Oakwood Village LLC v. Albertsons, Inc.

In 1978, Albertsons, Inc. (the defendant) signed a lease with Oakwood Development Company, Oakwood Village, LLC’s successor in interest (the plaintiff) to lease space in a planned shopping center as an anchor tenant for 25 years. The defendant agreed to pay the plaintiff $1,667 in rent per month and the plaintiff agreed to not lease any other space in the shopping center to supermarket tenants. 21 years into the lease, the defendants closed its store but continued to pay rent. This prevented the plaintiffs from opening another store as the anchor tenant. This led to other vacancies in the plaintiff’s shopping center and a significant decline in the plaintiff’s sales. The plaintiffs sued for breach of lease, arguing that the lease required the defendants to operate continuously, to act in good faith, and to deal fairly. At trial, the defendants admitted that the reason behind their continued rent payments was to restrict competition.

The plaintiff requested declaratory relief from the trial court, including the ability to end the lease with the defendants and to lease the space to a new anchor tenant, as well as over $1 million in damages. The trial court dismissed the case, holding that the lease did not contain an implied covenant of continuous operation and that the defendants did not violate an implied covenant of good faith and fair dealing.