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Northglenn Gunther Toody's LLC v. Hq8-10410-10450 Melody Lane, LLC

United States District Court, D. Colorado

November 4, 2016

NORTHGLENN GUNTHER TOODY'S, LLC, a Colorado limited liability company, Plaintiff,
v.
HQ8-10410-10450 MELODY LANE, LLC, a Delaware limited liability company, Defendant.

          ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

          William J. Martinez United States District Judge.

         In this action, Plaintiff Northglenn Gunther Toody's, LLC (“Gunther Toody's”), sues Defendant HQ8-10410-10450 Melody Lane, LLC (“Melody Lane”) for breach of a restrictive covenant in a shopping center lease. (See ECF No. 8.) Currently before the Court is the preliminary injunction portion of Gunther Toody's Motion for Temporary Restraining Order and Preliminary Injunction (“TRO/PI Motion” or “Motion”). (ECF No. 2.)[1]

         After reviewing the TRO/PI Motion, Melody Lane's response (ECF No. 26), and Gunther Toody's reply (ECF No. 34), the Court finds that an evidentiary hearing will not assist the Court to resolve the Motion. For the reasons explained below, the Motion is denied.

         I. BACKGROUND

         Melody Lane owns a shopping center on 104th Avenue in Northglenn, Colorado, known as the “Northglenn Marketplace.” (ECF No. 8 ¶ 11.) Melody Lane has leased a portion of the Northglenn Marketplace to Gunther Toody's, which operates a restaurant named Gunther Toody's on the leased premises. (Id. ¶¶ 12-14.) The restaurant is designed to evoke a 1950s American roadside diner with features such as vehicles from that era on display, employee uniforms that resemble restaurant uniforms of the 1950s, a jukebox with 1950s music, checkered flooring, and unique fonts used in signage and on its menus. (ECF No. 2-7; ECF No. 26-5 at 2.)

         In June 2016, Melody Lane executed a lease agreement with non-party Tayseer Zuiater, a franchisee of the International House of Pancakes (“IHOP”) system. (ECF No. 26-2.) That lease permits Zuiater to operate “a full-service sit-down restaurant serving breakfast food and related beverages as the primary menu item, which is identified as selling 40% or greater of gross sales towards breakfast food and related beverages.” (Id. § 1.17.) The specific premises leased to Zuiater comprise a building previously leased to a different restaurant. (ECF No. 8 ¶ 15.) This building is very close to Gunther Toody's-just across one of Northglenn Marketplace's internal streets. (ECF No. 1-5.)

         On June 17, 2016, the City of Northglenn announced that an IHOP restaurant would be coming to the Northglenn Marketplace. (ECF No. 26-3.) A little over a month later (July 20, 2016), Gunther Toody's wrote to Melody Lane, asserting that Melody Lane's lease with Zuiater violated a restrictive covenant in Melody Lane's lease with Gunther Toody's. (See ECF No. 26-4 at 1.) That restrictive covenant states that “Landlord shall not permit any other portions of the Shopping Center to be leased or sold for usage as a diner similar in concept to the operation conducted from the Leased Premises by Tenant.” (“Restrictive Covenant, ” ECF No. 2-2 at 32 (art. XXV, ¶ J).)

         Gunther Toody's claims that an IHOP restaurant is a “diner similar in concept” to the Gunther Toody's restaurant because both:

• are allegedly “diner-style restaurant[s] that offer[] relatively inexpensive food with an emphasis on breakfast items such as pancakes, omelets, waffles, and French toast, which are served throughout the day”;
• do not have a drive-through;
• serve food “cooked to order”;
• “have table service, and uniformed servers that wear blue”; and
• “serve traditional American dishes such as cheeseburgers, fries, salads, steak and mashed potatoes, club sandwiches, BLTs, ice cream sundaes and other simple fare.”

         (ECF No. 2 at 3-4.) The Court notes, however, that one aspect of these assertions is contradicted by Gunther Toody's own evidence. Specifically, Gunther Toody's submitted a copy of its menu, which states that breakfast items are served from “6am to 11am.” (ECF No. 2-7 at 5.) Thus, the argumentative assertion ...


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