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Lowes Foods, LLC v. Burroughs & Chapin Co., Inc.

United States District Court, D. South Carolina, Florence Division

January 30, 2019

Lowes Foods, LLC, Plaintiff,
v.
Burroughs & Chapin Company, Inc., Grand Dunes Development Company, LLC, and Myrtle Beach Farms Company, Inc., Defendants.

          ORDER

          R. Bryan Harwell, United States District Judge.

         This matter is before the Court on the parties' cross motions for summary judgment. [ECF Nos. 71 & 73]. For the reasons stated below, the Court grants in part and denies in part Defendants' motion for summary judgment and denies Plaintiff's motion for summary judgment.[1]

         Background

         On September 15, 2006, Plaintiff Lowes Foods, LLC ("Lowes") and Defendant Grand Dunes Development Company, LLC ("GDDC") entered into a lease agreement ("Lease") for property to be used as a location for a Lowes Foods retail grocery store. [Complaint, ECF No. 1, at ¶ 9].

         Lowes alleges that Burroughs & Chapin Company, Inc. ("B&C"), who is the parent company of Defendants GDDC and Myrtle Beach Farms Company, Inc. ("MBF"), was developing the area as the Grande Dunes community. Id. at ¶ 11. The new Lowes Foods grocery store was to be located at the Grande Dunes Marketplace, 970 Cipriana Drive, Myrtle Beach, South Carolina. Id. at ¶ 9.

         In negotiating the Lease, Lowes alleges that it discussed with Defendants two critical issues regarding the Lease and the new grocery store. First, it was important to Defendants that the Lowes store at the Grande Dunes development be a high quality, “four-star project” befitting an upscale shopping center. Second, it was critical to Lowes that the Lease contain a “radius restriction” protecting Lowes from the development of a competing grocery store within a two-mile radius of the Lowes store at Grande Dunes. Id. at ¶ 12.

         Lowes alleges the radius restriction was the subject of communications between Jeffrey LeForce, Chief Commercial Real Estate Officer for B&C, and Roger Henderson, Vice President of Real Estate for Alex Lee, Inc., which is Lowes's corporate parent. Id. at ¶¶ 13-20. Lowes viewed the communications between LeForce and Henderson to be a clear representation by Defendants that (1) they knew the importance of the radius restriction to Lowes, (2) they knew Lowes would not enter into the Lease if it thought its sales might be diminished as a result of a competing grocery store within the radius restriction, and (3) they knew the radius restriction must be effective throughout the term of the Lease.[2] Id. at ¶ 21.

         Lowes alleges that it signed the Lease on November 3, 2006, in reliance on the representation that the radius restriction would be effective throughout the term of the Lease. Id. at ¶ 22.

         Section 7.4.3 of the Lease (the "radius restriction") provides:

In addition, Landlord, any entity which controls, is controlled by or under common control with Landlord, any entity which acquires all or substantially all of Landlord's assets, or Landlord's affiliates, successors or assigns (collectively, the “Landlord Entities”), shall not (directly or indirectly) develop a supermarket on any property within a radius of two (2) miles from any portion of the Demised Premises; provided, however, at any time after the seventh (7th) anniversary of the Commencement Date, Landlord and each of the Landlord Entities may develop a grocery store with up to 25, 000 square feet on any property within such radius other than property owned by Landlord or any of the Landlord Entities that is contiguous to the Center.

[Lease, ECF No. 1-1 at 28-29].

         Lowes alleges it would not have entered into the Lease without the radius restriction and the Defendants knew the radius restriction must remain effective throughout the term of the Lease to adequately protect Lowes's interests. [Complaint, ECF No. 1 at ¶ 24]. Lowes alleges that it made a greater than normal financial investment in the Lowes store at Grande Dunes to comply with Defendants' demand that the Lowes store at Grande Dunes be a high-end, "four star" store befitting an upscale shopping center. Id. at ¶ 25.

         Lowes alleges that in or about December 2013, B&C sold a substantial amount of its property within the Grande Dunes development to LStar Management (“LStar”). Included in the sale was a tract of land owned by MBF, located at the northwest corner of 82nd Avenue North and North Kings Highway in Myrtle Beach (the "New Development"), which was also within the two-mile radius restriction in the Lowes Lease. MBF's sale of the "New Development" to LStar did not include a restriction like the one included in the Laniado Deed.[3]

         On October 31, 2014, LStar, along with a company called Crosland Southeast, issued a press release stating its intention to develop a new commercial center at the New Development, anchored by a grocery store of approximately 45, 000 square feet. [Complaint, ECF No. 1 at ¶ 28; Deposition of Steven Vining, ECF No. 95-3 at 43].

         Lowes states that a 45, 000 square foot Publix grocery store at the New Development is now open and operating less than a mile from the Lowes store, in violation of the radius restriction. Id. at ¶ 34; Henderson Depo. at 146.

         Lowes filed this case on February 4, 2016, against Defendants Burroughs & Chapin Company, Inc. ("B&C"), Grande Dunes Development Company, LLC ("GDDC"), and Myrtle Beach Farms Company, Inc. ("MBF"), asserting four claims for relief: 1) fraud in the inducement; 2) breach of contract; 3) breach of contract accompanied by a fraudulent act; and 4) violation of the South Carolina Unfair Trade Practices Act, SC Code Ann. § 39-5-140.

         On August 31, 2018, Defendants filed a motion for summary judgment as to all of Lowes's claims. Lowes filed a cross-motion for summary judgment on its breach of contract claim. In its brief in response to Defendants' motion for summary judgment, Lowes indicated that it is not proceeding on its claim for fraud in the inducement. The motions have been fully briefed and are ripe for review.

         Summary Judgment Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (2010). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record . . .; or (B) showing that the materials cited do not establish the absence or presence of a ...


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