J.C. Penney Co. v. Giant Eagle, Inc.
United States Court of Appeals for the Third Circuit
85 F.3d 120 (1996)
Penney's predecessor (plaintiff) signed a 1962 shopping-center lease with an exclusive right to run a pharmacy, plus a renewal option, and recorded a memorandum summarizing the lease. Giant Eagle (defendant) signed its own lease for a grocery store in 1977; Penney renewed its lease (and the exclusive pharmacy right) in 1978. In 1990, Giant Eagle planned to add a pharmacy to its store, and the shopping center's owner told Giant Eagle about Penney's exclusive right, which Penney refused to waive; Giant Eagle opened the pharmacy anyway. Penney sued to enforce its exclusivity, and Giant Eagle argued it lacked constructive notice of the exclusive right in 1977, or that any notice from the recorded memorandum applied only to later purchasers and lenders, not lessees. The district court granted Penney a permanent injunction, and Giant Eagle appealed.
Whether the recording of a lease memorandum constitutes constructive notice of the entire lease to subsequent lessees, not just subsequent purchasers.