Genovese Drug Stores, Inc. v. Conn. Packing Co., Inc.

732 F.2d 286 (1984)


The shopping center was purchased by Packing (D). A Joint Development Agreement was entered into by the owners of D. It provided: Neither of the parties shall build or erect, or suffer to be built or erected, any building or structure upon any portion of the property owned by it which is . . . used or reserved as a common area for the use and benefit of the entire shopping center, including . . . areas shown as parking . . . unless the party desiring to erect such additional building(s) or structure(s) shall have first obtained the written consent of the other party. The agreement was recorded and listed in the grantor index under the names of both owners, D, and Bercrose. Bercrose leased a portion of its part of the shopping center property to P for the operation of a retail drug store. The lease contained a restrictive covenant in which Bercrose agreed that it would not demise any portion of the shopping center to any 'drive-in operation whose principal business is the receipt and processing of photographic film for development, including, but not limited to, drive-ins known as 'Foto-Mat.'' Bercowetz, acting in his capacity as president of D, executed a statement entitled 'Consent and Agreement' ('Consent'), in which D agreed to be bound by the lease terms with respect to the portions of the shopping center owned by D. In 1982 Fotomat (D) negotiated with Johnson, who was in charge of leasing for both D and Bercrose, to lease space at the shopping center. Ultimately, they agreed upon the leasing of space for a drive-in kiosk in the parking lot of the shopping center. The kiosk was to be placed on the portion owned by D. Irving Bercowetz, executed a lease with D for a 36-square-foot portion of parking lot owned by D. No one informed Fotomat of the restrictive covenant in the Bercrose-Genovese lease. Fotomat (D) did not make a title search. Fotomat (D) placed a prefabricated kiosk on the spot and P made demand upon Johnson to have the kiosk removed.  P sued D, Bercrose, and Fotomat (D). The court concluded that Fotomat (D) had constructive notice of the restrictive covenant. A preliminary injunction was issued and D appealed.