Mark-It Place Foods, Inc. v. New Plan Excel Realty Trust, Inc., 2004 Ohio 411 (Ohio App. 1/26/2004)

• Decision Date: 26 January 2004
• Docket Number: Case No. 02CA2863.
• Citation: 2004 Ohio 411
• Parties: Mark-It Place Foods, Inc., dba Festival Foods, Plaintiff-Appellant, v. New Plan Excel Realty Trust, Inc., et al., Defendants-Cross Appellants.
• Court: Ohio Court of Appeals

Page 1

Unpublished Opinion

2004 Ohio 411

Mark-It Place Foods, Inc., dba Festival Foods, Plaintiff-Appellant, v. New Plan Excel Realty Trust, Inc., et al., Defendants-Cross Appellants.

Case No. 02CA2863.

Court of Appeals of Ohio, Fourth District, Scioto County.

DATE JOURNALIZED: January 26, 2004.

Civil Appeal from Scioto County Common Pleas Court.

Stanley C. Bender, 707 Sixth Street, P.O. Box 950, Portsmouth, Ohio 45662, Counsel for Appellant, Mark-It Place Foods, Inc., dba Festival Foods.

R. Alan Lemons, Miller, Searl & Fitch, 806 Sixth Street, Suite 200, P.O. Box 991, Portsmouth, Ohio 45662, and James K. Brooker and Robert J. McBride, Day, Ketterer, Raley, Wright & Rybolt, Ltd., Millennium Centre, Suite 300, 200 Market Avenue, North, P.O. Box 24213, Canton, Ohio 44701, Counsel for Appellant, Fleming Companies, Inc.

Mark E. Kogan and Christopher N. Jones, Satzberg, Trichon, Kogan & Wertheimer, P.C., 1818 Market Street, 30^th Floor, Philadelphia, Pennsylvania 19103, and Daniel P. Ruggiero, Ruggiero & Haas, 600 National City Bank, 800 Gallia Street, Portsmouth, Ohio 45662, Counsel for Cross Appellant, New Plan Excel Realty Trust, Inc.

DECISION AND JUDGMENT ENTRY

ABELE, J.

{¶1} This is an appeal from several Scioto County Common Pleas Court judgments that resolved various claims between Mark-It Place Foods, Inc., d/b/a Festival Foods (Festival), plaintiff below and appellant herein, Fleming Companies, Inc. (Fleming), defendant below and appellant herein, and New Plan Excel Realty Trust, Inc. (New Plan), defendant below and cross appellant herein. Festival assigned the following errors for our review:

First Assignment of Error:

"The Trial Court Erred in Failing to Grant Summary Judgment in favor of Mark-I [sic] Place Foods, Inc., dba Festival Foods, on its complaint against new plan Excel Realty Trust, Inc."

Second Assignment of Error:

"The Trial Court Erred in Granting Summary Judgment to New Plan Excel Realty Trust, Inc., against Mark-It Place Foods, Inc., dba Festival Foods."

Third Assignment of Error:

"The Trial Court Erred in failing to construe the facts most Favorably to Mark-It Place Foods, Inc., dba Festival Foods, when ruling on the motion for summary judgment by New Plan Excel Realty Trust, Inc."

Fourth Assignment of Error:

"The Trial Court Erred in holding that privity of contract prevent Mark-It Place Foods, Inc., dba Festival Foods, from maintaining an action directly against New Plan Excel Realty Trust, Inc., for breach of contract."

Fifth Assignment of Error:

"The Trial Court Erred in holding that Mark-It Place Foods, Inc., dba Festival Foods, could not maintain an action Directly against New Plan Excel Realty Trust, Inc., as Third-Party of the lease."

Sixth Assignment of Error:

"The Trial Court Erred in holding that the estoppel letters can be considered as evidence of reasonable reliance by New Plan Excel Realty Trust, Inc."

Seventh Assignment of Error:

"The Trial Court Erred when it failed to hold, as a matter of law, that the lease was clear and unambiguous on its face, that Mark-It Place Foods, Inc., dba Festival Foods, and Fleming Companies, Inc. Had the exclusive right to sell foodstuffs and that a sale of foodstuffs by Wal-Mart violated the lease."

Eighth Assignment of Error:

"The Trial Court Erred when it considered parol evidence to change a contract clear and unambiguous on its face."

Ninth Assignment of Error:

"The Trial Court Erred in holding that Mark-It Place Foods, Inc., dba Festival Foods, and Fleming Companies, Inc., could not recover from New Plan Excel Realty Trust, Inc., rents paid under protest."

Tenth Assignment of Error:

"The Trial Court Erred in holding that R.C. 1331 had application to the lease."

Eleventh Assignment of Error:

"The Trial Court Erred in finding section 6.3 of the lease to be `overbroad'."

{¶2} Fleming advances its own assignments of error as follows:

First Assignment of Error:

"The Trial Court Erred in granting summary judgment to New Plan Excel Realty Trust, Inc. on Fleming Companies, Inc.'s cross-claim against new plan."

Second Assignment of Error:

"The Trial Court Erred in denying the motion for summary judgment of Fleming Companies, Inc. on its cross-claim against new plan."

Third Assignment of Error:

"The Trial Court Erred in granting summary judgment to new plan on its cross-claim against fleming."

{¶3} Finally, New Plan posits the following cross assignments of error for review:

First Cross Assignment of Error:

"The Trial Court Erred in holding that an issue of fact existed as to New Plan Excel Realty Trust, Inc.'s ("New Plan") reasonable reliance on the valid estoppel letter signed by Fleming Companies, Inc. ("Fleming") and Mark-It Place Foods, Inc. ("Mark-It"), and that new plan was not entitled to judgment as a matter of law based on its estoppel theories."

Second Cross Assignment of Error:

"The Trial Court Erred in failing to hold that under the interpretation of section 6.3 of the lease urged by fleming and Mark-It, the rent abatement would constitute an unenforceable penalty."

{¶4} In the late 1980s, Wal-Mart Stores, Inc. (Wal-Mart) began to explore the possibility of opening a store in the Scioto County area. Wal-Mart retained the services of Leo Eisenberg Co. (Eisenberg), a nationwide developer and shopping center manager, to examine the area. Eisenberg found an appropriate location in New Boston. Eisenberg then formed the New Boston Development Company (NBDC) to build and to later own the shopping center intended to house the new Wal-Mart store. NBDC sought other tenants for the shopping center as well and, on July 27, 1989, entered into a "shopping center lease" (the lease) whereby it agreed to let 52,628 square feet to Scrivner, Inc. (Scrivner), for use as a supermarket. That lease contained the following "exclusive use" provision:

"Neither Lessor nor any affiliate or related party shall, without Lessee's prior written consent, own, operate or grant any lease or permit any assignment or sublease for a store (or any portion of a store) in the Shopping Center or any of Lessor's real estate located within 1,500 yards of the Shopping Center which permits a tenant under such lease to sell or offer for sale groceries, meats, poultry, seafood, dairy products, fruits, vegetables or baked goods, provided these restrictions shall not be deemed to prohibit a restaurant serving prepared food." (Emphasis added.)

{¶5} In November of that year, NBDC leased a 112,238 square foot building and garden center in the shopping center to Wal-Mart. The lease did not include any provision to prohibit Wal-Mart from selling any of the items listed in the above cited exclusive use provision¹ and it is undisputed that, "from its opening day," Wal-Mart sold foodstuffs such as "chips, nuts, beverages, cereal, cookies, canned meats, pasta and other convenience food items."

{¶6} On June 14, 1990, Scrivner assigned its leasehold interest to S.M. Flickinger, Co. (Flickinger) which, on January 9, 1991, entered into a "sublease agreement" subletting the premises to Festival. Fleming is the successor in interest to Flickinger.

{¶7} In 1992, NBDC decided to sell the shopping center. New Plan expressed interest in acquiring the property and began examining the shopping center leases. It appears that during the course of this examination process, New Plan may have discovered both the exclusive use covenant in Scrivner's lease (the property occupied by Festival Foods under the aforementioned sublease) and the absence of a reciprocal restrictive use covenant in Wal-Mart's lease. In any event, New Plan sent an "estoppel letter" to NBDC and to Fleming asking, among other things, their assurances that there were "no defaults under the terms of the [l]ease." NBDC and Scrivner executed the letter and signified their assent to that representation. Festival, likewise, consented to "execution and delivery of [the] Estoppel Letter."² An updated "tenant estoppel certificate," reaffirming that there were no breaches in the lease, was provided to New Plan two months later. On the basis of those assurances, New Plan acquired the shopping center in early 1993.

{¶8} In December of 1998, Fleming sent a letter to New Plan to notify the company that Wal-Mart was selling foodstuffs at its New Boston store in violation of its assigned lease's exclusive use provision. Fleming asked that New Plan promptly take action to "ensure that Wal-Mart immediately discontinue the sale of groceries, meats, poultry, seafood, dairy products, fruits, vegetables or baked goods to the public." No action was taken and Fleming discontinued their rental payments.³

{¶9} Festival commenced the instant action on November 17, 1999 and alleged that New Plan and Fleming had violated the lease's terms by permitting Wal-Mart to sell foodstuffs. The sub-lessee asked for damages, as well as a declaratory judgment to construe its rights and obligations under the lease.

{¶10} Fleming denied liability to its sub-lessee. Fleming also filed a cross-claim against New Plan and alleged that the lessor breached the lease by permitting Wal-Mart to sell foodstuffs. Like Festival, Fleming asked for damages and a declaration of its rights and obligations under the lease. New Plan denied liability on the complaint and the cross-claim. The lessor also filed a cross-claim and counterclaim against its sub-lessor and sub-lessee and alleged that they were in default for failure to pay rent. New Plan asked for, inter alia, all rental payments due under the lease as well as possession of the demised premises.

{¶11} These matters proceeded through a lengthy discovery process and on February 23, 2001, all parties filed motions for summary judgment on their respective claims. On March 9, 2001, the trial court issued its decision and judgment and addressed many of the different issues in the competing claims, counterclaim and cross-claims.

{¶12} First, the trial court held that Festival was a sublessee...