The Law

Lease Does Not Prohibit Wal-Mart by Ron Davis Efforts to halt Wal-Mart’s plans for the parking of its customers next to a Charlotte, North Carolina, CVS store have failed. Those plans were disputed by CVS from the time developers of the property announced their intensions for the addition of the Wal-Mart store to the shopping center. That’s because those plans, if sanctioned, would violate a restrictive covenant. Or so CVS contended. In fact, the land proposed for the Wal-Mart store’s parking did indeed raise questions. As noted by CVS, its lease stated that “during the time of the existing CVS lease…no owner of any portion of [the property in question] shall allow the parcel to be leased or to be used for the purpose of a health and beauty aids store, a drug store, a vitamin store and/or a pharmacy.” There was no question as to Wal-Mart’s plans for its new store. It intended to sell, among other items, health and beauty aids, drugs and vitamins, as well as operate a pharmacy. Such plans seemed to offer items and services that would be alike or similar to those offered by the CVS store. Moreover, CVS would be required the share its parking lot with other “retail establishments.” CVS protested to the developers of the property that such uses would indeed violate their previous agreement. In turn, both parties consented to allow the courts to decide the matter. At a subsequent hearing, a North Carolina judge granted the developers’ request. CVS responded to that decision with an appeal, contending that the courts erred in granting the developers’ position. CVS argued that the correct decision should have been that the proposed use of the disputed land for Wal-Mart’s use and convenience would indeed violate the agreement between the two parties. The Court of Appeals of North Carolina sided with the landowner and Wal-Mart, stating that the use of the property “does not violate the particular restrictive agreement [between the two parties].” Added the court, “In this case, we interpret the [agreement] to prohibit exactly what it purports to ban on the face of the restriction—the erection of a structure on the tract that operates as a prohibited type of store namely a pharmacy—four walls and a roof—that constitutes a vitamin store, beauty aid store, or pharmacy. We do not believe that the intent of the grantor was to outlaw the construction of those things which are integral or essential to the operation of a retail business. If such prohibition was intended, the drafter could have said as much by incorporating phrases such as ‘used for store purposes’ or ‘used for purposes incidental to a store.’ However, without more, we conclude the construction of a parking lot and access easement to the restricted property is not a prohibited use.” (Charlotte Pavilion Road Retail Inv, L.L.C. v. North Carolina CVS Pharmacy, LLC, [2041 WL 7123842 (N.C.App.) Decision: December 2014 Published: January 2015