Exclusive Use Provisions: Avoiding Common Pitfalls in Retail

Lease Agreements
By Karla Kraft, David Keithly, and Kenneth Hsu
2014 All Rights Reserved.

I. INTRODUCTION
The world of retail is competitive. Competition for the
same customers by established brands, new brick-and-mortar
concepts, and the ubiquitous threat of online competition
all make it increasingly difficult to maintain a successful,
profitable retail business. We all are familiar with the headlines
that periodically proclaim the demise of well-known national
retail chains. To survive and succeed in this hyper-competitive
world, retailers look for every possible advantage. Exclusive use
provisions in retail leases provide one such advantage by limiting
geographical competition between a tenant and its rivals.
From the retail tenants perspective, exclusive use provisions
are a tool to protect its investment and market share in a
particular geographical area. Food service retailers in particular,
including restaurants and grocery stores, face fierce competition
and are constantly looking for ways to survive on thinner and
thinner margins. As a result, retailers frequently request and
rely upon exclusive use provisions in their leases to effectively
eliminate nearby competitors. For example, the owner of a Del
Taco franchise would not want to invest in a specific location,
only to have a Taco Bell open up next door.
However, from a landlords perspective, exclusive use
provisions are an obstacle to filling spaces in a shopping center.
Landlords likewise face fierce competition in attracting and
retaining in-demand retailers who contribute to the diversity
of dining, retail and shopping options and make their center
attractive to customers. By granting an exclusive use provision,
a landlord restricts its ability to lease to a similar business,
even if, in the landlords judgment, the two businesses would
complement each other and not diminish each others market
share. Exclusive use provisions reduce a landlords profits and
may lead to vacancies a result which is harmful to landlords
and tenants alike. An exclusive use provision that is not precisely
drafted is also likely to lead to disputes between the landlord and
the tenant, and may even lead to litigation over whether a new
tenant violates the provision.
New retail concepts add another layer of complexity to this
equation. Restaurant concepts that seek to blend two or more
categories of food potentially run afoul of exclusives granted to
existing tenants, particularly if the exclusive was drafted years
before a new concept emerged. Food trucks, for example, have
become trendy and delicious in the last few years. A restaurateur
may not have worried about a food truck parking at the center
once a week ten years ago, but now could lose a significant
percentage of its lunch traffic to the newest food truck concept
that pulled into the parking lot. A previously drafted exclusive
use provision may not encompass the food truck, or may be
hopelessly ambiguous with regard to this new concept. As

retailers increasingly seek to provide unique experiences to

consumershow about Mexican-Korean fusion, or Thai-Italian
fusion for dinner tonight? commonly used terms and existing
exclusives become almost certainly vague and difficult to apply.
Bruxie, LLC is a good example of one such concept
currently challenging existing definitions. Bruxie is a restaurant
that offers gourmet waffle sandwiches. Bruxies menu includes
both savory and sweet options that simultaneously inhabit the
breakfast, sandwich, and dessert categories. This new concept
begs the question: is a Bruxie sandwich a breakfast food, a
traditional sandwich, or a dessert? In addition to creating fodder
for cocktail party debate, the ambiguity presented by this and
other new concepts also presents a unique challenge in drafting
and enforcing exclusive use provisions.
Exclusive use negotiations often are reserved for leasing
agents. However, in the atmosphere of heightened retail
competition and new concepts, counsel should be involved at
an early stage in drafting exclusive use provisions, and must be
aware of potential pitfalls to insulate their clients from the risks
that result from imprecise drafting. Despite their competing
interests, retail landlords and tenants can both benefit from
more precise exclusive use provisions that specifically detail
both parties expectations and eliminate ambiguities that lead to
strained relationships, uncertainty, and ultimately disputes and
litigation.
II. EXCLUSIVE USE PROVISIONS
A tenant generally has the right to use the leased premises
for any lawful purpose without interference from the landlord
unless the use is prohibited by law, results in waste or destruction
of the premises, or is forbidden by an express or necessarily
implied provision of the lease.1 Landlords can expressly restrict
a tenants use of the premises in two waysthrough permitted
use provisions or through exclusive use provisions.
Permitted use provisions detail for what purpose a tenant
may use the leased property in precise terms.2 For example,
a landlord leasing a large restaurant space may require that
the tenant use and occupy the property only for general
food services and dining purposes. This prevents a sudden,
unacceptable change in the type of business occupying the space,
so that the landlord does not unexpectedly find the restaurant
has become, say, a gym or a computer retailer. Use provisions are
a first line of defense in allowing landlords to control the mix of
retail experiences within their centers.
While permitted use provisions benefit the landlord,
exclusive use provisions, or exclusives, benefit the tenant.
Exclusives are restrictive covenants of the landlord written into a
lease for the benefit of the tenant that prohibit the purposes for

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19

which the landlord or other tenants may use their leased premises.
For example, a landlord may grant a tenant the exclusive right to
sell delicatessen or submarine type sandwiches3 or insurance
and insurance-related products.4 Such exclusives restrict the
landlords ability to rent to future tenants seeking to engage
in the activities detailed in the exclusive use provision. Under
California law, use restrictions are valid and enforceable so long
as they are reasonable.5
There are two categories of violations of exclusives: violations
by landlords and violations by other tenants. Landlords have a
duty to uphold and enforce exclusive use provisions.6 Thus, if
a landlord and a new tenant enter into a lease that breaches an
existing tenants exclusive, the landlord is liable to both tenants.
Under California law,7 if the landlord is directly at fault for
such a breach, it is not entitled to a reasonable opportunity to
correct the breach.8 Another tenant can be liable for violating
an exclusive if it infringes upon an existing tenants provision. In
these cases, the landlord is only indirectly at fault for the breach,
and is entitled to reasonable notice and time sufficient to try to
correct the breach.9
Courts generally construe exclusive use provisions broadly.10
In addition, the implied covenant of good faith and fair dealing,
which is implied in every contract, also applies to exclusive use
provisions.11 If a violation is found, remedies for the breach of
an exclusive include rent abatement, money damages (including
lost profits),12 and excuse from further performance under
the lease (including non-payment of rent).13 In determining
the amount of any award, the calculation must be based upon
unspeculative evidence showing with reasonable certainty
both [the] occurrence and extent of the lost profits.14 In
addition, California courts may award injunction relief to
prevent interference with contractual relations.15 When a
landlord attempts to lease to a tenant who will violate an
exclusive, the tenant who holds the exclusive may seek injunctive
relief.16
III. RECENT CALIFORNIA CASES
California state courts apply general principles of contract
interpretation to interpret and enforce exclusive use provisions.17
Thus, if a tenant wishes to prevent a landlord from leasing to a
competitor on the grounds of an exclusive use provision, the
terms of the provision must clearly restrict the landlord.18
Especially in recent years, courts have continued to rely first
upon the plain language of the lease to determine the precise
scope of the tenants exclusive right. Pursuant to the parol
evidence rule, courts typically refuse to consider oral or written
extrinsic evidence to vary, alter, or add to the scope of the
provision.19 Even when such extrinsic evidence is considered,
the text of the provision remains the focal point for the courts
analyses. In sum, cases considering exclusive use provisions
are very fact-specific, and closely analyze the language of the
provision at issue. An overview of pertinent California case law
therefore is helpful.
In City Best Insurance Services, Inc. v. Corona Town Center,
LLC,20 for instance, the Court of Appeal for the Fourth
Appellate District found a shopping center that leased to an
insurer did not breach the express terms of the leases exclusive
use provision when another tenant, a supermarket, began
subleasing 100 square feet of its space to a competing insurer.

20

The court focused on the plain language of the provision: [The

shopping center] shall not execute and deliver any lease for
space in the Project pursuant to which [the center] authorizes
the use of the premises demised by said lease primarily for the
sale of insurance and insurance-related products (the Exclusive
Use).21 The provision also did not apply to any portion of the
shopping center the use of which is not controlled by [the center]
as of the date of the Lease.22
The court of appeal affirmed the trial courts finding that
the supermarkets sublease fell directly within this exception
because the center technically did not control the use of the
subleased space.23 More specifically, the supermarkets own
lease gave it the right to unilaterally sublease any portion of the
market (comprising 65,000 square feet or less) for any lawful
nonobnoxious retail use without the centers approval.24 Even if
the sublease was not covered by the exception, the court further
held that the center technically did not execute and deliver a
lease, as prohibited by the plain language of the exclusive use
provision.25 Further, the court found that the parol evidence
rule barred the insurers claim that the center misrepresented
that it would have exclusive right to sell insurance within the
center.26 The fraud exception to the parol evidence rule, asserted
by the insurer, did not apply because the allegedly fraudulent
promise was directly at odds with the much more limited
exclusive-use provision of the lease.27
The Court of Appeal for the First Appellate District adopted
a similar textual approach in Hanna v. ENS Management.28 The
court rejected a grocery stores argument that an exclusive use
provision requiring its landlord to not lease space to any other
convenience or grocery market selling the same products barred
the landlord from leasing to a bargain reseller of clothing and
household items, even if the reseller sold a large number of
products also sold by the grocery store.29 The court first noted
substantial evidence that the bargain store did not operate as a
convenience or grocery market; the store was listed in its own
lease as a Total Clothing/General Merchandise Only store, it
generally did not sell food items, and it did not fall within the
customary meaning of a convenience or grocery market, as
defined by an expert witness.30 The grocery store itself admitted
that the bargain store was not a convenience or grocery market,
but argued that discussions leading up to the drafting of the
provision suggested a broader scope than the plain language
suggested, one that included any store that sold competing
products.31 Even after finding the trial courts admission of parol
evidence proper, the court of appeal rejected this interpretation,
holding that the provision expressly prohibited a particular class
of businesses (convenience or grocery market[s]) and not just
any other business selling some of the same products.32
In Freestyle Martial Arts Corp. v. Soco,33 the Court of Appeal
for the Fourth Appellate District applied a textual analysis very
similar to that applied in Hanna, but instead ruled against a
landlord in determining that it had violated a tenants exclusive
right. The complaining tenant was a martial arts company
leasing space in a shopping plaza protected by an exclusive use
provision stating: [l]andlord will not lease within the subject
shopping center to any tenant whose authorized use clause (or
portion of same) is described as the operation of a martial arts
studio.34 The landlord subsequently agreed to lease another

California Real Property Journal Volume 32 Number 3

space to a kickboxing club, which in its lease described its use

for the space as a kickboxing personal defense/fitness facility.35
The court of appeal affirmed the jurys conclusion that
the landlord was liable for breach of contract, finding that
the jury reasonably inferred that the landlord was aware that
kickboxing was a martial art and that the plaintiff s lease
granted it an exclusive right to be the only martial arts studio
in the shopping plaza.36 As was the case in Hanna, the evidence
presented to the jury here included testimony by the landlords
manager explicitly admitting that he knew kickboxing was a
martial art and thus fell expressly within the provision.37
The furthest a California court has ventured beyond the
text of an exclusive use provision was in Garcha v. Central
Plaza-Union City, L.P.38 In 2004, the plaintiff bought and
began operating a Quiznos sandwich franchise in Building A
of a shopping center that also contained a Building B and
Building C.39 The lease agreement contained an exclusive use
provision detailing that:

relevant provisions text, they are steadfast in beginning and

ending their analyses with the leases plain language.
IV. DRAFTING CONSIDERATIONS
Although litigation over exclusive use provisions is relatively
rare, pre-litigation disputes are much more frequent and take
time and resources to resolve, to say nothing of the strain that
the dispute imposes upon the landlord-tenant relationship.
Case law can help inform counsel on how to best draft
such provisions. Exclusives are often the product of lengthy
negotiations between landlords and retailers, both of whom
have become increasingly sophisticated in understanding the
business and legal implications of exclusive rights. Drafting an
effective provision that both parties can agree upon involves
spotting potential issuesespecially those ripe for litigation
and resolving them through further negotiation. Throughout
the process of negotiation and drafting, counsel should keep in
mind the following considerations.
A. Choosing the Right Tools

Tenant shall have the exclusive right in the Shopping

Center to engage in the sale of delicatessen and submarine type sandwiches . . . . Excluding existing tenants,
Landlord will not lease to similar business such as
Blimpies, Subway, etc. Future tenant menus shall not
include more than eight percent of their gross sales to be
delicatessen or submarine type sandwiches.40
The same year, the landlord agreed to amend a separate
leaseinitially for a computer storein Building B to
describe the spaces use as caf (food, internet, music).41
Operating as eMocha, the tenant began selling sandwiches
similar to those sold at Quiznos, ultimately earning enough
revenue from sandwich sales to exceed eight percent of its gross
profits.42
The Court of Appeal for the First Appellate District rejected
the landlords argument that the exclusive use provision only
applied to competing business in Building A of the shopping
center, where Quiznos was located, and not Building B, where
eMocha was located.43 Like the cases discussed above, the court
began its analysis with the plain language of the provision: [t]
enant shall have the exclusive right in the Shopping Center.44
However, the court added that the spirit and letter of
the provision supported an interpretation that applied to all
three buildings.45 Permitting the landlord to lease space to
a competitor within the shopping center but in a separate
building could still devastate the business of the exclusive right
holder, undermining the entire purpose of the provision.46
The court also contemplated practical considerations related to
the separate buildingstheir shared address, their physical
layout, and their shared useas factors weighing against a
narrow construction of the provision.47 Finally, similarly to the
Hanna and Freestyle Martial Arts opinions, the court cited an
explicit, pre-litigation admission by the landlord that eMocha
was violating the Quiznos lease and [eMochas] own lease as
evidence of the landlords knowledge of the tenants exclusive
right.48
As the four cases described above suggest, courts will focus
on the specific language of the provisionat least, most of
the time. Even when courts consider evidence extrinsic to the

The first step in drafting an effective lease that will meet

the needs of both tenants and landlords is to choose the right
tools. Use provisions and exclusive use provisions can both help
to define the contours of acceptable use.
Permitted use provisions define the limits of the retailers
permitted use. Thus, with a properly drafted permitted use
provision, the owner of a sporting-goods store could not decide
to open a donut shop in the same space without the landlords
consent. These provisions are a much finer instrument than
the exclusive use provisions discussed below, as they only apply
to the retail tenant49 and do not affect any other tenants. A
use provision alone merely restricts the tenant and does not
affect the landlords ability to do as it pleases with other spaces
within a center. This gives the landlord ongoing oversight into
the retail mix of its center. Moreover, a use provision can be
drafted with knowledge of the tenants current business and be
tailored accordinglythere is no need to try to predict what new
business concepts may come up or what other businesses may try
to move into the center.
In contrast, exclusive use provisions grant the retailer an
exclusive right to use the space for a defined purpose. These
provisions restrict the use of subsequent tenants within a certain
area and restrict the landlords right to rent to whomever it
wants. Thus, as in Garcha, a restaurant may hold an exclusive
right to sell certain kinds of sandwiches. These provisions have
an effect that extends beyond the individual tenant. Subject
to the language of the exclusive, subsequent tenants in the
surrounding area could be restricted by the terms of any existing
exclusives. These clauses result in added protection for the
holder of the exclusive and less flexibility for the landlord and
subsequent tenants.
Thus, while landlords may prefer to control the various uses
of their properties through use provisions, tenants may request
broader protections. When determining which tool will meet
both the landlords and the tenants needs, the retail lease drafter
must consider which tools will adequately address the concerns
of the parties, and draft the lease accordingly.

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21

ously contemplates customers viewing and purchasing products from such aisles. Thus, on remand, the
temporary injunctive relief granted should be revised
to make clear that the 500 square foot figure includes
fixtures and their proportionate aisle space.54

B. Specificity
Exclusives that are litigated in court typically suffer from
a lack of specificity. Often, the exclusive in question will grant
an exclusive right to a broad category of services or products
without specifying what exactly falls under that category. Such
undefined or under-defined terms lead to ambiguity. According
to California law, any ambiguity in a restriction on use of leased
property is construed in favor of unrestricted use.50 In other
words, when faced with an ambiguous term in an exclusive use
provision, the court will always err on the side of allowing the
use of the alleged infringer.
Tenants and landlords can instead avoid strained
relationships and litigation by very clearly detailing the scope
of the tenants exclusive right. As the recent case law discussed
above suggest, courts generally adopt a plain language approach
to exclusive use provisions. In City Best, for instance, the court
did not find the landlord liable when another tenant subleased
to a competitor partly because the landlord technically did not
execute or deliver a lease, as prohibited by the provision.
Drafting a detailed exclusive must take into account
practical complexities that may arise. The Garcha court refused
to limit the scope of the exclusive use provision to only one
building of the shopping center because the provision failed to
account for the separate buildings entirely. Similarly, in Hanna,
despite the tenants parol evidence suggesting otherwise, the text
of the provision did not contemplate the possibility of a store
that sold the same products as the tenant, but could not be
classified as a convenience or grocery market.
Tenants and landlords should especially over-define esoteric
or specialized terms, rather than allowing the court to rely on
evidence extrinsic to the lease. In Freestyle Martial Arts, the
exclusive use provision prohibited leasing to other martial arts
studios. Because the term martial arts is not further defined
in the provision, the court was forced to rely upon testimony
from the landlords manager that he believed that martial arts
included kickboxing before finding the landlord liable for breach
of contract.
However, even everyday terms can be the subject of
litigation. For example, in Winn-Dixie Stores, Inc. v. 99 Cent
Stuff-Trail Plaza, LLC,51 the court was left to determine what
was meant by a provision granting an exclusive for groceries
and carving out a permitted use for competitors so long as the
sale of such items did not exceed 500 square feet. The provision
did not define groceries and did not specify how square
footage was to be calculated. The plaintiffs argued that the
500 square foot limitation included not only fixtures (i.e., the
shelves on which groceries were stored) but also the adjacent
aisle space.52 The defendants argued that the 500 square foot
limitation applied only to the fixtures.53 In its decision, the
court used common sense to interpret the undefined terms in
the exclusive:
Limiting the amount of sales to just the footprint
of the actual fixtures is not a reasonable construction
of the clause at issue. Shoppers do not arrive by chopper, sending ropes down to hoist up their purchases.
Shoppers make choices while standing in aisles and the
500 square feet provided for in the leases at issue obvi-

22

Relying upon the common sense of the court to define

potentially ambiguous terms or clauses in the same way the
parties intended, however, may create a result not contemplated
by the parties. Thus, to avoid uncertainty in the administration
of exclusive use provisions as well as strained relationships,
drafters must be specific and should over-define the terms of the
agreement. All details must be thought through and thoroughly
defined; no meaning or interpretation should be assumed to be
obvious.
C. Specific Lists
Another option for drafters is to list the specific products
or services that are protected by the exclusive. Rather than
granting an exclusive for Mexican food, the lease might
grant an exclusive for tacos or burritos. Again, specificity is
important in this context as well, and defining terms within the
lease can help avoid the problems discussed above. For example,
an exclusive that includes burritos may also implicate wraps if
the term burrito is not adequately defined. Freestyle Martial
Arts would likely have been decided differently if the lease
listed specific martial arts covered by the exclusive, including
kickboxing.
Likewise, an exclusive might list prohibited parties.
Tenants and landlords can protect themselves from litigation
by agreeing to a specific list of other parties prohibited from
leasing. The City Best court noted that the plaintiff tenant was
a longtime direct competitor of Fred Loya Insurance, which
subleased within the shopping center. The tenant in Hanna
was aware of the existence of direct competitors who could
potentially be interested in leasing within its local market. In
such instances, drafting an exclusive use provision that lists
the tenants direct competitors or other parties intended to
be within the provisions scope would be helpful in avoiding
litigation altogether.
D. Limiting the Exclusive
To allow more flexibility for the landlord, rather than
prohibiting others from occupying an entire category, the
exclusive might merely limit the use of restricted categories
to a certain percentage of sales, or of floor-space that can be
dedicated to different categories. Thus, a coffee-shop may not
be the only tenant allowed to sell coffee, but may have an
exclusive that limits the amount of coffee that can be sold by its
neighbors. These types of limitations allow some protection for
the retailer, while at the same time, not completely foreclosing
an entire category.
Another way to limit the exclusive is to limit the amount
of floor space that may be dedicated to a certain activity. Here,
too, specificity is imperative. As in Winn-Dixie, courts have
considered the issue of whether a floor space restriction included
only the fixtures, or the fixtures along with the adjoining
aisle space.55 Thus, a careful drafter will specify whether the
restriction applies to linear feet or square feet and will adequately

California Real Property Journal Volume 32 Number 3

define the chosen term.56 When limiting either the percentage

of sales or of floor space, drafters should define how to determine
sales and how to measure floor space to avoid uncertainty and
litigation.
Similarly, an exclusive might be limited by geographical
scope. This could be especially useful and important in larger
centers with multiple food courts or dining options. An
exclusive might be limited to a specific wing or building. For
example, in Garcha, the exclusive did not specify a geographic
scope, and so the court applied the exclusive to all three
buildings. The drafter in that case could have avoided issues
if they had specifically limited the geographical scope of the
exclusive.
An exclusive might also be limited in duration. When
a tenant insists upon the protection of an exclusive, but the
landlord does not want to be bound for a lengthy term, the
parties may agree to an exclusive for the first few years of the
lease, thereby allowing the tenant to gain a foothold, while at the
same time limiting the restriction on the landlord.

Karla Kraft is a shareholder at Stradling Yocca

Carlson & Rauth. Her practice focuses on litigation, with a specific emphasis on real estate
disputes, class action defense, business disputes,
and employment matters. Karla was recently
named one of Orange County's top attorneys
for the third year in a row, and serves on a
number of professional, educational, and nonprofit boards.
David Keithly is an associate at Stradling
Yocca Carlson & Rauth. His practice focuses
on business litigation, securities litigation,
real estate disputes, and regulatory compliance
matters.

Kenneth Hsu was a summer associate at

Stradling Yocca Carlson & Rauth in 2014.
He is currently attending UC Hastings College
of the Law and will be joining Stradlings business and securities litigation practices in 2015.

E. Exceptions
Another way to limit the scope of an exclusive is to carve
out express exceptions to its scope. Typically, such exceptions
limit the parties or spaces to which it applies. In City Best, for
instance, the tenants exclusive right to sell insurance did not
apply to any portion of the landlords center the use of which is
not controlled by [the landlord]. The court found that another
tenants sublease to a competing insurer fell squarely within the
exception because the landlord did not control the subleased
space. Other common exceptions include the incidental sales
exception, the existing tenant exception, the major tenant
exception, and the small tenant exception. Parties can also agree
to exclude or except specific tenants or spaces from the scope of
the exclusive.

ENDNOTES
1
2
3
4

F. Remedies
To take some of the guesswork out of exclusive enforcement,
the parties can elect specific remedies if the provision is breached.
Remedies should clarify both damages and enforcement. Because
actual damages may be extremely difficult to calculate, the
parties might consider alternatives, such as liquidated damages,
rent abatement, buyout options or termination provisions.

G. Best Practices
Finally, because exclusive use provisions are binding upon
subsequent tenants, landlords should include the terms of all
relevant provisions in all subsequent leases. The landlord should
attach the actual exclusive as an addendum or a rider to all future
leases. Similarly, a short form memorandum of lease may be
recorded to put third parties, including prospective tenants, on
notice of the exclusive.
IV. CONCLUSION
Although increasingly sophisticated tenants and new
concepts present unique challenges in the negotiation and
drafting of exclusive use provisions, diligent corporate counsel
can avoid uncertainty by thinking through the various issues that
these provisions present and carefully addressing them.

7
8

See Davidson v. Goldstein, 58 Cal. App. 2d Supp. 909, 910

(1943); see also Keating v. Preston, 42 Cal. App. 2d 110, 115
(1940).
See TDY Indus. v. San Diego Unified Port Dist., 2006 Cal.
App. Unpub. LEXIS 67 (Cal. Ct. App. Jan. 5, 2006).
Garcha v. Central Plaza-Union City, L.P., 2009 Cal. App.
Unpub. LEXIS 10209 (Cal. Ct. App. Dec. 23, 2009).
City Best Ins. Servs., Inc. v. Corona Town Ctr., LLC, 2012
Cal. App. Unpub. LEXIS 8625 (Cal. Ct. App. Nov. 28,
2012).
Pay n Pak Stores v. Superior Court, 210 Cal. App. 3d 1404,
1410 (1989); see also Carter v. Adler, 138 Cal. App. 2d 63,
70 (1955) (A restrictive covenant, such as the grant of the
exclusive mercantile rights to respondents, is not merely
ornamental words, inserted to please the eye. It is a living
expression of the grantor incorporated in a lease as a consideration for the lessees faithful performance.).
Hildebrand v. Stonecrest Corp., 174 Cal. App. 2d 158, 164
(1959) ([The landlord cannot] abrogate [the] obligation,
or excuse itself from performance of [the] duty by seeking
to delegate its performance to others, especially to the very
persons from whose competition [the] promise was made
for the protection of the plaintiffs.).
These legal defaults only take effect if the contract does not
directly address these situations.
Kulawitz v. Pacific Woodenware & Paper Co., 25 Cal. 2d
664, 673 (1944) (stating that where the landlord is directly
at fault, the contention that notice and reasonable opportunity to comply with the terms of the covenant are necessary to put the lessor in default, has been rejected).
Id. (stating that where the landlord is only indirectly at
fault, he is entitled to reasonable notice and time sufficient

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12
13

14
15

16

17

18

19
20
21
22
23
24
25
26
27
28

24

to enable it to acquire knowledge of the facts, to ascertain

whether the condition could be corrected, and if possible to
prevent a continued breach).
See Edmonds of Fresno v. MacDonald Grp., Ltd., 171 Cal.
App. 3d 598, 605 (1985) (holding that the general rule that
restrictive covenants are strictly construed does not apply to
exclusive use provisions in a commercial lease).
See id. at 607.
Freestyle Martial Arts Corp. v. Soco, 2007 Cal. App. Unpub.
LEXIS 8925 (Cal. Ct. App. Nov. 2, 2007).
Medico-Dental Bldg. Co. of L.A. v. Horton & Converse, 21
Cal. 2d 411 (1942) (noting that the restrictive use must be
vital to [the tenants] successful operation of its business
under the circumstances which prevailed).
Sanchez-Corea v. Bank of Am., 38 Cal. 3d 892, 907 (1985).
See, e.g., Sunbeam Corp. v. Payless Drug Stores, 113 F. Supp.
31, 47 (N.D. Cal. 1953) (Injunctive relief may be had to
restrain third persons from unlawfully inducing the breach
of a lawful contract by one of the parties thereto when it
will result in irreparable injury to the other.); Pac. Gas &
Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1130 n.9
(1990) (Injunctive relief is available to restrain unjustified
interference with contractual relations when damages would
not afford an adequate remedy.).
See, e.g., In re Chestnut Ridge Plaza Assocs., 156 B.R. 477,
485 (W.D. Pa. 1993) (shopping center tenant could seek
injunctive relief against a prospective tenant to the extent the
new tenancy would interfere with the existing tenants right
to be the only supermarket in the shopping center); Park
Ave. BBQ & Grille of Wellington, Inc. v. Coaches Corner, Inc.,
746 So. 2d 480, 483 (Fla. Dist. Ct. App. 1999) (affirming
injunction against restaurant that sought to televise sporting events in violation of an exclusive right in a sports bars
lease agreement); Wons Cards, Inc. v. Samsondale/Haverstraw
Equities, Ltd., 165 A.D.2d 157, 162 (N.Y. App. Div. 1991)
(third-party tenant could be enjoined from selling greeting
cards where it had actual or constructive knowledge of an
exclusive use covenant in the plaintiff s lease).
Pay N Pak Stores, Inc. v. Superior Court, 210 Cal. App. 3d
1404, 1411 (1989); see also Deutsch v. Phillips Petroleum
Co., 56 Cal. App. 3d 586, 590 (1976); Bates v. Indus. Prop.
Holding Co., 155 Cal. App. 2d 697, 700 (1957).
See Carr v. King, 24 Cal. App. 713, 72223 (1914)
(although landlord could not lease to a competitor of the
tenant, landlord was allowed to sell to a competitor). But
see Hudson Oil Co., Inc. v. Shortstop, 111 Cal. App. 3d 488,
497 (1980) (enforcing restrictive covenant against the buyer
of a property who was aware of restrictive use provision).
See Cal. Civ. Code 1856
2012 Cal. App. Unpub. LEXIS 8625 (Cal. Ct. App. Nov.
28, 2012).
Id. at *4 (emphasis added).
Id. (emphasis added).
Id. at *911.
Id. at *9.
Id. at *8.
Id. at *12.
Id.
2011 Cal. App. Unpub. LEXIS 6549 (Cal. Ct. App. Aug.

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29, 2011).
Id. at *45 (emphasis added).
Id. at *67.
Id. at *78.
Id. at *13.
2007 Cal. App. Unpub. LEXIS 8925 (Cal. Ct. App. Nov. 2,
2007).
Id. at *2 (emphasis added).
Id. at *56.
Id. at *1332 (citing Sanchez-Corea v. Bank of Am., 38 Cal.
3d 892, 907) (1985)) (affirming the jurys verdict awarding
Freestyle $522,645 in damages based on a lost profits calculation, which the court ruled must be based on unspeculative evidence showing with reasonable certainty both
their occurrence and extent thereof ).
Id. at *17.
2009 Cal. App. Unpub. LEXIS 10209 (Cal. Ct. App. Dec.
23, 2009).
Id. at *23.
Id. at *34 (emphasis added).
Id. at *4.
Id.
Id. at *22.
Id. at *19.
Id. at *16.
Id.
Id. at *18.
Id. at *19.
These provisions also necessarily limit the rights of sublessees.
Cal. Civ. Code 1997.220.
811 So. 2d 719, 722 (Fla. Dist. Ct. App. 2002).
Id.
Id.
Id.
See id.
See Super Fresh/Sav-A-Center, Inc. v. Ashy-Bickham Baker,
655 So. 2d 531, 535 n.* (La. Ct. App. 1995) (lease expressly
provided the square footage calculation was exclusive of
any adjacent aisle space).