Lord & Taylor, LLC v. White Flint, L.P.
2015 U.S. App. LEXIS 3438, 780 F.3d 211, 2015 WL 898530 (2015)
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Rule of Law:
A court may deny a request for a permanent injunction to enforce a restrictive covenant if the injunction would be infeasible to implement and would require long-term, complex judicial supervision of a commercial enterprise.
Facts:
- In 1975, Lord & Taylor, LLC ('Lord & Taylor') and White Flint, L.P. ('White Flint') entered into a reciprocal easement agreement (REA) for the development of the White Flint Shopping Center (the 'Mall').
- The REA contained restrictive covenants requiring White Flint to construct and maintain a 'first class high fashion regional shopping center' on the site until at least 2042.
- The REA also gave Lord & Taylor approval rights over any changes to the Mall's architectural design or layout.
- Over time, the Mall experienced a significant business decline; by 2013, 75% of its tenants had departed.
- The Mall's other anchor tenant, Bloomingdale's, chose not to renew its lease, and its building was subsequently demolished.
- In 2011, White Flint announced a plan, later approved by Montgomery County, to demolish the Mall and redevelop the site into a mixed-use town center.
- The redevelopment plan would keep the Lord & Taylor store but eliminate the enclosed mall structure, which Lord & Taylor alleged was a violation of the REA.
- By January 2015, the Mall was permanently closed, leaving Lord & Taylor as the sole operating business on the site.
Procedural Posture:
- Lord & Taylor filed a two-count complaint against White Flint in the U.S. District Court for the District of Maryland, seeking declaratory relief and a permanent injunction.
- White Flint filed a motion for partial summary judgment on Count II, the claim for a permanent injunction.
- The district court granted White Flint's motion and dismissed the injunction claim, concluding that such relief would be infeasible for the court to enforce.
- Lord & Taylor, the appellant, appealed the district court's dismissal of its injunction claim to the U.S. Court of Appeals for the Fourth Circuit, where White Flint was the appellee.
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Issue:
Does a court abuse its discretion by denying a permanent injunction to enforce a restrictive covenant when enforcing the injunction would be infeasible and require the court to undertake long-continued and complex supervision over the restoration and operation of a large shopping mall?
Opinions:
Majority - Judge Harris
No, a court does not abuse its discretion by denying an injunction under these circumstances. Under Maryland law, while injunctive relief is a typical remedy for the breach of a restrictive covenant, it is not automatic and remains subject to the court's equitable discretion. A court may properly deny an injunction where enforcement would be 'unreasonably difficult' or require 'long-continued supervision.' Here, the district court correctly determined that ordering White Flint to restore and operate a 'first class' mall would be infeasible. It would require the court to supervise the rebuilding of a partially demolished site, recruit new tenants, and ensure compliance with the REA's highly detailed specifications for potentially over 40 years, entangling the court in the Mall's daily operations. Even a more limited negative injunction simply halting redevelopment would be unworkable, as it would create a 'judicially mandated blight' by freezing a vacant, derelict property in place. Therefore, the district court's denial of injunctive relief based on feasibility concerns was a reasonable exercise of its discretion.
Analysis:
This decision reaffirms the principle that equitable remedies like permanent injunctions are discretionary, not absolute, even in cases involving restrictive covenants on real property. It strongly establishes that courts can and will refuse to grant specific performance where it would require impractical, long-term judicial supervision of complex commercial activities. The ruling provides a significant precedent for defendants to argue that monetary damages are the more appropriate remedy when an injunction would be infeasible due to changed circumstances or the complexity of enforcement. It signals that courts are wary of becoming long-term project managers for failing commercial enterprises.
