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J.C. Penney Corp., Inc. v. Milwaukee Golf Development Co.

May 3, 2006

J.C. PENNEY CORPORATION, INC., PLAINTIFF,
v.
MILWAUKEE GOLF DEVELOPMENT COMPANY, LLC & INTER-TRACK PARTNERS, LLC, DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-Yeghiayan United States District Court Judge

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge

This matter is before the court on Plaintiff J.C. Penney Corporation, Inc.'s ("J.C. Penney") motion for a preliminary injunction. For the reasons stated below, we deny the motion for a preliminary injunction.

BACKGROUND

J.C. Penney claims that it is a long-term anchor store at the Golf Mill Shopping Center ("Shopping Center") in Niles, Illinois. The Shopping Center is owned by Defendant Milwaukee Golf Development Company, LLC ("Milwaukee Golf"). J.C. Penney alleges that Milwaukee Golf has agreed to lease space at the Shopping Center to an off-track betting parlor ("OTB Parlor"), owned by Defendant Inter-Track Partners, LLC ("Inter-Track"), and that the lease with the OTB Parlor interferes with several aspects of the lease between J.C. Penney and Milwaukee Golf ("J.C. Penney Lease"). J.C. Penney claims that it voiced its opposition to the OTB Parlor in October 2005, by notifying Milwaukee Golf in writing of its objections.

J.C. Penney further alleges that Milwaukee Golf did not stop its plans to lease space to Inter-Track, and that in February 2006, Inter-Track began renovating the space where it intended to open the OTB Parlor. J.C. Penney also claims that Inter-Track initially planned to open the OTB Parlor in June 2006, and that Inter-Track later decided to open the OTB Parlor on April 24, 2006.

J.C. Penney filed the complaint in the instant action against Milwaukee Golf on April 3, 2006, and on the same day filed its motion for a preliminary injunction. On April 10, 2006, J.C. Penney filed an amended complaint, adding Inter-Track as a defendant. The amended complaint includes a claim for specific performance and injunctive relief due to a breach of contract by Milwaukee Golf (Count 1), a claim for monetary damages due to a breach of contract by Milwaukee Golf (Count 2), and a claim for injunctive relief and damages due to intentional interference with a lease against Inter-Track (Count 3). On April 13, 2006, we denied J.C. Penney's motion for a temporary restraining order.

LEGAL STANDARD

A preliminary injunction "should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Goodman v. Illinois Dept. of Financial and Professional Regulation, 430 F.3d 432, 437 (7th Cir. 2005)(stating that "[a]s the Supreme Court has observed, '[a] preliminary injunction is an extraordinary and drastic remedy'")(quoting Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)). In order to obtain a preliminary injunction, a plaintiff must show that: "(1) [the plaintiff] ha[s] a reasonable likelihood of success on the merits; (2) no adequate remedy at law exists; (3) [the plaintiff] will suffer irreparable harm which, absent injunctive relief, outweighs the irreparable harm the [defendant] will suffer if the injunction is granted; and (4) the injunction will not harm the public interest." Goodman, 430 F.3d at 437. If the moving party meets "this threshold burden, then the inquiry becomes a 'sliding scale' analysis where these factors are weighed against one another." Joelner v. Village of Washington Park, Illinois, 378 F.3d 613, 619 (7th Cir. 2004).

DISCUSSION

J.C. Penney is seeking a preliminary injunction prohibiting the OTB Parlor from opening or operating at the Shopping Center, pending the resolution of this action. As a preliminary matter, we note that J.C. Penney filed the instant motion before it amended the complaint to add Inter-Track as a defendant. However, under Federal Rule of Civil Procedure 65(d), an injunction is binding not only on the parties to the injunction, but also upon "their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise." Fed. R. Civ. P. 65(d); see also Rockwell Graphic Systems, Inc. v. DEV Indus., Inc., 91 F.3d 914, 919 (7th Cir. 1996)(quoting Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1945) for the idea that "[t]he Supreme Court has explained that the last clause of Rule 65(d) 'is derived from the common law doctrine that a decree of injunction not only binds the parties defendant but also those identified with them in interest, in 'privity' with them, represented by them or subject to their control'"). In the instant action, Inter-Track's Lease puts it in privity with Milwaukee Golf. In addition, Inter-Track appeared at the TRO hearing before this court and has filed a response to the instant motion, showing that it has received notice of the motion. Accordingly, we will treat Inter-Track as a party to J.C. Penney's motion for a preliminary injunction.

I. Likelihood of Success on the Merits

J.C. Penney has based its breach of contract claims and its intentional interference with lease claim on several provisions in the J.C. Penney Lease. To begin, J.C. Penney claims that "[u]nder the Lease, Milwaukee Golf committed to limit the Center tenants to retail and retail-related businesses, and to operate and maintain the Center according to the 'best standards of regional shopping center practice.'" (Mot. 8). J.C. Penney, however, has not provided any evidence to show that opening the OTB Parlor would not be in accordance with the best standards of regional shopping center practice, other than its own affidavits, nor has it defined this term in any way. (Mot. 8). Moreover, Milwaukee Golf has provided the court with several articles from Illinois newspapers, discussing the other communities in the Chicago metropolitan area that have off-track betting ("OTB") parlors in their shopping malls. (M Resp. Ex. D, E). These articles show, contrary to J.C. Penney's contention, that in fact it is common practice in these communities, including those near Niles, to have OTB parlors in their shopping centers. Therefore, we find that J.C. Penney has not sufficiently established a likelihood of success on the merits on the issue of whether the existence of the OTB Parlor at the Shopping Center is in accordance with the best standards of regional shopping center practice.

J.C. Penney also argues that the Inter-Track Lease is in non-compliance with the J.C. Penney Lease because the automobiles that the OTB Parlor will attract will interfere with J.C. Penney's parking rights at the Shopping Center. J.C. Penney argues that under the J. C. Penney Lease, it must be provided 4.5 parking spaces for every 1000 square feet of space at the Shopping Center that it occupies. Defendants do not deny that the OTB Parlor will also need parking spaces for its customers at the Shopping Center. (M Resp. 5). However, as Milwaukee Golf correctly points out, the J.C. Penney Lease only states that J.C. Penney will be provided a certain ratio of parking spaces to square feet, just like any other establishment at the Shopping Center is provided a certain ratio of parking spaces to square feet. There are no specifically designated parking spaces for particular tenants. For example, a customer visiting the Shopping Center may park in front of one establishment in an available parking space and continue to shop on foot at various other establishments. In addition, the OTB Parlor will be physically located at an existing vacant retail space at the Shopping Center, which means that no expansion is taking place that will physically infringe on any existing parking spaces at the Shopping Center. The fact that the OTB Parlor's patrons may use parking spaces, ...


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