MARCUS, Circuit Judge.
When a Winn-Dixie supermarket signs on to anchor a shopping center, its lease often contains a restrictive covenant sharply limiting grocery sales by other tenants. In this complex lawsuit, Winn-Dixie claimed that, since 2005, it suffered more than $90 million in lost profits because Defendants Dollar General, Dollar Tree, and Big Lots violated, and continue to violate, these restrictive covenants. Trial involved ninety-seven of Defendants' stores across five southeastern states. The district court handled this complicated case with thought and skill.
For fifty-four stores, the district court reached the question of whether the Defendants violated the terms of the restrictive covenants, whose standard language for most stores limited the sale of "staple or fancy groceries" to a discrete "sales area." Applying general principles of Florida law, the district court construed these terms narrowly, reading groceries as only food items and measuring sales area only by shelving space. As a result, the court refused to order injunctions for thirty-seven stores where it found no violation of the terms of the covenants. As for the seventeen other stores, the court issued injunctive relief that limited only the sale of food items measured by shelving space. Being Erie-bound to apply state rules of decision in this diversity jurisdiction case, we must reverse and remand as to the fifty-four stores. We do so for forty-one of these stores found in Florida, compelled by an intermediate appellate decision from that state interpreting a restrictive covenant materially identical to many of those at issue here. See Winn-Dixie Stores, Inc. v. 99 Cent Stuff-Trail Plaza, LLC, 811 So.2d 719 (Fla. 3d DCA 2002). As we read controlling Florida law, "groceries" broadly includes food and "many household supplies (as soap, matches, paper napkins)," and sales area "includes fixtures and their proportionate aisle space." Id. at 722 (emphasis added). Also, for eleven stores in Alabama and two found in Georgia, we are required to reverse and remand for interpretation of the covenant terms in accordance with the appropriate law of each of those states.
For the remaining forty-three stores, the district court denied all relief for a variety of reasons, without deciding whether the Defendants had violated covenant terms. Finding no error, we affirm the judgment of the district court as to these forty-three stores. To begin with, the district court acted well within its considerable discretion in excluding the testimony of Dr. Pacey, Winn-Dixie's expert on damages, based on twin findings that the expert opinion would not assist the trier of fact and was not grounded in reliable methodology. As a result, the court made no error in refusing to award compensatory damages as to any of the stores. Nor did the court err in finding that the restrictive covenants were unenforceable under
The cross-appeals lodged by Big Lots and Dollar Tree lack merit. As the district court concluded, Big Lots need not have signed the restrictive covenants to be bound by them because section 542.335 of the Florida Statutes does not apply to covenants running with the land. The district court also properly concluded that Big Lots' landlords were not indispensable parties under Federal Rule of Civil Procedure 19(a)(1), and that Winn-Dixie was not required to make a pre-suit demand for compliance upon Big Lots under Florida law. Finally, the district court did not err in granting summary judgment against Dollar Tree's statute of limitations affirmative defense; in Florida, a continuing violation principle applies because the Defendants' stores engaged in ongoing grocery sales.
Thus, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
Plaintiffs ("Winn-Dixie") own or operate roughly 500 supermarkets or grocery stores on leased property throughout Alabama, Florida, Georgia, Louisiana, and Mississippi. Most of their stores are found in Florida. Defendants, in turn, run discount general merchandise stores, some of which are colocated in shopping centers featuring a Winn-Dixie supermarket as an anchor tenant. Dolgencorp, LLC ("Dollar General") is a Kentucky limited liability company with over 9,600 stores in 36 states. Dollar Tree Stores, Inc. ("Dollar Tree") is a Virginia corporation that operates more than 4,400 stores in 48 states. Big Lots Stores, Inc. ("Big Lots") is an Ohio corporation that runs over 1,400 stores in 48 states.
Winn-Dixie's commercial leases often include a "grocery exclusive" provision that precludes landlords from renting to other tenants who operate grocery stores in the same shopping center. Many of the leases specify that these tenants may devote a limited "sales area" to certain restricted products, including "staple or fancy groceries." Winn-Dixie argued that these grocery exclusives bind subsequent tenants as covenants running with the land. Based on reports of estimated sales activity compiled by its investigators, Winn-Dixie concluded that a number of colocated Dollar General, Dollar Tree, and Big Lots stores operate in violation of the restrictive covenants created by the grocery exclusives. Not surprisingly, the parties vigorously dispute which products are restricted and how the permissible sales space is measured.
On May 20, 2011, Winn-Dixie sued Dollar General in the United States District Court for the Southern District of Florida. Two weeks later, Winn-Dixie filed separate suits against Big Lots and Dollar Tree in the same court. Winn-Dixie initially identified 136 stores in all as being in violation of the restrictive covenants. Of these original claims, Winn-Dixie at trial pursued its rights as to only ninety-seven
For ninety-one of the ninety-seven locations at issue, a standard grocery exclusive in Winn-Dixie's lease included the following critical terms:
Winn-Dixie Stores, Inc. v. Big Lots Stores, Inc., 886 F.Supp.2d 1326, 1336 (S.D.Fla.2012). Of these ninety-one standard grocery exclusives, seventy-eight contain the following exception:
Id. (alterations in original). Of the remaining thirteen standard grocery exclusives, five include similar language that allows up to 1,000 square feet of restricted products; three allow up to 400 square
Winn-Dixie sought summary judgment against each of the Defendants, which the district court granted in part and denied in part. The court found that the grocery exclusives formed valid and enforceable covenants running with the land under Florida law, but that genuine issues of material fact remained as to the meaning of "groceries" and "sales area." On February 1, 2012, the court consolidated Winn-Dixie's actions against Dollar General, Dollar Tree, and Big Lots.
After many more motions were filed, the district court entered a pretrial "Omnibus Order Concerning the Meaning of the Terms `Groceries' and `Sales Area.'" The court found that both the terms "staple or fancy groceries" and "sales area" were ambiguous as used in the grocery exclusives. Ultimately, applying Florida principles of real covenant interpretation, the court construed the restrictions narrowly, determining that the parties intended "staple or fancy groceries" to mean only food items, including nonalcoholic beverages, and "sales area" to include only the footprint of the display unit, excluding aisle space. As a result, the evidence presented at trial was premised on these definitions, and the court found covenant violations only when Defendants sold food items in excess of the allowable shelving space.
Also before trial, the court excluded the testimony of Winn-Dixie expert Dr. Patricia Pacey, an economist who intended to opine as to damages. The Defendants did not challenge Dr. Pacey's qualifications, which included a Ph.D. in economics and extensive statistical experience. Based on data drawn from almost 500 Winn-Dixie stores and over 12,000 potential nearby competitors, Dr. Pacey employed a multiple regression model to determine whether a competitor selling similar grocery products in proximity to a Winn-Dixie store has an effect on Winn-Dixie sales. Because the Defendants' stores generally do not sell meat, Dr. Pacey calculated the effect of the Defendants' presence on Winn-Dixie non-meat grocery sales. After equalizing other factors, Dr. Pacey claimed that the presence of a Big Lots, Dollar General, or Dollar Tree store within two-tenths of a mile of a Winn-Dixie was correlated with a reduction in non-meat grocery sales of 7.7%, 6.7%, and 5.0%, respectively. Dr. Pacey used these suppression numbers to calculate the monetary damages allegedly sustained by each Winn-Dixie store. However, the district court barred her testimony, finding its methodology was unreliable and that it would not assist the trier of fact. The court concluded that her analysis failed to reconcile that most of Defendants' stores were permitted to sell a certain amount of restricted products and that it did not establish causation between a covenant violation and decreased Winn-Dixie profits. The district court also took issue with the methods underlying her regression analysis, which calculated damages from 2005 to 2008 based on recession-period sales data drawn from 2009 and 2010, measured Winn-Dixie foot traffic by assuming that consumers purchase their groceries and meat at the same store, imposed an arbitrary three-mile outer radius to measure competition, alleged damages for items that the Defendants do not sell, and had not been peer-reviewed.
The district court conducted a bench trial from May 14 until May 22, 2012. On August 13, it issued detailed "Findings of Fact and Conclusions of Law." The court determined that the leases created enforceable restrictive covenants under the laws of Florida, Georgia, and Alabama, but that the grocery exclusives could not be enforced in Louisiana, under that state's
Turning to Winn-Dixie's request for injunctive relief, the district court determined that, with Dr. Pacey's testimony off the table, a remedy at law was inadequate because of its "skepticism that Plaintiffs could ever provide sufficient evidence to be entitled to an award of damages." However, the court granted injunctive relief only if a Defendant's store violated a narrowly construed restrictive covenant.
For a number of reasons, the district court found that injunctive relief was unavailable at forty-three stores regardless of whether Defendants had violated the terms of the grocery exclusives. Thirty-one stores had closed, making an injunction unnecessary.
At the remaining fifty-four stores, the district court reached the question of whether the Defendants had violated the narrowly construed covenants. The court checked for violations by looking to reports from Winn-Dixie investigators that estimated grocery sales areas for the stores at issue — again, counting only food items and shelving space. For thirty-seven stores, these reports showed no violation and the court entered no injunction.
In total, then, of the ninety-seven stores, the court found no violation of the grocery exclusives at thirty-seven stores; ordered some injunctive relief based on a narrow interpretation of "groceries" and "sales area" at seventeen; and granted no relief for an array of other reasons as to forty-three. The district court rejected Defendants' affirmative defenses. After Winn-Dixie appealed, Big Lots and Dollar Tree filed separate cross-appeals. On September 10, 2012, Dollar General, Big Lots, and Dollar Tree certified to the district court that all stores identified as having been in violation by the order were in compliance with the injunction.
After we inquired of the parties about our jurisdiction, the district court entered a second amended final judgment. That order certified the judgment as final pursuant to Rule 54(b). See Nat'l Ass'n of Bds. of Pharmacy v. Bd. of Regents of the Univ. Sys. of Ga., 633 F.3d 1297, 1306 (11th Cir.2011) ("[A] subsequent Rule 54(b) certification cures a premature notice of appeal from a nonfinal order dismissing claims or parties."). It also addressed concerns about whether diversity jurisdiction had been properly pled. See 28 U.S.C. § 1653 ("Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts."); Mallory & Evans Contractors & Eng'rs, LLC v. Tuskegee Univ., 663 F.3d 1304, 1305 (11th Cir. 2011) (per curiam). Therefore, appellate and subject matter jurisdiction are proper. See 28 U.S.C. § 1291; id. § 1332.
Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), commands that we apply the substantive law of Florida, the forum state, in this diversity action filed in the Southern District of Florida. See Nebula Glass Int'l, Inc. v. Reichhold, Inc., 454 F.3d 1203, 1212 (11th Cir.2006). Thus, for the stores located in Florida, we interpret and
Winn-Dixie argues that the district court erred by awarding little or no injunctive relief at fifty-four stores where the grocery exclusives were binding and enforceable as restrictive covenants. At thirty-seven of these stores, the court found no violation, and thus refused to issue injunctions. Where it did order injunctive relief, at seventeen other stores, it did so on a limited basis, requiring only that Defendants ensure that their sale of food items did not exceed an allowable shelving area. Winn-Dixie claims that this relief was insufficient because the district court erred in interpreting the terms "staple or fancy groceries" and "sales area." Despite the district court's careful analysis of this difficult matter, we are compelled to reverse as to these fifty-four stores because the court interpreted the essential terms in the grocery exclusives based on a mistaken application of state law.
Florida law applies to forty-one of these stores located in Florida,
We review de novo the district court's interpretation of the language of the restrictive covenant. See Gibbs v. Air Canada, 810 F.2d 1529, 1532 (11th Cir. 1987) ("Contract interpretation is generally a question of law subject to de novo review on appeal."). However, if the language "is ambiguous and the district court must look to extrinsic evidence to determine the intent of the parties, the district court's determination of such intent is a finding of fact and is reviewed using the clearly erroneous standard." United Benefit
The district court narrowly construed the covenant terms, confining "staple and fancy groceries" to food items and measuring "sales area" based only on shelving space. The court did so based on a long-standing general principle of Florida law: ambiguous restrictive covenants necessarily receive a narrow construction. The Florida Supreme Court has explained:
Moore v. Stevens, 90 Fla. 879, 106 So. 901, 903 (1925) (emphasis added). Florida law calls for a two-stage analysis. Courts first ask whether a restrictive covenant is ambiguous. And second, if it is, "substantial ambiguity or doubt must be resolved against the person claiming the right to enforce the covenant." Id. at 904.
First, then, we are required to determine whether the grocery exclusives are indeed ambiguous. In Florida, ambiguity exists when a restrictive covenant "is susceptible to two different interpretations, each one of which is reasonably inferred from [its] terms." Commercial Capital Res., LLC v. Giovannetti, 955 So.2d 1151, 1153 (Fla. 3d DCA 2007); see also Cont'l Ins. Co. v. Roberts, 410 F.3d 1331, 1333 (11th Cir.2005) (noting that a term is ambiguous under Florida law "if it is subject to two reasonable interpretations"). "In reviewing a document, a court must consider the document as a whole, rather than attempting to isolate certain portions of it. A court must look first to the plain language of a document and consider parol evidence only when the document is ambiguous on its face." Lambert v. Berkley S. Condo. Ass'n, Inc., 680 So.2d 588, 590 (Fla. 4th DCA 1996) (citations omitted); see Rose v. M/V "Gulf Stream Falcon", 186 F.3d 1345, 1350 (11th Cir. 1999) ("Contract interpretation principles under Florida law require us to look first at the words used on the face of the contract to determine whether that contract is ambiguous.").
If we were to assess the covenant terms using only this general analysis, both terms might appear ambiguous: "staple or fancy groceries" and "sales area" could be read as "susceptible to more than one reasonable interpretation." Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000). Neither of the terms is defined in the document. Referencing the historical evolution of the supermarket, Winn-Dixie argues that "staple or fancy groceries" includes both food and nonfood items. Originally, the general store sold a
At first blush, the same could be said of the term "sales area." Winn-Dixie argues that "sales area" must include the aisle space in which shoppers stand when accessing shelves. "Shoppers do not arrive by chopper, sending ropes down to hoist up their purchases." 99 Cent, 811 So.2d at 722. But Defendants counter that "sales area" applies only to the physical space occupied by shelves displaying restricted products. A Dollar General official "testified that there are many ways to measure `sales area,' including linear feet of the fixture shelves, linear feet of the fixture footprint, cubic feet, square feet of the fixture footprint, and square feet of the fixture footprint plus one-half of the adjacent aisle space." Different readings of the grocery exclusive appear plausible.
Still, we cannot assess ambiguity in this case without accounting for what a Florida intermediate appellate court has said before about these very terms. In a 2002 decision, Winn-Dixie Stores, Inc. v. 99 Cent Stuff-Trail Plaza, LLC, 811 So.2d 719, Florida's Third District Court of Appeals interpreted a standard grocery exclusive materially identical to many of those at issue in this case.
The district court avoided applying 99 Cent, nevertheless, by distinguishing its factual and legal context, even though it recognized that "the standard grocery exclusive considered in 99 Cent is identical to the standard grocery exclusives in these consolidated cases." "[W]hether a decision is binding on another is dependent upon there being similar facts and legal issues.... [W]here the ... underlying facts are different, then a previous decision should not be binding." U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 882-83 (Fla.2007). The district court distinguished 99 Cent, which involved one lease signed in 1999, from the current case, which involved many stores and leases that had been signed in the 1950s, 1960s, 1970s, 1980s, and 1990s, a fact deemed significant "in light of the changing definition of `groceries' over the past sixty years." The trial court concluded that "[i]t would be untenable ... to apply 99 Cent's definition of `groceries' in 2002 to leases that were signed as much as forty-five years earlier in five different states" because "what 99 Cent considered to be `groceries' in 2002 is likely more expansive than what ... the parties to the leases at issue ... considered to be groceries in previous years."
We do not find it so easy to distinguish 99 Cent from the present case. A Florida court considering the meaning of the same terms in a materially identical grocery exclusive sided with Winn-Dixie, finding these terms to be clear and unambiguous based on a dictionary definition. Thus, the 99 Cent court applied an alternate Florida rule of contract construction: "One looks to the dictionary for the plain and ordinary meaning of words." Beans v. Chohonis, 740 So.2d 65, 67 (Fla. 3d DCA 1999); see Garcia v. Fed. Ins. Co., 969 So.2d 288, 291-92 (Fla.2007) (assessing ambiguity in an insurance contract by consulting a dictionary as a "reference[ ] commonly relied upon to supply the accepted meanings of words"); Citizens Prop. Ins. Corp. v. M.A. & F.H. Props., Ltd., 948 So.2d 1017, 1020 (Fla. 3d DCA 2007) (citing 99 Cent for the principle that, "[i]n the absence of a contractual definition, we must presume that [a] word was intended to be used in its plain and ordinary way as can be ascertained by reference to a dictionary"). The fact that a similar form contract was signed many times over five decades in the current case, but was signed only once in 99 Cent, does little to undermine the Florida court's conclusions about the plain meaning of the same covenant terms. The appellate court in no way based its conclusions on the development of the terms over time. Nor, significantly do we see any
The Florida court in 99 Cent referenced Webster's Third New International Dictionary, which was first published in 1961. Its definitions of "groceries" and "grocer" have remained unchanged since. Notably, just one lease in this case was signed before publication of Webster's Third New International.
The district court also supported its interpretation of these terms by pointing to language in approximately twenty of the leases that referred to "groceries" as "food items." More specifically, the standard grocery exclusives in these leases included additional carve outs for some drug stores, providing, for example, that "the permitted sale of the above listed food items shall be expanded to 1,500 sq. ft. of sales area." The Defendants contend that, because the carve out refers to "groceries" as among "the above listed food items," only food sales are restricted. This argument fails too because the very same type of carve out, including the same reference to "above listed food items," was present in the lease at issue in 99 Cent. In short, a Florida appellate court looking at identical language did not read "above listed food items" to restrict "groceries" to only food. This interpretation is consistent with the text: it is possible that the added carve-outs were meant only to restrict food grocery sales, whereas the original language retained broader meaning. Because the Florida court confronted the same added language, no such distinction can be wedged between this case and 99 Cent on that basis.
Federal courts sitting in diversity are "bound to adhere to decisions of [Florida's] intermediate appellate courts, absent some persuasive indication that the state's highest court would decide the issue otherwise." Studstill v. Borg Warner Leasing, 806 F.2d 1005, 1007 (11th Cir.1986) (per curiam) (alteration in original) (quoting Provau, 772 F.2d at 820). We see no persuasive indication that the Florida Supreme Court would interpret the grocery exclusives in this case differently than the state appellate court did for the materially identical language found in 99 Cent. Indeed, the only other state intermediate appellate court to confront the interpretation of the Winn-Dixie grocery exclusives reached the same result in a nonprecedential order affirming without opinion when a trial court followed 99 Cent. See Winn-Dixie
We are Erie-bound to give effect to the state rules of decision on the meaning and application of restrictive covenants. Thus, we conclude that the district court erred in finding the terms ambiguous and proceeding to the second step to construe the terms narrowly. Instead, the court should have followed the holding in 99 Cent by looking to the dictionary definitions, which instruct that "groceries" includes food and "many household supplies (as soap, matches, paper napkins)" and that sales area "includes fixtures and their proportionate aisle space." 811 So.2d at 722 (emphasis added).
Of course, the Florida court's analysis in 99 Cent is binding only as a pronouncement of Florida law. But the district court applied Florida law to the interpretation of grocery exclusive terms found in all the leases at issue, including for eleven stores in Alabama
For the remaining forty-three stores, the district court denied all relief on other grounds, regardless of whether the stores violated Winn-Dixie's grocery exclusives. Discerning no error as to these stores, we affirm.
After barring testimony from Winn-Dixie's expert on damages, Dr. Pacey, the district court refused to award compensatory damages for any store at issue. Winn-Dixie argues that the court erred in excluding Dr. Pacey, but we disagree. The district court acted within its considerable discretion when it concluded that Dr. Pacey's testimony would not assist the trier of fact and that her methodology was not sufficiently reliable.
We review for abuse of discretion a trial court's decision to exclude an expert's testimony. Kilpatrick v. Breg, Inc., 613 F.3d 1329, 1334 (11th Cir.2010); see also Gen. Elec. Co. v. Joiner, 522 U.S. 136, 140, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). Exclusion of an expert amounts to an abuse of discretion if the court "applies the wrong law, follows the wrong procedure, bases its decision on clearly erroneous facts, or commits a clear error in judgment." United States v. Brown, 415 F.3d 1257, 1266 (11th Cir.2005). The district court enjoys "considerable leeway" in making such evidentiary decisions, and will be reversed only if "the ruling is manifestly erroneous." United States v. Frazier, 387 F.3d 1244, 1258 (11th Cir.2004) (en banc).
Under Rule 702 of the Federal Rules of Evidence, interpreted in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the district courts perform an essential "gatekeeping" function in screening expert scientific and technical evidence. Frazier, 387 F.3d at 1260. To this end, trial courts conduct a rigorous three-part inquiry that asks: (1) if the expert is qualified by background, training, and expertise to testify competently regarding the matters he intends to address; (2) whether the methodology by which the expert reaches his conclusions is sufficiently reliable as determined by the sort of inquiry mandated in Daubert; and (3) if the expert testimony would assist the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue. Id.
Here, the district court barred Dr. Pacey's testimony based on the second and third prongs: her reports "would not assist the trier of fact in determining a fact in issue in this case" and "her methodology [wa]s not sufficiently reliable." To begin
The district court acted within its broad discretion in determining that Dr. Pacey's reports could not satisfy the second and third Daubert prongs. In this case, these two considerations are connected. Dr. Pacey's testimony was not based upon a methodology that could reliably estimate Winn-Dixie damages caused by Defendants' covenant violations. As a result, her testimony would not assist the trier of fact in determining a fact at issue.
First, the trial court could fairly determine that the regression analysis employed by Dr. Pacey was not a reliable method of showing damages suffered by Winn-Dixie as a result of grocery exclusive violations. Dr. Pacey's model failed to recognize that nearly all of the restrictive covenants permitted some amount of grocery sales at Defendants' stores. Winn-Dixie acknowledges this shortcoming, but argues that a finder of fact could calculate damages merely by applying a "credit" for "permitted" sales. The district court rejected this approach, however, because the analysis measured "overall competition and consumer behavior instead of Winn-Dixie's damages caused by Defendants' violations of the grocery exclusives." Dr. Pacey measured for the effect of the wrong factor — a dollar store's proximity, not its prohibited grocery sales. The district court could determine, as it did, that "no tweaking can fix that problem." Winn-Dixie also argues that Dr. Pacey believed that sales of grocery products up to a maximum of 500 square feet of sales area have zero or negligible impact. But the district court reasonably rejected the unsupported assumption that, because Winn-Dixie permits some sales, those permitted sales must have no effect on supermarket revenue. In the end, Dr. Pacey's regression model was not a reliable method for establishing the damages caused by Defendants' violations of restrictive covenants. Dr. Pacey herself admitted to the district court, when asked why her regression analysis did not measure "the effect of the violation" instead of the more general presence of a competitor: "if you want to measure it that way, it's not a regression measure. Then don't use regression. Use some other avenue."
Second, because Dr. Pacey's methodology did not reliably measure Winn-Dixie's damages, and instead estimated the effect of a Defendant store's presence on Winn-Dixie
509 U.S. at 591-92, 113 S.Ct. 2786 (citations omitted).
Here, the trial court could reasonably determine that "fit" is lacking. Dr. Pacey studied the correlation between Winn-Dixie non-meat grocery sales and the presence of a Defendant's store nearby. But, to prove its claims, Winn-Dixie needed to make a far more precise showing: that Winn-Dixie suffered damages as a result of Defendants' sale of groceries in a larger sales area than permitted by the restrictive covenants. Dr. Pacey's analysis employed tools far too blunt to illuminate this question. Winn-Dixie asks to bridge too broad a logical gap: the fact that Dr. Pacey found lower Winn-Dixie sales when a dollar store is nearby sheds little light on the amount of direct damages caused by a Defendant's impermissible grocery sales. But admission of the evidence could mislead a jury into believing that the data speaks to a causal link. See Frazier, 387 F.3d at 1263 ("[E]xpert testimony may be assigned talismanic significance in the eyes of lay jurors, and, therefore, the district courts must take care to weigh the value of such evidence against its potential to mislead or confuse."). As the district court explained:
Thus, the district court acted within its discretion in excluding Dr. Pacey's testimony when it found her conclusions about damages were not based on reliable methodology and her analysis did not assist the trier of fact (here, the district court) with any issue in the case. See Goodman v. Highlands Ins. Co., 607 F.2d 665, 668 (5th Cir.1979) ("[A] trial judge sitting without a jury is entitled to even greater latitude concerning the admission or exclusion of
Winn-Dixie's unsuccessful Daubert argument is the only challenge it makes to the court's conclusion that Winn-Dixie could not prove damages. See Winn-Dixie, 886 F.Supp.2d at 1346 (explaining that, after Dr. Pacey was excluded, evidence as to damages "was hopelessly speculative," and "Winn-Dixie effectively conceded that it could not prove damages"). Thus, we see no error in the district court's determination that Winn-Dixie cannot prove compensatory damages. With damages off the table, then, we affirm the denial of all relief as to thirty-one stores that had closed by the time of trial, necessarily making injunctions ineffective.
We also affirm the district court's refusal to enforce the grocery exclusives at six stores in Louisiana
The district court refused to enforce the restrictive covenants under Louisiana law, concluding that state law required more than "a clearly expressed intention" that a covenant run with the land. We agree. In Louisiana, "[m]erely stating that a contract is to `run with the land' does not create immoveable rights." U-Serve Petroleum & Invs., Inc. v. Cambre, 486 So.2d 821, 824 (La.Ct.App.1986). Instead, for a covenant to run with the land — to be a "real obligation" — it "can be established only by a title.... [T]he real obligation must be clearly apparent from the title documents themselves." Leonard v. Lavigne, 245 La. 1004, 162 So.2d 341, 343 (1964). The district court refused to enforce Winn-Dixie's grocery exclusives at the six Louisiana locations at issue because the grocery exclusives were not a "real
Winn-Dixie's effort to squeeze a common law rule into the civil law fails because, in Louisiana, a lease contract is not a title document that can give rise to a real obligation. See Leonard, 162 So.2d at 343. "Under the civil law concept, a lease does not convey any real right or title to the property leased, but only a personal right." Richard v. Hall, 874 So.2d 131, 145 (La.2004). Winn-Dixie thus cannot enforce its grocery exclusives under Louisiana law because the leases established only personal, not real property rights — the leases containing the grocery exclusives are not title documents that can create a real obligation. See Leonard, 162 So.2d at 343 (refusing to find a covenant running with the land when a lease provision restricted operation of a competing filling station on adjoining property); Wolfe v. N. Shreveport Dev. Co., 228 So.2d 148, 149-51 (La.Ct.App.1969) (refusing to find a covenant running with the land when a lease provision prohibited the operation of other shoe stores in a shopping center); see also U-Serve, 486 So.2d at 824 ("Although the contract in question stated that it was to `run with the land,' it was in fact a personal contract between Cambre and U-Serve because it favored the person of U-Serve and not a dominant estate."). In short, the district court did not err in concluding that Louisiana law does not recognize Winn-Dixie's grocery exclusives as real obligations running with the land.
Likewise, the district court declined to enforce a grocery exclusive against one Dollar General store at issue in Mississippi because of a lack of privity of estate. Again, we find no error. The Mississippi Supreme Court requires that "privity of estate must exist between the person claiming right to enforce the covenant and the person upon whom burden of covenant is to be imposed." Hearn v. Autumn Woods Office Park Prop. Owners Ass'n, 757 So.2d 155, 158 (Miss.1999); see Vulcan Materials Co. v. Miller, 691 So.2d 908, 913 (Miss.1997). In Mississippi, privity of estate exists between "those who stand in mutual or successive relationship to the same rights of property," Lipscomb v. Postell, 38 Miss. 476, 489 (1860). In other words, privity of estate is "that which exists between lessor and lessee, tenant for life and remainderman or reversioner, etc., and their respective assignees, and between joint tenants and coparceners." Hearn, 757 So.2d at 158 (quoting Black's Law Dictionary 1080 (5th ed.1979)).
Mississippi case precedent does little to elaborate on this privity requirement. Traditionally, however, privity of estate is satisfied when a party shows both horizontal and vertical privity. See 9 Powell on Real Property § 60.04(3)(c)(v) (Michael Allan Wolf ed., 2001 & Supp.2013). Horizontal privity requires that a covenant is created as part of a simultaneous conveyance of an estate between the parties. 20 Am. Jur.2d Covenants, Conditions, and Restrictions § 26 (2014). Here, such a relationship did exist. The shopping center landlord shared a lessor-lessee relationship with tenant Winn-Dixie when the grocery exclusive was included in the lease agreement.
Vertical privity, by contrast, refers to the relationship between a covenanting party and her successor(s) in interest: here, between the landlord and Dollar General. Id. Vertical privity comes in two flavors, strict and relaxed:
Restatement (Third) of Prop.: Servitudes § 5.2 cmt. b. (2000). In the present case, relaxed vertical privity exists, but strict vertical privity does not. Because Dollar General took only part of the landlord's estate (a leasehold), and was not an assignee of its entire interest, there is no strict vertical privity. However, because Dollar General took a part of the estate, relaxed privity is satisfied. Thus, Winn-Dixie cannot enforce its grocery exclusive for the Mississippi store if that state requires strict vertical privity.
Mississippi case law does not address the appropriate vertical privity standard. The modern trend, exemplified in the Third Restatement of Property, is to eliminate the vertical privity requirement. Instead of following this trend, Mississippi courts have retained a general privity rule in recent cases without specifying what type of vertical privity they require. See, e.g., Journeay v. Berry, 953 So.2d 1145, 1154 (Miss.Ct.App.2007). Therefore, to determine the vertical privity rule in Mississippi, we look to earlier authorities that reflect the traditional privity principles from which Mississippi drew its doctrine. "The first Restatement of Property took the position that relaxed vertical privity is required for the benefit of covenants to run either at law or in equity, and that strict vertical privity is required for the burdens of covenants to run at law." Restatement (Third) of Prop.: Servitudes § 5.2 cmt. b. Indeed, the First Restatement of Property explained:
Restatement (First) of Prop. § 535 (1944). The Restatement authors commented:
Id. cmt. a.
Though courts and commentators do not universally agree about the wisdom of a strict vertical privity requirement, courts in a number of states have cited the First Restatement in requiring strict vertical privity for a burden to run. See, e.g., Marathon Fin. Co. v. HHC Liquidation Corp., 325 S.C. 589, 483 S.E.2d 757, 765 (S.C.Ct.App.1997); Grimes v. Walsh & Watts, Inc., 649 S.W.2d 724, 728 (Tex.App. 1983); Old Dominion Iron & Steel Corp. v. Va. Elec. & Power Co., 215 Va. 658, 212 S.E.2d 715, 721 (1975). We believe that, confronted with this question, Mississippi courts would follow this trend and require strict vertical privity to enforce the burden of a restrictive covenant. As a result,
We also affirm the district court's conclusion that Winn-Dixie could not enforce a covenant against one Dollar General store in Florida whose lease was signed before the Winn-Dixie lease that contained the restrictions.
"Restrictive covenants are only enforceable against those who have notice of such restrictions...." Hagan v. Sabal Palms, Inc., 186 So.2d 302, 311 (Fla. 2d DCA 1966) (quoting Batman v. Creighton, 101 So.2d 587, 593 (Fla. 2d DCA 1958)). Therefore, a party who takes an interest in property before a restriction is created, and who thus lacks notice of that limitation, is not bound by a restrictive covenant. See Norwood Shopping Ctr., Inc. v. MKR Corp., 135 So.2d 448, 450 (Fla. 3d DCA 1961). One cannot know of what does not exist. However, after Winn-Dixie signed its lease, Dollar General agreed to lease modifications that "extended the term, added some common area maintenance charges that were not involved in the original lease, changed the property tax obligation, added some options to renew under specific terms, and altered the original percentage rent provisions." Winn-Dixie argues that, because Dollar General executed these lease modifications, it formed a new lease subject to Winn-Dixie's then-existing property rights.
No Florida precedent, and little national case law, addresses whether a lease modification can subject a tenant to a restrictive covenant formed after creation of the original leases. A New York case cited by the district court provides the closest comparator. See L'Art de Jewel Ltd. v. Hudson Sheraton Corp., 46 A.D.3d 418, 850 N.Y.S.2d 3 (N.Y.App.Div.2007). There, the dispute involved two jewelers who leased space in a hotel. The jeweler who signed the later lease sued the first based on a restrictive covenant, claiming that the first "was on notice of the terms of the restrictive covenant in plaintiff's lease when [the first jeweler] commenced a `new' term of its license." Id. at 420, 850 N.Y.S.2d 3. The New York appellate court rejected this argument:
Id. Because the original lease remained in effect, albeit subject to modified terms concerning the length of the lease and location of the operation, the first jeweler's original lease controlled for purposes of determining restrictive covenants. As a result, later lease modifications did not bind a first tenant to a restrictive covenant created by a second tenant's lease. Subsequent New York cases cite and apply the rule found in L'Art. See Ernie Otto Corp. v. Inland Se. Thompson Monticello, LLC, 91 A.D.3d 1155, 1157, 936 N.Y.S.2d 756
A Florida court likely would apply the same rule, particularly because in Florida "[r]estrictive covenants are not favored and are to be strictly construed in favor of the free and unrestricted use of real property." Wilson v. Rex Quality Corp., 839 So.2d 928, 930 (Fla. 2d DCA 2003) (citing Moore, 106 So. at 903); cf. Fratelli's Pizza, 74 A.D.3d at 482, 902 N.Y.S.2d 534 ("[G]uided by the principles that restrictive covenants in leases, such as use clauses, are `strictly construed against those seeking to enforce them' ... we find that the language of the subject restrictive covenant is consistent with its prospective application, and that the parties did not intend the covenant to apply to tenants with preexisting leases." (citations omitted)). A lease modification that alters only such terms as the lease length and cost, and that otherwise demonstrates an intent to leave the remaining conditions of the underlying lease unchanged, does not automatically bind the modifying tenant to restrictive covenants executed after the date of the original lease.
Nevertheless, Winn-Dixie cites to a number of cases drawn from other contexts in which Florida courts found that material alterations in lease modifications gave rise to new agreements. One court held that a landlord's statutory lien was not entitled to priority when the "landlord and tenant terminated the original lease prior to any default of the tenant's lease obligations and entered into a new lease after creditors' security interest was perfected." Robie v. Port Douglas (Fla.), Inc., 662 So.2d 1389, 1390 (Fla. 4th DCA 1995); see Flowers v. Centrust Sav. Bank, 556 So.2d 1123, 1125 (Fla. 3d DCA 1989) ("[W]hen the commencement of a tenancy, based upon a lease, creates a statutory landlord's lien ... such lien is viable only as long as the underlying lease exists."). Other courts have ruled that a real estate broker's entitlement to commissions "ends with the original lease term where an extension of that term involves new and different rights and responsibilities of the landlord and tenant so that in effect a `new' lease has been negotiated." Rauch v. Chama Invs., N.V., 641 So.2d 501, 502 (Fla. 4th DCA 1994) (per curiam); see Strano v. Reisinger Real Estate, Inc., 534 So.2d 1214, 1215 (Fla. 3d DCA 1988) (lease modification was not a "renewal" for purposes of a real estate broker's entitlement to a commission). Finally, when a new arbitration statute was enacted between the signing of an original lease and a modification, a court held that the statute applied because the modification amounted to a new agreement. See Bartke's, Inc. v. Hillsborough Cnty. Aviation Auth., 217 So.2d 885, 887 (Fla. 2d DCA 1969).
These cases represent Florida law for cases that involve statutory lien priority, real estate broker commissions, and the applicability of arbitration statutes. But they say precious little about the enforcement of a restrictive covenant, a disfavored device that involves far different policy considerations. We decline to extrapolate from these dissimilar cases when Florida
Winn-Dixie raises a number of other issues that lack merit, and thus do not alter the outcome at any stores.
Winn-Dixie argues that the district court should have awarded punitive damages pursuant to Florida law. After a bench trial, we review a district court's decision to award or deny punitive damages for abuse of discretion. See Claiborne v. Ill. Cent. R.R., 583 F.2d 143, 154 (5th Cir.1978) ("Having determined that a punitive damages award under section 1981 is permissible, we also find no abuse of discretion in the grant of such an award in this case.").
Florida law allows punitive damages only "if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence." Fla. Stat. § 768.72(2). "`Intentional misconduct' means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage." Id. § 768.72(2)(a). "`Gross negligence' means that the defendant's conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct." Id. § 768.72(2)(b).
The district court denied punitive damages because "[t]he grocery exclusives sought to be enforced against the Defendants are rife with ambiguities and the scope of their restrictions are uncertain at best," and, "[m]oreover, Plaintiffs did not make a formal demand on Defendants to comply with their grocery exclusives prior to filing this lawsuit." The district court did not abuse its discretion in determining that Winn-Dixie failed to prove, by clear and convincing evidence, that the Defendants committed the requisite intentional misconduct or gross negligence. The proper construction of the grocery exclusives presents a difficult question of Florida law upon which reasonable observers surely can differ. Winn-Dixie provided no evidence indicating actual intent, nor that Defendants acted in a grossly negligent manner. Instead, the evidence presented indicated that Defendants conducted themselves in accordance with a reasonable interpretation of the grocery exclusives. The district court did not err in denying punitive damages when it found Winn-Dixie failed to meet its burden under Florida law. Cf. Mee Indus. v. Dow Chem. Co., 608 F.3d 1202, 1221 (11th Cir.2010) ("Although sufficient evidence was presented to place the issues of probable cause and advice of counsel before the jury, the closeness of those issues confirms that the evidence is insufficient to allow a reasonable juror to find by the clear and convincing standard that Dow could be liable for punitive damages.").
Winn-Dixie also argues that collateral estoppel precluded Dollar General from relitigating the enforcement, scope, and meaning of the grocery exclusives in force at any of its stores at issue. Winn-Dixie
"Under the Full Faith and Credit Act, 28 U.S.C. § 1738, a federal court must `give preclusive effect to a state court judgment to the same extent as would courts of the state in which the judgment was entered.'" Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324, 1331 (11th Cir.2010) (quoting Kahn v. Smith Barney Shearson Inc., 115 F.3d 930, 933 (11th Cir.1997)). Therefore, we give preclusive effect to a state court judgment if: "(1) the courts of the state from which the judgment emerged would do so themselves; and (2) the litigants had a full and fair opportunity to litigate their claims and the prior state proceedings otherwise satisfied the applicable requirements of due process." Quinn v. Monroe Cnty., 330 F.3d 1320, 1329 (11th Cir.2003). In Florida, "collateral estoppel applies if (1) an identical issue, (2) has been fully litigated, (3) by the same parties or their privies, and (4) a final decision has been rendered by a court of competent jurisdiction." Id.; see Essenson v. Polo Club Assocs., 688 So.2d 981, 983 (Fla. 2d DCA 1997).
Here, the result turns on the appropriate Florida rule for assessing whether issues are identical. Florida case law does not discuss in any great detail the standard for measuring the identity of issues. However, the authors of the Second Restatement of Judgments, which Florida courts have cited in otherwise applying collateral estoppel, see, e.g., Cook v. State, 921 So.2d 631, 634 (Fla. 2d DCA 2005), commented:
Restatement (Second) of Judgments § 27 cmt. c (1982). We believe that Florida courts would consider factors like those
Here, identity of issues is lacking because of differences in the time, location, and terms of the leases. These differences made pretrial preparation and discovery necessarily broader than that required for Noble. Unlike the lease in Noble, created in 1985 for a single store in Osceola County, Florida, leases for the fifty-one Dollar General stores at issue in this case were signed across three decades throughout four states. Interpretation of the leases in this case has not "previously been decided between" Winn-Dixie and Dollar General. Mobil Oil Corp. v. Shevin, 354 So.2d 372, 374 (Fla.1977); cf. Rufenacht v. Iowa Beef Processors, Inc., 656 F.2d 198, 203 (5th Cir. Sept.1981) (refusing to apply collateral estoppel due to non-identical issues when "each claim is referable to a separate and distinct cattle transaction"); id. at 204 n. 2 ("[E]stoppel applies [when] there is an actual identity of issues ... as opposed to the cases at bar which involve separate albeit similar sales of cattle."). Without identity of issues, Winn-Dixie cannot invoke offensive issue preclusion as to the interpretation of the leases involved in this action.
Arguing for collateral estoppel, Winn-Dixie cites only Provau v. State Farm Mutual Automobile Insurance Co., 772 F.2d at 821, in which a panel of this Court interpreted substantive state law by looking to a previous state decision when "the language in the two policies at issue [were] substantially similar." But Provau did not use this analysis in the context of collateral estoppel. Moreover, Provau highlighted "particular judicial concerns" with offensive collateral estoppel that counsel against its broad application. Id.; see Johnson v. United States, 576 F.2d 606, 614 (5th Cir. 1978) ("[T]he offensive use of collateral estoppel calls for the courts to use special care in examining the circumstances to ascertain that the defendant has in fact had a full and fair opportunity to litigate and that preclusion will not lead to unjust results."). The district court made no error in refusing to recognize collateral estoppel under Florida law.
Finally, Winn-Dixie challenged the district court's application of the Florida standard for injunctive relief, arguing that the court improperly required that Winn-Dixie show that a remedy at law was inadequate. Compare Autozone Stores, Inc. v. Ne. Plaza Venture, LLC, 934 So.2d 670, 673 (Fla. 2d DCA 2006) ("Injunctive relief is normally available to redress violations of ... restrictive covenants [affecting real property] without proof of irreparable injury or a showing that a judgment for damages would be inadequate. The value of a restrictive covenant ... is often difficult to quantify and may be impossible to replace." (alterations in original)) (quoting Restatement (Third) of Prop.: Servitudes § 8.3 cmt. b), with Liza Danielle, Inc. v. Jamko, Inc., 408 So.2d 735, 738 (Fla. 3d DCA 1982) (requiring that a plaintiff seeking to enforce an "exclusivity" clause as a restrictive covenant barring retail competition "prove two interrelated requirements necessary to establish its right to injunctive relief: (1) that it was without an adequate remedy at law, or (2) that it would suffer irreparable harm if the injunction were denied").
Though it required such a showing, the district court concluded that no legal remedy was adequate because Winn-Dixie could not prove damages. Winn-Dixie, 886 F.Supp.2d at 1348 ("Having rejected Plaintiffs' claim for damages as too speculative and considering my skepticism that Plaintiffs could ever provide sufficient evidence to be entitled to an award of damages,
Ultimately, then, we affirm as to the forty-three stores for which the district court denied all relief without reaching the question of whether Defendants violated the grocery exclusives. Because the district court made no error when, for a variety of other reasons, it found it unnecessary to examine whether covenants had been broken at these locations, we do not disturb its denial of all relief as to these stores.
Big Lots and Dollar Tree separately raise a number of issues on cross-appeal. We review the district court's interpretation of state law de novo. Jones, 494 F.3d at 1309. None of the cross-appeals have merit.
First, Big Lots argues that a Florida statute requires that Big Lots have signed the restrictive covenant to be bound by it. We find no error in the district court's determination that Florida law permits enforcement of the covenants.
Section 542.335 of the Florida Statutes concerns "[v]alid restraints of trade or commerce" — typically, non-compete agreements. It provides that "[a] court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought." Fla. Stat. § 542.335(1)(a) (2011). Big Lots contends that the district court erred in allowing Winn-Dixie to enforce a restrictive covenant against non-signatory stores. But this argument is foreclosed by Winn-Dixie Stores, Inc. v. Dolgencorp, Inc., 964 So.2d 261 (Fla. 4th DCA 2007), in which a Florida intermediate appellate court held that, with respect to § 542.335(1)(a), "`a restrictive covenant' does not include real property covenants running with the land. Rather, the section is directed at personal service contracts not to compete." Id. at 268. The Florida court in Winn-Dixie distinguished a case now relied upon by Big Lots, Tusa v. Roffe, 791 So.2d 512 (Fla. 4th DCA 2001), because "there was no claim in Tusa that the ... use restriction was a real property covenant running with the land." Winn-Dixie, 964 So.2d at 269; see id. ("There is no indication in Tusa that any of the leases were recorded or that the parties intended to create covenants running with the land."). But the covenants here ran with the land and section 542.335 does not apply. Florida law does not require that Winn-Dixie have signed a contract with Big Lots to enforce its real covenant.
Big Lots argues "that the holding in Winn-Dixie contradicts the clear mandate of Section 542.335." Big Lots' Reply Br. 3. It urges that the Florida Supreme Court would read section 542.335 as applying to the restrictive covenant in this case, or that this Court should certify the question. We disagree. The holding of the Florida appellate court in Winn-Dixie represents a reasonable interpretation of a statute that deals with personal, not real, covenants.
Big Lots argues next that Winn-Dixie failed to join indispensable parties — the shopping center landlords. We review a district court's decision regarding the joinder of indispensable parties for abuse of discretion. United States v. Rigel Ships Agencies, Inc., 432 F.3d 1282, 1291 (11th Cir.2005) (per curiam); Mann v. City of Albany, Ga., 883 F.2d 999, 1003 (11th Cir. 1989). "A district court abuses its discretion when, in reaching a decision, it applies an incorrect legal standard, follows improper procedures in making the determination, or makes findings of fact that are clearly erroneous." Rigel Ships Agencies, 432 F.3d at 1291 (quoting S.E.C. v. Smyth, 420 F.3d 1225, 1230 (11th Cir.2005)).
Federal Rule of Civil Procedure 19 sets out two steps for determining whether a party must be joined as indispensable. First, under Rule 19(a), the court determines "whether the person in question is one who should be joined if feasible." Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1280 (11th Cir.2003) (quoting Challenge Homes, Inc. v. Greater Naples Care Ctr., Inc., 669 F.2d 667, 669 (11th Cir.1982)). Second, for all such necessary parties, a court determines whether the Rule 19(b) factors permit the litigation to continue if the party cannot be joined, or instead whether they are indispensable. Id.
First, then, we look to the language of Rule 19(a)(1) to determine if the landlords were necessary parties:
Fed.R.Civ.P. 19(a)(1).
Here, the landlords are not necessary parties under Rule 19(a)(1)(A) because the district court could provide "complete relief" among the litigants without joining the landlords. Winn-Dixie sought legal and equitable relief in the form of damages or an injunction against Big Lots. The district court could award all of the requested relief without haling the landlords into court because Big Lots was fully able to pay damages and comply with injunctions. Cf. Focus on the Family, 344 F.3d at 1280 (finding that a party was necessary when "complete relief cannot be afforded in Eller's absence, as PSTA cannot require the running of a
Nor does Rule 19(a)(1)(B) require that the landlords be joined. Section (B)(i) does not make the landlords necessary because they had no rights at stake in the litigation that were in danger of being "impair[ed] or imped[ed]" by the case proceeding without them. Big Lots acknowledges that in future litigation the landlords will not be bound by the decision of the district court. Instead, Big Lots urges under section (B)(ii) that, because the landlords were not joined, Big Lots will be subject to "inconsistent obligations." Fed. R.Civ.P. 19(a)(1)(B)(ii). It mistakes the meaning of this term. Big Lots labels as an inconsistent obligation a breach of contract claim against it brought by a landlord. Yet the resolution of a separate contract dispute between Big Lots and its landlord in no way conflicts with the district court's determination that Big Lots violated the grocery exclusive. As a panel of the First Circuit explained:
Delgado v. Plaza Las Ams., Inc., 139 F.3d 1, 3 (1st Cir.1998) (per curiam) (citations omitted); accord Sch. Dist. of City of Pontiac v. Sec'y of U.S. Dep't of Educ., 584 F.3d 253, 282 (6th Cir.2009) (en banc) ("Inconsistent obligations arise only when a party cannot simultaneously comply with the orders of different courts."); Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. California, 547 F.3d 962, 976 (9th Cir.2008) ("We adopt the approach endorsed by the First Circuit [in Delgado].").
Moreover, where two suits arising from the same incident involve different causes of action, defendants are not faced with the potential for double liability because separate suits have different consequences and different measures of damages. See In re Torcise, 116 F.3d 860, 866 (11th Cir.1997). Here, the case on appeal involves claimed violations of the restrictive covenants, while Big Lots complains of secondary suits from landlords alleging breach of lease contracts. Big Lots does not face section (B)(ii) "inconsistent obligations," and has no other Rule 19(a) hook on which to hang its mandatory joiner hat. As a result, we need not reach the second step to consider, under Rule 19(b), "whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed." Fed. R. Civ. Pro. 19(b). The district court did not abuse its discretion in refusing to dismiss the case for failure to join the landlords.
Finally, Big Lots argues that Winn-Dixie cannot enforce its restrictive covenants because it neglected to make "a reasonable demand for compliance with the restriction after the breach has occurred." Majestic View Condo. Ass'n v. Bolotin, 429 So.2d 438, 439 (Fla. 4th DCA 1983). We find no pre-suit demand requirement here because the cases relied upon by Big Lots concern materially different species of covenants. Big Lots first points to Richards v. Dodge, 150 So.2d 477, 483 (Fla. 2d DCA 1963), in which a residential tenant raised breach of covenants as an affirmative defense in a landlord's action for unpaid rent. The court found that the tenant was estopped from asserting
Big Lots also looks to Majestic View, in which a condominium association sued unit owners for violating a restrictive covenant limiting pets to "one dog or cat under twenty-five pounds." 429 So.2d at 439. A Florida appellate court reversed a trial court that had applied a "due process" test requiring "a condominium association to provide a unit owner with an adversary proceeding before seeking to enforce its restrictive covenants in court." Id. at 439-40. Finding no basis in law for imposing such a due process test, the court noted that the condo association had given the residents pre-suit notice of the violation. Id. Without explanation or analysis, the court cited Richards in noting that enforcement of the restrictive covenant required "a reasonable demand for compliance with the restriction after the breach has occurred." Id. at 439.
Majestic View involved the special relationship among a condominium association and its constituent unit owners. See id. at 440 ("Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization." (quoting Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180 (Fla. 4th DCA 1975))). The only other Florida case in this vein, Europco Management Co. of America v. Smith, 572 So.2d 963, 966-67 (Fla. 1st DCA 1990), similarly concluded that a residential developer did not owe any more due process to homeowners when enforcing restrictive covenants than outlined in Majestic View. Id. ("The undisputed facts of this case show that Europco complied with all necessary due process requirements for enforcement of a protective covenant such as involved in this case. See Majestic View ....").
Winn-Dixie is a commercial tenant whose covenant limiting competition within a shopping center arises in a far different context than the residential restrictions enforced by the condominium association in Majestic View and the residential management company in Europco. And both Majestic View and Europco refused to impose burdensome "due process" requirements for enforcing covenants. Regardless, even if these cases imposed a pre-suit demand requirement here, the exception in Richards would relieve any need for demand because violations at Big Lots stores were not "mainly or exclusively within the knowledge of" Winn-Dixie.
Buttressing this conclusion, not a single Florida case has barred enforcement of a
Because Florida law imposed no pre-suit demand requirement on Winn-Dixie for enforcement of the restrictive covenants, we have no occasion to consider whether Big Lots waived this argument by not pleading it as an affirmative defense. See Fed.R.Civ.P. 9(c) ("[W]hen denying that a condition precedent has occurred or been performed, a party must do so with particularity.")
In its lone issue on cross-appeal, Dollar Tree argues that the Florida statute of limitations precluded Winn-Dixie from enforcing its restrictive covenants because the continuing tort doctrine should not apply. We review the district court's grant of summary judgment on an affirmative defense de novo. See Capone v. Aetna Life Ins. Co., 592 F.3d 1189, 1194 (11th Cir.2010).
Florida applies a five-year limitations period to actions to enforce a restrictive covenant. Fla. Stat. § 95.11(2)(b); Pond Apple Place III Condo. Ass'n v. Russo, 841 So.2d 526, 527 (Fla. 4th DCA 2003). Here, however, the district court applied "the doctrine of continuing tort" because "each day Plaintiffs' grocery exclusives were allegedly violated resulted in a distinct, separate breach of the restrictive covenant." The continuing tort doctrine, or the continuing violation principle, distinguishes between a single act that causes multiple, cascading harms, and recurrent, repetitive acts excepted from the running of the statute of limitations: "A continuing tort is `established by continual tortious acts, not by continual harmful effects from an original, completed act.'" Suarez v. City of Tampa, 987 So.2d 681, 686 (Fla. 2d DCA 2008) (quoting Horvath v. Delida, 213 Mich.App. 620, 540 N.W.2d 760, 763 (1995)).
Dollar Tree reasons that, because Winn-Dixie brings contract, not tort claims, there is no continuing "tort." But Florida law does not so clearly distinguish between covenant-enforcement actions and tort suits for purposes of the continuing violation principle. Dollar Tree cites contract cases in which courts found that the cause of action accrued at the first breach, with no applicable continuing violation principle. See Garden Isles Apts. No. 3, Inc. v. Connolly, 546 So.2d 38, 41 (Fla. 4th DCA
No Florida authority has addressed whether the continuing violation doctrine applies to restrictive covenants running with the land. Because Florida courts look to decisions from around the country in applying the continuing tort doctrine, the parties turn to out-of-state cases. See, e.g., Suarez, 987 So.2d at 686. Winn-Dixie cites Barker v. Jeremiasen, 676 P.2d 1259, 1260-61 (Colo.App.1984), in which a plaintiff neighbor sued to enforce a restrictive covenant against a horse farm for violation of a restrictive covenant providing that the property was not to contain more than twenty head of livestock. The Colorado intermediate appeals court stated: "We agree with the trial court that defendants' horse operation resulted in repeated and successive breaches of the continuing protective covenants which continued until the date of trial. Thus, the statute of limitations... does not bar this action for breach of covenant." Id. at 1261.
Similarly, in Black Island Homeowners Ass'n v. Marra, 263 Ga.App. 559, 588 S.E.2d 250, 251-52 (2003), plaintiffs sued to enforce a restrictive covenant requiring that land be maintained in its native state when defendants had periodically mowed grass. The Georgia court distinguished between two types of cases: those in which a defendant had erected a permanent fixture violating a covenant, when the cause of action "accrues when the violation first results," and cases in which a defendant commits a "distinct, separate act that constitutes an alleged breach each time it occurs." Id. at 253. In the latter type, the court agreed with the trial court that the statute of limitations does not bar recovery because "each incidence of mowing gives rise to a new cause of action." Id. The most relevant out-of-state case cited by Dollar Tree tracked this distinction: an Oklahoma court did not consider the continuing violation doctrine when a fixture, a "modular home," violated a restrictive covenant that prohibited buildings near property lines. Russell v. Williams, 964 P.2d 231 (Okla.Civ.App.1998).
Based on the parallel application of the continuing tort doctrine in Florida and persuasive precedent from other states, we believe that Florida law recognizes a continuing violation principle when restrictive covenants are violated by ongoing, separate acts. Cf. Carlton, 803 So.2d at 855-56 (applying the continuing tort doctrine to nuisance and trespass actions by distinguishing between permanent injuries and reoccurring injuries to a property owner's land). Applying this continuing violation principle, we must determine whether Dollar Tree's sale of products allegedly in violation of a Winn-Dixie restrictive covenant amounts to many discrete acts (measured daily, as the district court found), or instead one overarching
Finally, Dollar Tree argues that the district court erred in granting summary judgment on the statute of limitations defense because material facts remained in dispute. Florida courts have repeatedly stated that the question of "[w]hether the continuing torts doctrine applies to the facts of a case is for a trier of fact to decide." Pearson v. Ford Motor Co., 694 So.2d 61, 67-68 (Fla. 1st DCA 1997). For example, in Carlton, the Florida appellate court refused to grant summary judgment recognizing an affirmative defense because the plaintiff had "alleged sufficient facts with regards to the flooding and resulting damage occurring in the four years preceding the date suit was filed so as to urge application of the continuing torts doctrine and preclude summary judgment." 803 So.2d 856; see Halkey-Roberts Corp. v. Mackal, 641 So.2d 445, 447 (Fla. 2d DCA 1994) ("The question of whether [Defendants'] actions constituted continuing torts precludes the granting of summary judgment as to counts I and II. To what extent, if any, the concept applies to this case is an issue for the trier of fact to decide."). Typically, these cases involve the denial of a defendant's motion for summary judgment when the plaintiff presents facts suggesting the continuing tort doctrine may apply. Here, however, Dollar Tree did not dispute material facts before the district court. Instead, it made purely legal arguments explaining why the continuing tort doctrine did not apply. Because this legal position was unsuccessful, the district court was left with no material facts in dispute, and thus did not err in granting Winn-Dixie summary judgment on the defense.
Two key material facts could be at issue in a case involving the continuing tort doctrine: whether any acts took place within the limitations period; and whether these acts were sufficiently similar to qualify as "continuing" the prior events. See Rindley v. Gallagher, 890 F.Supp. 1540, 1549 (S.D.Fla.1995) ("To establish a continuing violation, the plaintiff must show a substantial nexus between the time barred acts and the timely asserted acts."). Here, unlike in the many cases denying summary judgment, no dispute exists as to either type of fact. There is no dispute that the acts continued up to a point well within the limitations period. Nor do the parties dispute that the repeated stocking and selling of challenged items at Dollar Tree stores remained largely consistent in manner and scope. As a result, the only issue raised was a pure question of law: whether a violation of a covenant restricting grocery sales could qualify as a continuing violation measured each day, or was instead a discrete violation that occurred when a store first established its shelving arrangements. With no material facts in dispute, the district court did not err in granting Winn-Dixie summary judgment as a matter of law.
In sum, we hold that, for forty-one Florida stores, the district court misapplied Florida law in determining whether Defendants
99 Cent, 811 So.2d at 720 (emphasis omitted).