By Patrick Southern

Today, in a published opinion in the civil case of Lord & Taylor, LLC v. White Flint, L.P.,  the Fourth Circuit affirmed a ruling from the District of Maryland which refused to stop plans for redevelopment of a now-vacant shopping mall. It did so over the objections of the plaintiff, Lord & Taylor, which had argued the plans were barred by an existing Reciprocal Easement Agreement (“REA”) between the parties.

The Parties Had a Long-Standing Relationship

In 1975, White Flint began discussions with Lord & Taylor about developing a store at a new mall in Maryland. The parties ultimately agreed Lord & Taylor would serve as an anchor tenant in a building detached from the mall itself.

As part of their agreement, they entered into the REA, which bound White Flint to operating a three-story mall on the site. Any changes to the mall were to be approved by Lord & Taylor. The REA was to remain operative until at least 2042, and Lord & Taylor had an option to extend it until 2057 by exercising its final option to renew its lease.

The relationship was initially positive, but business at the mall steadily declined. By 2013, 75 percent of the mall’s tenants had left, and the mall was ultimately shuttered permanently early in 2015.

In October 2012, the local county government approved plans to tear down the mall and redevelop the site into a mixed-use development with apartments, parks, a hotel, and high-rise office buildings. The Lord & Taylor store was to remain in place.

Lord & Taylor Sought Declaratory Judgment and Injunctive Relief

Lord & Taylor filed an action to stop White Flint from going forward with the redevelopment plan, saying the REA promised Lord & Taylor’s store would have a “first class high fashion shopping center” adjacent to it for the duration of its lease. It said the new plans violated the terms of the REA and would negatively affect the store’s business.

Lord & Taylor sought declaratory judgment that the REA barred the plans and a permanent injunction that would prohibit White Flint from replacing the mall with the proposed “town center” development.

White Flint moved for partial summary judgment, arguing it would be infeasible for the courts to enforce an injunction requiring what was, by then, a mostly empty mall to resume operations and then to maintain status as a “first class high fashion shopping center” until 2057. White Flint further argued that halting the redevelopment project was against the public interest given the time and expense already devoted to the project.

The District Court granted White Flint’s motion, concluding an injunction would be unworkable in light of the advanced stage of the project.

Lord & Taylor Appealed On Two Grounds

On appeal to the Fourth Circuit, Lord & Taylor argued two separate issues: (1) that the district court erred by failing to apply the correct Maryland law to its request for injunctive relief, and (2) that the district court erred in judging the injunctive relief it sought would not be feasible.

The Fourth Circuit rejected both arguments, adopting similar reasoning to that of the District of Maryland in choosing to affirm the lower court’s decision.

The District Court Applied the Proper Legal Standards in Rendering Judgment

Lord & Taylor argued a proper application of Maryland law would necessarily mean an injunction should be granted. It indicated Maryland law strongly favors injunctive relief for breaches of restrictive covenants, to the point that other factors such as the public interest or the availability of monetary damages to compensate for a breach aren’t to be considered.

But the Fourth Circuit disagreed. It noted that even the cases cited by Lord & Taylor said that injunctive relief is subject to “sound judicial discretion.” Further, Maryland law makes clear that trial courts may take account of feasibility concerns, such as those cited by the District Court in this case, in considering injunctive relief for breach of a restrictive covenant.

The Fourth Circuit indicated Maryland courts have made clear that injunctions may be denied if they would cause courts to have to engage in “long-continued supervision” or “enforcement of the injunction would be ‘unreasonably difficult.'” Thus, it rejected Lord & Taylor’s argument.

The District Court Correctly Ruled Injunctive Relief Was Infeasible

Lord & Taylor further argued that the District Court incorrectly ruled that injunctive relief in this case would be infeasible. The Fourth Circuit reviewed that decision under an abuse of discretion standard and affirmed the lower court ruling. In making its decision, the Fourth Circuit noted that the practical realities of the situation didn’t weigh in favor of an injunction.

Much of the mall was vacant, so enforcing the REA would have necessitated an affirmative injunction ordering White Flint to transform the mall back into a “first class high fashion shopping center.” Such an order is difficult to draft with specificity, and also difficult to enforce. The court would be left to enforce detailed provisions involving parking and interior access roads, potentially for a protracted period of time, and such enforcement is beyond the level of judicial involvement that is practical.

While Lord & Taylor had indicated a “negative injunction” (which would merely bar the redevelopment plans from going forward) would be acceptable, the Fourth Circuit said that, too, was unrealistic. Such an injunction would freeze in place a vacant mall, and would essentially be a judicially-mandated blight on the area. The court was not prepared to take such a step, doing so would be against the public interest.