Winn-Dixie Stores, Inc. v. Dolgencorp, Inc.

• Decision Date: 19 September 2007
• Docket Number: No. 4D06-1585.,4D06-1585.
• Citation: 964 So.2d 261
• Parties: WINN-DIXIE STORES, INC., a Florida corporation, Appellant, v. DOLGENCORP, INC., a Kentucky corporation, and Crest Haven, L.L.C., a foreign limited liability company, Appellees.
• Court: Florida District Court of Appeals

964 So.2d 261

WINN-DIXIE STORES, INC., a Florida corporation, Appellant, v. DOLGENCORP, INC., a Kentucky corporation, and Crest Haven, L.L.C., a foreign limited liability company, Appellees.

No. 4D06-1585.

District Court of Appeal of Florida, Fourth District.

September 19, 2007.

Thomas E. Warner, Dean A. Morande, and Jason Alderman of Carlton Fields, P.A., West Palm Beach, for appellant.

Tod Aronovitz and Christopher Marlowe of Aronovitz Trial Lawyers, Miami, and William N. Withrow, Jr. and Andrea D. Seeney of Troutman Sanders, LLP, Atlanta, Georgia, for appellee Dolgencorp, Inc., a Kentucky corporation.

Monterey Campbell, Mark N. Miller, and Kristie Hatcher-Bolin of GrayRobinson, P.A., Lakeland, for amicus curiae Publix Super Markets, Inc., and The Food Marketing Institute.

Douglas C. Spears, Todd K. Norman, and Donald T. Regan, III of Stump, Callahan, Dietrich & Spears, P.A., Orlando, for amicus curiae Family Dollar Stores of Florida, Inc.

ON MOTION FOR REHEARING

GROSS, J.

We grant Winn-Dixie Stores, Inc.'s motion for rehearing, withdraw our previous opinion, and substitute the following.

In the circuit court, Winn-Dixie Stores, Inc. brought suit to enjoin Dolgencorp, Inc., another tenant in a shopping plaza, from selling groceries. Winn-Dixie based its suit upon a covenant in its recorded lease with the landlord giving it the exclusive right to sell groceries in the plaza. The circuit court granted summary final judgment in favor of Dolgencorp. We reverse, holding that if we view the evidence in the light most favorable to Winn-Dixie, the covenant in its lease was one running with the land that was enforceable against Dolgencorp.

We state the facts in the light most favorable to Winn-Dixie, the non-moving party in the summary judgment below. See Byrd v. BT Foods, Inc., 948 So.2d 921, 923 (Fla. 4th DCA 2007).

Winn-Dixie operates a grocery store at the Crest Haven Shopping Plaza, where it is the anchor tenant. An anchor tenant in a shopping center is one that provides a benefit to the center and its tenants by attracting customers.

In March, 1996, the landlord and Winn-Dixie entered into a lease which granted Winn-Dixie the exclusive right to sell groceries at Crest Haven, with the exception that other stores could sell groceries, provided that they devoted no more than 500 square feet to such items. Paragraph 33 of the lease provided that all the provisions in the lease, including Winn-Dixie's grocery exclusive, were "deemed" to be covenants that ran with the land:

This lease and all of the covenants and provisions thereof shall inure to the benefit of and be binding upon the heirs, legal representatives, successors and assigns of the parties hereto. Each provision hereof shall be deemed both a covenant and a condition and shall run with the land.

A short form of the lease, containing a legal description of the shopping plaza and the grocery exclusive, was recorded on April 23, 1996 in the public records of Palm Beach County, Florida. The recorded short form lease appears in the chain of title for the Crest Haven Shopping Plaza.

Shopping plaza exclusives similar to Winn-Dixie's are customary and standard throughout the industry, especially with regard to anchor tenants. Sophisticated tenants such as Winn-Dixie and Dolgencorp encounter exclusives in almost every shopping center in which they do business. Dolgencorp knew that Winn-Dixie stores typically operated under grocery store exclusives.

In 1998, Dolgencorp became a tenant at Crest Haven and began operating a Dollar General Store. Dolgencorp operates 7,800 Dollar General Stores in 32 states. Dolgencorp's lease contained a provision granting it the exclusive right to operate a Dollar General type of store at the shopping plaza.

Winn-Dixie learned that Dolgencorp was violating its grocery exclusive by devoting more than 500 square feet of sales area to grocery items. Winn-Dixie demanded that the landlord enforce the grocery exclusivity provision, but the landlord failed to do so. Winn-Dixie filed a complaint against the landlord and Dolgencorp seeking injunctive relief, specific performance, damages for breach of contract, and unjust enrichment.¹

Dolgencorp moved for summary judgment, arguing that section 542.335, Florida Statutes (1998) rendered the grocery exclusive unenforceable against it because Dolgencorp was not a signatory to Winn-Dixie's lease. The trial court granted the motion, holding that Winn-Dixie's grocery exclusive was not a real property covenant that ran with the land, that Dolgencorp did not have constructive notice of the grocery exclusive under Florida law, and that section 542.335 rendered the grocery exclusive unenforceable.

Concerning appellate review of a summary judgment, we have held that

[a]n order granting summary judgment is reviewed de novo. Summary judgment is proper only when there are no genuine issues of material fact conclusively shown from the record and the movant is entitled to judgment as a matter of law. All doubts and inferences must be resolved against the moving party, and if there is the slightest doubt or conflict in the evidence, then summary judgment is not available. An issue of fact is `material' if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case.

Byrd, 948 So.2d at 923 (internal citations omitted).

The Grocery Exclusive in the Lease was a Real Property Covenant that Ran With the Land

Winn Dixie's grocery exclusive was a real property covenant that ran with the land and not a personal contract obligation. The distinction between the two is well established in Florida law.

We explained the difference between a covenant running with the land and a personal covenant in Alternative Networking, Inc. v. Solid Waste Authority of Palm Beach County, 758 So.2d 1209, 1211 (Fla. 4th DCA 2000):

"A personal covenant creates a personal obligation or right enforceable at law only between the original covenanting parties whereas a real covenant creates a servitude upon reality for the benefit of another parcel of land. A real covenant binds the heirs and assigns of the original covenantor, while a personal covenant does not." A covenant running with the land differs from a merely personal covenant in that the former concerns the property conveyed and the occupation and enjoyment thereof, whereas the latter covenant is collateral or is not immediately concerned with the property granted. If the performance of the covenant must touch and involve the land or some right or easement annexed and appurtenant thereto, and tends necessarily to enhance the value of the property or renders it more convenient and beneficial to the owner, it is a covenant running with the land.

(quoting Palm Beach Cty. v. Cove Club Investors, Ltd., 734 So.2d 379, 382 n. 4 (Fla.1999) (quoting 19 FLA. JUR.2D DEEDS § 174 (1998), and Maule Indus., Inc. v. Sheffield Steel Prods., Inc., 105 So.2d 798, 801 (Fla. 3d DCA 1958))).

Florida courts have long enforced use restrictions in commercial leases as covenants running with the land.

In Dunn v. Barton, 16 Fla. 765 (1878), John Dunn, the assignee of a tenant in a commercial lease, assigned the lease to Mary Barton, who agreed not to permit the leased premises to be used as a "public bar-room." Dunn owned a bar in an adjoining building and he sought to limit competition. Barton sublet to Annie Hazelton, who began to operate a bar. Dunn sued Barton and Hazelton to enforce his agreement with Barton. Id. at 770.

The supreme court characterized the Dunn/Barton use restriction as covenant which ran with the land, because it affected "the mode of enjoyment of the premises." Id. at 771. The court also held that the covenant was enforceable against Hazelton, who, as a sublessee, was "subject to the covenants running with the land in the hands of her lessor," Barton. Id. at 772. The supreme court applied the rule that a lease "restriction upon the manner of using the premises runs with the land and is binding upon the estate in the hands of sub-tenants . . . [who] take only the title of the lessee, and with the title, limitations and restrictions." Id. at 772 (quoting Wheeler v. Earle, 59 Mass. 31 (1849)).

More recently, in Park Avenue BBQ & Grille of Wellington, Inc. v. Coaches Corner, Inc., 746 So.2d 480 (Fla. 4th DCA 1999), this court enforced a use restriction in one tenant's commercial lease against another tenant of a shopping center. There, the landlord granted a lease exclusive to a sports bar to be the only TV sports bar in the shopping center. Id. at 481. The lease exclusive was recorded in the public records when the landlord conveyed the shopping center to a new owner. Id. at 482. Later the shopping center leased space to a barbeque restaurant that began showing televised sporting events. The sports bar obtained an injunction against the shopping center and the restaurant enforcing its lease exclusive. Id. On appeal, the restaurant argued that it was not bound by the sports bar exclusive because it was not in direct contractual privity with the sports bar. This court affirmed the injunction, rejecting the argument that privity was a requirement to enforce a covenant running with the land, in light of the restaurant's actual knowledge of the restrictive covenant. Id. 482.

From the Florida cases, we extract the following rule: to establish a valid and enforceable covenant running with the land arising from a landlord-tenant relationship, a plaintiff must show (1) the existence of a covenant that touches and involves the land, (2) an intention that the covenant run with the land, and (3) notice of the restriction on the part of the party against whom enforcement is sought. See Maule Indus., 105 So.2d at 801; Park Avenue BBQ, 746 So.2d at 481-82; Alternative Networking, 758 So.2d at 1211; see also RALPH E. BOYER, SURVEY OF THE LAW OF PROPERTY 530 (3d ed.1981).

The grocery exclusive in this case was a covenant...