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Nice Try but No Go
by Ron Davis
Pharmacy chain Eckerd Corp. has prevented a Florida shopping center developer from leasing space to rival Walgreen Co. at a site that Eckerd previously owned.
The site of the proposed Walgreen store is located in Orlando, and Eckerd had originally planned to build a prototype pharmacy there. But Eckerd was unable to do so because of its inability to acquire additional property needed for parking. So Eckerd decided to sell the site and buy a larger property directly across the highway.
Before selling the site of the first proposed store, however, Eckerd shrewdly recorded with the county a restrictive covenant stating that “no part of the property shall be used as a pharmacy or drug store....” Eckerd then bought the larger property and built the prototype pharmacy originally planned.
Eventually, the shopping center developer bought the site that Eckerd was offering for sale and soon began soliciting for tenants as a prelude to construction. Walgreen expressed an interest, and the developer, while aware of the restrictive covenant on the property previously owned by Eckerd, hit on a plan to avoid a violation of that property’s use.
That plan called for construction of the Walgreen store on shopping center land, but using the former Eckerd property as Walgreen’s parking lot.
When Eckerd learned of that plan, however, company officials immediately protested. In response, the developer pointed out that the restrictive covenant covered only a pharmacy or drug store, not a parking lot. Eckerd then asked the courts to prohibit the developer from proceeding with his plan to lease to Walgreen.
A Florida appellate court ruled in favor of Eckerd, explaining, “The courts have previously ruled that land used for the parking area is an integral part of a shopping center and just as important to its development as the land upon which the buildings are erected.... Here, the manifest purpose of the restriction was to prohibit the restricted parcel from being used as any necessary part of a competing pharmacy. The proposed pharmacy cannot be built without the use of the restricted area, thus making the restricted parcel an integral part of the proposed pharmacy. We cannot separate the whole from the sum of its parts.” (Eckerd Corp. v. Corners Group, Inc., 786 So.2d 588 [Fla.App. 5 Dist. 2001])
Decision: July 2001
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