D.B. INDY, L.L.C. v. TALISMAN BROOKDALE L.L.C. (D.Minn. 2004)

PAUL MAGNUSON, Senior District Judge

This matter is before the Court on Plaintiff's Motion for a Temporary Restraining Order. All parties were present at the hearing and therefore the Court will consider the Motion as one for a preliminary injunction pursuant to Fed.R.Civ.P. 65. For the reasons that follow and for the reasons stated at the hearing, the Motion is granted.

BACKGROUND

Plaintiff is D.B. Indy, L.L.C., doing business as retailer Harold Pener, Man of Fashion ("Harold Pener"). Harold Pener and Defendants Talisman Brookdale L.L.C., CS Brookdale Realty Corporation, and BZA Brookdale Mall Corporation (collectively "Defendants") entered into a lease agreement on December 17, 2003, for Harold Pener to open and operate a store in the Brookdale Mall. Harold Pener is in the business of selling men's and women's clothing in various retail stores around the country. Harold Pener sells men's suits, as well as "urban wear," or hip-hop clothing. The lease agreement between Defendants and Harold Pener states:

(3) PERMITTED USE: The Premises shall be used and occupied by the Tenant only for the retail sale of clothing for men, women and children, including, without limitation, the sale of suits, slacks, sport coats, shirts, casual wear and related accessories, including, without limitation, ties, belts, socks and other accessories only, together with shoes, provided that the area for the display of shoes shall not exceed 20% of the Premises. The Premises shall not be used for any other purpose.

(Compl. Ex. A at ¶ 3.) This lease agreement was executed on December 17, 2003. (Pl.'s Mem. at 3.) The parties negotiated the terms of the lease from May 2003 to December 2003.

In January 2004, Harold Pener began construction on the store's interior. Harold Pener hired FWH Architects to design the plans, which Defendants approved. (D. Pener Decl. ¶¶ 5-6.) Harold Pener also hired a general contractor for the interior construction, who obtained all necessary permits and began construction on the store's interior in late January 2004. (Id. ¶ 7.) Harold Pener planned to open the store in mid-March 2004. (Id.)

On January 26, 2004, Barry Pener, Vice President of Harold Pener, received a phone call from Vice President of Talisman Brookdale, L.L.C., Bill McClure. (B. Pener Decl. ¶ 7.) There was some discussion between the two about the clothing that Harold Pener planned to offer for sale. Discussion ensued between Harold Pener's attorney and James Schlesinger, President of CS Brookdale Corporation. Schlesinger told the attorney that the Brookdale Mall wanted a fine men's suit store with fine tailoring, and that after learning that Harold Pener also sold "urban wear" and "hip-hop" clothing, Brookdale Mall determined that Harold Pener was not the type of store that Brookdale Mall originally contemplated. (Welman Aff. ¶ 7.) Schlesinger acknowledged the executed lease, told Harold Pener's attorney that Brookdale would no longer honor the lease and offered a nominal amount for Harold Pener to walk away from the lease. (Id. ¶ 8.) Harold Pener refused this offer. (Id. ¶ 9.)

On February 18, 2004, Harold Pener's contractors were told by Brookdale Mall Facilities Manager Rick Petersburg that work on the space was to be suspended and that the contractors were to vacate the premises immediately. (Jones Decl. ¶¶ 4-6.) There is some dispute about who actually locked the premises and whether Defendants have in fact denied Harold Pener access to the premises, but it appears that Harold Pener's leased space is locked.

Defendants maintain that they discovered that Harold Pener consistently represents to other shopping centers that it is a men's suit store, and then after obtaining the lease it "[switches] out clothing lines" from the "mix from [a] majority of men's suits to about 85% urban wear focused towards a younger clientele." (McClure Aff. ¶ 3.) However, Defendants provide no evidence to support this bald assertion. Defendants also maintain that they already have two urban wear stores in Brookdale Mall, and that they leased space to Harold Pener under the belief that Harold Pener sold fine men's suits and tailoring. (Id. ¶ 6.) Defendants submit no evidence to support that Harold Pener will not sell men's suits, and in fact submits evidence to the contrary. (Salzman Aff. Exs. B-E.) Defendants also argue that they are not locking Harold Pener out of Brookdale Mall, but fail to sufficiently rebut Harold Pener's evidence that it is denied access to its leased space. (Defs.' Opp'n Mem. at 3.)

DISCUSSION

A. Standard for Preliminary Injunctions

A preliminary injunction may be granted only if the moving party can demonstrate: (1) a likelihood of success on the merits; (2) that the balance of harms favors the movant; (3) that the public interest favors the movant; and (4) that the movant will suffer irreparable harm absent the restraining order. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). Injunctive relief is considered to be a "drastic and extraordinary remedy that is not to be routinely granted."Intel Corp. v. ULSI Sys. Tech., Inc., 995 F.2d 1566, 1568 (Fed. Cir. 1993).

B. Likelihood of Success on the Merits

Harold Pener asserts breach of the lease agreement and violations of both federal and state civil rights laws. Defendants concede that Harold Pener has presented an arguable contract claim. (Defs.' Opp'n Mem. at 7.) It is clear that the plain language of the lease does not prevent Harold Pener from selling "urban wear" or "hip-hop" clothing. In fact, the lease specifically identifies that Harold Pener will retail "clothing for men, women and children, including, without limitation, the sale of suits, slacks, sport coats, shirts, casual wear and related accessories." (Compl. Ex. A ¶ 3 (emphasis added).) Harold Pener does sell fine men's clothing, but it also sells "urban wear." The expansive language of the lease does not limit or prohibit Harold Pener from selling "urban wear." There is no indication that Harold Pener is not complying with the broad terms of the contract. Therefore, the Court finds that thisDataphase factor weighs in favor of Harold Pener.

Although Harold Pener also asserts federal and state civil rights claims based on racial discrimination, the Court will not issue any ruling on these claims. The likelihood of success on the merits of Harold Pener's contract claim alone is sufficient for this Court to grant injunctive relief.

C. Irreparable Harm

Harold Pener maintains that it will suffer irreparable harm because it will be unable to open the store as scheduled, and thus it will miss out on customers shopping for the Easter holiday. Harold Pener also asserts that its $80,000 investment in the Brookdale Mall and its goodwill and reputation are harmed each day the store remains locked. See United Healthcare Ins. Co. v. Advance PCS. 316 F.3d 737, 742 (8th Cir. 2002) (holding that harm to goodwill and reputation is irreparable). Moreover, Harold Pener maintains that it only has one chance to make a good first impression, and the existence of a dark, empty store in Brookdale Mall reflects unfavorably on Harold Pener.

Defendants assert that the amount of damages Harold Pener will sustain, if any, is ascertainable and thus injunctive relief is not necessary. If money damages will adequately compensate Harold Pener, then the Court should refrain from granting injunctive relief. Watkins, Inc. v. Lewis, 346 F.3d 841, 846 (8th Cir. 2003). However, the Brookdale Mall location is Harold Pener's first store in Minnesota. Harold Pener has not yet opened the store, making it difficult to ascertain either its loss of customers or loss of revenues. Moreover, despite Harold Pener's valid lease to occupy the property, it has been denied access. Harold Pener has a vested interest in the leased premises. The Court finds that Harold Pener will suffer irreparable harm absent the issuance of the injunction it seeks.

D. Balance of Harms

Harold Pener will undoubtedly lose potential customers, business, and its reputation if its store remains inaccessible. Defendants claim that Brookdale Mall already has two "urban wear" stores and that in order to operate a diverse mall Brookdale Mall does not need another "urban wear" store, but rather a fine men's suit store. Defendants claim that if the injunction is granted, they will be harmed because Brookdale Mall will lack a fine men's suit store, and that Brookdale Mall revenues will not increase because the existing clientele will buy "urban wear" either from Harold Pener or an existing tenant. Therefore, Defendants maintain that the balance of harms is equal.

The Court disagrees. Harold Pener and Defendants entered into a valid lease for Harold Pener to occupy the premises. Defendants are attempting to modify the terms of the lease by preventing Harold Pener from accessing property it has a vested legal right to occupy. The Court finds that the balance of harms weighs in favor of the injunction.

E. Public Interest

Harold Pener asserts two public policy reasons favoring injunctive relief: (1) modern commerce demands that contractual obligations be enforced; and (2) "courts must act decisively to pull the pernicious weed of bigotry out by its roots whenever it gains hold in some desolate crack of society." (Pl.'s Mem. at 13-14.) Defendants contest that this is merely a routine commercial lease dispute, which does not invoke the public interest. To the contrary, the Court finds that enforcing contracts and permitting free enterprise to function clearly invokes the public interest.

CONCLUSION

The Court finds that the Dataphase factors weigh in favor of granting injunctive relief. The Court grants a preliminary injunction, but with caution, and encourages the parties to move towards building a solid business relationship. Moreover, the Court again emphasizes that this Order should not be construed as validating Harold Pener's claims of racial discrimination. Accordingly, based on all the files, records and proceedings herein, IT IS HEREBY ORDERED that:

1. Plaintiff's Motion for Temporary Restraining Order/Preliminary Injunction (Clerk Doc. No. 3) is GRANTED, and Defendants Talisman Brookdale L.L.C., CS Brookdale Realty Corp., and BZA Brookdale Mall Corp., and any persons acting on behalf of or in concert with them, are ENJOINED from prohibiting Plaintiff and Plaintiff's agents, representatives, employees, contractors, and servants access to the premises leased by Plaintiff within the Brookdale Mall Shopping Center, Brooklyn Center, Minnesota; and

2. Pursuant to Fed.R.Civ.P. 65, within ten days from the date of this Order, Plaintiff shall post a bond in the amount of $4,000 to secure this Preliminary Injunction. In lieu of a bond, Plaintiff may post cash or its equivalent with the Clerk of Court.