Tippecanoe Assocs. II, LLC v. Kimco Lafayette 671, Inc. - 811 N.E.2d 438 (Ind. Ct. App. 2004)

Rule:

Under Indiana case law, courts should be wary of invalidating restrictive covenants based solely on changes in the areas covered by the covenants and courts should enforce the restrictions because the benefits of the covenant could still be realized by other property owners in the area.

Facts:

The original lease between the parties' predecessors included a restrictive covenant precluding the lessor from renting space to grocery stores. Part of the space became vacant, and the only prospective tenant was a corporation operating grocery stores. Plaintiff lessor filed a complaint asking the trial court to declare unenforceable the restrictive covenant in the original lease. After hearing, the trial court granted plaintiff lessor’s request and declared the restrictive covenant unenforceable. Defendant lessee of shopping center space appealed, arguing that the trial judge should have recused himself and that the ruling was clearly erroneous. 

Issue:

Was the restrictive covenant which precluded the lessor from renting the space to grocery stores enforceable, thereby rendering the decision of the trial court an error? 

Answer:

Yes.

Conclusion:

The appellate court held that the trial court had not followed Indiana precedent when it held that changed conditions made the covenant unenforceable. The lessee had other interests in grocery store property in the area, and it was quite conceivable that the covenant keeping a supermarket out of the shopping center was an important contributor to its decision to rent the retail space that it used for another store. The lessee had also argued that the lessor's contributions to the trial judge's election campaign and his old firm's occasional representation of the lessor had mandated recusal, but the appeals court held that there had been no abuse of discretion in the trial judge’s failure to recuse himself. The issue had not been timely raised, and in any case, there was no evidence supporting the claims of impropriety.