Walgreen Co. v. Sara Creek Property Co.
| Decision Date | 30 September 1991 |
| Docket Number | No. 91-C-165.,91-C-165. |
| Citation | 775 F. Supp. 1192 |
| Parties | WALGREEN COMPANY, Plaintiff, v. SARA CREEK PROPERTY COMPANY a/k/a Sara Kreek Beta, and Phar-Mor Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
Kevin J. Lyons, Pamela H. Schaefer, Cook & Franke, S.C., Milwaukee, Wis., for plaintiff.
Richard M. Knoth, Greenberger, Krauss & Jacobs, Chicago, Ill., for defendants.
On February 15, 1991, plaintiff Walgreen Company filed a complaint against defendants Sara Creek Property Company and Phar-Mor Corporation seeking preliminary and permanent injunctive relief for breach of a lease agreement. Walgreen seeks an order enjoining Sara Creek and Phar-Mor from entering into a lease under which Phar-Mor would rent retail store space from Sara Creek at the Southgate Mall in Milwaukee, Wisconsin or from entering into any other arrangement which would permit Phar-Mor to operate at the Southgate Mall.
In 1971, Walgreen contracted to lease store space from Froedert Enterprises, Inc. at the Southgate Mall. The plaintiff maintains that, with certain narrow exceptions, its lease with Sara Creek, the successor lessor, prohibits the operation of any other store at Southgate Mall with a pharmacy or any other store which devotes the principal portion of its stock to health and beauty aids. Sara Creek argues that Walgreen has waived this restrictive provision; that the exclusivity clause violates public policy; or, in the alternative, that Walgreen is not entitled to injunctive relief because it can be compensated by money damages. The defendants filed counterclaims which they have moved to dismiss without prejudice.
As agreed by the parties, Walgreen's motion for a preliminary injunction was consolidated with a trial on the merits. The bench trial was conducted beginning on September 3, 1991 and concluding on September 12.
Having reviewed the stipulations, evidence, testimony and arguments offered by the parties, the court now recites its findings of fact and conclusions of law separately as required by Federal Rule of Civil Procedure 52. The parties' stipulated facts are incorporated into the court's findings.
The parties agree that Wisconsin substantive law governs the claims in this case.
The court finds and concludes that it has diversity jurisdiction over the subject matter of this action, pursuant to Section 1332 of Title 28 of the United States Code, in that it is undisputed that plaintiff Walgreen Company is a citizen of the state of Illinois with its principal place of business in Deerfield, Illinois; defendant Sara Creek Property Company is a citizen of the Netherlands with its principal place of business in the state of New York; defendant Phar-Mor is a citizen of the state of Pennsylvania with its principal place of business in Youngstown, Ohio; and the amount in controversy exceeds $50,000.00, exclusive of interest and costs.
1. On or about April 26, 1971, a lease was entered into between Froedert Enterprises, Inc., or its agents, and Walgreen.
2. The exclusive use provision contained in the Walgreen lease and which applies to the entire Southgate Mall states in part that:
Landlord covenants and agrees that, during the continuance of this lease, but only if drugs are sold and medical prescriptions filled on the leased premises by Tenant, by an assignee.... by or under the supervision of a qualified pharmacist, no other portion of the entire property shown on said attached Exhibit B-1 will be used for the operation of a drug store or a so-called prescription pharmacy or for any other purpose requiring a qualified pharmacist, nor for the operation of a business the principal portion of which is the sale of so-called health and beauty aids and drug sundries...... This provision shall also apply to any additional property which Landlord, directly or indirectly, may now or hereafter own or control, and which may be adjacent to said Shopping Center, or which may be added to or used in conjunction therewith. The provisions of this Article shall not be applicable to the Gimble-Schuster department store in said Shopping Center, nor to another department store with at least 180,000 square feet of floor area, and except with respect to a drug store, so-called prescription pharmacy or any other purpose requiring a qualified pharmacist shall not apply to the premises occupied by W.T. Grant Co. and The Kroger Co. under their present leases or extensions thereof, nor to an F.W. Woolworth Co. type of operation nor to a super food market. The provisions of this Article with reference to health and beauty aids shall not apply to a cosmetic shop of the Merle Norman type with not more than 2000 square feet of floor area.
3. In 1977, after negotiations with Froedert, Walgreen agreed to the operation in Southgate Mall of a Pill & Puff Store. Pill & Puff leased approximately 2,000 square feet of space in the Mall and operated a store which sold health and beauty aids. Prior to the opening of the Pill & Puff, Walgreen informed Froedert that:
With reference to the lease dated April 26, 1971, covering the above premises, we hereby agree that the provisions of Article 9 with respect to the sale of health and beauty aids shall not be applicable to Pill and Puff, Inc. so long as Pill and Puff, Inc. shall occupy the space formerly occupied by National Food Stores, as shown on the plan attached to said lease.
4. In 1978, Sara Creek purchased all rights and interest in Southgate from Froedert, continued operations of the mall and succeeded to Froedert and is bound by the terms and conditions of the lease, including all amendments to the lease, entered into between Walgreens and Froedert. Sara Creek is the present owner of the Southgate Mall and the Landlord under the terms of the lease.
5. Anticipating that a Southgate Mall anchor tenant known as The Boston Store would vacate the premises, defendant Sara Creek sought another tenant. On May 25, 1990, one prospect, defendant Phar-Mor sent Sara Creek a letter of intent which stated:
We have reviewed your plans relative to Southgate Mall and have tentatively approved the location subject to satisfactory lease terms and corporate approval.
6. Phar-Mor operates pharmacies in each of its more than 200 stores.
7. Phar-Mor intends to operate a pharmacy in any store it operates at the Southgate Mall.
8. The Phar-Mor operation does not come within any of the exceptions to the exclusivity clause contained in Walgreen's lease with Sara Creek.
9. Under Wisconsin law, a plaintiff claiming breach of contract has the burden of proving by a preponderance of the evidence that a contract exists, that the defendant's actions violate the express language of the contract, and that the defendant's breach is material and results or will result in injury. See Household Utilities, Inc. v. Andrews Company, Inc., 71 Wis.2d 17, 28, 236 N.W.2d 663, 669 (1976); St. Francis Savings and Loan Association v. Hearthside Homes, Inc., 65 Wis.2d 74, 78-79, 221 N.W.2d 840 (1974).
10. To establish an anticipatory breach of a contract, a definite and unequivocal manifestation of an intention on the part of the repudiator that it will not give the promised performance must be proved. In this case Walgreen has the burden of proving by a preponderance of the evidence that Sara Creek intentionally repudiated its obligation in advance. See Repinski v. Clintonville Federal Savings and Loan Association, 49 Wis.2d 53, 59, 181 N.W.2d 351, 354 (1970).
11. In construing the terms of a contract, a court is required to engage in a two-fold inquiry. First, it is necessary to look to the plain language of the provision at issue. If the language of the contract unambiguously provides an answer to the question at hand, the inquiry is over. If the plain language of the contract is ambiguous, then the court must go on to declare the contract's meaning. If the court finds that a contract is ambiguous and that extrinsic evidence is undisputed, then the interpretation of the contract remains a question of law for the court to decide. However, if the parties dispute the extrinsic evidence on an ambiguous contract, then a fact finder must determine the intent of the parties. See Lumpkin v. Envirodyne Industries, Inc., 933 F.2d 449, 457 (7th Cir. 1991), petition for cert. filed, No. 91-276 (U.S. August 15, 1991).
12. The question of whether a contract is ambiguous is a question of law. See Toys "R" Us, Inc. v. NBD Trust Company of Illinois, 904 F.2d 1172, 1176 (7th Cir. 1990); Lamb v. Manning, 145 Wis.2d 619, 627, 427 N.W.2d 437, 441 (1988). Words or phrases in a contract are ambiguous when they are susceptible of more than one meaning. See Wilke v. First Federal Savings & Loan Association, 108 Wis.2d 650, 654, 323 N.W.2d 179, 181 (1982).
13. The phrase "the principal portion," as used in clause nine of the contract at issue, is not defined in the contract and is not plain on its face. Therefore, the phrase "the principal portion" is ambiguous in that the court must resort to extrinsic evidence to define the words.
14. The parties presented no persuasive extrinsic evidence establishing the intent of the contracting parties in using the phrase "the principal portion."
15. Resorting to the Random House Dictionary of the English Language (2d ed. 1987), the court concludes that "principal" is synonymous with "main" which means "chief in size or extent." The word "portion" refers to size or space. The phrase is introduced by the article "the" which indicates "one." Thus, as used in this contract, the phrase "the principal portion" means fifty percent or more in space or number. In other words, clause nine of the lease prohibits Sara Creek, the lessor, from leasing space to any other operation which devotes fifty percent or more of its shelf space or sales to health and beauty aids and drug...
To continue reading
Request your trial
- Munoz v. Expedited Freight Systems, Inc.
-
Walgreen Co. v. Sara Creek Property Co., B.V.
...This appeal from the grant of a permanent injunction raises fundamental issues concerning the propriety of injunctive relief 775 F.Supp. 1192 (E.D.Wis.1991). The essential facts are simple. Walgreen has operated a pharmacy in the Southgate Mall in Milwaukee since its opening in 1951. Its cu......
-
Dominion Video v. Echostar Satellite Corp., No. 03-1274.
...difficulty of calculating damages, and unique nature of interest in real estate constituted irreparable harm); Walgreen Co. v. Sara Creek Prop. Co., 775 F.Supp. 1192, 1197 (1991) (where exclusivity clause in lease was breached, loss of goodwill, erosion of customer base, and diminution of c......
-
Electrology Lab., Inc. v. Kunze
...product, and existence of intangible harms such as loss of goodwill or competitive market position); Walgreen Co. v. Sara Creek Prop. Co. , 775 F.Supp. 1192, 1197 (E.D.Wis.1991) (irreparable harm may be found where plaintiff could not be compensated in money damages for its loss of goodwill......