Opinion ID: 2052446
Heading Depth: 1
Heading Rank: 2

Heading: restraint of trade

Text: A. Reasonableness of the Restrictions. The tenant concedes in its brief that, on its face, the use restriction in the lease is valid: This lease provision, if fairly implemented, would probably be deemed a reasonable restraint of trade. The purpose of maintaining a balanced mix of vendors in the context of a food court or shopping center, if not abused by the actors, colorably justifies a reasonable restraint of trade. The tenant contends, however, that the lease was not fairly implemented. First, according to the tenant, the landlord strictly enforced the use restriction against the tenant by limiting the tenant and its potential successors in interest to the sale of baked goods and by refusing to allow the tenant to sell bagels. Second, the landlord leased the adjacent space to Au Bon Pain and permitted Au Bon Pain to sell baked goods as well as bagels. According to the tenant, the landlord's conduct was designed to drive and in fact drove the tenant out of business, and the lease as enforced therefore constitutes an unreasonable restraint of trade. In the first instance, we note that the tenant has not alleged that the lease contains an express provision which would prevent the landlord from leasing space near or adjacent to the tenant's premises to a direct competitor of the tenant. [3] As far as the record discloses, the lease in no way limits the landlord's discretion with regard to the leasing of other spaces in the food court. While the tenant clearly agreed to a restriction on its own use of the premises, it did not require the landlord to make a similar concession. The question, then, is whether the landlord was entitled to enforce the use restriction in the lease against the tenant. The tenant argues that the restriction, as applied here, constitutes an unreasonable restraint of trade, and relies on Ellis v. James V. Hurson Assocs., 565 A.2d 615 (D.C.1989). In Ellis, an employer brought an action against a former employee to enforce a post-employment covenant not to compete. Id. at 615-16. This court adopted the common law principles regarding promises in restraint of trade, as reported in the RESTATEMENT (SECOND) OF CONTRACTS, [4] and remanded for reconsideration of the covenant in light of those principles. Id. at 618-19. The tenant's reliance on Ellis is misplaced. Ellis involved an express covenant by an employee not to engage in business competition with the company following termination of his employment. Id. at 616. Such a covenant not to compete implicates the common law policy against unreasonable restraints of trade because it is a promise to refrain altogether from competition with the promisee. See RESTATEMENT (SECOND) OF CONTRACTS, supra note 4, § 188 cmt. e (discussing promise[s] to refrain from competition). The use restriction in this case, by contrast, is not a promise to refrain altogether from competition. Rather, it is a promise to engage in competition in a certain way and with certain limitations. By signing the lease, the tenant essentially agreed to compete with other vendors in the food court by selling bakery items. Indeed, the lease provision contains an exhaustive list of the various bakery items that the tenant may sell in the food court, and it specifically prohibits only the sale of sandwiches and bagels. While the lease does restrict the tenant's use of the premises, the provision in this case is far less detrimental to the smooth operation of a freely competitive private economy, id. at § 186 cmt. a, than the noncompetition covenant at issue in Ellis. Ellis is the primary case cited by the tenant in support of its contention that the use restriction was unreasonable. We are aware of no precedent to support the tenant's position. Essentially, the tenant is asking us to place restrictions on the landlord's exercise of its rights under the lease, which was apparently freely negotiated, [5] when the lease itself contains no such restrictions. This a court may not do. B. Selective Enforcement. The complaint also alleges that the landlord selectively enforced the use restriction against the tenant. The tenant apparently is claiming that the landlord refused to permit the tenant to sell bagels, while at the same time allowing Au Bon Pain to sell bagels and baked goods, perhaps in contravention of a similar use restriction in Au Bon Pain's lease. [6] Even assuming this claim to be true, however, the tenant is not entitled to relief based on a selective enforcement theory. The tenant has cited no authority  and we know of none  which would prevent the landlord from enforcing an otherwise valid use restriction, even if the landlord has acted more leniently vis-a-vis persons who have failed to comply with separate agreements with the enforcing party. Bagley v. Foundation for the Preservation of Historic Georgetown, 647 A.2d 1110, 1114 & n. 10 (D.C.1994). C. Evil Motive. The tenant contends that its claims of anticompetitive conduct and selective enforcement should be considered in light of its allegation, repeated in various pejorative forms in the complaint, brief, and oral argument, [7] that the landlord enforced the restrictive covenant against the tenant in order to drive the tenant out of business. The tenant claims that this evil motive renders the restriction unreasonable and converts a facially valid provision into an unlawful restraint of trade. We do not agree with this contention. The Supreme Court explicated the governing principle 135 years ago: An act legal in itself, and violating no right, cannot be made actionable on account of the motive which superinduced it. It is the province of ethics to consider of actions in their relation to motives, but jurisprudence deals with actions in their relation to law, and for the most part independently of the motive. Adler v. Fenton, 65 U.S. (24 How.) 407, 410, 16 L.Ed. 696 (1861). More than half a century later, the Supreme Court of the District of Columbia elaborated on Adler in formulating the law of this jurisdiction: In our view it would be a dangerous doctrine to announce that a party may be punished for doing that which is legal if in the judgment of a jury his motive was unworthy. Neither the diligence of counsel, nor our own researches, have uncovered any authority, either text or decision, which approves such a principle. Nor is it in consonance with reason. The motive of an act, as a general thing, has to do with its ethical value, not with its juristic character, and is immaterial where the act itself is legal. To condemn a legal act because of the motive which inspired it would be to subordinate the legal to the ethical, would be to condition the validity of acts upon the motive which called them into existence. This is not within the province of jurisprudence. Until ethical principles are adopted by the law they lie in a domain apart from the field in which jurisprudence operates. As long as a man keeps himself within the law by doing no act which violates it, we must leave his motives to Him who searches hearts. Chambers v. Baldwin, 91 Ky. 121, 11 L.R.A. 545, 34 Am. St. Rep. 165, 15 S.W. 57. This is in harmony with many decisions of the Federal courts. Hammond v. Sully, 48 App. D.C. 320, 329 (1919) (citations omitted). Although of ancient vintage, the reasoning of the Adler and Hammond decisions remains persuasive in the modern era. See, e.g., Bay City-Abrahams Bros. v. Estee Lauder, Inc., 375 F.Supp. 1206, 1211 (S.D.N.Y.1974); [8] Hinrichs v. Tranquilaire Hosp., 352 So.2d 1130, 1131 (Ala.1977) (per curiam); [9] Gans v. Delaware Terminal Corp., 2 A.2d 154, 156 (Del.Ch.1938); [10] 74 AM. JUR.2D Torts § 6, at 623-24 (1974 & 1995 Supp.). There are, of course, exceptions to the foregoing principles. The intentional infliction of emotional distress, for example, is actionable in circumstances where recovery would be denied if the same distress had been caused by the defendant's mere negligence  the actor's state of mind is decisive. See, e.g., Drejza v. Vaccaro, 650 A.2d 1308, 1312 (D.C.1994). The tenant has cited no authority, however, and we are aware of none, in which a defendant's exercise of a right secured by a contractual arrangement with the plaintiff has been held to be unlawful on account of the defendant's alleged evil motive. The lease permitted the landlord to prohibit the tenant from selling bagels. Nothing in the lease precluded the landlord from renting space to Au Bon Pain. Such a preclusive provision could perhaps have been negotiated, but it was not. We conclude that no unlawful conduct has been alleged and that the tenant's unfavorable characterizations of the landlord's motive do not alter that dispositive fact. D. Constructive Eviction. Alternatively, the tenant claims that the landlord's conduct  enforcing the use restriction against the tenant and leasing the adjacent space in the food court to Au Bon Pain  amounted to a constructive eviction. The tenant argues that the landlord destroyed [the] tenant's business by wrongful acts which precluded the tenant from engaging in the only use for the premises permitted under the lease ... even though there was no allegation [in the complaint] that the landlord physically denied the tenant access to the subject premises, or that the tenant abandoned the premises. We agree with the tenant that, in order to proceed with a claim of constructive eviction, it need not allege actual physical removal from the premises. As this court stated in Bown v. Hamilton, 601 A.2d 1074 (D.C.1992), [b]oth historically and functionally, the doctrine of constructive eviction is an extension of the doctrine of actual eviction. Here the concept is that, because of some wrongful act or omission by the landlord, the premises become uninhabitable (untenantable) for the intended purposes. The tenant is not physically evicted or excluded  but he might as well be.... Thus, there is an eviction, though constructive instead of actual. Id. at 1077 n. 9 (quoting ROGER A. CUNNINGHAM, ET AL., THE LAW OF PROPERTY § 6.33, at 296 (1984) (alteration in original)). Although physical interference is not a necessary element of a constructive eviction claim, however, it is essential that the tenant's quiet enjoyment be disturbed by some wrongful act or omission by the landlord. Id. (emphasis added). In this case, the tenant agreed to the use restriction in the lease, and the landlord made no corresponding promise not to rent adjacent spaces to direct competitors of the tenant. The landlord was therefore entitled to lease the adjacent space to Au Bon Pain and to enforce the use restriction against the tenant. Because the tenant has alleged no legally wrongful conduct on the landlord's part, the complaint fails to state a claim for constructive eviction. [11]