REDNER'S MARKETS, INC. Plaintiff,
JOPPATOWNE G.P. LIMITED PARTNERSHIP Defendant.
RICHARD D. BENNETT, District Judge.
On January 24, 2013, Judge Legg of this Court found that Defendant Joppatowne G.P. Limited Partnership ("Defendant" or "Joppatowne") had violated a restrictive use covenant in the lease agreement between Joppatowne and the Plaintiff Redner's Markets, Inc. ("Plaintiff" or "Redner's"). Thereafter, Redner's filed the subject Motion for Permanent Injunction (ECF No. 141), seeking an order permanently enjoining Joppatowne from continuing to violate the restrictive use covenant. The proposed order (ECF No. 147) would require Joppatowne to cause two farmer's market stalls that were found to violate the restrictive covenant-All Fresh Quality Seafood & Produce and Lapp's Fresh Meat-to be removed from the Joppatowne Plaza Shopping Center. The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons that follow, Plaintiff's Motion for Permanent Injunction (ECF No. 141) is GRANTED with respect to these two stalls.
The following facts were found by Judge Legg of this Court in the Memorandum Opinion issued on January 24, 2013. See Jan. 24, 2013 Mem. Op., ECF No. 133. Plaintiff Redner's Markets, Inc. ("Plaintiff" or "Redner's") is a Pennsylvania corporation with its principal place of business in Reading, Pennsylvania. Redner's operates a chain of grocery stores in the mid-Atlantic region. At issue in this case is the Redner's grocery store located at the Joppatowne Plaza Shopping Center in Joppa, Maryland.
On November 23, 2005, Redner's entered into a twenty-year lease agreement (the "Redner's Lease") with the owner and landlord of the Joppatowne Plaza Shopping Center, Defendant Joppatowne G.P. Limited Partnership ("Defendant" or "Joppatowne"), a Maryland limited partnership. The Redner's Lease contains a restrictive covenant preventing Joppatowne from leasing property within a five mile radius of the shopping center to be used as a "food supermarket, butcher shop, seafood shop, or grocery store." See Redner's Lease, Art. XIII, 13.01(a)(i), Addendum to Jan. 24, 2013 Mem. Op. Despite that covenant, Joppatowne permitted an Amish Farmer's Market,  as well as two vendor stalls (the "Vendor Stalls"), both of which compete with Redner's, to operate on the leased premises starting on March 17, 2011.
On May 10, 2011, Redner's sued Joppatowne for breach of the restrictive covenant in the United States District Court for the Eastern District of Pennsylvania. The case was transferred to this Court on July 7, 2011. Judge Legg of this Court, who was originally assigned to this case, decided to bifurcate the issues for trial. The first stage of trial would proceed on issues of liability and "traditional theories of damages (e.g., lost profit; lost sales), " while "more esoteric damage theories (e.g., diminution of value; constructive trust)" would be considered at a later stage. See Sept. 30, 2011 Letter Order, ECF No. 42; Nov. 29, 2011 Letter Order, ECF No. 62.
The first stage of the bifurcated bench trial proceeded over seven days from December 2011 to August 2012. On January 24, 2013, Judge Legg issued an opinion resolving some, but not all, of the issues presented at the first stage of trial. See Jan. 24, 2013 Mem. Op. Specifically, Judge Legg found that two of the Amish Farmer's Market Stalls, All Fresh Quality Seafood & Produce and Lapp's Fresh Meats, were prohibited by the restrictive covenant, as the first constituted a seafood shop and the second was a butcher shop. See id. at 30-32. Judge Legg also found that three stalls-Dutch Pantry Fudge, Kreative Kitchen, and Dutch Delights-did not violate the restrictive covenant. See id. at 32-35. Finally, Judge Legg left certain issues unresolved-namely, whether Beiler's BBQ, Beiler's Baked Goods, King's Cheese & Deli, and the two Vendor Stalls violated the restrictive covenant of the Redner's Lease. On the same day that Judge Legg rendered his Opinion, the case was reassigned to the undersigned of this Court, who has certified familiarity with the record and that the case can proceed without prejudice to the parties under Rule 63 of the Federal Rules of Civil Procedure. See May 23, 2013 Letter Order, ECF No. 155.
After Judge Legg's Opinion was issued, Redner's filed the subject Motion for Permanent Injunction (ECF No. 141), seeking an order permanently enjoining Joppatowne from continuing to violate the restrictive use covenant. Specifically, the proposed order submitted by Redner's would require Joppatowne to cause the two stalls already found to be in violation of the restrictive covenant, All Fresh Quality Seafood & Produce and Lapp's Fresh Meats, as well as any seafood shop or butcher shop, to be removed from the Amish Farmer's Market at the Joppatowne Plaza Shopping Center. See Am. Proposed Order, ECF No. 147. In rebuttal, Joppatowne contends that the previous Opinion of Judge Legg of this Court made none of the factual findings or legal conclusions required to lay the foundation for an award of permanent injunctive relief. For the reasons stated below, the Motion for Permanent Injunction (ECF No. 141) filed by Redner's is GRANTED.
To determine whether a permanent injunction should issue against Joppatowne, this Court must confront two questions: first, whether state or federal law governs the remedy of a permanent injunction when the Court sits in diversity pursuant to 28 U.S.C. § 1332; and second, whether Redner's has made the necessary showings to obtain a permanent injunction. Arguing that state law applies, Redner's claims that it has demonstrated the requisite elements under Maryland law for obtaining a permanent injunction. Joppatowne suggests that federal law applies and therefore Redner's has failed to show the four factors needed to obtain injunctive relief.
I. Maryland Law Governs the Remedy of Injunctive Relief in This Case
The fundamental dispute between the parties is whether Redner's must prove irreparable harm to obtain a permanent injunction. Under Maryland law, a permanent injunction that is sought to enforce a restrictive covenant may issue "with no requirement that irreparable injury be shown." Chestnut Real Estate P'ship v. Huber, 811 A.2d 389, 399-401 (Md. Ct. Spec. App. 2002). By contrast, the federal law governing permanent injunctions requires that the plaintiff demonstrate four factors, one of which is that it has suffered an irreparable injury.
In this case, Judge Legg preliminarily concluded that state law would govern the request for a permanent injunction. After conducting several days of the bench trial, Judge Legg stated in a Letter Order to the parties that Redner's would be entitled to injunctive relief "to enforce the restrictive covenant in the event of breach." See Feb. 29, 2012 Letter Order, ECF No. 92. "Redner's need not demonstrate irreparable harm in order to obtain injunctive relief, " Judge Legg explained, because "in diversity cases, state law governs the substantive issues, including whether a district court may issue a permanent injunction." See id. (citing Hess Newmark Owens Wolf, Inc. v. Owens, 415 F.3d 630, 633 (7th Cir. 2005); Chick-Fil-A, Inc. v. CFT Dev., LLC, 652 F.Supp.2d 1252, 1263 (M.D. Fla. 2009)). Under Maryland law, Judge Legg emphasized, "the plaintiff need not prove irreparable harm as a condition of obtaining a permanent injunction for violation of a restrictive covenant." Id. (citing Chestnut Real Estate, 811 A.2d at 401).
Under the law of the case doctrine, a decision by a court "should continue to govern the same issues in subsequent stages in the same case." TFWS, Inc. v. Franchot, 572 F.3d 186, 191 (4th Cir. 2009). However, the law of the case doctrine does not necessarily apply here, as Judge Legg stated in his Letter Order that his conclusion was "tentative and subject to change depending on the remaining evidence and closing argument." Feb. 29, 2012 Letter Order. ...