Gray•Duffy, LLP Investigation into Public Filings Prevents Big Box Store from Moving into Local Neighborhood

December 2013

Overview

David S. Fisher of Gray•Duffy’s Encino office utilized Security Exchange Commission’s public filings to help keep big box store from moving into a neighborhood.

Discussion

Gray•Duffy’s client is the owner of a commercial shopping center in Southern California which was previously owned by Ralph’s Grocery. Adjacent and contiguous to the property is another commercial shopping center owned by the defendant in this case. The prior owner of the defendant’s property was Thrifty Corporation. In 1958, Ralph’s and Thrifty agreed in a covenant that runs with the land that Thrifty’s property “shall [n]ever be used at any time for the operation of a food market, grocery store, fresh or frozen meat or poultry store, or fresh or frozen fruits or vegetable store.” In 2012, the firm’s client became aware that the defendant was in the midst of negotiations to lease its property to a publicly traded company that is currently rolling out stores throughout the U.S. The firm’s client objected to the proposed transaction, asserting that the big box store’s business model was akin to a Walmart and that a substantial portion of its operational income was derived from the sales of food products. The defendant and the publically traded store in turn joined forces and asserted the covenant that runs with the land did not apply because the store only sold food products as an ancillary part of its business. Gray•Duffy filed a lawsuit for declaratory and injunctive relief on our client’s behalf. By scouring through the SEC’s public filings, we were able to obtain information that the store’s food sales were a large part of its business, including the fact that consumable food products accounted for 66.5% of the total sales in 2011. As a result of Mr. Fisher’s thorough investigation, the big box store gave up its efforts to lease the defendant’s property and the case was dismissed in exchange for a waiver of fees and costs.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.