Whitinsville Plaza, Inc. v. Kotseas

Supreme Judicial Court of Massachusetts · Property

Propertyreal covenantsrunning with the landrestrictive covenantsanticompetitive covenantstouch and concerncommercial developmentcontract assignment

Facts

In 1968, Kotseas conveyed Parcel A to trustees of the 122 Trust, a wholly owned subsidiary of Plaza, and the deed imposed reciprocal restrictions intended to assure harmonious shopping-center development on Parcel A and adjacent land retained by Kotseas. Among other things, Kotseas promised not to use the retained land in competition with the discount store contemplated by the grantee, while the deed stated that the restrictions were covenants running with the land and binding on heirs and assigns. In 1975, the Trust conveyed Parcel A to Plaza, expressly giving Plaza the benefit of and subjecting it to the 1968 restrictions. Plaza alleged that Kotseas later leased part of the retained land to CVS for a "discount department store and pharmacy," that the lease was expressly subject to the 1968 restrictions, and that the contemplated CVS operation would violate them.

Issue

Whether Plaza's complaints were properly dismissed where Plaza alleged that successors were about to violate deed restrictions barring competitive use of adjacent land. More specifically, the court considered whether reasonable anticompetitive deed covenants may run with the land, whether Plaza could proceed on contract and interference theories, and whether the complaints sufficiently stated claims under c. 93A or could be rejected as unreasonable restraints of trade as a matter of law.

Rule

Reasonable covenants against competition may be considered to run with the land when they serve a purpose of facilitating orderly and harmonious development for commercial use, so long as the ordinary requirements for creation and enforcement of real covenants are satisfied. Such covenants are not unenforceable merely because they protect against competition; instead, reasonableness in time, space, product line, and consistency with the public interest governs enforceability. On a motion to dismiss, a complaint should not be dismissed if the pleaded facts would support relief on any legal theory, but bare allegations that contractual violations were "unfair acts and practices" are insufficient by themselves to state a c. 93A claim.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 1972, Dana Mercer sold a parcel in Columbus, Ohio, to Rivergate Shops LLC for a planned retail center. The deed, signed by Mercer, stated that Mercer would not permit the adjacent parcel she retained to be used as a competing supermarket, declared the restriction binding on heirs and assigns, and granted reciprocal access easements between the parcels. In 1980, Rivergate conveyed its parcel to Oak Square Retail, and Mercer's successor, with record notice, now plans to lease the retained parcel to a grocer.

If the successor to Oak Square sues to enforce the restriction, which is the best argument against dismissal?

Explanation. The majority held that reasonable covenants against competition may run with the land when they serve the purpose of facilitating orderly and harmonious commercial development, provided ordinary requirements such as writing, intent, privity, and notice are satisfied. A motion to dismiss tests the sufficiency of allegations, not proof at trial. (Derived from Whitinsville Plaza, Inc. v. Kotseas (n.d.).)