Winn-Dixie Stores, Inc. v. Big Lots Stores, Inc.
| Decision Date | 10 August 2012 |
| Docket Number | Case No. 9:11-80641-DMM,Case No. 9:11-cv-80601-DMM,Case No. 9:11-80638-DMM |
| Parties | WINN-DIXIE STORES, INC., et al., Plaintiffs, v. BIG LOTS STORES, INC., et al., Defendants/Third-Party Plaintiffs, v. NORTHEAST VENTURE PLAZA I, LLC, et al., Third-Party Defendants. |
| Court | U.S. District Court — Southern District of Florida |
THIS CAUSE comes before the Court for final disposition after a bench trial that was held on May 14, 15, 16, 17, 18, and 22 regarding Plaintiffs' claims for injunctive relief and damages against all Defendants based on Defendants' alleged violations of Plaintiffs' real property covenants running with the land at certain of Plaintiffs' store locations. Subsequent to trial, the parties submitted proposed findings of fact, conclusions of law, and other memoranda and oral argument was presented on August 6, 2012.
Plaintiffs Winn-Dixie Stores, Inc., Winn-Dixie Stores Leasing, LLC, Winn-Dixie Raleigh, Inc., Winn-Dixie Raleigh Leasing, LLC, Winn-Dixie Montgomery, LLC, and Winn-Dixie Montgomery Leasing, LLC ("Plaintiffs" or "Winn-Dixie") own or operate Winn-Dixie grocery stores on leased property located in Florida, Alabama, Mississippi, and Louisiana.Plaintiffs filed lawsuits against Defendants Dolgencorp, LLC ("Dollar General"), Dollar Tree Stores, Inc. ("Dollar Tree"), and Big Lots Stores, Inc. ("Big Lots") on May 20, 2011 and June 1, 2011, respectively. (DE 1, Case No. 9:11-cv-80601; DE 1, Case No. 9:11-cv-80638; DE 1, Case No. 9-11-cv-80641). While the facts and circumstances in each action are specific to the parties and the commercial properties identified therein, Plaintiffs' claims against these Defendants are essentially identical. In each case, Plaintiffs claim that Dollar General, Dollar Tree, or Big Lots stores co-located in a shopping center with a Winn-Dixie store has "violated" Winn-Dixie's "grocery exclusive"—a clause in Winn-Dixie's commercial lease whereby the shopping center landlord has granted Winn-Dixie the exclusive right to operate as a grocery store in that particular location, subject to certain items, which I will refer to in this Order as "Restricted Products". Plaintiffs contend that they have negotiated grocery exclusives with their landlords in each of the shopping centers at issue, which they now seek to enforce directly against Defendants. In each case, Plaintiffs seek damages arising out of the alleged breaches of their grocery exclusives and injunctive relief as an alternative to future damages.
Plaintiffs initially identified 69 Dollar General, 48 Dollar Tree, and 19 Big Lots stores that allegedly violated the restrictive covenant by selling Restricted Products in excess of what is permitted under the terms of Winn-Dixie's grocery exclusive. Of these original claims asserted, at trial Plaintiffs pursued its rights as to only 51 Dollar General, 32 Dollar Tree, and 14 Big Lots stores. Therefore this Court must determine whether the 97 Defendant stores at issue in this matter are violating Plaintiffs' restrictive covenants and if so what, if any, relief Plaintiffs are entitled to.
Pursuant to Fed. R. Civ. P. 52(a), the Court makes the following findings of fact andconclusions of law.
Of the 97 Defendant stores still at issue in this case, the operative grocery exclusive language of 91 of these leases1 provides:
Landlord further covenants and agrees not to permit or suffer any property located within the shopping center to be used for or occupied by any business dealing in or which shall keep in stock or sell for off-premises consumption any staple or fancy groceries, meats, fish, vegetables, fruits, bakery goods, dairy products or frozen foods without written permission of the Tenant.
Despite this restriction, most of Winn-Dixie's leases allow other properties within the shopping center to sell certain Restricted Products. Of the 91 typical grocery exclusives at issue in this case, 41 Dollar General stores2 , 27 Dollar Tree stores, and 10 Big Lots stores are co-located with a Winn-Dixie lease containing the following exception:
[E]xcept the sale of such items in not to exceed the lesser of 500 square feet of sales area or 10% of the square foot area of any storeroom within the shopping center, as [an] incidental only to the conduct of another business . . . shall not be deemed a violation hereof.
Of the remaining thirteen stores, five (5) allow other tenants to sell up to 1,000 square feet of sales area of such items, three (3) allow other tenants to sell up to 400 square feet of such items, and five (5) do not allow the sale of any such items. Since the vast majority of the leasesat issue here involve the same or substantially similar restrictive covenant language, my conclusions presume this standard language is included unless provided otherwise.
The parties do not dispute that Defendants are not parties to these leases containing Plaintiffs' restrictive covenants. Accordingly, in order to be enforceable against Defendants, Winn-Dixie's grocery exclusives must be real property covenants running with the land. The requirements vary by state and therefore should be considered separately.
Most of the Defendant stores at issue in this case are located in Florida.3 I previously considered whether Winn-Dixie's grocery exclusives are real property covenants running with the land under Florida law in my orders concerning the parties' summary judgment motions in the respective cases. (DE169, Case No. 9:11-cv-80601; DE 281, Case No. 9:11-cv-80638; DE 194, Case No. 9:11-cv-80641). Under Florida law, the elements of a valid and enforceable covenant running with the land are: (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. Winn-Dixie Stores, Inc. v. Dolgencorp, 964 So. 2d 261, 265 (Fla. 4th DCA 2007); Maule Indus., Inc. v. Sheffield Steel Prod., Inc., 105 So. 2d 798, 801 (Fla. 3d DCA 1958). I previously found that Plaintiffs' restrictive covenants in its Florida leases met the first criteria of touching and involving the land since "each exclusive is intended to limit or prohibit the sale of certain items, namely groceries or food, by other tenantsin the shopping center." (DE 169 at 7, Case No. 9:11-cv-80601; DE 281 at 7, Case No. 9:11-cv-80638; DE 194 at 7, Case No. 9:11-cv-80641). I also found that the second requirement was met as each of Winn-Dixie's leases at issue here4 contain a clause stating:
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.
(DE 169 at 8, Case No. 9:11-cv-80601; DE 281 at 8, Case No. 9:11-cv-80638; DE 194 at 8, Case No. 9:11-cv-80641). Finally, I found that Defendants had actual, constructive, or implied actual notice of the grocery exclusives at each of the locations at issue in this case except as noted otherwise herein. (DE 169 at 9-11, Case No 9:11-cv-80601; DE 281 at 8-9, Case No. 9:11-cv-80638; DE 194 at 9-11, Case No. 9:11-cv-80641). See Winn-Dixie, 964 So. 2d at 265 (). In Winn-Dixie, the court found that Dolgencorp had at least implied actual notice of Winn-Dixie's grocery exclusive, stating:
Dolgencorp was an experienced commercial tenant with 7,800 stores in 32 states, most of which are located in shopping plazas; it often sought exclusives in its own leases . . . . Dolgencorp understood that Winn-Dixie was the anchor tenant at Crest Haven. Dolgencorp was aware that anchor tenants like Winn-Dixie typically secure restrictive covenants in shopping center leases. Under these circumstances, Dolgencorp had the obligation to make further inquiry of the landlord or Winn-Dixie or to examine the shopping center's chain of title to see if Winn-Dixie had recorded its grocery exclusive.
Winn-Dixie, 964 So. 2d at 266. Although I previously found that Defendants had actual or constructive notice at most of the locations at issue here, by virtue of their experience, I find thatDefendants had at least implied actual notice at all of the Florida locations at issue here except as noted otherwise.5
Seven (7) Dollar General stores and six (6) Dollar Tree stores at issue here are located in Alabama and two (2) Dollar Tree stores at issue here are located in Georgia. Under Alabama law a covenant "runs with the land" if: (1) it was intended by the parties creating it to run with the land; and (2) it touches and concerns the land. See Miller v. Associated Gulf Land Corp., 941 So. 2d 982, 985 (Ala. Civ. App. 2005) (citations omitted). Under Georgia law, a covenant is binding on future successors if the covenant concerns the land or its use and the subsequent grantee has notice of it. Hayes v. Lakeside Village Owners Ass'n. Inc., 640 S.E.2d 373, 376 (Ga. Ct. App. 2006). With regard to the notice requirement, "[t]he presence of the recordation of such restrictive covenants would provide constructive notice of the existence of such covenants." See Roth v. Connor, 510 S.E. 2d 550, 556 (1998) (citation omitted). Recording a restrictive covenant in Alabama is also a valid form of constructive notice. See Willow Lake Residential Ass'n, Inc. v. Juliano, 80 So. 3d 226, 237 (Ala. Civ. App. 2010) (). For the reasons stated above and in my previous Orders (DE 169, Case No. 9:11-cv-80601; DE 281, ...
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