Safeway Inc. v. Cesc Plaza Lid. Partnership
| Decision Date | 06 March 2003 |
| Docket Number | No. CIV.A. 02-1497-A.,CIV.A. 02-1497-A. |
| Citation | 261 F.Supp.2d 439 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | SAFEWAY INC., Plaintiff, v. CESC PLAZA LIMITED PARTNERSHIP, Defendant. |
Barbara Susan Wahl, Joseph Ray Price, Arent Fox Kintner Plotkin & Kahn P.L.L.C., Washington, DC, for Plaintiff.
Vivian Katsantonis, Watt Tieder Hoffar & Fitzgerald L.L.P., McLean, VA, for Defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The central question in this action for declaratory judgment and injunctive relief is whether a supermarket tenant reasonably withheld its consent, pursuant to a provision in its lease, to the landlord's proposed changes to a common area. The proposed changes, which are part of a larger renovation and revitalization project for the immediately surrounding urban area, involve the elimination of the existing above ground parking structure currently used by the supermarket's customers to accommodate the construction of new retail development and the relocation of the supermarket's parking to an underground garage immediately under the supermarket store. The supermarket has withheld its consent and seeks (i) a declaration that its withholding of consent was not unreasonable, and (ii) a permanent injunction to preclude the elimination of the common area surface parking that has heretofore been available to supermarket customers.
After the entry of a temporary restraining order, a bench trial was held in which the hearing on the merits was consolidated with the preliminary injunction pursuant to Rule 65(a)(2), Fed.R.Civ.P. Set forth here are the Court's findings of fact and conclusions of law pursuant to Rule 52, Fed.R.Civ.P.
Plaintiff Safeway Inc. ("Safeway"), the tenant in this action, is a Delaware corporation with its principal place of business in California. Safeway operates over 1,700 grocery stores nationwide. Defendant CESC Plaza Limited Partnership ("CESC"), the landlord in this action, is a Virginia limited partnership with its principal place of business in Virginia. CESC, a real estate developer, owns seventy percent of the office and retail space in Crystal City. Crystal City is a large office, retail and apartment building complex located in Arlington, Virginia, with approximately 400,000 square feet of retail space and approximately 10 million square feet of commercial office space.
The Safeway store at issue in this litigation is located in the Crystal City Plaza Shops, between South 23rd Street and South 20th Street (the "Plaza Block") in Crystal City. The Plaza Shops constitute an enclosed, retail mall of about 40 stores, located on the ground floor of the Plaza Block. The Safeway store opens onto the interior of the Plaza Shops mall; thus, customers coming from the surface parking lot must walk down an interior mall corridor, approximately 100 feet in length, to reach the entrance to the store. A two story parking structure runs alongside the Plaza Shops between the Plaza Shops and Crystal Drive.
CESC developed and is seeking to implement a forty million dollar renovation project designed to transform and revitalize the Plaza Block and the surrounding area. The proposed renovations, which are subject to a consent provision in Safeway's lease, include the removal of the parking structure, which provides surface level parking for the Plaza Shops and the Safeway store, and the construction of new retail stores in its place to revitalize the street front as part of a larger plan to redevelop the Crystal City area.
This complaint was filed on October 8, 2002. Safeway seeks a declaratory judgment that its withholding of consent to the proposed alteration of the common area is reasonable, and claims that CESC's plan to proceed without Safeway's consent constitutes a breach of the lease. Safeway also seeks preliminary and permanent injunctions prohibiting CESC from altering the common areas without Safeway's consent. CESC counterclaimed and seeks a declaration that Safeway's withholding of consent is unreasonable, and also claims breach of the lease.
On Friday, January 3, 2003, the parties appeared on Safeway's emergency motion for a temporary restraining order. This motion was precipitated by CESC's plans to close the parking structure and commence construction activity on its revitalization project on Monday, January 6, 2003. After a hearing, the motion for a temporary restraining order was granted in part and denied in part, permitting CESC to close the structure, but prohibiting any irreversible alterations to the parking structure, and requiring CESC to provide Safeway's trucks with access to the Safeway loading dock. See Safeway Inc. v. CESC Plaza L.P., Civil Action No. 02-1497-A (E.D.Va. January 3, 2003) (Order). Pursuant to Rule 65(a)(2), Fed.R.Civ.P., the trial on the merits was advanced and consolidated with the hearing on the preliminary injunction, which was scheduled for January 7, 2003. See id.
On January 7, after hearing argument from the parties regarding the need for further discovery and more time to prepare, the consolidated trial on the merits and the preliminary injunction was continued until January 30, 2003. By consent between the parties, construction activities were limited pending resolution of the merits of the dispute in the scheduled January 30 trial. Specifically, the parties agreed (i) that the surface lot would remain closed for parking, (ii) that the relocation of the parking to the underground lot below the store would continue, (iii) that CESC would continue to ensure that Safeway had access to Safeway's loading dock as previously provided, (iv) that no irreversible structural changes would be made to the parking structure, and (v) that pedestrian access to the rear entrance of the Plaza Shops mall would be maintained. See Safeway Inc. v. CESC Plaza L.P., Civil Action No. 02-1497-A (E.D.Va. January 9, 2003) (Order). In the meantime, CESC was permitted to proceed with some construction activities, including (i) the relocation of utilities from the parking structure, (ii) access into Safeway's leasehold space for the installation of new piping, (iii) utility work and traffic control on Crystal Drive, and (iv) alteration or removal of landscaping and fences in preparation for construction. Id.
The bench trial commenced on January 30, 2003, continued on January 31 and, as a result of unavoidable scheduling conflicts, the presentation of evidence continued on February 19 through 21. Closing arguments were heard on February 25. The decision in this matter was announced from the bench on February 28, 2003, and is more fully set forth and memorialized here. Thus, trial of this matter was conducted and concluded as expeditiously as possible in less than eight weeks after the filing of the January 3 motion for a temporary restraining order.
The lease at issue here was originally entered into on May 11, 1967 by Safeway and CESC's predecessor in interest, Crystal Associates and Plaza Associates. The term of the original lease was ten years, with two 10-year options. As modified, the current lease expires on March 31, 2005, with two renewal options of five years each thereafter.
The relevant provision in the lease with regard to common area changes and consent is as follows:
4. COMMON AREAS. COMPLETION OF SHOPPING CENTER. All those portions of the shopping center not shown as building areas on Exhibit "A" shall be common areas for the joint use of all tenants, their customers, invitees and employees, and lessor hereby grants to lessee and its customers, invitees and employees the right to use all of said common areas and any enlargement thereof.... Lessor further agrees ... that, following completion of construction of any portion of the shopping center, the sizes and arrangements of said buildings and common areas (including parking areas) will not be changed without lessee's written consent, which shall not be unreasonably withheld, and that if said buildings are not completed or if said sizes and arrangements are changed without lessee's written consent, lessee may cancel this lease by notice to lessor. Lessee shall not have the right to cancel this lease if less than twenty-five percent (25%) of the shopping center common area outside the area crosshatched on Exhibit "A" is removed or changed and lessor can provide equivalent shopping center common areas of equal convenience to the leased premises [emphasis added].
In addition, Paragraph 21 of the lease states:
21. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to lessor or lessee shall exclude any other remedy herein or by law provided, but each shall be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.1
The original lease was modified several times. In November 1983, the lease was modified to acknowledge Safeway's consent under Paragraph 4 to the construction of a parking structure over the existing surface parking lot that served the Plaza Shops mall and the Safeway stores. After this construction, the existing surface lot was covered by a second parking level, but continued to serve the mall and the Safeway store. In April 1984, the lease was modified again, as the Safeway store was expanded in size from the original 10,000 square feet to the current size of approximately 17,000 square feet. The surface parking was preserved within the new parking structure. At the same time, the lease was extended to its current duration, with a base term expiring in 2005, and with two five year options for Safeway to extend the lease until 2015.
The character, configuration, and location of the Plaza Shops Safeway store is important context for the issues at bar. Much evidence was presented by the parties to describe and locate the...
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