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Hoover Brothers Farms, Inc. v. Wal-Mart Stores, Inc.

United States District Court, W.D. Arkansas, Harrison Division

May 2, 2018

WAL-MART STORES, INC., a Delaware corporation DEFENDANT



         Currently before the Court are ripe cross-motions for summary judgment. Plaintiff Hoover Brothers Farms, Inc. ("Hoover") filed its Motion for Summary Judgment (Doc. 29), Brief in Support (Doc. 30), and Statement of Facts (Doc. 31) on November 15, 2017. Defendant Wal-Mart Stores, Inc. ("Walmart") filed a Response to the Motion (Doc. 35), Response to Statement of Facts (Doc. 36), and Brief in Support (Doc. 37) on December 6, 2017. Thereafter, on December 20, 2017, Hoover filed a Response to Defendant's Statement of Facts (Doc. 38). About a month later, Walmart filed a Cross-Motion for Summary Judgment (Doc. 40), accompanied by a Statement of Facts (Doc. 41) and Brief in Support (Doc. 42). On February 12, 2018, Hoover filed a Response to Walmart's Statement of Facts (Doc. 45) and a Brief in Support (Doc. 46). Then on February 20, 2018, Walmart filed a Reply to the Response (Doc. 47).

         In reviewing the parties' submissions, they agree on all the underlying facts that are material to deciding this contract dispute, but they disagree about how the contractual provisions at issue should be interpreted as a matter of law. For the reasons explained below, Hoover's Motion for Summary Judgment (Doc. 29) is GRANTED, and Walmart's Cross-Motion for Summary Judgment (Doc. 40) is DENIED.

         I. BACKGROUND

         The Amended Complaint (Doc. 9) asserts a single cause of action for declaratory judgment. Hoover asks the Court to declare the rights of the parties with respect to an agreement (Doc. 9-1) it entered into with Walmart on June 28, 2001 (the "Agreement"). Walmart admits that it drafted the Agreement. See Doc. 31 at 1. It concerns certain easements, covenants, and restrictions affecting two pieces of real property in Mountain Home, Arkansas, described as Tracts 1 and 2. Tract 1 is currently owned by a Walmart affiliate and contains a Walmart store and parking lot, and Tract 2 is adjacent to and east of Tract 1 and is currently owned by Hoover. Tract 2 contains various buildings and a parking lot. The 2001 Agreement envisions that Walmart's Tract 1 and Hoover's Tract 2 will be "developed in conjunction with each other pursuant to a general plan of improvement to form a commercial shopping center . . . ." (Doc. 9-1, p. 2). The contract refers to Tracts 1 and 2 in combination as the "Shopping Center." Id. A diagram is attached to the Agreement as Exhibit A, id. at 17, and it labels Tracts 1 and 2.

3. Competing Business. Developer [Hoover] covenants that as long as Wal-Mart or any affiliate of Wal-Mart is either owner or lessee of Tract 1, no space in or portion of Tract 2, and no space in or portion of any other real property adjacent to the Shopping Center which may subsequently be acquired by Developer, shall be leased or occupied by or conveyed to any other party for the following uses:
(1) A general merchandise discount store or a wholesale membership/warehouse club; or
(2) a discount drug store selling prescription drugs required to be dispensed by a licensed pharmacist; or
(3) a retail or discount grocery store devoted to selling food or grocery items, specifically including, but not limited to, the wholesale or retail sale of dairy products, bakery goods, meat, poultry, fish, frozen goods, produce, and shelf grocery items.

(Doc. 9-1, p. 3).

         In paragraph 11 of the Agreement, the parties contemplate the future expansion of the Shopping Center, as follows:

11. Shopping Center Expansion. The parties agree that in the event the Shopping Center is expanded by ownership, control of the parties or agreement with a third party, all of the provisions of this Agreement shall apply to the expanded area and the parking to the building ratio in the expanded area shall not be less than that provided in Paragraph 6a(2).

Id. at 12.[1]

         The parties' Agreement continued for approximately the next 15 years, seemingly without incident, until a discount grocery store chain called Aldi Grocery Store ("Aldi") approached Hoover about acquiring a piece of real property located south of Tract 2-which Hoover had purchased on June 2, 2000, about a year before it entered into the Agreement with Walmart. This so-called "South Lot" is adjacent to Walmart's commercial Shopping Center. It appears Hoover held off on selling or leasing the South Lot to Aldi because Walmart expressed concern that doing so would violate one or more of the provisions of their Agreement, particularly the Competing Business ...

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