The 11th Circuit recently ruled on a cross-appeal filed by the parties in the Winn Dixie Exclusive Use suit (originally brought in the Southern District of Florida) that all retail shopping center developers have had on their collective radar.  The remand, in part, to allow the district court to apply the laws of the relevant home states where the Winn Dixie stores are located could result in some important authority relative to the application of exclusive use clauses in leases, which should trigger shopping center landlords to pay close attention to the drafting of these clauses when they are required to give them to lure an anchor tenant.  In addition, the facts applied may impact landlord “behavior” down the line – providing guidelines as to what violates the exclusive.

In this case, Winn Dixie sued certain competitors, alleging violations of restrictive covenant grocery exclusives contained in its leases with shopping centers.  Following the bench trial, the United States District Court for the Southern District of Florida, 886 F.Supp.2d 1326, entered judgment for plaintiffs in part and for defendants in part. The parties cross-appealed.

Holdings: The Court of Appeals, Marcus, Circuit Judge, held that:

  1. remand was required, under Erie, where district court failed to give effect to Florida intermediate  appellate case;
  2. remand was required to allow district court to properly apply law of home states in interpreting grocery exclusive terms;
  3. exclusion of expert testimony on damages was not abuse of discretion;
  4. there was no strict privity of estate, as required under Mississippi law as predicted by the federal court, for enforcement of restrictive grocery exclusives covenant;
  5. restrictive covenant in supermarket’s lease with shopping  center  could  not  be  enforced  against competitor whose lease was signed before that of supermarket;
  6. shopping  center  landlords  were  not  necessary parties to action;
  7. supermarkets were not required, under Florida law, to make a reasonable demand for compliance prior to seeking enforcement of restrictive covenants; and
  8. continuing tort doctrine applied to toll Florida’s five-year limitations period for enforcing a restrictive covenant.

Affirmed in part, reversed in part, and remanded.

The remand in Item (2) above is the part that caught our attention for this post.  Stay tuned!  We will as we always do!  There could be new law for lease exclusives very soon.

Do you have leases with exclusives and/or restrictive use covenants (in other private title documents) for shopping centers and retail facilities?  How will this case affect you?  Interesting question, the answer to which, will depend on the wording of your exclusive, the status of the law in your jurisdiction and other facts, as well as further outcomes from this Winn Dixie case on remand.

Investing, developing and operating retail real estate assets require a mix of real estate, land use, regulatory, environmental, construction, finance, leasing, litigation and zoning experience.  We represent clients of all sizes and types in acquisitions, dispositions, development, leasing, managing/operating and financing of retail facilities both large and small – including malls, outlet malls, lifestyle shopping centers, power centers, and strip centers as well as shadow retail facilities in mixed-use master developments.