Farmer's Market 'Stalls' Violated Supermarket's Restrictive Use

Facts: The lease between a shopping center owner and a supermarket tenant contained a restrictive-use covenant prohibiting the owner from leasing space to another grocery store or “food market.” The lease defined food market to include any vendor selling food items. The owner later leased space on the premises for a farmer’s market made up of “stalls” run by vendors selling various types of food. Two stalls were directly in the shopping center. Several other stalls were set up in an adjacent area that was owned by the owner but separated by a fence from the shopping center.  

The tenant asked a district court for an injunction ordering the owner to remove all of the stalls. It also asked the court for lost profits damages. The district court ruled in favor of the tenant in part and the owner in part. The tenant and owner appealed.

Decision: A Maryland appeals court upheld the district court’s decision.

Reasoning: The district court had determined that the operation of only the two stalls directly in the shopping center where the tenant operated its business violated the restrictive-use covenant. The owner’s allowance of the other stalls didn’t. The appeals court agreed. It determined that a permanent injunction was warranted with respect to the two stalls, but because the tenant failed to prove it had lost any profits as a result of the violation of the restrictive-use covenant, the owner wasn’t liable for damages.

• Redner’s Markets, Inc. v. Joppatowne G.P. Ltd. Partnership, December 2014