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Gmk Properties, LLC, F/K/A Gymk Properties, LLC, and Martin's Liquors, LLC v. Developers Diversified Realty Corporation; Centerton Square

February 16, 2012


On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-1332-10.

Per curiam.


Argued January 23, 2012

Before Judges Parrillo and Skillman.

Plaintiffs GMK Properties, LLC and Martin's Liquors, LLC (collectively plaintiffs) appeal from the August 30, 2010 and April 12, 2011 orders of the Law Division dismissing their complaint against defendants Developers Diversified Realty Corporation (Diversified) and Centerton Square, LLC (Centerton) (collectively DDRC) and defendants Wegmans Food Markets, Inc. (Wegmans) and South Jersey Wine and Spirits, LLC (SJW) (collectively the Wegmans defendants). We affirm.

The relevant facts are not disputed. Plaintiffs operate a liquor store on land they own on Route 38 in Mount Laurel and adjacent to property that now houses the Centerton Square shopping center. The shopping center is owned by Centerton, an entity, in turn, owned by Diversified. In connection with their efforts to develop the shopping center, DDRC was required to perform certain improvements, including widening a road adjacent to the complex at its intersection with Route 38 to handle increased traffic resulting from the development. In order to do so, DDRC needed to acquire a strip of property from plaintiffs.

DDRC paid plaintiffs $2.4 million for this property and, in addition, agreed to a certain limitation on the use of the Centerton Square property as reflected in the parties' sale agreement:

[DDRC] agrees, that so long as a liquor store is continuously operated on the Adjacent Property (except for temporary closures for remodeling and the like), not to lease any portion of the Centerton Square Property to a liquor package store. Anything to the contrary notwithstanding, the following shall be permitted to operate on the Centerton Square Property: (i) a food market or grocery with an accessory on-site liquor package store sales, (ii) any restaurant holding a Broad C Liquor License, and (iii) any store or operation that sells liquor as an ancillary part of its business. [(emphasis added).]

Thus, while designed to prevent the opening of a competing liquor store, this use restriction nevertheless permits DDRC to lease a portion of its shopping center to a food market that allows liquor sales on its premises. This restrictive covenant, which was first incorporated into the purchase agreement, was later recorded as a Declaration of Restriction.

On April 14, 2003, Wegmans entered into a lease with landlord DDRC to locate one of its grocery stores in the Centerton Square shopping center. Wegmans opened its store in 2006. In 2009, as an accommodation to its patrons, Wegmans entered into a sublease with SJW pursuant to which SJW owns and operates a wine, beer and liquor store within Wegmans' Centerton Square supermarket, in space renovated and converted for that purpose. Wegmans' patrons have direct access to the package shop from the supermarket, as with any other department in the grocery store. There is no access to the package shop directly from the exterior of the building, as customers must enter the supermarket to access and leave the liquor store. Although owned and operated by SJW, the package shop appears to customers as a department within the Wegmans' supermarket. Wegmans licenses its name to SJW and the liquor store is known as "Wegmans Wine, Liquor and Beer," as evidenced by a prominent sign in the entry way to the shop. Employees wear Wegmans uniforms and advertising is done in conjunction with Wegmans.

On March 17, 2010, plaintiffs filed a complaint against DDRC and the Wegmans defendants, seeking to enjoin operation of the liquor store, alleging, among other causes of action,*fn1 breach of the restrictive covenant. Plaintiffs' motion to show cause with temporary restraints was denied and the matter was then transferred to the Law Division. In lieu of an answer, DDRC filed a motion to dismiss, Rule 4:6-2, and both plaintiffs and DDRC filed certifications and supplemental documentation in opposition and support thereof, respectively. Following argument, the judge granted DDRC's motion, finding the language of the restrictive covenant unambiguous in allowing the liquor store operation in issue as an "accessory on-site liquor package store . . . ." Thereafter, the Wegmans defendants filed a motion for summary judgment, which the court granted, as unopposed, dismissing plaintiffs' complaint.

On appeal, plaintiffs essentially argue that the summary dismissal of their complaint was erroneous because issues of the parties' intent and understanding as to the scope and meaning of the restrictive covenant remain outstanding and subject to discovery. We disagree.

We note at the outset that because the judge considered evidence outside the pleadings, DDRC's motion to dismiss pursuant to Rule 4:6-2 "shall be treated as one for summary judgment and disposed of as provided by [Rule] 4:46." R. 4:6-2. Thus, we must determine, as does the trial judge, whether there is a "genuine issue as to any material fact challenged" and whether "the moving party is entitled to judgment or order as a matter of law." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-2(c). Measured against this standard, we are satisfied that neither plaintiffs' complaint nor the record facts in support thereof offer a viable claim for relief. Given the clarity of the restrictive covenant's language, we can imagine no interpretation, and we can envision no putative set of facts disclosable in discovery, sufficient to render the operation, as it presently exists, in breach thereof.

The restrictive covenant, on its face, expressly allows for "a food market or grocery store with an accessory on-site liquor package store sales . . . ." This exemption from the covenant's use restriction aptly characterizes SJW's operation, whose space is wholly within the physical confines of Wegmans' supermarket. There is no free-standing feature to the liquor store, which functions entirely on-site. It has no exterior entrance or exit and can only be accessed from within the supermarket. Moreover, the operation is clearly an accessory to the supermarket as it accommodates Wegmans' patrons by adding to the number and variety of available departments and products. And as an accessory, the liquor store is sufficiently integrated within the supermarket that it appears to the consuming public to be ...

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