IN THE COMMON PLEAS COURT OF FAIRFIELD COUNTY, OHIO BM-CLARENCE CARDWELL, INC., : Plaintiff, : Case No. 12CV694 v. : Judge Berens COCCA DEVELOPMENT LTD., ET AL, Defendants. : : : ENTRY REGARDING MOTIONS FOR PARTIAL SUMMARY JUDGMENT AS TO ENFORCEABILITY AND MOTION TO STRIKE This matter is before the Court upon (1) Plaintiff BM Clarence Cardwell, Inc. s ( Plaintiff ) Motion for Partial Summary Judgment Concerning Enforceability of the Restrictive Covenant, filed August 2, 2013, (2) Defendants Dolgencorp, LLC and Dollar General Corporation s ( DG ) Cross-Motion for Partial Summary Judgment as to Enforceability, filed August 19, 2013, and (3) Plaintiff s Motion to Strike DG s Cross-Motion, filed September 3, 2013. Each of these motions has been briefed, both in support and opposition thereof, extensively. A non-oral hearing on these motions was scheduled for November 8, 2013. STATEMENT OF THE CASE The Court set forth the underlying facts of this case in detail in its Entry Overruling DG s Motion for Partial Summary Judgment as to the Issue of Notice (Sept. 10, 2013). The facts as related in said Entry are incorporated in full herein. LAW & ANALYSIS A. Plaintiff s Motion to Strike DG s Cross-Claim Plaintiff filed a Motion to Strike DG s Cross-Claim Motion for Partial Summary Judgment on August 19, 2013, arguing that DG s cross-motion raised issues that went well 1
beyond the Court s clear instruction to limit briefing to the issue of notice. DG argued that Plaintiff opened the door concerning the issue of enforceability when it filed its own Motion for Partial Summary Judgment regarding not only notice, but also the enforceability of the restrictive covenant. The Court agrees with DG, and finds Plaintiff s argument, and insistence that it cannot adequately respond to DG s cross-motion without further discovery, incompatible with its own motion concerning the exact same topic. It is clear to the Court that both parties motions for partial summary judgment were submitted with the aim of obtaining a legal determination from the Court as to the enforceability of the restrictive covenant. The Court will do so, but will do so fairly, upon consideration of both parties motions. However, the Court notes that its analysis will be limited to the issue of enforceability of the covenant only. The Court will decline to address any ancillary topics the parties may have attempted to bootstrap to their enforceability only motions for partial summary judgment. The parties are free to brief said issues at a later date within the scope of a properly styled motion. Plaintiff s Motion to Strike DG s Cross-Motion for Summary Judgment as to Enforceability is therefore OVERRULED. B. The Parties Motion and Cross-Motion for Partial Summary Judgment Regarding the Enforceability of the Restrictive Covenant 1. General Standard Ohio Civ. R. 56(A) and (B) permit both plaintiffs and defendants to move for summary judgment on all or part of any claim. Summary judgment is appropriate when (1) there is no genuine issue as to any material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to 2
the party against whom the motion for summary judgment is made. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375 N.E.2d 46, 47 (1978). The party moving for summary judgment has the initial burden of demonstrating the absence of any genuine issues of material fact, and must specifically delineate the basis for which summary judgment is sought in order to allow the opposing party a meaningful opportunity to respond. Mitseff v. Wheeler, 38 Ohio St. 3d 112, 116, 526 N.E.2d 798, 802 (1988); Dresher v. Burt, 75 Ohio St. 3d 280, 293, 1996-Ohio-107, 662 N.E.2d 264, 274. In so doing, the moving party cannot rest on bare conclusory assertions that the non-movant lacks evidence or cannot prove her case. Rather, the moving party must be able to specifically point to some evidence of the type listed in Civ. R. 56(C)[.] Dresher, at 293. If the moving party fails to meet its burden, summary judgment is inappropriate; however, if the moving party meets its initial burden, the burden then shifts to the non-moving party to set forth specific facts showing that there is a genuine issue for trial. Id. at 294. If the non-movant does not so respond, summary judgment, if appropriate, shall be entered against the nonmoving party. Id; Egli v. Cong. Lake Club, 5th Dist. No. 2009-CA-00216, 2010-Ohio-2444 (June 1, 2012), appeal not allowed, 126 Ohio St. 3d 1600, 2010-Ohio-4928, 935 N.E.2d 46; Ohio Civ. R. 56(E). In evaluating the facts and evidence provided by the parties in a summary judgment motion, the Court must construe all inferences and factual disputes in favor of the nonmoving party. See Civ. R. 56(C) (stating that the non-moving party is entitled to have the evidence or stipulation construed most strongly in the party s favor ). The underlying material facts of the case are largely undisputed. The question, therefore, is which party is entitled to judgment as a matter of law. 2. Law & Analysis Specific to the Case 3
The parties motions for partial summary judgment are limited to one issue: whether the restrictive covenant set forth in the deed is enforceable against DG. Ohio case law mandates that for a restrictive covenant to run to a successive grantee, four requirements must be met: (1) the successive grantee has actual or constructive notice of the covenant; (2) the original parties intend for the covenant to run with the land; (3) the covenant touches and concerns the land; (4) privity exists between the parties. LuMac Dev. Corp. v. Buck Point Ltd. Partnership, 61 Ohio App.3d 558, 562, 573 N.E.2d 681 (1988); Keil v. Thompson, 5th Dist. No. 03 CA 10, 2004-Ohio- 6976, 14 (Dec. 17, 2004). The Court will address each of these four requirements separately. a. Actual or Constructive Notice The Court hereby incorporates its analysis and conclusion set forth in its Entry Overruling DG s Motion for Partial Summary Judgment as to the Issue of Notice (Sept. 10, 2013). In said Entry, this Court determined (1) DG did not qualify as a bona fide purchaser under Ohio s recording statute and (2) even if DG did constitute a bona fide purchaser, Defendant still had constructive notice, as the deed containing the restrictive covenant was properly recorded before DG obtained any legal interest in the property pursuant to the estoppel by deed and after-acquired property doctrines. Therefore, the Court finds that DG had constructive notice of the restrictive covenant at issue. b. The Original Parties Intent An important factor in determining whether the original parties intended for the original covenant to apply to successive grantees is the plain language of the deed. Keil, supra, at 14. Specifically, Ohio appellate courts have determined that when parties use terms such as successors or assigns in the deed, it clearly reflects upon and is indicative of the intention 4
of the parties to create a restrictive covenant that runs with the land. Lone Star Steakhouse & Saloon of Ohio, Inc. v. Quaranta, 7th Dist. No. 01CA60, 2002-Ohio-1540, 19 (Mar. 18, 2002). The Court has reviewed the language of the deed, which was attached as Exhibit 2 to Plaintiff s Motion for Partial Summary Judgment. The deed, in pertinent part, states: The easements and restrictions granted in this deed shall run with the land herein conveyed in fee simple and bind Grantor and Grantee, and their respective successors and assigns. The Court finds this to be a clear and unambiguous reflection of the parties intent for the restrictive covenant concerning the sale of groceries to run with the land. Therefore, the Court finds that the original parties intended for the restrictive covenant to apply to successive grantors and grantees, thereby establishing the second factor. c. Touch and Concern the Land The third factor a court must consider in determining whether a restrictive covenant binds successive grantees is whether the covenant is a real covenant or a personal one. Real covenants are said to run with the land and are enforceable by all subsequent assignees and grantees of the original parties. Personal covenants are generally only enforceable against the original grantor and grantee. Lone Star, supra, at 15. Plaintiff argues that the restrictive covenant at issue is a real covenant and is therefore enforceable against DG. DG contends that the restrictive covenant is a personal covenant, drafted for the personal use of the original parties only. A real covenant requires that its performance or non-performance must affect the nature, quality, value, or mode of enjoyment of the estate demised to which it must relate. Capital City Cmty. Urban Redevelopment Corp. v. City of Columbus, 10th Dist. Not. 2009-Ohio-6835 (Dec. 5
24, 2009). Otherwise and commonly stated, a real covenant must touch and concern the land. Touching or concerning the land is a determination of whether the property was made more useful or valuable by the covenant. Id. at 12; Glenmoor Properties Ltd. P'ship v. Josephine Joseph, 5th Dist. No. 2003CA00126, 2003-Ohio-6152 (Ohio Ct. App. Nov. 17, 2003). Otherwise stated, a covenant touches and concerns the land when it increases the value of the unrestricted property and decreases the value of the restricted property by limiting its use. LuMac Dev. Corp. v. Buck Point Ltd. P'ship, 61 Ohio App. 3d 558, 563, 573 N.E.2d 681 (1988). Further, covenants touch and concern the land if the restrictive covenant relates to the ongoing operation of a business located on the land, and is deeply intertwined with the business s general functions. See Capital City, supra, at 16 (finding a restrictive covenant touched and concerned the land when it affected such things as the business s maintenance, scheduling, income, purchasing, advertising, and marketing. ). The restrictive covenant at issue states: Grantee covenants and agrees that the Fee Parcel shall not be used for the distribution of gasoline and liquid fuels and that no retail store located on the Fee Parcel shall offer groceries and/or alcoholic beverages as its primary products.... whether by Grantee or Grantee s successors or assigns. The Court initially notes that again, the plain language of the covenant demonstrates that the parties intent to bind any and all of Grantee s successors or assigns. Further, the Court finds this covenant increased the value of the dominant estate while decreasing the value of the servient estate by restricting its use: the covenant (1) increased the value of Plaintiff s parcel by allowing Plaintiff to operate its business without direct competition from any future business located on the adjoining parcel, and (2) decreased the value of the parcel now possessed by DG by restricting the distribution of certain merchandise. Courts have specifically found that this 6
ability to be free from competition imputes sufficient value to touch and concern the land. See Lone Star Steakhouse & Saloon of Ohio, Inc. v. Quaranta, 7th Dist. No. 01CA60, 2002- Ohio-1540, 21 (Mar. 18, 2002). Further, the Court finds that this restrictive covenant, limiting what items may or may not be sold or distributed is deeply intertwined with the ongoing operation of Plaintiff s business located on the property, i.e. the operation of a grocery store. For all of these reasons, the Court finds that the restrictive covenant in the deed regarding the distribution of gasoline, groceries, and/or alcoholic beverages touches and concerns the land. d. Privity Privity of estate is generally required to enforce a restrictive covenant. See Lone Star, supra, at 22. Privity can be defined as the mutual or successive relationship to the same rights of property. Berardi v. Ohio Tpk. Comm'n, 1 Ohio App. 2d 365, 370, 205 N.E.2d 23 (1965) (citing Black s Law Dictionary). Otherwise stated, privity requires successive ownership or possession of the identical estate in the same property. Metalworking Mach. Co., Inc. v. Fabco, Inc., 17 Ohio App. 3d 91, 92, 477 N.E.2d 634 (1984) (emphasis added). The parties have provided only a cursory review of case law and argument pertaining to this issue. DG argues that no contractual privity exists between it and Plaintiff, as there is no dispute that DG never entered into any contract with Plaintiff. Plaintiff argues that, for the purposes of enforcing the restrictive covenant at issue, privity of estate exists between it and DG. Specifically Plaintiff asserts that DG succeeded to an estate formerly held by Plaintiff, thereby establishing privity between the parties. 7
The Court finds that privity of estate between Plaintiff and DG does not exist. However, the Court s determination does not rest on the non-existence of a contract, as privity of estate does not require a contractual relationship between parties. As the case law makes clear above, privity of estate requires the succession of the identical estate in the same property. A leasehold interest is not the same as a fee simple interest: a leasehold is a lesser estate than that of fee simple ownership. See Rawson v. Brown, 104 Ohio St. 537, 136 N.E. 209 (1922) (finding that even perpetual leaseholds do not constitute fee simple estates). Rather, when a lessor leases property, the lessor retains ownership: the lease merely conveys the right to possession and/or use to the lessee. Thus, the fee simple estate remains in the lessor, his heirs, devisees, or assigns. Id. at syllabus. Prior to 2004, Plaintiff owned a large parcel of real property located in Baltimore, Ohio. In 2004, Plaintiff executed a Sale Agreement with co-defendant Cocca Development, Ltd., whereby it conveyed 5.81 acres of said property to Cocca. Subsequently, Cocca entered into a Lease Agreement with DG. Thus, in summary: (1) Cocca currently owns the real property at issue in fee simple; (2) DG has a leasehold interest in said property; and (3) Plaintiff currently owns the adjoining property (i.e. the portion of its original tract of land that it did not sell to Cocca) in fee simple. DG, as a lessee of Cocca, is not a successor of the identical estate of the same property as Plaintiff and Cocca. As stated above, a leasehold estate is not identical to a fee simple estate. Put differently, DG does not share a successive relationship to the same rights of property as Plaintiff and Cocca. A lessee does not have the same rights of property as does an owner in fee simple. Thus, the Court finds privity does not exist between Plaintiff, as owner of the dominant estate, and DG, as lessee of the servient estate. 8
The Court emphasizes that this determination does not leave Plaintiff without recourse. Nothing in this opinion should be construed as precluding Plaintiff from seeking relief against, and enforcement of the restrictive covenant through, Cocca (owner in fee simple of the servient estate). CONCLUSION Because no privity of estate exists between Plaintiff and DG, the Court finds that the restrictive covenant set forth in the deed is not enforceable directly against DG. DG s Motion for Partial Summary Judgment as to Enforceability is SUSTAINED but only to the issue of enforceability. The Court declines to rule on any ancillary arguments not relating to enforceability that were set forth in Defendant s motion. Plaintiff s Motion for Partial Summary Judgment Regarding Enforceability of the Restrictive Covenant is therefore OVERRULED. IT IS SO ORDERED. Judge Richard E. Berens Copies to: Plaintiff c/o Counsel Defendants c/o Counsel Nita Hanson, 191 W. Nationwide Blvd., Ste. 300, Columbus, OH 43215 William Myers, 100 DeBartolo Pl., Ste. 400, Boardman, OH 44512 Al Mokhtari, 300 E. Broad St., Ste. 590, Columbus, OH 43215 9