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Whitinsville Plaza, Inc. v. Kotseas - 378 Mass. 85, 390 N.E.2d 243 (1979)

Rule:

Reasonable covenants against competition may be considered to run with the land when they serve a purpose of facilitating orderly and harmonious development for commercial use. To the extent they are inconsistent with this statement, Shade v. M. O'Keefe, Inc., 260 Mass. 180, 183 (1927), Norcross v. James, 140 Mass. 188, 192 (1885), and Shell Oil Co. v. Henry Ouellette & Sons, 352 Mass. 725 (1967) are overruled.

Facts:

Defendants Charles H. Kotseas and Paul Kotseas (Kotseas) and Whitinsville CVS, Inc. (CVS), conveyed land identified as parcel A to individuals as trustees of a wholly owned subsidiary of Plaintiff Whitinsville Plaza, Inc. (Plaza). The deed set forth numerous restrictions designed to assure the development of a shopping center on parcel A and on abutting land retained by Defendants. The wholly owned subsidiary subsequently conveyed parcel A to Plaza and ceased operations. The deed to Plaza expressly made Plaza subject to the restrictions in the deed from Defendants to the subsidiary. Defendants then leased a portion of the abutting land to a company. In its further amended complaint against Kotseas, Plaza alleged imminent violations of certain anticompetitive deed restrictions and requested declaratory, injunctive, and monetary relief under theories of breach of contract and unfair acts or practices within the meaning of G. L. c. 93A, § 2. Plaza's amended complaint against CVS likewise alleged imminent violations of the deed restrictions, and it requested declaratory, injunctive, and monetary relief on theories of breach of contract, unfair trade practices, and interference with contractual relations. The trial court granted defendants' motion to dismiss, and plaintiff appealed.

Issue:

Did the trial court err in granting defendants’ motion to dismiss plaintiff’s complaints?

Answer:

Yes.

Conclusion:

On appeal, the Supreme Judicial Court of Massachusetts reversed the dismissal of the claims, concluding that such anticompetitive covenants could be considered to run with the land when they served a purpose of facilitating orderly development for commercial use. According to the Court, with respect to covenants in commercial leases, reasonable anticompetitive covenants were enforceable by and against successors to the original parties.

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