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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

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


February 16, 2012

GMK PROPERTIES, LLC, F/K/A GYMK PROPERTIES, LLC, AND MARTIN'S LIQUORS, LLC, PLAINTIFFS-APPELLANTS,
v.
DEVELOPERS DIVERSIFIED REALTY CORPORATION; CENTERTON SQUARE, LLC; WEGMAN'S FOOD MARKETS, INC. AND SOUTH JERSEY WINE & SPIRITS, LLC, DEFENDANTS-RESPONDENTS.

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

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

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 part and parcel of the overall operation. On this score, it is undisputed that the entry way to the liquor store displays a sign identifying the space as Wegmans' and employees within wear Wegmans' uniforms.

Indeed, plaintiffs seem to tacitly concede that if Wegmans itself owned and operated the liquor store, the operation would not be in violation of the restrictive covenant. They argue, however, that because the operator and owner is another entity, SJW's operation does not fall within the exclusionary language. Yet the restrictive covenant contains no such requirement. In fact, if common ownership and operation were essential to qualify, then the restrictive covenant's other stated exemption allowing "any store or operation that sells liquor as an ancillary part of the business" would be rendered meaningless. We do not, of course, presume the drafters of the restrictive covenant intended any such redundancy. See, e.g., Gabin v. Skyline Cabana Club, 54 N.J. 550, 555 (1969).

To the contrary, "[i]t is firmly established that the policy of the law is against the imposition of restrictions upon the use and enjoyment of land and such restrictions are to be strictly construed." Hammett v. Rosensohn, 46 N.J. Super. 527, 535 (App. Div. 1957); see also Bruno v. Hanna, 63 N.J. Super. 282, 285 (App. Div. 1960) ("Restrictions on the use to which land may be put are not favored in law because they impair alienability. They are always to be strictly construed, and courts will not aid one person to restrict another in the use of his land unless the right to restrict is made manifest and clear in the restrictive covenant.") "Generally, in the context of restrictive covenants, a rule of strict construction should be applied. Absent explicit indications of a special meaning, words in such covenants are given their ordinary meaning." Citizens Voices Ass'n v. Collings Lakes Civic Ass'n, 396 N.J. Super. 432, 443 (App. Div. 2007) (internal citations omitted).

In other words, restrictions upon the use and enjoyment of land must be "made manifest and clear in the restrictive covenant." Hammett, supra, 46 N.J. Super. at 535. Any "ambiguities and uncertainties in the restrictive provisions of grants are to be resolved in favor of the owner's free use of his [or her] property." Majeski v. Stuyvesant Homes, Inc., 140 N.J. Eq. 460, 462 (Ch. 1947); see also Cooper River Plaza East, LLC v. Briad Group, 359 N.J. Super. 518, 526 (App. Div. 2003) ("all doubts and ambiguities must be resolved in favor of the owner's unrestricted use of the land.").

So construed, we find the plain language of the restrict covenant's exclusionary clause susceptible of no reasonable interpretation that would render defendants in breach thereof. Because plaintiffs' remaining claims are all predicated on their fundamental cause of action that SJW's operation wholly inside Wegmans' supermarket constitutes a breach of the parties' restrictive covenant, they must fail as well.

Affirmed.


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