J.C. Penney Co. v. Giant Eagle, Inc.

85 F.3d 120 (1996)

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J.C. Penney Co. v. Giant Eagle, Inc.

United States Court of Appeals for the Third Circuit
85 F.3d 120 (1996)

SC

Facts

In 1962, J.C. Penney Company’s predecessor in interest (Penney) (plaintiff) signed a lease in a shopping center. The lease granted Penney the exclusive right to operate a pharmacy in the shopping center. The lease granted a renewal option to Penney. Penney recorded a memorandum of the lease, which was essentially a summary of the lease. In 1977, Giant Eagle, Inc. (defendant) signed a lease to operate a grocery store in the shopping center. In 1978, Penney renewed its lease. The renewal continued Penney’s exclusive right to operate a pharmacy. In 1990, during Penney’s renewal lease, Giant began planning to expand its grocery store to include a pharmacy. The owner of the shopping center informed Giant of Penney’s exclusive right. Penney refused to waive the right. Nevertheless, Giant opened a pharmacy. Penney sued Giant to enforce its exclusive right in the lease. Giant contended that it did not have constructive notice of Penney’s exclusive right when it entered the shopping center in 1977, and that even if Penney’s lease memorandum did provide constructive notice, such notice applied only to subsequent purchasers, mortgagees, and creditors, and not to subsequent lessees. The district court granted Penney a permanent injunction. Giant appealed.

Rule of Law

Issue

Holding and Reasoning (Gibson, J.)

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