Definition of Similar Stretches Only So Far
by Ron Davis
Is there a similarity between a grocery store and a hardware store?
Yes, there is, argue the owners of Ozark Corners Shopping Center in Ozark, MO. So similar, in fact, the owners add, that one could replace the other as a tenant at their shopping center without disturbing the composition of the tenant mix.
But that argument didn’t persuade the Missouri courts in a lawsuit resulting from a tenant’s displeasure over the grocery store/hardware store distinction. That tenant, who operates a ladies’ apparel store at Ozark Corners, objected to the fact that a hardware store actually replaced a grocery store as an anchor at the center.
The tenant had leased space at Ozark Corners with a written understanding that if an anchor store at the shopping center closed, it would be replaced by a “similar type and size business.” Otherwise, the tenant could reduce his monthly rental payments by half.
The two anchors at the center at the time of lease signing were a Wal-Mart store and a Consumer Foods grocery store. And when Consumer Foods closed its facility, the apparel store tenant began paying half the previous amount of rent owed. And he continued doing so even after the center’s owners leased the Consumer Foods space to a hardware-store operator.
The shopping center’s owners sued the tenant, insisting that the hardware store was similar to the grocery store. They pointed out that both are retail establishments; they both carry product lines that include flowers, plants, cleaning agents and hardware; and they both occupy the same space at the shopping center. Moreover, they added, they both advertise and bring customers to the shopping center and are similar in type because they are large retail sellers of consumer goods.
In ruling in favor of the tenant, a Missouri appellate court explained, “It is apparent from the record that the hardware store does not qualify as a ‘similar type’ business to the grocery store. One caters primarily to males and the other to females…. The shopping center’s own witnesses state that the hardware store isn’t really a supermarket but is a home-improvement store, and the parties intended that the major anchor tenants would be Wal-Mart and Consumer Foods.” (Rathbun v. Cato Corp., 93 S.W.3d 771 [Mo.App. S.D., 2003])
Decision: February 2003
Published: April 2003