Whitinsville Plaza, Inc. v. Kotseas
390 N.E.2d 243 (1979)
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Rule of Law:
Reasonable covenants against competition in a deed may run with the land when they serve a purpose of facilitating orderly and harmonious commercial development, and are therefore enforceable by and against successors in title.
Facts:
- In 1968, Kotseas conveyed a parcel of land ('Parcel A') to the 122 Trust, a subsidiary of Whitinsville Plaza, Inc. (Plaza).
- The deed contained detailed, reciprocal covenants, including a promise by Kotseas not to use his retained, abutting land for business purposes that would compete with the discount store planned for Parcel A.
- The deed specified that these restrictions were 'covenants running with the land' intended to bind and benefit the heirs and assigns of both parties.
- In 1975, the Trust conveyed Parcel A to Plaza, and the deed expressly granted Plaza the benefit of the 1968 covenants.
- Subsequently, Kotseas leased a portion of his retained land to Whitinsville CVS, Inc. (CVS) for use as a 'discount department store and pharmacy'.
- Plaza alleged this lease to CVS would violate the 1968 deed restriction against competition.
Procedural Posture:
- Whitinsville Plaza, Inc. (Plaza) filed civil actions against Charles H. Kotseas and Paul Kotseas, and against Whitinsville CVS, Inc. (CVS) in the Massachusetts Superior Court.
- Plaza sought declaratory, injunctive, and monetary relief for alleged imminent violations of deed restrictions.
- The defendants, Kotseas and CVS, filed motions to dismiss for failure to state a claim upon which relief could be granted.
- A judge in the Superior Court granted the defendants' motions and dismissed Plaza's actions.
- Plaza appealed the dismissals, and the Supreme Judicial Court of Massachusetts granted its application for direct appellate review before the case was heard by an intermediate appellate court.
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Issue:
Does a covenant in a deed that restricts commercial competition on a grantor's retained land 'touch and concern' the benefited parcel, thereby allowing it to run with the land and be enforceable by successors in title to the grantee?
Opinions:
Majority - Quirico, J.
Yes. A reasonable covenant against competition in a deed can 'touch and concern' the land and run with it. The court explicitly overruled its prior precedents in Norcross v. James and Shade v. M. O’Keefe, Inc., which had established that anti-competition covenants were personal and did not run with the land because they did not confer a 'direct physical advantage' on the dominant estate. The court found this rule to be anachronistic, inequitable, and contrary to the law in the vast majority of other states. The court adopted the modern view that such covenants are enforceable as real covenants when they are reasonable and serve the purpose of facilitating orderly commercial development. This approach allows courts to assess the reasonableness of the restraint directly rather than striking down all such covenants through the 'touch and concern' doctrine. The new rule applies to all such covenants executed after the court's 1967 decision in Shell Oil Co. v. Henry Ouellette & Sons, which had signaled the court's intent to reconsider the old rule.
Analysis:
This decision represents a major reversal of long-standing Massachusetts property law, bringing the Commonwealth in line with the majority of American jurisdictions. By overruling the nearly century-old precedent of Norcross v. James, the court abandoned a rigid, formalistic rule for a more flexible, policy-based approach. The new standard focuses on the 'reasonableness' of the anti-competition covenant and its role in promoting orderly commercial development, reflecting a modern understanding of land use planning in commercial contexts like shopping centers. This provides greater certainty and protection for developers and businesses that rely on such covenants to safeguard significant financial investments from direct, localized competition.
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