2010 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-30-2010 

# Int e rs t at e Re alty C o v

. S e ars Ro ebuck & C o P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 09-2552

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2010

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2010 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " Int e r s t at e Re alty C o v

. S e ar s Roebuck & C o " (2010). 2010 D e cisio n s . P ape r 1608. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2010/16081 NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N os . 09- 2552 & 09- 2702

____________ IN T E R S T A T E R E A L T Y C O ., L .L .C ., A ppel l anti n N o. 09- 2552 vs. S E AR S RO E BU CK & COMP ANY, A ppel l anti n N o. 09- 2702

____________ APP EAL S F ROM THE UNI TE D ST ATE S DI S TRI CT C OURT

FOR TH E DI STRI CT O F NEW J ERSEY ( D . C . C i v. N o. 2- 06- cv- 05997 ) D i stri ctJudg e: H on orabl e D i ckinson R . D ebev ois e

____________ Subm i t t ed U nderT hi r d C i r cui tL . A . R . 34. 1( a)

February22, 2010 B efore: S C IR IC A , C hief J ud ge, C H A G A R E S and W E IS, C i rcui tJudg es. ( Fi l ed: M ar ch 30, 2010)

____________ OP I NI ON W E I S, C i r cui tJ udge.

I n t hi s cas e, t he part i es di s put e the i nt erpr et at i on of an e xcl us i vi t ypr ovi s i on i n a l eas e gr ant ed t o Sear s R oebuck & C o. byI nt er s t at e R eal t yC om pany , the ow ner s of2

the C edarK nol l s Pl aza s hoppi ng m al l . I nt er s t at e cl ai m s thati tw as unabl e t o l eas e s pace in th e m a ll to a p ro s p e c tiv e te n a n t a s a re s u lt o f th a t d is a g re e m e n t. I nt er s t at e fi l ed a c om pl ai nts eeki ng damages fr om Sear s , al l egi ng t or t i ous i nt er fer ence w i th pr os pect i ve ec onom i c adva nt age a nd contr actual r i ght s , as w el l as br eac h of contr act . I n addi t i on, I nt er s t at e as ked fora dec l ar at oryj udgm ent . R ul i ng on S e a rs’ m o tio n f

o r su m m a ryju d g m e n t, th e D istric t C o u rt g ra n ted d e c lar a to ryre lief to I nt er s t at e butdi s m i s s ed i t s ot hercl ai m s w i t h pr ej udi ce. A ft erthor ough cons i der at i on of b o th p a rt ie s ’ a p p e a ls , w e w ill a f f ir m th e D is tr ic t C o u rt ’s o rd e r i n its e n tir e ty. T he l eas e, w hi ch the part i es exec ut ed i n 1996, s t at ed thatthe “[ p] r emi s es m aybe us ed by[Sear s ] fort he s al e, s ervi ci ng and s t or i ng of m er chandi s e, [and] al l other item s o r se rv ice s n o rm a llyso ld in S e a rs H a rd w a re S to re s.” In ter sta te a lso a c c e d e d to Sear s ’ r eques tfora r es t r i ct i ve cove nant , ent i t l ed “Excl us i ve U s e. ” Thi s l i m i t at i on p ro v id e d th a t, w ith c e rta in e x c e p tio n s, In ter sta te w o u ld n o t lea se to a ten a n t th a t w o u ld u se th e p re m ise s “ f

o r th e sa le o f

c e rta in item s o r se rv ice s w h ich w o u ld n o rm a llyb e so ld in a ‘S ea rs H ard w are S tore[ ]’ . . . inclu d ing , w ith o u t l im it ati o n , the s ale o f h ard w are m at er i al s , t ool s and s uppl i es , pai nt , pl ant s , and pow erand non- pow erl aw n and gar den equi pm ent , t ool s and s uppl i es . ”

I n 2004, as par tof a na t i onal pr ogr am, Sear s ’ C edarK nol l s l ocat i on w as convert ed i nt o a “Sea r s A ppl i ance and H ar dw ar e” s t or e. B yFebruary2006, the s t or e w as s el l i ng w as her s , dr y er s , r efr i ger at or s , di s hw as her s , and otherhous ehol d appl i ance s andT h a t th is re lie f w a s e n te re d s u a s p o n te d o e s n o t a lte r o u r c o n c lu s io n . 1 B oth part i es had a m ple oppo rtun i t yt o argue the b readth an d scop e of the E xclusi ve U se pr ovi s i on, t he i nt erpr et at i on of w hi ch w as centr al t o t he dec l ar at oryj udgm entrul i ng. See B rues ew i t z v. W y eth I nc. , 561 F. 3d 233, 241 n. 6 ( 3d C i r . 2009) ( fac tthatcour tgr ant ed s um m aryj udgm ents ua s pont e di d notr equi r e r emand w her e part i es “w er e on not i ce that the D i s tr i ctC our tm ayhave be en cons i der i ng [gr ounds fors um m aryj udgm entnot req u ested b yp arti es] a t th at t im e a n d . . . h ad an o p p o rtu n ityto resp o n d o n this i ssu e” ). 3 f ix tu re s . A fter n eg o ti ati n g w ith Interstate fo r som e m o n ths, pro sp ec ti v e ten an t K arl’s S ales a n d S erv ice C o m p an y , L L C , ask ed Interstate t o fu rnish a lett er f rom S ea rs acknow l edgi ng t hatK ar l ’ s coul d s el l w as her s , dr y er s , r efr i ger at or s , and s i m i l ari t ems at C edarK nol l s not w i t hs t andi ng t he exc l us i vi t ypr ovi s i on. I nt er s t at e not i fi ed Sear s of the p e n d in g n e g o tiatio n s b ylette r d a ted F e b ru a ry1 , 2 0 0 6 , an d re q u e ste d S e a rs’ c o n se n t to K arl’s sales o f a p p li an ce s. S ea rs de cli n ed , an d , af ter ad d it ion al ne g o ti ati o n s w ere un successful , K arl ’s acqu i red space i n an otherl ocati on . T hroug ho ut this process, In te rs ta te c o n tr o lle d th e f lo w o f in f o rm a tio n b e tw e e n S e a rs a n d K a rl ’s . I n gr ant i ng t he dec l ar at oryj udgm entr eques t ed byI nt er s t at e, the D i s t r i ct C our thel d t hat , undert he t erm s of the l eas e, Sear s coul d change the name of the s t or e and th e m e rc h a n d ise so ld . H o w e v e r, n o rig h t ex iste d to e x p a n d th e sc o p e o f th e e x c lu siv ity cl aus e. W e agr ee thatt he pl ai n m eani ng of the Excl us i ve U s e cl aus e l i m i t s i t s appl i cat i on t o i t ems typi cal l ys ol d i n “Sear s H ar dw ar e St or es . ” B eca us e Sear s has fai l ed t o “pr ovi de[ ] a r eas onabl e al t ernat i ve r eadi ng of the contr actunderw hi ch [I nt er s t at e] w oul d notbe e n tit led to ” d e c lar a to ryju d g m e n t o n th is p o in t, su c h re lief w a s p ro p e rlyg ra n ted . A rn o ld 14

M . D i amond, I nc. v. G ul f C oas tT r ai l i ng C o. , 180 F. 3d 518, 521- 22 ( 3d C i r . 1999) ( s et t i ng for t h s t andar d of r evi ew i n cas es i nvol vi ng s um m aryj udgm enton i s s ue of c o n tr a c t in te rp re ta tio n ).

W ith resp ec t t o the to rt iou s interfe ren ce claim s, the D istri ct C o u rt concl uded that , beca us e Sear s had notact ed w i t h m al i ce, I nt er s t at e fa i l ed t o demonstr at e a genui ne i s s ue of mat er i al fac t . W e agr ee. See Lam or t e B urns & C o. , I nc. v. W al t er s , 770 A .2 d 1 1 5 8 , 1 1 7 0 (N .J. 2 0 0 1 ) (to su c c e e d o n c laim o f to rtio u s in ter f

e re n c e w ith pr os pect i ve ec onom i c adva nt age, pl ai nt i ff musts how m al i ce, i . e. , “thatharm w as i nfl i ct ed i nt ent i onal l yand w i t houtj us t i fi cat i on orexcus e”) ; s ee a l s o D el l o R us s o v. N agel , 817 A . 2d 426, 434 ( N . J . Super . C t . A pp. D i v. 2003) ( s ame show i ng r equi r ed fort or t i ous in te rf e re n c e w ith c o n tr a c tu a l r e la tio n s c la im ). Interstate n ev er c o m m u n icated to S ea rs th at K arl’s w as w il li n g to ex p lore var i ous compromi s es r egar di ng t he exc l us i vi t ycl aus e, nordi d i ts har e Sear s ’ pr opos ed r es ol ut i ons w i t h K ar l ’ s . Sear s , fori t s part , di s cus s ed i nt ernal l ythe r eac h of the Excl us i ve U s e pr ovi s i on befor e r es pondi ng t o I nt er s t at e. I n t hes e ci r cumst ance s , Sear s ’ conduct cannotbe dee m ed “both i nj ur i ous and tr ans gr es s i ve of ge ner al l yacc ept ed s t andar ds of comm on m or al i t yorof l aw . ” Lam or t e B urns , 770 A . 2d at1170- 71 ( quot at i on m arks and c ita tio n o m itte d ).

F o r sim ilar r e a so n s, th e D istric t C o u rt f o u n d n o g e n u in e f

a c t issu e a s to Sear s ’ al l eged br eac h of the i m pl i ed cove nantof good fa i t h and fa i rdeal i ng. O urr evi ew5

of the r ecor d l eads us t o t he s ame concl us i on. Forthe r eas ons s etfor t h i n t he pr ece di ng par agr aph, Sear s ’ conductgi ves no s ugges t i on of “ba d m ot i ve ori nt ent i on, ” pr oof of w hi ch “i s vi t al t o an ac t i on forbr eac h of the cove nant . ” B runs w i ck H i l l s R acque tC l ub, I nc. v. R out e 18 Shoppi ng C t r . A s s ocs . , 864 A . 2d 387, 396 ( N . J . 2005) ( quot at i on m arks an d cit ati o n o m itted).

W e c o m m e n d th e D istric t C o u rt’s c o m p re h e n siv e a n d p a in sta k in g a n a ly sis in th is m a tte r. F in d in g n o re v e rs ib le e rr o r, w e w ill a f f ir m th e O rd e r o f

th e D is tr ic t C o u rt .