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Wal-Mart Wins on Technicality

by Ron Davis

Wal-Mart Stores, Inc., has won an okay from the North Carolina courts to build a Supercenter in Albemarle despite a competitor’s stiff opposition.

The competitor is Ingles Markets, Inc., a supermarket chain that claims Wal-Mart’s plans to build the Supercenter violate the terms of an agreement on a portion of shopping center property that Wal-Mart owns in Albemarle. Ingles operates a supermarket on a separate portion of that same shopping center.

Wal-Mart’s plans, however, call for the Supercenter construction on land a couple of miles from the shopping center. So Wal-Mart officials contend that there is no violation of the shopping center lease.

In response, Ingles argues that the Wal-Mart deed for the shopping center property includes a noncompete agreement that prohibits the sale of groceries within five miles of the Ingles store. The new Supercenter would in fact offer groceries.

Wal-Mart’s deed for the shopping center tract actually does include a restriction requiring the property owner to comply with the noncompete agreement. So even though Wal-Mart did not sign the deed, Ingles sued to stop the Supercenter construction.

Wal-Mart subsequently answered the lawsuit by noting that the noncompete agreement is between Ingles and its landlord only. Wal-Mart added that it has never been Ingles’ landlord and is therefore not subject to the restrictions of the Ingles-shopping center lease.

A North Carolina appellate court, in ruling in favor of Wal-Mart, explained, “The language of the restrictions in the Wal-Mart deed does not indicate that Wal-Mart agreed to a five-mile radius restriction…. Nor would such a restriction fall within the original purpose of the radius restriction, which was to establish the landlord’s obligation not to allow grocery store competition…. The restriction thus did not impose upon Wal-Mart the five-mile radius restriction to which the shopping center agreed in the negotiated commercial lease with Ingles.” (Wal-Mart Stores, Inc. v. Ingles Markets, 581 S.E.2d 111 [N.C.App. 2003])

Decision: July 2003
Published: August 2003



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