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Mercury Investment Co. v. F.W. Woolworth Co.
Facts
Mercury Investment Co. (Plaintiff) leased space in its multi-tenant shopping center to F.W. Woolworth Co. (Defendant) in 1959. Under Plaintiff’s merchandising plan, Defendant was intended to be an “anchor tenant” that would attract shoppers for the mutual benefit of all the shopping center’s tenants. Defendant’s lease was for fifteen years and provided for an annual minimum rent of $19,350 for the first fourteen years and $17,425 thereafter. It also provided for additional rent, calculated by taking a percentage of Defendant’s gross receipts in excess of a specified base amount. Defendant’s gross receipts never exceeded the specified base amount and therefore, Defendant never paid additional percentage rent. In 1981, Plaintiff sued to terminate the lease with Defendant, arguing that Defendant breached an implied covenant to diligently operate its business in order to generate percentage rent and to attract customers to the shopping center. The trial court granted summary judgment in Defendant’s favor. The court of appeals reversed.
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