of a competing super......
-
In re Kent Manor Inn, LLC
...to convert the economic value in [executory contracts] into cash that can increase creditor recoveries.In re Ames Dept. Stores, Inc., 316 B.R. 772, 794 (Bankr. S.D.N.Y. 2014); see In re Rickel Home Centers, Inc., 209 F.3d 291, 298 (3d Cir. 2000). Finally, in the bankruptcy sale, Mr. Karbelk......
-
In re Adelphia Communications Corp.
...Inc., 289 B.R. 45, 50 (Bankr.M.D.N.C.2003) (Carruthers, J.); Hannaford Bros. Co. v. Ames Dep't Stores, Inc. (In re Ames Department Stores, Inc.), 316 B.R. 772, 794-95 (Bankr.S.D.N.Y. 2004) (Gerber, J.) ("Hannaford"); In re The IT Group, Inc., 302 Bit. 483, 487-489 (D.Del. 2003) (Farnan, J.)......
-
Doing Equity in Bankruptcy
...strictly for affirmative than negative covenants).130. See, e.g., Hannaford Bros., Co. v. Ames Dep't Stores (In re Ames Dep't Stores), 316 B.R. 772 (Bankr. S.D.N.Y 2004) (use covenant runs with the land); In re 523 E. Fifth St. Hous. Pres. Dev. Fund Corp., 79 B.R. 568, 575 (Bankr. S.D.N.Y. ......