LORETTA B. MEALY, in Her Capacity as Executor of the ESTATE OF TERRENCE L. MEALY, Plaintiff-Appellant,
NASH FINCH COMPANY, Defendant-Appellee
This decision has been referenced in a "Decisions Without Published Opinions" table in the North Western Reporter.
Appeal from the Iowa District Court for Muscatine County, J. Hobart Darbyshire (partial summary judgment) and Nancy S. Tabor (trial), Judges. The Estate of Terrence Mealy appeals the dismissal of its request for a declaration of the meaning of a phrase used in a restrictive covenant in a deed.
Nicholas J. Kilburg and Patrick M. Roby of Elderkin & Pirnie, P.L.C., Cedar Rapids, for appellant.
Don Heeman of Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, Minnesota, and Joseph W. Younker of Bradley & Rile, P.C., Iowa City, for appellee.
Heard bye Danilson, C.J., and Vaitheswaran and Mullins, JJ. Tabor, J., takes no part.
The Estate of Terrence Mealy appeals the dismissal of its request for a declaration of the meaning of a phrase used in a restrictive covenant in a deed. The district court erred in finding the question was not ripe for review. We reverse and remand for further proceedings.
I. Background Facts and Proceedings.
Mealy purchased the commercial property at issue from the Nash Finch Company in 2004. The property is located in downtown Muscatine, Iowa. A restrictive covenant in the special warranty deed reads, in part:
The Property (or any part thereof) hereby conveyed shall not be used or occupied as a supermarket or grocery store, which shall be defined as any store or department primarily devoted to the retail sale of food for off-premises consumption. Furthermore, in addition, no portion of the Property hereby conveyed shall be used for parking, ingress or egress for any property owned, used or occupied for any of the foregoing uses.
The restriction set forth above commences on the date of this conveyance and shall remain in effect for a period of three (3) years from and after the date of this conveyance, or until Grantor, or any of its affiliates, subsidiaries, successors or assigns, or any entity to which Grantor, or any of its affiliates, subsidiaries, successors or assigns supplies groceries to, ceases to operate a retail grocery store in Muscatine, Iowa, whichever occurs last.
Mealy filed this declaratory judgment action against Nash Finch in September 2009, seeking a declaration that the restrictive covenant was unenforceable. In July 2010, notwithstanding a resistance by Nash Finch, Mealy was allowed to amend the petition, adding a second count for declaratory relief. Mealy asked that the court interpret the restrictive covenant. Mealy urged that the court find the " primarily devoted to" language meant more than fifty percent of the business's revenue be derived from the retail sale of food for off-premises consumption.
Nash Finch filed a motion for summary judgment on both counts of the declaratory judgment action. As to count two, Nash Finch argued the matter was not ripe for adjudication. Mealy resisted the motion and in support of the resistance submitted Terrance Mealy's deposition. During the deposition testimony, Terrance Mealy explained that he proposed a tenant, Dollar General and even offered $5000 to rescind the restrictive covenant. Both proposals were rejected by Nash Finch.
On November 30, 2010, the district court (Judge Darbyshire) found a genuine issue of material fact remained with regard to whether the restrictive covenant unduly and unreasonably interfered with the interests of public and denied summary judgment as to the first count. As to Mealy's request for judicial interpretation of the covenant's " primarily devoted to" language, the court found no justiciable controversy existed and dismissed the second count. The court wrote,
Presently, Mealy has no concrete plans to lease or sell the Property for use as a grocery store, and no such arrangements have been recently proposed by any individual or entity. A declaratory judgment cannot be had on the possibility that Mealy will one day locate such a lessor or purchaser for the Property. " [T]he danger or dilemma of which plaintiff complains must be present and not speculative or contingent on the happening of hypothetical future events." 26 C.J.S. Declaratory Judgments § 28, at 102-03. As a result, the Court determines that this matter is not yet ripe for adjudication and summary judgment as to this particular issue is therefore granted.
A bench trial on the remaining count was held March 20, 2013. Mealy sought to introduce evidence of recent ongoing negotiations with Kum & Go and communications between the parties. Nash Finch moved in limine to exclude such evidence as irrelevant to the remaining issue before the court.
Before evidence was presented, the following dialogue between Mealy's counsel and the court occurred:
MR. ROBY: . . . The petitioner originally said basically that the language that is complained of in Exhibit C of the lease that basically the property can't be used for purposes of a grocery store was--should be stricken for a lot of different reasons. We then amended to say we wanted a declaration that the language means that you have to have at least 50 percent of your sales of groceries from a grocery store.
Well, in his ruling on the Motion for Summary Judgment, Judge Darbyshire said, I'm not going to rule on that because it's hypothetical. Well, our brief evidence is going to be it's not a hypothetical because it de[t]ers prospective purchasers. . . . [S]o our evidence is going to be very brief . . . from Kevin Shea who is an attorney from Cedar Rapids who has taken over Mr. Mealy's various business enterprises, that that language ...