*1 a claim which can be upon to state relief 12(b)(6). Trial
granted under Rule
SHEPARD, C.J., DICKSON, J.,
concur.
BOEHM, J., with concurs result RUCKER, J., opinion,
separate which
joins.
BOEHM, J., concurring in result. majority, I given
For the reasons legislature cre-
agree that the intended to of action under the private
ate no cause
statutory provisions Blanck cites. Be- conclusion, of that I do not
cause believe subject presents any
this case issue of jurisdiction
matter or under the issue
Open provision Courts of the Indiana Con- Rather, complaint
stitution. should be
dismissed because it fails to state a claim. view, if my private there were a cause statutes,
of action under it could
presumably presented a court of jurisdiction.
general
RUCKER, J., joins. II, LLC,
TIPPECANOE ASSOCIATES (Defendant
Appellant below), Havel, Vaughan, Charles R. Linda H. Lafayette, Appellant. for 671, INC., LAFAYETTE KIMCO (Plaintiff below). Appellee Pennell, Stephen Kealey, R. P. William Lafayette, Appellee. No. 79S05-0506-CV-289.
Supreme Court of Indiana. BOEHM, Justice. 23, 2005.
June given We hold that a covenant to a prohibiting tenant
center from leasing competitors However, generally tenant is enforceable. *2 acquired Kroger. tenant or its successor from Tippecanoe once the ac site, original. the use of the relinquishes quired the lease in a series of maneuvers anticompetitive covenant is severed the and seeks to enforce thirty-year-old longer occupancy from the no enforce- covenant against the current owner of the give assignee able to the tenant or an the center, 671, Lafayette Kimceo even Inc.4 right to restrict for a location though there grocery has been no in store outside the the center since 1982. History Facts & Procedural 2000, tenant, In large another Target, 19783, Development In Company SES Sagamore Center, left leaving nearly one- Sagamore leased one of the stores in its half of the space center's unoccupied. Kroger Company center to for an Kimeo contends that only prospective the years, of twenty op initial term with four by tenant the void Target's caused fill lease, for a tions to renew the each term of Schuncks, departure is a Missouri-based years.1 five The lease contained a restric operator grocery stores. Kimeo filed preventing tive covenant from leasing SES asking the trial court to complaint declare in the center to space another the restrictive covenant unenforceable. Kroger operated store. a super— After a hearing granted the trial court at premises the leased until 1982. request, reasoning Kimeo's that "the use of 1983, Kroger In all closed three of its property the and the area surrounding Tippecanoe County assigned stores and changed have radically ... that Markets, the Pay Super their leases to Less so Inc., original purpose of the covenant can operated which at the time two other stores within two miles of the be achieved." Sagamore assignment, Center.2 After the reversed, The Court of conclud Pay opened Less stores two of the ing Tippecanog's space lease the sites, Kroger Pay former but Less cheer appliance an space store and the empty fully concedes that it never intended to resulting Target from the move are not operate Sagamore the changes sup sufficient covenant acquired Sagamore Center and lease port invalidating the restrictive covenant. purpose excluding competitors for the II, Tippecanoe Assoc. LLC Kimco Lo 1984, nearby Pay stores. In Less sub fayette 671,Inc., 438, 811N.E.2d 448-49 Sagamore space leased its to H.H. Gregg, (Ind.Ct.App.2004). Tip The result is that dealer, appliance who remains in that pecanoe, operates grocery which stores defendant, today.3 location Tippeca within few miles is allowed II, LLC, noe Associates is a limited Habili to enforce a restrictive covenant that nei ty company family owned control ther ling Pay Tip benefits the center nor Less and current holder of Sagamore Pay leasehold pecanoe's Less interest Gregg op- 1974, 3. If HH. chooses to exercise its 1. In lease was amended lease tions, agreement provide modification right occupy that the it has the to continue to Sagamore space the former at Center 1, began initial lease on June 1974 and ended 1, expiration until of the lease on June 31, 1994. May 2014. many 2. The record is not clear as to how 1997, 671, Inc., Lafayette pur- 4. Kimco stores, any, Pay operated other SES, subject the center from to the chased county. Gregg Less lease and the HH. sublease. (its (1963) 261, 272 Gregg). sublease to H.H. We now 246 Miss. 153 So.2d ("Tremendous outlays capital of venture grant transfer. required and risk are and entailed from Restrictive Covenants supermarket tenant as well as the *3 Shopping Centers developer-landlord. Restrictive covenants permits cove Indiana law restrictive ancillary in the nature of and reasonable justi nants but finds them disfavored and absolutely required are to in- restraints only unambigu fied to the extent are place duce investors to a new venture in and enforcement is not adverse to ous Stores, area."); untried such Wal-Mart Cir., v. public policy. Dupont One LLC Mkts, Inc., Ingles N.C.App. Inc. v. 158 Auburn, LLC, 507, 819 N.E.2d 516 Dupont S$.E.2d ("The 414, 111, 116 581 de- (2003) (Ind.Ct.App.2004). Doubts should be re velopment shopping of new centers re- property solved in favor of the free use of quires outlays capi- tremendous of venture However, against and restrictions. Id. by prospective tal and risk tenants as well quite willing courts have been to enforce landlords; as restrictive covenants restrictive covenants written shopping against competition unwanted consis- though“ they lease contracts even center tent with the interest such devel- prevent competition within the center. Thus, opment."). restrictive covenants Almacs, See, Drogin, 771 eg., Inc. v. shopping have allowed centers to offer (D.R.I.1991); 506, F.Supp. 513 Whitins diversified, "noncompetitive in- and but Kotseas, Plaza, 85, ville Inc. v. 378 Mass. terrelated, designed businesses not to 248, (1979); Kingpin, 252-583 390 N.E.2d just many serve one need but as needs of Dev., 256, Inc. v. Hillerest 267 Minn. 126 the consumer as is within the eco- feasible 435, (1964); N.W.2d 489 Keith Hardware shopping nomic framework center." (Tenn.Ct. White, 500, v. 956 S.W.2d 501 (1964). Annotation, 4, 97 11 Ac- A.L.R.2d ("[Rlather App.1997) restricting com than Valley Prop., King's Dep't cord Inc. v. petition, such covenants serve to facilitate Inc., 92, Tewksbury, F.Supp. Stores 505 in par trade and induce to rent tenants (D.Mass.1981) (restrictive covenants are shopping ticular center.... is reason "necessary inducements to cen- want plaintiff able for the to to avoid com orderly ter tenants which facilitate the center."); petition 49 Am. within development for commercial harmonious (1995). § Jur.2d Landlord and Tenant TO property"). All of use of real these cited in shopping Restrictive covenants center to support limiting reasons the covenant have, part, found leases the most been protection of current tenants of the center. unreasonably to not restrain Ap- Both the trial court and the Court generally and have been found to be con- to peals agreed that the initial covenant sistent with the interest. The ratio- Kroger evaluating was enforceable. on the to nales for this result need Kimeo's claim that the covenant ereated in focus encourage develop- in new investment enforceable, the trial 1982 was no develop- ment both the and Court of focused court See, eg., significant whether there have been er and its tenants. Vi Nat'l Co., 257, Bank v. Chittenden Trust 148 Vt. think changes the cireumstances. We only there is one factor that is central and 465 A.2d Courts have recognized that and tenants of Kroger landlords dispositive here. Because the site Sagamore longer being centers invest considerable sums no Center is location, money attractive to make the center used as a there is within the center for the re- interest customers. Parker Lewis Grocer protect. Pay strictive covenant to Less is operates or successor store in attempting use the covenant to restrict for its stores located Finally, the issue not whether at other locations. was within its covenant violates federal or state antitrust Less,
rights assign Pay the lease to law. Judge We assume Posner was cor- Less had chosen continue rect passing his observation deeming operations at the "implausible" a claim that federal antitrust support lease would enforcement prevented law a drug store from invoking However, Pay covenant. center covenant to exelude a grocery operations abandoned in the cen- competitor.5 But the issue here is not *4 thereby ter and severed the restrictive whether the antitrust prevent laws en occupancy. covenant from the forcement of such a covenant. It is wheth er state permits law obviously
The enforeement not receives by a tenant of the but in permitting benefit from a the hands transfer of of one occupied who has never the center unlikely the covenant. And it seems that a merely attempts purchase to right the prospective signifi- new tenant would be to exclude from a remote site. cantly by motivated the prospect of re- (See- As the comment couping by selling its investment a restric- to the Restatement ond) nearby explains: tive covenant to a if Contracts competitor the of event, tenant's In any business fails. the restraint may [TJhe be unreasonable in effect of either of permitting a covenant to two situations. be sold The first oc- separately curs when the operation greater from the it restraint is than is de- necessary signed protect legitimate to the protect perhaps to is inter- to add some promisee. ests of lessee, minimal the The original value to the second occurs but at when, though even the restraint is not considerable cost to the lessor and the public. greater None of these than necessary suggests protect rationales to those interests, promisee's the pro- need for powerful a permit reason to secondary tection outweighed by hardship is the to in restrictive covenants divorced promisor the likely and the injury to the real designated estate to from.the protect. public. It thing is one to conclude that restrictive in leases of (Second) § Restatement Contracts 188 covenants of center tenants should be enforceable to emt. a example This restraint is an protect the of interests the center and of a restriction that "proscribes types of those tenants who have a current protecti- activity more than necessary extensive to ble interest within the quite It is protect engaged by those in promisee." the permit another to § enforcement of an anti- Id. emt. Usually d. a restriction is competitive covenant by someone foreign unenforceable it prohibits is because it an to the center who simply acquires right the "type activity" overbroad promi- the to exclude competition without making any sor. it protected this case is the activi- in investment ty And the interest promisee the that needs nar- to be lessee, original case, of the Kroger in 'bring justification rowed to the and the may fully well be served permitting existence of the harmony. restriction into enforcement of the long covenant as as it usually is true that this concern comes clause, expressly leases, 5. The issue was not shopping-center addressed common in is occasionally challenged grounds, Walgreen on antitrust Prop. Co. v. Sara Creek ..."). (7th Cir.1992) ("Such day ... but that is an issue for another exclusivity agreement context of an not up here, however, it is whether is reasonable any grocery equally appli- deny public access compete, but rationale agreement prevents deny and to the center cable where the center leasing to of a center from perhaps owner of a store and the benefit that is no specified type of store largest tenant at all for one of its in the center. present spaces. Enforcement of the covenant of a non-tenant runs afoul of the hands also runs afoul of the The restriction against restrictive covenants policy excessively concern: it is burden- second justified by legitimate unless concerns com- promisor to the and the some the inter- promisee against balanced promisee's need for pared to a remote to the ests of the and the detriment There is little doubt that protection. above, policy promisor. explained As may be competitor in same center usually justifying covenants store, given evenif overall harmful to centers-protection encouragement is unharmed. The fact that inapplicable investment-is here. tenants demand and seek enforce only policy the dissent identifies is naked Indeed, that. covenants demonstrates *5 That is not a justification for the restriction is incentive enforcement of contracts. were, invest-assuming policy the ten- reason. If it all re- for the tenant to sufficient expects ant to be benefited from the re- strictive covenants would be enforceable. striction, Similarly, Tippecanoe's effort to recognizes But the law that enforce the covenant demonstrates its be- limit the may under some cireumstances a lief that sales will flow to new store ability private parties arrange of their that placed one is in the follows affairs. This is such case. center. certainly the convenience of the sum, because of the landlord are served the interest site as a relinquished having a store location, it cannot enforce the restric- under the Act is The issue Sherman prevent tive covenant to cen- whether there is an adverse effect on leasing ter from to a tenant. We competi competition, i.e. whether overall hold that the restrictive covenant is not drugstore pre tion suffers if a second is stop enforceable and cannot be used to operating single shopping from in a cluded protect the holder's inter- competition USA, Inc., States v. Visa United at other site. ests some (2d Cir.20083)(in a Sher Conclusion action, proper inquiry man Act "the there has been 'actual whether declaratory affirm trial court's We adverse competition as a whole in the effect judgment that the restrictive covenant has (emphasis original)). relevant market.'" occupancy and is been severed from the A has no typical covenant unenforceable.6 such effect because customers cen seeking the one to en ter are served RUCKER, JJ., concur. DICKSON and covenant,
force the
and other locations for
See,
SULLIVAN, J.,
separate
dissents with
competitors
plentiful.
eg.,
Keith
SHEPARD, C.J., joins.
Hardware,
opinion in which
Judge Posner challenges has called covenant unenforceable and mandate that the enforceability of shopping center re all such covenants are and will be unen- strictive covenants on antitrust grounds they forceable whenever are "severed from "implausiblie] ... given the competition occupancy." among This existing malls" rewrites Walgreen Co. v. Sara (7th Property Creek commercial ability leases and restrains the Cir.1992) parties J.). (Posner, the future to enter them on And two scholars have observed that: beneficial, terms mutually view to be
A noncompetition regardless clause in a lease of whether there is demon- property ordinarily poses no threat to strable adverse effect competition. the decision of the Court
I would affirm Appeals.
SHEPARD, C.J., joins. LACEY, Appellant
William
(Petitioner below), Indiana, Appellee
STATE of below).
(Respondent
No. 49S04-0502-PC-57.
Supreme Court Indiana. 23,2005.
June Carpenter, K. Public Defender of
Susan Indiana, Brien, Deputy Public De- Liisi *7 fender, Indianapolis, Appellant. for Carter, Attorney Steve General Indiana, Deputy Attor- Kopp, Daniel Jason General, ney Indianapolis, Appellee. for SULLIVAN, Justice. Lacey convicted
Petitioner William was March, 1998, robbery of a carrying handgun grocery store and parties agree a license. The without man the evidence at trial indicated that the hat who robbed the store wore baseball hat on the police and that the found the following the store the rob- ground outside June, 1999, bery. Lacey pro filed a se In Au- petition post-conviction relief.