Thatcher's Drug Store of West Goshen, Inc. v. Consolidated Supermarkets, Inc.

• Decision Date: 13 January 1994
• Citation: 636 A.2d 156,535 Pa. 469
• Parties: THATCHER'S DRUG STORE OF WEST GOSHEN, INC., Appellee, v. CONSOLIDATED SUPERMARKETS, INC., Appellant.
• Court: Pennsylvania Supreme Court

Page 156

636 A.2d 156

535 Pa. 469

THATCHER'S DRUG STORE OF WEST GOSHEN, INC., Appellee, v. CONSOLIDATED SUPERMARKETS, INC., Appellant.

Supreme Court of Pennsylvania.

Argued Oct. 25, 1991.

Decided Jan. 13, 1994.

Stephen J. Springer, D. Jackson Loughhead, Philadelphia, for appellant.

Joseph R. Podraza, Jr., Rachel R. Munafo, Philadelphia, for amicus curiae--The Phila. Bar Assoc.

C. Richard Morton, Nannette M. Swadey, West Chester, for appellee.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and CAPPY, JJ.

OPINION

NIX, ¹ Chief Justice.

Appellant, Consolidated Supermarkets, Inc. ("Consolidated"), appeals from the Order of the Superior Court affirming the Order of the Court of Common Pleas which enjoined Consolidated from operating a pharmacy in the West Goshen Shopping Center ("the Shopping Center"). In this case, we granted allocatur to address the question of whether this Commonwealth should adopt Section 524 of the Restatement of Property as an exception to the Statute of Frauds and, if so, whether the facts of this case fit within the exception. However, because we find that this Commonwealth's Statute of Frauds does not apply to the instant facts, we need not address whether Section 524 should be adopted. For the reasons that follow, we reverse.

This case was commenced on April 29, 1987, by Appellee, Thatcher's Drug Store of West Goshen, Inc. ("Thatcher's"), which for the last nineteen years has been operating a pharmacy in the Shopping Center immediately adjacent to Consolidated's Shop-Rite supermarket. Thatcher's commencement of this action was in response to Consolidated's plan to operate a pharmacy in the supermarket.

The facts as found by the trial court are as follows: On October 29, 1965, Consolidated entered into a long-term lease with then owner, Enal Productions ("Landlord"), to open a Shop-Rite supermarket as an "anchor" store for the Shopping Center. Under the terms of the lease, Consolidated was prohibited from using more than twenty percent of its selling space for the sale of "non-food" items.

In September 1973, Thatcher's entered into a ten-year lease with Landlord to open a pharmacy in the store immediately adjacent to the Shop-Rite supermarket. The lease contained the following paragraph protecting Thatcher's from competition within the Shopping Center:

Landlord shall not lease any store within the premises for use as a drug store or pharmacy or for the sale of medical equipment or prosthetic supplies. The foregoing restriction shall not apply to any of the shopping center presently used as a supermarket or department store.

Record at 376a. The lease also prohibited Thatcher's from selling any "food."

In 1976, Thatcher's installed a refrigeration case from which it sold milk. In response, Consolidated posted a sign in front of the supermarket announcing that: "Coming soon--a Shop-Rite pharmacy." Upon seeing the sign, Ronald Zukin, the president and sole shareholder of Thatcher's contacted Joseph Greenblatt, the comptroller and vice-president of Consolidated. Mr. Zukin asked Mr. Greenblatt why the sign announcing the coming of a Shop-Rite pharmacy was in the window. Mr. Greenblatt responded, "We don't want you in the dairy business," referring to Thatcher's recent selling of milk. After some discussion, Mr. Greenblatt said, "You get out of the dairy business and we won't open a pharmacy." Within a week, Thatcher's removed the refrigeration case, and, in response, the supermarket removed the pharmacy announcement.

In 1983, nearing the end of Thatcher's ten-year lease, Mr. Zukin approached Landlord about securing a ten-year renewal. Mr. Zukin was informed that Consolidated desired Thatcher's space to use as a Shop-Rite pharmacy. As a result, Mr. Zukin located an alternative site for the pharmacy three blocks from the Shopping Center. Mr. Zukin, with his attorney, negotiated a lease at the new location, drew a deposit check, and was prepared to finalize the deal. Before finalizing that deal, Mr. Zukin had a conversation with Landlord and was advised that Consolidated had changed its mind about taking Thatcher's space and that a renewal would be offered to Thatcher's.

When Mr. Zukin received the proposed renewal, he met with Mr. Greenblatt to seek assurances that Consolidated would not open a competing pharmacy. Mr. Zukin testified that Mr. Greenblatt's direct response was, "We don't hurt the little guys. We have no desire to want to hurt you and we have no intention of opening a pharmacy." Mr. Greenblatt admitted in testimony that this meeting took place but denied making such a statement. Based on the assurances he received from Mr. Greenblatt, Mr. Zukin executed a ten-year renewal in late 1983.

Within the next year, Mr. Greenblatt became aware that Thatcher's had a "Beverage Center" in front of its store. In response, a sign was again posted in the supermarket window announcing "Shop-Rite Pharmacy coming soon." Again, Mr. Zukin contacted Mr. Greenblatt, who advised him that Consolidated did not want Thatcher's to go into the soda business and, if Mr. Zukin would take his beverage center sign down, "we won't be in the pharmacy business." Within a few days, Mr. Zukin removed the beverage center sign and, immediately thereafter, the Shop-Rite pharmacy announcement was removed.

In 1985, Consolidated secured the rental space immediately adjacent to the supermarket, on the side opposite of Thatcher's. Thereafter, Consolidated removed the partition wall between the supermarket and the new space and secured the federal and state licenses necessary to operate a pharmacy. Aware of Consolidated's imminent plans to open a pharmacy, Thatcher's filed the instant action seeking to enjoin Consolidated from implementing its plans.

Thatcher's presented three grounds in its complaint in support of its request for injunctive relief: (1) breach of the lease between Consolidated and Landlord; (2) breach of an oral contract between Consolidated and Thatcher; and (3) estoppel based upon an oral promise and detrimental reliance. The trial court conducted an evidentiary hearing on May 7 and 8, 1987. At the hearing, the breach of lease argument was rejected by the trial court and the oral contract theory was abandoned by Thatcher's. The trial court ruled in favor of Thatcher's on the grounds of equitable estoppel and entered a decree nisi enjoining Consolidated from operating a retail, prescription pharmacy on the premises of the West Goshen Shopping Center.

Consolidated filed exceptions to the trial court's order claiming, inter alia, that the Statute of Frauds ² rendered any agreement between the parties unenforceable. In its "opinion sur exceptions," the trial court upheld its decision on the basis of equitable estoppel but also determined that the Restatement of Property § 524 ³ provided an applicable exception to the Statute of Frauds defense. The trial court denied Consolidated's exceptions and entered a final order. On appeal, the Superior Court, like the trial court, determined that the Restatement of Property § 524 provided an applicable exception to the Statute of Frauds defense.

Consolidated appealed and we granted allocatur. For the reasons that follow, we find that the Superior Court incorrectly affirmed the trial court's decision to enjoin Consolidated from operating a pharmacy.

The first question we must address is whether this Commonwealth's Statute of Frauds is applicable in the instant factual setting. By its terms, the Statute of Frauds governs "any ... interest of, in, or out of any ... lands...." 33 P.S. § 1. Consolidated argues that the oral promise created an "easement." However, this case does not involve an interest in land in the form of a negative easement. In this matter we are presented with an oral assurance by Consolidated that it did not intend to operate a pharmacy. Such an agreement not to compete does not qualify as an interest in land.

This Court indicated in Clements v. Sannuti, 356 Pa. 63, 51 A.2d 697 (1947), how a negative easement arises and operates.

[T]here can be no easement, no incorporeal right, binding the servient tenement, the effect of which would be to deprive its owner of the right of use or possession thereof. "An easement is a liberty, privilege or advantage which one may have in the lands of another without profit ... It may be merely negative ... and may be created by a covenant or agreement not to use land in a certain way...."

Id. at 65, 51 A.2d at 698 (quoting Slegel v. Lauer, 148 Pa. 236, 240, 23 A. 996, 997 (1892)). This definition is not so broad that Consolidated's promise not to operate a pharmacy falls within it. The term "negative easement" can not be construed in such an expansive way.

To the extent Consolidated's promise relates in any way to the land, the relationship is too tenuous to be treated as a basis for establishing an interest in land. At most, Consolidated made a covenant that it would not sell certain products. This is not analogous to the agreements that are conventionally referred to as negative easements. Negative easements are especially viewed as vehicles to assure the owner of the dominant estate that the owner of the servient estate will not interfere with the flow of air or light to, or the subjacent or lateral support of the dominant estate. Restatement of Property § 452 comment a. ⁴ Treating Consolidated's promise not to compete as a negative easement would go beyond what the Restatement contemplates. Since Consolidated's promise to Thatcher's does not qualify as an interest in land, neither the Statute of Frauds nor any of its exceptions applies to this case.

Consolidated also argues that Thatcher's has failed to prove all the elements of the doctrine of estoppel by clear, precise and unequivocal evidence. Thatcher's submits that it established all the requirements of estoppel and, therefore, the Superior Court was correct to apply it. ⁵

The theory upon which...