Daily Development for Thursday, January 17, 2002
By: Patrick A. Randolph,
Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu
RESTRICTIVE COVENANTS; USE RESTRICTIONS: (2 cases) (1) Deed provision prohibiting "use" of property as drug store also
prohibited use as parking lot for drug store to be constructed on adjacent,
unrestricted parcel. Eckerd Corp. v.
Corners Group, Inc.,
786 So.2d 588 (Fla.App. 5 Dist. 2000). (2) Deed provision
prohibiting "operation of a drug store" on property also prohibited
use as parking lot for adjacent pharmacy. Eckerd Corp. v. Zaremba Land Dev.,
L.L.C., 790 So.2d 591 (Fla.App. 5 Dist. 2001)
Obviously these two cases involve skirmishes in the
"drugstore wars" earlier commented upon here. In Corners Group, Eckerd accumulated a group
of parcels on which to build a new drug store facility. It had intended to acquire even more area and
built a "prototype" drug store, but was unable to complete this
acquisition. When Eckerd simply built
its "standard" model drug store facility, the instant parcel became
surplus and it sold it to others.
Perhaps keenly aware that its competition was engaged in a practice of
locating new drug store facilities as close as possible to its new facilities,
Eckerd included in the sale of the new parcel a restriction that prohibited
drug store competition on the parcel:
"No part of the property shall be used as a pharmacy or
drug store or for the sale or offer for sale of any pharmaceutical products for
a period fifty (50) years from [date of sale] and this restriction shall run
with the land."
In Rosemont, Eckerd was the tenant in a shopping
center. The developer resolved to sell
some of the property within the center.
Probably pursuant to "exclusive use" protections contained in
Eckerd's lease, the developer included the following language in the deed:
"As long as the Eckerd Drug Store (or other similar
drug store) occupies space in the Lake Conway Woods Shopping Center, the
Premises shall not be used to operate a drug prescription department, or any
store commonly known as an Army Navy store, drug store, surplus store, discount
store, or any store or business devoting more than 1,000 square feet of retail
floor space to the sale of cosmetics, health and beauty aids, and related
items."
In both cases, parties who acquired the parcels in question
resolved to use the parcels for parking facilities supporting a competing drug
store. In both cases, the trial court, pursuant to the tradition established in
Florida cases generally of construing restrictive covenants narrowly, concluded
that the restrictions in question did not prohibit the use of the parcels as
parking lots, even though related to pharmacy operations. And in both cases, the Florida Supreme Court
ultimately reversed.
Although the Florida Supreme Court acknowledged that there
was an established common law tradition in Florida that "covenants running
with the land must be strictly construed in favor of the free and unrestricted
us of real property," it concluded that the "unambiguous intent"
of the parties in this case was that parking lots supporting competing
pharmacies were within the restriction and should not be permitted.
The court noted that this was a case of first impression in
Florida. It noted a contrary case in
Pennsylvania and cases in accord with its position in Texas and Colorado. The only other cases apparently that could
be found dealt with the question of whether a restriction prohibiting
"business purposes" or requiring "residential" use
prohibited the construction of parking related to a business on adjacent
unrestricted property. These latter
cases, arguably, present distinct issues, since parking supporting a business
clearly is "business" itself, while parking supporting a pharmacy
arguably is parking, and not a pharmacy. There was a dissent in the instant
case that made this point.
Comment 1: This case is a 2-1 appellate decision. It's safe to say that the "jury's still
out" on the general issue.
Comment 2: Although the majority likely is correct that Eckerd had in mind prohibiting any use that might possibly be associated with a competing drug store, there may be some merit in requiring that parties with this objective in mind clearly so state. What if, for instance, it would have been necessary to run a sewer line below ground on the restricted parcel in order to serve a pharmacy on a nearby adjacent parcel? Was this prohibited? Even if the local utility or municipality was proposing to condemn the property for that purpose? Was Eckerd entitled to compensation in that event? What if, after the restriction is created, sewer and water lines are installed and thereafter hooked up to a competing store? For that matter, what if a public parking lot is created and later patrons of a competing store park there? Is it really sufficient to say that "we don't have those cases yet?" Wouldn't it be better to say that people who desire to restrict the alienability of land after they sell it should be very, very precise as to the nature of the restriction? Just asking.
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