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Perpetual Motion
by Ron Davis

An attempt by a New Hampshire shopping center tenant to block competition at the facility has failed – at least for now.

The shopping center, located in Manchester, originally leased space to the tenant for the operation of a supermarket, and the block attempt has been aimed at preventing another supermarket from operating there, if not now then after 2019.

That date–2019–is when a lease with a former tenant, F.W. Woolworth Company, will expire. When Woolworth ceased operations at the shopping center, the company subleased its space to Stop & Shop Supermarket Co. That was possible because the Woolworth lease apparently superseded those of other tenants at the center.

The existing supermarket tenant nevertheless objected to Stop & Shop’s right to operate a supermarket at the shopping center. But the courts ruled that Stop & Shop could continue operations there.

Explained the judge, “The Woolworth lease is superior in title to the [supermarket tenant’s] lease and, at least until termination of the Woolworth lease in January 2019, the covenant restricting the landlord from renting to any other supermarket is unenforceable against Woolworth, its successors and assigns.”

The existing supermarket tenant then sued, arguing that Stop & Shop must cease operations at the shopping center when the Woolworth lease expires in January 2019. In response, the shopping center owners claim that the exemption for Woolworth is “perpetual.”

A Massachusetts court, assuming jurisdiction of the lawsuit, rejected the shopping center owners’ arguments, but left the matter for further court findings. The judges pointed out, “A court would still have to assess whether [future] conditions have sufficiently changed so as to defeat the purpose of any claimed restriction. Because the issue was not developed, we leave for determination in future proceedings whether the use restriction prohibits a supermarket use beyond 2019.” (Manchester Vickerry Realty Co. v. 777 South Willow Street Plaza Limited Partnership, 849 N.E. 256 [Mass.App.Ct.])

Decision: June 2006
Published: July 2006



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