Court Opinion

ID: 2969013
Source: CourtListenerOpinion
Date Created: 2015-09-22 09:13:08.822983+00
Date Added: 2024-06-11T15:29:11.761750
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-2548

LORD & TAYLOR, LLC,

                Plaintiff - Appellant,

           v.

WHITE FLINT, L.P., f/k/a White Flint Mall, LLLP,

                Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, Senior District Judge.
(8:13-cv-01912-RWT)

Argued:   January 28, 2015                 Decided:   March 4, 2015

Before WILKINSON, AGEE, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Harris wrote the opinion,
in which Judge Wilkinson and Judge Agee joined.

ARGUED: Michelle DeFinnis Gambino, GREENBERG TRAURIG LLP,
McLean, Virginia, for Appellant.   Stuart Scott Morrison, KATTEN
MUCHIN ROSENMAN LLP, Washington, D.C., for Appellee. ON BRIEF:
Kevin B. Bedell, David G. Barger, GREENBERG TRAURIG LLP, McLean,
Virginia, for Appellant.
PAMELA HARRIS, Circuit Judge:

     Plaintiff-Appellant Lord & Taylor, LLC (“Lord & Taylor”)

has for many years operated a retail store connected to the

White Flint Shopping Center (the “Mall”), an enclosed shopping

mall along Rockville Pike in Montgomery County, Maryland.                     In

October 2012, the Montgomery County Council approved plans to

tear down the Mall and redevelop the site into a mixed-use,

town-center-style development as part of the county’s broader

plan to revitalize the surrounding area.                  Lord & Taylor filed

this action to stop the Mall’s owner, Defendant-Appellee White

Flint,     L.P.   (“White   Flint”),       from   going    forward    with   the

redevelopment.     In addition to declaratory relief, Lord & Taylor

seeks a permanent injunction that would prohibit White Flint

from replacing the Mall with the proposed town center.

     The     district   court   denied        Lord   &     Taylor’s    request,

concluding that an injunction would be unworkable in light of

the already advanced stage of the project:                   Either the court

would be required to supervise the repopulation and restoration

of the largely vacant Mall, or the effect of its order would be

to suspend the site in its current unusable state.                    We see no

grounds for disturbing the district court’s reasoned exercise of

its equitable discretion, and therefore affirm.

                                       2
                                            I.

                                            A.

       In 1975, White Flint opened discussions with Lord & Taylor

and Bloomingdale’s, a nonparty to this case, about development

of what would become the Mall.                   Ultimately, Lord & Taylor and

Bloomingdale’s agreed to lease land immediately adjacent to the

Mall and serve as retail “anchor” tenants.                    In exchange, White

Flint agreed that it would construct and then maintain a “first

class high fashion regional [s]hopping [c]enter,” on the Mall

property.

       The   parties        memorialized         their     understanding     in    a

reciprocal easement agreement (“REA”), committing White Flint to

continued operation of a three-story, enclosed mall on the site,

and    detailing     the    layout    of     the    Mall   and    its   surrounding

internal roadways and parking areas.                Under the REA, most of the

site may be used only for retail purposes, and White Flint may

build additional structures only with Lord & Taylor’s consent.

Any    changes      to     the   Mall,      including      alterations     to     its

“architectural design or appearance,” also must be approved by

Lord & Taylor.        All of these conditions are treated by the REA

as    restrictive    covenants       that    “run   with    the   Land,”   creating

rights in real property.          They remain operative at least through

2042, and Lord & Taylor may extend them until 2057 by exercising

its final lease-renewal option.

                                            3
       The     Mall       opened      in    1977     and    operated    smoothly      for   many

years.       More recently, however, the Mall began to experience a

decline in business.                  Where to place the blame for that decline

is disputed by the parties.                         But whatever the cause, in 2012,

Bloomingdale’s opted not to renew its lease at the Mall site.

By 2013, 75 percent of Mall tenants, accounting for at least a

third     of      the      Mall’s       space,       had     left.      Since      then,    the

Bloomingdale’s building has been demolished and the remaining

businesses have closed.                     The Mall was shuttered permanently on

January      4,     2015,       and     Lord    &    Taylor    alone    remains     open    for

business.

       In November 2011, White Flint released a preliminary plan

to redevelop the site (the “Sketch Plan”), as part of Montgomery

County’s broader initiative to redevelop the surrounding area

(the    “Sector       Plan”).           The     Sector      Plan   is   a   massive    public-

private undertaking.               Once complete, it will transform the area,

anchored       by     a       station      of   the       Washington    metropolitan        area

subway,        into       a     430-acre        urban       center,     with      14,000     new

residential units and 7.5 million square feet of new mixed-use

space.       Execution of the Sector Plan is expected to involve $1

billion      in     new       public       works    and    eventually       to   generate   $40

billion in additional tax revenue.

       White Flint’s Sketch Plan also is ambitious.                                The Sketch

Plan would transform the Mall site into the sort of mixed-use

                                                    4
development increasingly popular across the country, with a 45-

acre   town    center      including   2,400    apartment     units,     parks   and

schools, a hotel, and at least three high-rise office buildings.

The Lord & Taylor store would remain, but the enclosed Mall

would be demolished, along with portions of the parking lots and

internal roadways surrounding Lord & Taylor.                  Montgomery County

approved      the   plan     in   October     2012,   and    considers     it    “an

essential component of the Sector Plan.”

                                         B.

       Lord & Taylor objects to implementation of the Sketch Plan

and the contemplated redevelopment of the Mall site.                     According

to Lord & Taylor, what it was promised by White Flint was a

“first class . . . [s]hopping [c]enter,” devoted to retail uses

and consistent with the design specifications memorialized in

the REA.       The town center that White Flint proposes to build

around its store instead, Lord & Taylor argues, violates the

plain terms of the REA and will negatively affect the store’s

business,     disrupting      customer      access    by    destroying    internal

roads and parking areas and denying the store the benefit of

foot traffic from Mall customers.

       Negotiations between Lord & Taylor and White Flint reached

an impasse in the spring of 2013, and in July 2013, Lord &

Taylor filed the two-count complaint that is the basis for this

lawsuit.      Count I, for declaratory relief, seeks a declaration

                                         5
that the REA precludes White Flint from redeveloping the Mall

site as contemplated by the Sketch Plan and instead requires

White Flint to continue operation of a “first class high fashion

retail [s]hopping [c]enter.”         Count II – the count at issue here

– seeks a permanent injunction compelling White Flint to honor

the terms of the REA.         Specifically, Lord & Taylor asks the

court to enjoin White Flint “from taking any steps to carry out

or construct [the] redevelopment” in a manner inconsistent with

the   REA   and   to   “require      [White   Flint]       to   abide   by   its

obligations   under    the   [REA]    to   operate     a   first   class     high

fashion regional retail [s]hopping [c]enter.”

      White Flint moved for partial summary judgment with respect

to Count II of the complaint.         It argued, in part, that it would

be infeasible for the district court to enforce an injunction

requiring what was at the time a mostly empty Mall to resume

operations, and then to maintain its status as a “first class

high fashion shopping center” until as late as 2057.                    Lord &

Taylor, LLC v. White Flint, L.P., Case No. 8:13-cv-01912-RWT (D.

Md. Sept. 5, 2013), ECF No. 15.            White Flint also argued that

the equities of the case did not favor specific performance of

the terms of the REA and a halt to the redevelopment because of

the significant public interest in seeing the project go forward

and the time and expense already devoted to the project.

                                       6
       The district court agreed and dismissed Count II of the

complaint.        It assumed for purposes of its decision that Lord &

Taylor could show under Count I that the proposed redevelopment

would breach the REA, and that Lord & Taylor would be entitled

to damages for any harm that resulted.                        It concluded, however,

that      injunctive         relief     would      be      infeasible       under    the

circumstances.          Because of physical changes to the site (most

notably the demolition of the Bloomingdale’s store) and what was

then      a    75-percent      vacancy       rate,      the    court    reasoned,     an

injunction requiring White Flint to operate the “first class”

shopping center contemplated by the REA would require the court

to supervise “rebuilding [and] bringing tenants back in” to the

Mall – a task the court deemed outside its competence.                            “[F]or

me   to       enter   into   this     case   and     try      to   enjoin   an    ongoing

development project like this is just not feasible.”

       The      district     court    subsequently         denied    Lord   &    Taylor’s

motion for a stay pending appeal and preliminary injunction.

Lord & Taylor, LLC v. White Flint, L.P., Case No. 8:13-cv-01912-

RWT (D. Md. Feb. 7, 2014), ECF No. 64.                     The court reiterated its

practical concerns, explaining that even maintaining the status

quo was no longer feasible given the “advanced stage[]” of the

project and the “reality that the [M]all is almost completely

vacant and partially demolished.”

                                             7
     Lord & Taylor timely noted its appeal to this court.                            It

also moved for a stay of the district court’s decision, which we

denied.     Lord & Taylor, LLC v. White Flint, L.P., No. 13-2548

(4th Cir. Mar. 14, 2014).

                                            II.

                                             A.

     Lord       &    Taylor’s   first      contention    on   appeal   is    that   the

district court erred by failing to apply the correct Maryland

law to its request for injunctive relief.                     We review this claim

de novo, see Woollard v. Gallagher, 712 F.3d 865, 873 (4th Cir.

2013)     (de       novo    review    governs     district     court   decision     on

injunctive relief when “contested issue is a question of law”),

and find it unpersuasive.

     The parties agree, as do we, that Maryland substantive law

applies in this diversity action, and governs Lord & Taylor’s

Count II claim for a permanent injunction.                    See Capital Tool and

Mfg. Co., Inc. v. Maschinenfabrik Herkules, 837 F.2d 171, 172

(4th Cir. 1988) (Erie doctrine requires courts to apply state

substantive law to a request for permanent injunctive relief in

diversity cases); see also 11A Charles Alan Wright & Arthur R.

Miller,    Federal         Practice   and    Procedure    §   2943   (3d    ed.   2014)

(Erie   rationale          extends    to    requests    for   injunctive     relief).

According to Lord & Taylor, however, the district court took a

                                             8
different       approach,      and    relied        instead       on    the     federal-law

standard for injunctions in denying relief.

     We do not read the record that way.                         The parties’ briefing

on summary judgment may have generated some confusion as to the

appropriate         choice    of   law.    But       the    district        court     directly

addressed      the     choice-of-law      question         at    the    summary       judgment

hearing    and      expressly      clarified       in    its    decision       that    it   was

applying Maryland law.              We take the district court at its word

and have no reason to doubt that it properly identified Maryland

substantive law as controlling.

     Lord       &    Taylor    argues     in       the   alternative          that    if    the

district       court    applied      Maryland       law,       then    it   misapplied      it

badly, relying on factors that have no place in the analysis

under Maryland precedent.             Maryland law, Lord & Taylor contends,

strongly favors injunctive relief for breaches of restrictive

covenants – so strongly that injunctions are granted almost as a

matter    of    course       and   regardless       of     factors      like    the    public

interest or the availability of monetary damages to compensate

for a breach.           If White Flint’s proposed redevelopment would

violate the REA – and the district court assumed as much for

purposes of summary judgment – then according to Lord & Taylor,

there was virtually nothing left for the court to do but enjoin

the breach.

                                               9
      We disagree.     It is true that an injunction typically is an

appropriate remedy for breach of a restrictive covenant under

Maryland law.       See Dumbarton Improvement Ass’n., Inc. v. Druid

Ridge Cemetery Co., 73 A.3d 224, 233 (Md. 2013).              But injunctive

relief is not automatic, and the presumption in its favor does

not displace a trial court’s traditional discretion when it sits

in equity, see Roper v. Camuso, 829 A.2d 589, 601 (Md. 2003)

(“Trial    courts   are    granted    broad   discretionary       authority    to

issue equitable relief.”).           Indeed, the very cases cited by Lord

& Taylor recognize that injunctive relief remains subject to

“sound judicial discretion” even where restrictive covenants and

real property rights are concerned.           Chestnut Real Estate P’Ship

v. Huber, 811 A.2d 389, 401 (Md. Ct. Spec. App. 2002); see also

Redner’s Mkts., Inc. v. Joppatowne G.P. L.P., Civ. A. No. 11-

1864-RDB, 2013 WL 2903285, at *5 (D. Md. June 13, 2013).

      The parties dispute the precise scope of this equitable

discretion   and    the    particular    factors   that    should    guide    its

exercise.    We need not resolve any difficult questions of state

law   to   decide   this    case,     however,   because    one     thing    that

Maryland law makes perfectly clear is that trial courts may take

account of feasibility concerns – like those relied on by the

district    court   here    –   in   considering   injunctive       relief    for

breach of a restrictive covenant.

                                        10
       In    this        context,        as     in        others,      trial        courts       retain

discretion      to       deny     specific       performance           or     injunctive         relief

(Maryland      case       law     does    not    distinguish            between         the    two    for

these       purposes)           where     enforcement            would        be        “unreasonably

difficult” or require “long-continued supervision” by the court.

See Edison Realty Co. v. Bauernschub, 62 A.2d 354, 358 (Md.

1948).        So,        for    instance,        an       injunction        may     be     denied      as

infeasible          if    it     would        compel       the    parties          to    continue      a

commercial relationship, or require the court to closely monitor

the caliber of their performance.                          See, e.g., M. Leo Storch L.P.

v. Erol’s, Inc., 620 A.2d 408, 412-14 (Md. Ct. Spec. App. 1993)

(denying injunction to enforce continuous-operation lease clause

on    feasibility         grounds);           Edison      Realty       Co.,    62       A.2d    at    358

(specific       performance             may     be     denied         where    court          would    be

required       to     issue       “a     multiplicity            of    orders       . . .       in    its

endeavor to superintend [the parties’] work”).                                     Indeed, because

such affirmative injunctions are difficult to draft clearly and

even harder to enforce, Maryland courts typically will issue

them only where no other relief is possible.                                  See Md. Trust Co.

v. Tulip Realty Co. of Md., Inc., 153 A.2d 275, 284 (Md. 1959).

And    the   inquiry           into    feasibility          is    itself      wide       ranging      and

equitable in nature, with courts instructed to consider broadly

the “advantages to be gained” from injunctive relief as well as

“the    harm     to       be     suffered”       if       an     injunction         is    denied       as

                                                     11
infeasible.       M. Leo Storch L.P., 620 A.2d at 412 (quoting Edison

Realty Co., 62 A.2d at 358).

       Whether        the     district         court      properly          exercised      its

discretion       in    determining           that     injunctive       relief      would    be

infeasible in this case is a separate question, which we address

in turn.      The point here is simply that Maryland law did not

require the district court to turn a blind eye to feasibility

and related equitable concerns.                     On the contrary:          Maryland law

clearly authorized the district court to go beyond the state-law

presumption      in     favor      of    injunctive          relief    to    consider      the

feasibility of what it was being asked to do.

                                               B.

       Even on this account of the law, Lord & Taylor argues, the

district court erred, because the injunctive relief it seeks

would in fact be entirely feasible.                      On this claim, our review

of   the    district        court’s     determination         is   highly        deferential.

When    a    district        court’s         decision     rests       on    evaluation      of

equitable     considerations            or    other     traditionally        discretionary

factors, we generally apply an abuse of discretion standard.

See Ray Commc’ns., Inc. v. Clear Channel Commc’ns., Inc., 673

F.3d   294,   299      (4th    Cir.     2012)       (reviewing     application        of   the

doctrine of laches for abuse of discretion); Baldwin v. City of

Greensboro,      714        F.3d   828,       833     (4th    Cir.     2013)      (reviewing

application       of        equitable        tolling      doctrine         for     abuse   of

                                               12
discretion).         That deferential approach makes perfect sense when

it comes to the feasibility of equitable relief:                                 The district

court is better positioned than we are to weigh the costs and

benefits of injunctive relief and, in particular, to assess the

practical      difficulties          of    enforcement         of     an        injunction     –

difficulties         that    will    fall     in       the   first     instance        on    the

district court itself.              Accordingly, we will review the district

court’s feasibility determination for abuse of discretion, and

disturb it only if we find that the court “committed a clear

error of judgment.”             Brown v. Nucor Corp., 576 F.3d 149, 161

(4th    Cir.    2009)       (applying      abuse        of   discretion          standard     to

district       court        class-certification              determination             (quoting

Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.

1999))).

       Like    the    district       court,       we    must   take     account         of   the

practical      realities      of    the     situation.          At    the       time    of   the

district court’s decision in December 2013, Bloomingdale’s had

declined to renew its lease, and the building it occupied had

been   demolished.           Much    of    the     Mall      itself    was       vacant,     and

according to Lord & Taylor, many of the remaining tenants were

on short-term leases due to expire in 2014.                           Restoring the Mall

to its former glory, as Lord & Taylor requested in Count II of

its    complaint,       would       have    required         more     than        a    negative

prohibition      on     the     site’s      redevelopment.                 It     would      have

                                             13
necessitated an affirmative injunction ordering White Flint to

transform    the   now-fading     Mall    back    into    a    “first     class    high

fashion regional retail [s]hopping [c]enter” – the kind of order

that is so hard to draft with specificity and then to enforce

that Maryland courts generally will grant it only as a last

resort.     See Md. Trust Co., 153 A.2d at 284.

      In this case, affirmative injunctive relief would have been

even more impractical than usual, thanks to the highly detailed

provisions of the REA.          An order that White Flint “abide by its

obligations under the REA,” as sought by Lord & Taylor, also

would require judicial oversight of compliance with the myriad

of    REA   conditions    that    control       every    facet    of    the    Mall’s

operations, from the distribution of parking and interior access

roads to the placement of entrances to the design of the various

retail stores and restaurants that populate the Mall.                        And once

it    had   ascertained    that    the        Mall’s    operations      were      again

compliant with every provision of the REA, the district court’s

job still would not be done:             It would have to ensure that the

Mall remained in compliance for the duration of the REA, at

least until 2042 and potentially for over forty years.                         See M.

Leo    Storch   L.P.,     620    A.2d    at     414     (declining      to     enforce

continuous-operation clause because court would be required to

monitor     ongoing      performance).            Such        long-term,       ongoing

supervision     eventually      would    entangle       the    district      court   in

                                         14
every aspect of the Mall’s daily operations, with any potential

violation of the REA’s specifications becoming fair game in a

subsequent contempt proceeding.

       The cases Lord & Taylor cites to argue that all of this

would be perfectly feasible suggest to us just the opposite.

The scale and complexity of the Mall’s operations – spread over

45    acres,   and    potentially         involving         dozens   of    new   counter-

parties   as   the     Mall    repopulates         –    and    the    duration     of    the

proposed injunction have no parallel in the Maryland case law.

The    injunction     sought       here    would       be   nothing    like      one    that

prohibits operation of a single nearby competitor, see Redner’s

Mkts., Inc., 2013 WL 2903285, at *2 (enjoining operation of a

rival   grocery      store    in    the   same     strip      mall),      or   resolves   a

single dispute over misused office space, see City of Bowie v.

MIE, Props., Inc., 922 A.2d 509, 518, 538 (Md. 2007) (enjoining

operation of a dance studio).                   By comparison, Maryland courts

have found injunctive relief infeasible under circumstances far

more    streamlined     and        straightforward           than    these,      involving

purely bilateral commercial relations.                      See M. Leo Storch L.P.,

620 A.2d at 414 (refusing to order a tenant to reoccupy leased

retail space on feasibility grounds).                       We can find no Maryland

precedent, and Lord & Taylor provides none, even suggesting that

it would be feasible for the court to craft and enforce an order

directing White Flint to reboot and then maintain a “first class

                                           15
high    fashion      regional    retail        [s]hopping       [c]enter,”         consistent

with the REA’s detailed specifications, through the year 2057.

       At    oral    argument,       Lord      &    Taylor     refined       its    position,

suggesting      that    it    would       be   satisfied       with     a    more    limited,

negative      injunction       that    simply        prohibited       White        Flint   from

moving ahead with the destruction of the Mall and its adjacent

parking areas.          That is essentially the same proposal Lord &

Taylor offered to the district court when it moved there for a

stay pending appeal.            The district court rejected this version

of    the    proposed      relief    as    well,      deeming    it     “unrealistic”       to

require White Flint to maintain the status quo of a mostly empty

Mall with a demolished “anchor” store on one side.                                 In effect,

the district court held, the redevelopment had passed the point

of no return.

       Again, we must attend to the realities of the situation

facing the district court.                A negative injunction, as the court

understood,         would    freeze       in       place   a   vacant       and     partially

demolished Mall, tantamount to a judicially mandated blight on

the    area.        That     outcome      would      serve     neither       party    to    the

dispute, let alone the interests of the general public.                               Indeed,

it is so patently unworkable that Lord & Taylor defends it not

on its own terms, but as a form of leverage that might encourage

White Flint to resume Mall operations, consistent with the REA.

But    the    district       court    cannot        simply     assume       that    best-case

                                               16
scenario,        and     must           instead      contend        with          the     very        real

possibility that a negative injunction would produce nothing but

an    empty     and     unusable          45-acre        Mall    site        in     the       heart    of

Montgomery County’s redevelopment project.

      Moreover,         even       if    a    negative       injunction           did     send       White

Flint     back     to        the    drawing          board      and      eventually             to     the

negotiating table, feasibility concerns would remain.                                            Should

the     parties       dispute           whether      any     White       Flint          proposal       to

repopulate       and     restore          the     Mall     lived        up     to    the       detailed

specifications          of    the       REA    or    produced       a    sufficiently            “first

class”    and     “high       fashion”          shopping        experience,             the    district

court would find itself inserted once again into the thick of

ongoing and complex commercial relationships.                                And any effort to

resolve that dispute by way of injunctive relief would raise

precisely the feasibility issues already described.

      Taken      together,         these        concerns      are       more      than        enough    to

persuade us that the district court did not commit a “clear

error of judgment,” Brown, 576 F.3d at 161, in finding that

injunctive       relief       would       be    infeasible. *            Continuous            judicial

      *
       Lord & Taylor contends that additional discovery was
necessary before the district court could grant White Flint’s
motion for summary judgment on Count II of the complaint.    But
the discovery sought by Lord & Taylor had no connection to
feasibility, and so could not have affected the district court’s
feasibility determination or our disposition of this appeal. As
we have explained, the district court’s feasibility analysis

                                                    17
supervision of commercial relationships on this scale may place

a particular strain on a district court, and the decision to

refuse such intervention goes to the heartland of that court’s

discretion    to     manage   its   own   affairs.       Where,    as     here,   the

district     court    follows   applicable      state     law     and   reasonably

exercises     its     discretion     in    denying      injunctive      relief    as

infeasible, we have no grounds to second guess its decision.

                                       III.

     For    the     reasons   stated      above,   we    affirm     the    district

court’s dismissal of Count II of the complaint.

                                                                           AFFIRMED

turned on the current realities of the situation and the terms
of the REA, neither of which implicates any material factual
dispute between the parties.

                                          18