Court Opinion

ID: 1080881
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:44:18.731121+00
Date Added: 2024-06-11T10:32:20.580118
License: Public Domain

I N THE COURT OF APPEALS OF TENNESSEE

                                       EASTERN SECTI ON                FILED
                                                                          June 6, 1997

                                                                   Cecil Crowson, Jr.
KEI TH HARDWARE, I NC. ,                         )   C/ A NO. 03A01-Appellate C ourt Clerk
                                                                     9610- CH- 00339
                                                 )
        Pl a i nt i f f - Appe l l a nt ,        )   WASHI NGTON CHANCERY
                                                 )
v.                                               )   HON. LEW S W M
                                                             I   . AY,
                                                 )   CHANCELLOR
DOUGLAS L. W TE a nd wi f e ,
            HI                                   )
CAROLYN L. W TE,
            HI                                   )
                                                 )
        De f e nda nt s - Appe l l e e s .       )   REMANDED

M STANLEY GI VENS, ANDERSON, FUGATE, GI VENS, COUNTS & BELI SLE,
  .
J o h n s on Ci t y, f or Pl a i nt i f f - Appe l l a nt .

J OHN S. TAYLOR, M KI NNON, FOW
                          c              LER, FOX & TAYLOR, J ohns on Ci t y ,
f o r De f e nda nt s - Appe l l e e s .

                                            O P I N I O N

                                                               Fr a nks . J .

                The i s s ue on t hi s i nt e r l oc ut or y a ppe a l gr a nt e d

p u r s u a nt t o T. R. A. P. Rul e 9, i s whe t he r t he l e a s e be t we e n t he

p a r t i e s i s t oo br oa d t o be e nf or c e a bl e , a s wa s he l d by t he

Tr i a l Cour t .

                Si nc e 1994, a p pe l l a nt ha s be e n a t e na nt i n

a p p e l l e e s ’ s hoppi ng c e nt e r , a nd t he l e a s e c ont a i ns t he

f o l l o wi ng c l a us e :

                 Dur i ng t he t e r m of t hi s Le a s e , t he Te na nt s ha l l h a v e
                 t he e xc l us i ve a nd s ol e r i ght t o ope r a t e a r e t a i l
                 s t or e i n t he s hoppi ng c e nt e r , t he pr i nc i pa l bus i ne s s
                 of whi c h i s t h e s e l l i ng of a ny one of t he f ol l owi n g
               c l a s s e s o f me r c ha ndi s e , t o wi t : ha r dwa r e ,
               hous e wa r e s , a ut omobi l e s uppl i e s , e l e c t r i c a l
               pl umbi ng, t oys , home f ur ni s hi ngs , s por t i ng goods ,
               a ppl i a nc e s a nd pa i nt s .     No ot he r r e t a i l s t or e i n t h e
               s hoppi ng c e nt e r s ha l l de vot e mor e t ha n t we nt y- f i v e
               pe r c e nt ( 25% of i t s s a l e s t o t he a ggr e ga t e of t h e
                                  )
               f or e goi ng c l a s s e s of me r c ha ndi s e .
                         I n 1996, a ppe l l a nt wa s ma de a wa r e t ha t

a p p e l l e e s ha d r e nt e d s pa c e i n t he s hoppi ng c e nt e r t o a Dol l a r

Ge n e r a l St or e a nd Aut o Zone .        Appe l l a nt f i l e d s ui t t o pr e ve n t

wh a t wa s s e e n a s a vi ol a t i on of i t s l e a s e by t he l a ndl or d.

               On t he he a r i ng f or a n i nj unc t i on, a ppe l l a nt ’ s own e r

t e s t i f i e d t ha t t he p r oduc t s s ol d a t Dol l a r Ge ne r a l St or e

o v e r l a ppe d wi t h 68% of t he me r c ha ndi s e s ol d a t hi s s t or e , s u c h

a s e l e c t r i c a l e qui pme nt , l a wn a nd ga r de n f ur ni t ur e ,

a p p l i a nc e s , pa i nt , s por t i ng goods , a nd t oys .         He a l s o

t e s t i f i e d t ha t 7. 9 % o f a ppe l l a nt ’ s s a l e s c a me f r om a ut omot i ve

p r o d u c t s , whi c h he be l i e ve d woul d be ne ga t i ve l y a f f e c t e d by

t he c o mpe t i t i on o f Aut o Zone .        Appe l l e e s ’ wi t ne s s e s t e s t i f i e d

t h a t t he r e s t r i c t i ve c ov e na nt wa s br oa de r t ha n t ha t i n a

t yp i c a l c omme r c i a l l e a s e a nd t ha t , i n t he i r opi ni on, t h e

a d d i t i ona l bus i ne s s e s woul d br i ng e xt r a t r a f f i c t o a ppe l l a nt

a n d i mpr ove i t s bus i ne s s .

               The Tr i a l Cour t de ni e d a ppe l l a nt ’ s a ppl i c a t i on f or

a n i n j unc t i on, f i ndi ng t ha t t he c l a us e i n t he l e a s e wa s t oo

b r o a d t o be e nf or c e a bl e a nd t ha t t he r e ha d be e n ?no

d e mo n s t r a t i on t ha t t he Pl a i nt i f f woul d s uf f e r i r r e pa r a bl e h a r m

f r o m t hi s t i me u nt i l we t r y t hi s l a ws ui t . ?

               Re s t r i c t i ve c ove na nt s a r e f r e que nt l y i ns e r t e d i nt o

s h o p p i ng c e nt e r l e a s e s , f or t he pur pos e of pr ot e c t i ng t he

t e n a n t a ga i ns t c ompe t i t i on wi t hi n t he c e nt e r .     49 Am. J ur 2d

La n d l or d a nd Te na nt § 70 ( 1995) .           W ha ve be e n r e f e r r e d t o n o
                                                      e

                                               2
Te nn e s s e e whi c h h a s a ddr e s s e d t he i r e nf or c e a bi l i t y.        Howe ve r ,

ma n y o t he r s t a t e s ha ve c ons i de r e d s uc h c l a us e s a nd f ound t he m

e n f o r c e a bl e s o l ong a s t he y a r e r e a s ona bl e i n s c ope .

C. K. &J . K. , I nc . v . Fai r v i e w Shoppi ng Ce nt e r Cor p. , 407 N.E. 2 d

5 0 7 ( Ohi o 1980) ;          Al e x an de r ’ s De p’ t St or e s v . Ar nol d Cons t a b l e

Co r p . , 250 A.2d 792 ( N. J . Supe r . Ct . Ch. Di v. 1969) ;

Na t i o n al Supe r M k e t s , I nc . v . M
                      ar                     agna Tr us t Co. , 5 70 N.E.2d
1 1 9 1 ( I l l . App. Ct . 1991 ) ;           M nde l l v . Gol de n- Far l e y of
                                                e

Ho p k i ns v i l l e , I nc . , 573 S. W 2d 346 ( Ky. Ct . App. 1978) .
                                         .                                                    The

r a t i o n a l e be hi nd t he s e de c i s i ons i s t he r e c ogni t i on t ha t

r a t h e r t ha n r e s t r i c t i ng c ompe t i t i on, s uc h c ove na nt s s e r ve t o

f a c i l i t a t e t r a de a nd i nduc e t e na nt s t o r e nt i n a pa r t i c ul a r

s h o p p i ng c e nt e r .

                  The r e a s ona bl e ne s s of a r e s t r i c t i ve c ove na nt i s

e xa mi n e d i n t e r ms o f i t s s c ope a nd e f f e c t .          C. K. &J . K. , I nc .

Th e r e s t r i c t i on i n t hi s c a s e i s not unr e a s ona bl y br oa d by

t he s e c r i t e r i a .    I n t e r ms of e f f e c t , t he r e s t r i c t i on a f f e c t s

o n l y a s i ngl e s hoppi ng c e nt e r .             I t i s r e a s ona bl e f or t he

p l a i nt i f f t o wa nt t o a v oi d c ompe t i t i on wi t hi n t hi s c e nt e r .

Th e publ i c ’ s i nt e r e s t i s not a dve r s e l y a f f e c t e d, a s t he ma r k e t

a s a whol e i s u na f f e c t e d whe r e t he r e a r e s e ve r a l s hoppi ng

c e n t e r s a va i l a bl e i n a c ommuni t y.           I n t e r ms of s c ope ,

d e f e n d a nt s ’ e xpe r t opi ne d t ha t t hi s c l a us e wa s muc h br oa de r

t h a n t hos e he ha d de a l t wi t h i n hi s e xpe r i e nc e .              I t i s t r ue

t h a t t he c l a us e doe s c o nt a i n a r a t he r l e ngt hy l i s t of i t e ms

wh i c h ot he r s t or e s wi t hi n t he c e nt e r ma y not c a r r y i n

s i g n i f i c a nt a mount s .       Howe ve r , c our t s ha ve e xpe r i e nc e d

d i f f i c ul t y i nt e r pr e t i ng c l a us e s whi c h de s c r i be d c ompe t i t or s

wi t h l e s s s pe c i f i c i t y.     Se e e . g. , Ri t e Ai d of Ohi o, I nc . ,

                                                    3
M r c ’ s Var i e t y St or e , I nc . , 638 N.E.2d 1056 ( Ohi o Ct . App.
 a

1994) ;        Sny de r ’ s Dr ug St or e s , I nc . , v . She e hy Pr ope r t i e s ,

I nc . , 266 N. W 2d 882 ( M nn. 1978) .
                 .          i

                   I f t he c l a us e me r e l y ba r r e d s i mi l a r ?ha r dwa r e ? s t or e s

o r n a me d s pe c i f i c c ompe t i t or s , i t woul d be i gnor i ng t he f a c t

t h a t a ppe l l a nt ’ s bus i ne s s de pe nds on mor e t ha n s i mpl y t he s a l e

o f h a r dwa r e 1 .        The l i s t of goods , a l t hough r a t he r nume r ous ,

s e r v e s t o c l a r i f y a ny a mbi gui t y t ha t mi ght ot he r wi s e e xi s t i n

t he c l a us e .         I t i s l i mi t e d t o i t e ms whi c h pr ovi de s i gni f i c a n t

p o r t i ons of pl a i nt i f f ’ s s a l e s a nd i s not s o ove r l y br oa d i n

s c o p e a s t o r e nde r i t un e nf or c e a bl e .

                   I f t he l a ngua ge of a c ont r a c t i s c l e a r a nd

u n a mb i guous , i t mus t be c ons t r ue d a s wr i t t e n.                                Cummi ngs v .

Va u g h n, 911 S. W 2d 739, 742 ( Te nn. App. 1995) .
                    .                                                                           Thi s l e a s e

r e qu i r e s t ha t s t or e s whi c h l e a s e i n t he c e nt e r ma y not ha ve

o n e o f t he na me d i t e ms a s t he i r pr i nc i pa l bus i ne s s .                                  Nor ma y

a pp e l l e e s l e a s e t o a s t or e whi c h c a r r i e s s e ve r a l of t he na me d

c a t e g o r i e s , i f t he s um of t hos e pr oduc t s a mount s t o mor e t h a n

2 5 % o f i t s ove r a l l bus i n e s s .

                   W c onc l ude t he l e a s e i s e nf or c e a bl e a ga i ns t
                    e

a pp e l l e e s a nd t he c a us e i s r e ma nde d t o t he Tr i a l Cour t t o

p r o c e e d i n t hi s c a us e c o ns i s t e nt wi t h t hi s opi ni on.

                   The c os t o f t he a ppe a l i s a s s e s s e d t o a ppe l l e e s .

    1
          M . Ke i t h t e s t
           r                        i f i e d t h a t h a r d wa r e s a l e s p r o v i d e o n l y 2 0 % o f h i s
    s t or e ’ s r e ve nue .       Ot h e r a r e a s o f s i g n i f i c a n t r e v e n u e we r e
    l a wn / f a r m/ g a r d e n   a t 2 2 . 4 %, a u t o mo t i v e p r o d u c t s a t 7 . 9 %, e l e c t r i c a l a t
    7 . 9 %, p l u mb i n g a t       1 3 . 8 %, p a i n t a n d s u n d r i e s a t 1 2 . 7 %, a n d s p o r t i n g g o o d s
    a t 7 %.

                                                                4
                                     ________________________
                                     He r s c he l P. Fr a nks , J .

CONCUR:

_ _ _ _ _ ___________________ ___
Ho u s t o n M Godda r d, P. J .
              .

_ _ _ _ _ _ __________________ ___
Do n T. M M r a y, J .
              c ur

                                     5
                         I N THE COURT OF APPEALS OF TENNESSEE

                                        EASTERN SECTI ON                FILED
                                                                           June 6, 1997

                                                                        Cecil Crowson, Jr.
                                                                        Appellate C ourt Clerk

KEI TH HARDWARE, I NC. ,                          ) C/ A NO. 03A01- 9610- CH- 00339
                                                  )
         Pl a i nt i f f - Appe l l a nt ,        ) WASHI NGTON CHANCERY
                                                  )
v.                                                )
                                                  )
DOUGLAS L. W TE a nd wi f e ,
            HI                                    )
CAROLYN L. W TE,
            HI                                    )
                                                  )
         De f e nda nt s - Appe l l e e s .       )

                                              O R D E R

                     Thi s c a us e wa s r e gul a r l y he a r d a nd c ons i de r e d by t h e

c our t .      I T I S NOW ORDERED t ha t t he j udgme nt of t he Tr i a l Co u r t

i s r e ve r s e d, a nd t he c a us e r e ma nde d.         The c os t s of a ppe a l a r e

a d j u d g e d t o a ppe l l e e s , f or whi c h e xe c ut i on ma y i s s ue i f

n e c e s s a r y.

                                                  PER CURI UM