Grossman v. Wegman's Food Markets, Inc.
Unspecified (1973)
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Rule of Law:
Courts of equity will generally refuse to grant specific performance of a contract that requires varied and continuous acts over a long period, as enforcing such a decree would require constant and difficult judicial supervision.
Facts:
- Plaintiffs leased a store in the Big Ñ Shopping Plaza to the defendant for a 15-year term.
- The lease required an annual base rent of $48,450 plus a percentage rent of 1% of gross annual sales exceeding $4,845,000.
- Defendant, a retail grocery supermarket, began operating in the space in April 1970.
- During its two years and seven months of operation, the defendant's gross sales never reached the threshold for percentage rent, and it incurred losses of $615,000.
- On September 19, 1972, the defendant notified the plaintiffs that it would vacate the premises by October 7, 1972.
- Defendant stated its intention to continue paying the base rent until the property was re-let.
- The defendant's supermarket was considered an anchor tenant, intended to draw customers to the shopping center who would also patronize other stores.
Procedural Posture:
- Plaintiffs sued defendant in the Cattaraugus Trial Term, a New York State trial court.
- The plaintiffs' complaint sought an order of specific performance to compel the defendant to continue operating its supermarket in the leased premises.
- Following a trial, the trial court dismissed the plaintiffs' complaint.
- Plaintiffs, as appellants, appealed the judgment of dismissal to this intermediate appellate court; defendant is the appellee.
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Issue:
Is a commercial tenant, who has vacated the leased premises but continues to pay the base rent, subject to an order of specific performance compelling it to re-occupy and operate its business for the duration of a long-term lease?
Opinions:
Majority - The Court (Memorandum Opinion)
No. A commercial tenant who vacates the premises is not subject to an order of specific performance compelling it to continue operating its business. Courts of equity are reluctant to grant such relief for contracts requiring the performance of varied and continuous acts over a long period of time, because enforcing the decree would demand an impractical level of judicial supervision. The court acknowledged that the defendant's vacancy could diminish the business of other tenants and cause damage to the plaintiffs, but held that the difficulty of overseeing the operation of a retail business for the remainder of the 15-year lease term made specific performance an inappropriate remedy. Citing established precedent like Standard Fashion Co. v. Siegel-Cooper Co., the court reasoned that judicial control would be a matter of extreme difficulty. The court considered but was unpersuaded by out-of-state precedent that had granted specific performance in similar circumstances.
Analysis:
This decision reaffirms the traditional judicial principle against ordering specific performance for complex, ongoing service contracts, such as operating a business. It prioritizes judicial economy and the impracticality of long-term supervision over a landlord's interest in the non-monetary benefits of an operating tenant, like customer traffic for a shopping center. The ruling signals to commercial landlords that their primary remedy for a tenant 'going dark' is likely monetary damages, not a court order forcing the business to operate. Consequently, this encourages landlords to draft leases with strong financial disincentives for vacancy, such as liquidated damages clauses, rather than relying on equitable remedies like specific performance.
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