Saturday, January 4, 2014

Davidson Brothers, Inc. v. D. Katz & Sons, Inc. case brief

Davidson Brothers, Inc. v. D. Katz & Sons, Inc. case brief summary
643 A.2d 642 (Super. Ct. App. Div. 1994)

Plaintiff corporation appealed a judgment from the Superior Court of New Jersey, Middlesex County, that held a covenant prohibiting the use of property as a supermarket was unenforceable against defendant city, who purchased the property for use as a supermarket in an effort to promote economic development in the downtown area.

Plaintiff corporation closed one of its supermarket's in the downtown area, and sold the property to a merchant, who then sold the property to defendant city. Defendant then leased the property to another company that operated a supermarket at the location in violation of a covenant prohibiting the operation of a supermarket at that location contained in the contract of sale from plaintiff.


  • The court affirmed the judgment which held that plaintiff's covenant adversely impacted the public interest and therefore was unenforceable. 
  • Closing the supermarket caused difficulties and hardships on the downtown citizens, who lost the only opportunity to purchase food at a reasonably close location. 
  • Plaintiff's restriction impeded the relocation of another supermarket operation to the downtown area. 
  • This obstacle to remediation efforts by defendant city was so contrary to the public policies expressed in the New Jersey Urban Enterprise Zone Act, N.J. Stat. Ann. §§ 52:27H-60 to H89, and similar acts, that it represented a scorched earth policy that under the circumstances was unreasonable and unenforceable.

The court affirmed the judgment that held plaintiff corporation's covenant prohibiting the use of a property sold to defendant city for a supermarket was unenforceable. The covenant was so contrary to the public policy of promoting growth in the downtown area that the covenant was in these circumstances unreasonable and unenforceable.

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