United States District Court, W.D. Kentucky, Louisville Division
BEVERAGE WAREHOUSE, INC., ET AL. Plaintiffs
CENTRAL STATION (KY), LLC, ET AL. Defendants
MEMORANDUM OPINION AND ORDER
REBECCA GRADY JENNINGS DISTRICT JUDGE
Beverage Warehouse, Inc. and Gregory Anastas brought this
action against Defendants Central Station (KY), LLC,
(“Central Station”) and The Kroger Company
(“Kroger”) seeking relief for violations of state
law. [DE 1-1, Compl.]. Defendants removed the case to this
Court on diversity of citizenship jurisdiction. [DE 1].
Beverage Warehouse moved for a permanent injunction. [DE 20].
Timely responses and replies were filed. [DE 27; DE 28].
Defendants then moved for Summary Judgment. [DE 26].
Plaintiffs responded [DE 29], and Defendants replied [DE 31].
These matters are ripe for judgment. For the reasons below,
the Court DENIES Plaintiffs' Motion for Permanent
Injunction [DE 20]; and GRANTS Defendants' Motion for
Summary Judgment [DE 26].
2006, Beverage Warehouse entered a lease agreement
(“Retail Lease Agreement”) with Central Retail,
LLC for retail space in a Louisville, Kentucky shopping
center (“Shopping Center”). Defendant Central
Station is the successor in interest to Central Retail. [DE
1-1 at ¶¶ 6-7]. Under the lease, Beverage Warehouse
has a right to use the retail space to sell packaged liquor.
Id. at ¶ 8. The Retail Lease Agreement also
includes a restrictive covenant barring Central Station from
leasing other portions of the Shopping Center to tenants
whose primary business is the sale of packaged liquor, except
for tenants existing at the time of execution of the Retail
Lease Agreement. Id. at ¶ 9.
Retail Lease Agreement also includes a provision for common
area maintenance (“CAM”) fees. [DE 26-1 at 528].
It states that Central Station would “proportionately
allocate all Common Area Maintenance between the Anchor
[Kroger] and Minor Tenants [Beverage Warehouse] based on
leasable square feet.” Id. (quoting DE 26-8 at
5). At some point after execution of the lease, Central
Station “indicated to Beverage Warehouse that its share
of the common area maintenance was going to increase because
the unimproved [space in the Shopping Center] was no longer
going to be improved and/or leased, thus lowering the total
square footage of the shopping center and increasing each
tenant's respective share of the CAM.” [DE 1-1 at
¶ 11]. Beverage Warehouse paid the additional CAM
charges based on Central Station's representations.
early 2017, Beverage Warehouse discovered that Kroger
intended to build and operate a Wine and Spirits Shop in the
Shopping Center. Id. at ¶ 12. Shortly
thereafter, Beverage Warehouse notified Central Station and
Kroger that this action would violate the restrictive
covenant of the Retail Lease Agreement. Id. at
¶ 13. In response, Central Station acknowledged that
Kroger intended to build the Wine and Spirits Shop and
claimed that the shop would not violate the terms of Beverage
Warehouse's lease. Id.
Warehouse filed a Complaint against Kroger and Central
Station alleging breach of contract, misrepresentation, and
tortious interference with contractual interests. [DE 1-1].
Defendants removed the case to federal court on diversity of
citizenship jurisdiction [DE 1], Beverage Warehouse moved to
enjoin Kroger permanently from opening its Wine and Spirits
Shop. [DE 20]. Defendants then moved for Summary Judgment.
Motion for Permanent Injunction [DE 20]
Warehouse seeks to permanently enjoin Kroger from operating
the Wine and Spirits Shop within the Shopping Center. [DE
20-1 at 141]. A permanent injunction is “an
extraordinary remedy and will not be granted except upon a
clear showing of an existing equitable right.”
Oscar v. Ewing, Inc. v. Melton, 309 S.W.2d 760, 761
(Ky. 1958). While Kentucky case law on permanent injunctions
is scarce, courts have established that a plaintiff is
entitled to a temporary injunction if (1) there is a
substantial probability that the movant will ultimately
prevail on the merits of the case; (2) the movant's
remedy will be irreparably impaired without the extraordinary
relief; and (3) that an injunction will not be inequitable,
i.e., will not unduly harm other parties or disserve the
public. Price v. Paintsville Tourism Comm'n, 261
S.W.3d 482, 484 (Ky. 2008). The United States Supreme Court
has noted that the “the standard for a preliminary
injunction is essentially the same as for a permanent
injunction.” Amoco Prod. Co. v. Village of
Gambell, 480 U.S. 531, 546 n.12 (1987). But while a
temporary injunction requires that the plaintiff “show
a likelihood of success on the merits, ” a plaintiff
seeking a permanent injunction must show that they will
succeed on the merits of their case. Am. Civil Liberties
Union of Ky. v. McCreary Cty., 607 F.3d 439, 445 (6th
Cir. 2010). The plaintiff bears a higher burden because a
permanent injunction “is necessarily granted by a final
judgement which ultimately disposes of the action.”
Permanent Injunctions, 5 Ky. Prac. Methods of Prac. §
40:4; see also Ky. R. Civ. P. 65.01.
Beverage Warehouse seeks “a dipositive determination on
the contractual dispute as well as the relief of permanent
injunction.” [DE 28 at 742]. The Kentucky Supreme Court
has cautioned that “a permanent injunction should be
granted by means of summary judgment only in those cases
where the showing [of an existing equitable right] is very
clear and convincing.” LaVielle v. Seay, 412
S.W.2d 587, 591 (Ky. 1966).
Actual Success on the Merits
Warehouse has the burden to prove that Central Station will
violate the restrictive covenant of the Retail Lease
Agreement by allowing Kroger to open its Wine and Spirits
Shop. As Beverage Warehouse cannot show a violation of its