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A Horse of a Different Color
by Ron Davis

A major tenant of a South Carolina shopping center will simply have to accept the fact that the center's anchor tenant has undergone a big change.

The shopping center, located in Greenville, is White Horse Plaza, which has leased space to the major tenant, a Winn-Dixie supermarket, since 1987. And the change occurred when the anchor tenant, a Wal-Mart discount store, moved its retail operations elsewhere and converted the store at White Horse Plaza to a service center/warehouse.

After conversion of the Wal-Mart store, Winn-Dixie noted a drop in the number of patrons of the shopping center, and, as a result, Winn-Dixie sued the shopping center's owners, claiming that they breached the lease by allowing the conversion.

But Winn-Dixie had originally drafted that lease, and its wording doesn't include any continuous occupancy provisions as to the operation of a retail Wal-Mart store at the shopping center. And since Wal-Mart had not relinquished any of its space, but merely changed its method of operation, the shopping center's owners argued that no breach of lease had occurred.

Winn-Dixie charged, however, that it had been induced to enter into its lease by the promise of the shopping center's owners that they had leased space to Wal-Mart for 20 years as "an anchor tenant."

The case was tried in Georgia, and a Georgia court ruled that the shopping center's owners had not breached its lease agreement with Winn-Dixie. Winn-Dixie appealed.

A Georgia appellate court upheld the lower court decision, explaining, "Winn-Dixie states that it entered into the shopping center lease through representations that Wal-Mart would be a tenant for 20 years in a noncancellable lease with 81,922 square feet of rental space. The evidence shows that this was and is the case. The lease does not state that Wal-Mart must operate the premises as a retail store for the entire 20-year period, and so long as Wal-Mart occupies the space in some capacity within the provisions of the lease, the terms were satisfied. Even though Wal-Mart closed its retail store there and moved it, it remains a tenant in good standing under the lease." (Winn-Dixie Charlotte vs. Brunner Cos. Income, 538 S.E.2d 152 [Ga.App. 2000])

Decision: September 2000 Published: February 2001



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