Delaware Business Litigation Report

Court Enforces Lease Provision Protecting Supermarket from Competition from Other Shopping Center Tenants

Penn Mart Supermarkets, Inc. v. New Castle Shopping LLC, C.A. No. 20405-NC, 2005 WL 3502054 (Del. Ch. Dec. 15, 2005). Liquor store chain acquired leasehold rights in commercial shopping center under a Bankruptcy Court order that authorized it to operate one of its typical stores. In addition to alcohol products, those chain stores also sold food products and a wide range of products typically sold in supermarkets. Tenant who operated supermarket in same shopping center sued landlord and liquor store to enforce provision in its lease protecting it from competition by other tenants in the operation of a supermarket and in the sale of food or food products intended for off-premises consumption. In a post-trial opinion, the court found that the scope of the protective covenant covered some but not all of the products that the liquor store was selling. The court also found that the liquor store, which had no actual knowledge of the covenant, was charged with constructive notice because the underlying lease was properly and publicly recorded and that the covenant was not eviscerated by the bankruptcy order. Accordingly, the court granted the supermarket limited injunctive relief prohibiting the liquor store's sale of certain items. Because the supermarket failed to prove any quantifiable damages, however, the court refused to award monetary damages but did award nominal damages of $1. Share