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Baim v. Ashburn Corporation

A-2882-98T2 (N.J. Super. App. Div. 2000) (Unpublished)

DEEDS; RESTRICTIVE COVENANTS—A restrictive covenant that bars use of a parcel for a particular competitive use does not bar use of that parcel for access to an unrestricted parcel that is engaged in that use.

A fast food restaurant purchased a section of previously undivided land. It wanted to make sure that there was no direct competitor on the remainder of the land so the parties included a clause in the deed and a separately recorded restrictive covenant providing that the remainder of the land could not be “sold or developed for the sale of hamburgers” and that the land “will not be used for the sale of hamburgers.” After the balance of the land had been developed, the last remaining portion was swapped with an adjacent landowner and a hamburger restaurant was built on that new piece of land. An access road, however, was built across the original land to allow customers to get to the new hamburger restaurant. The original restaurant filed suit to prevent use of the new land for the sale of hamburgers and to prevent patrons from using the access road for ingress and egress to the new hamburger restaurant. When the lower court ruled that the new hamburger restaurant was not on land burdened by the covenant, the original restaurant did not appeal that decision. Nonetheless, it did appeal the lower court’s decision that the access road could be used to get to the restaurant on the new piece of land. In New Jersey, covenants restricting the use of land are valid and covenants that reasonably restrict competition are also enforceable. Nonetheless, the question here was much narrower, i.e. whether allowing customers to traverse the access road to the hamburger restaurant constituted using the land for the sale of hamburgers. The Court looked at the intent of the parties at the time of the agreement. It found that the original restaurant’s intent was clearly to keep a fast food hamburger restaurant from operating on the balance of the tract and that intent had been met. The new restaurant did not operate on the burdened land. The court rejected the original restaurant’s argument that it was not originally foreseeable that an access road be built, and had it been foreseen, it would have included a further restriction in the covenant. As a general rule, restrictive covenants on land are strictly construed. Therefore, the Court believed that the original restaurant sought to gain more than its bargain and it would not remake a contract better than the one the parties had originally made.


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