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El Di, Inc. v. Town of Bethany Beach

Delaware Supreme Court
477 A.2d 1066 (Del. 1984)


Facts

El Di (defendant) operates a restaurant in Bethany Beach that is under a restrictive covenant prohibiting the sale of alcoholic beverages and commercial construction. The restrictions were put in place as early as 1900 in order to maintain Bethany Beach’s status as a quiet, family community. When the restrictions were enacted, they covered about 2/3 of the town. Since then the town has expanded significantly so that the same restrictions now cover only 15 percent of the town. During this expansion, numerous commercial enterprises were constructed in the restricted area and the restriction on such construction was not enforced. As a result, tourism has also expanded significantly. El Di purchased its restaurant in 1969 and allowed its customers to engage in the practice of brown-bagging—bringing in their own alcohol to drink during their meal. This practice was possible because there were multiple places around El Di’s restaurant where people could buy alcohol. El Di then applied for and received a permit to sell alcohol on its premises in order to control the excessive consumption of alcohol due to the practice of brown-bagging. The Town of Bethany Beach (plaintiff) brought suit to enjoin El Di’s sale of alcohol under the restrictive covenant. The Delaware Court of Chancery granted the injunction. El Di appealed.

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Issue

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Holding and Reasoning (Herrmann, C.J.)

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Dissent (Christie, J.)

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