A Lake County judge ordered construction stopped at a suburban strip mall after a big-box store sued alleging a new neighboring restaurant violates its lease with the shopping center.
Lake County Associate Judge Daniel L. Jasica entered a temporary restraining order on Friday blocking work on the partially built Panda Express site in an outlot of the Hawthorn Village Commons shopping center in far north suburban Vernon Hills.
The order expands on an order Jasica issued on Nov. 27, one day after Hobby Lobby Stores Inc. filed its lawsuit in Waukegan.
Hobby Lobby, a chain of craft stores, leased its Vernon Hills location in July 2012, taking over a 46,984-square-foot space formerly home to a Dominick’s supermarket.
The current landlord, NARE Hawthorn Village Commons, bought the center in 2017.
This summer, NARE sold a portion of the parking lot to CFT NV Developments LLC, who then leased it to Panda Express.
In its amended complaint filed Dec. 4, Hobby Lobby seeks to enjoin NARE, the developer and Panda Express from building the Chinese fast-food joint and wants the site restored to parking.
Hobby Lobby alleges NARE breached its lease, which granted the store “a nonexclusive easement to use the [c]ommon [a]rea.”
The construction “deprives Hobby Lobby of much needed parking,” the complaint alleges, adding that “the new building, when constructed, will necessarily obstruct the visibility of the Hobby Lobby storefront to vehicles passing in front of the [s]hopping [c]enter along State Route 60.”
The complaint also included a breach-of-easement count against the developer and restaurant.
In response to Hobby Lobby’s motion for a temporary restraining order, NARE argued the store knew about the sale and construction of the restaurant for months.
“The [d]efendant has used this court to interfere with a nonparty owner’s construction which the [v]illage of Vernon Hills approved at public meetings, that Hobby Lobby and everyone else who drove in or out of the subject plaza in the months leading up to the sale of the subject parcel were well aware of,” NARE wrote in its filing.
NARE’s filing mentioned Hobby Lobby gave the OK two years earlier when a different restaurant considered building in front of the store — one that would have been even larger than Panda Express’ building.
“Hobby Lobby expressed no objection and in fact was fine with the potential new addition to the plaza,” the response reads. “Why wouldn’t they be? The very nature of a retail plaza is to bring in customers so all of the tenants can enjoy the benefits of a greater customer base than they would on their own.”
The heart of the dispute is a paragraph in the lease, which says “Landlord shall not erect or raise any building or permit any obstruction on any portion of the common area that provides for parking, aisles, walks, drives, entrances, exits and service areas except for those areas reserved and clearly designated for future expansion on Exhibit B to B-2.”
Exhibit B-2, included in the complaint, shows an aerial view of the center, with Hobby Lobby occupying the largest store on the eastern end of the complex. Closer to the highway and even farther east, the diagram includes a box reserved for “[f]uture [e]xpansion.”
Hobby Lobby contends that the diagram gives the landlord an option to expand onto space adjacent to the store’s parking spaces, but not in front of the store itself.
NARE’s filing suggests the diagram in Hobby Lobby’s filing does not show the property to an accurate scale. If it were to be interpreted literally, the expansion space to the southeast of Hobby Lobby would encompass a gas station parcel not owned by NARE.
NARE suggested the court should assume the boxes on the diagram should be interpreted as the property lines of the shopping center.
“The exhibit must mean something,” NARE wrote in its response. “If the future expansion area is meant to be the area at the property line in front of Hobby Lobby then the expansion area is significantly larger then the building and area which is being constructed by Panda Express. If the future expansion areas are to mean something, Hobby Lobby being the only drafter in this lawsuit, it has the burden to explain to the court how/why it thought the landlord was going to build on property that it did not own, including, potentially, the public way.”
The shopping center’s owner also argued the new building will ultimately increase the number of parking spaces, not reduce them.
And NARE argued a restraining order was inappropriate because Hobby Lobby’s case already has an adequate remedy at law: compensation. NARE questioned the store’s motives:
“[A]ssuming that Hobby Lobby can prove that it is losing money because of the Panda Express (not the retail apocalypse causing other big box retailers to lose sales and/or go out of business) then its remedy is one of financial damages,” NARE argued in its Dec. 3 filing. “This court should not aid in any effort for Hobby Lobby to renegotiate its [l]ease to some [lesser] sum if that is its motive in bringing this suit.”
In his Friday order, Jasica found that Hobby Lobby sufficiently showed it has a protectable interest in its lease.
“The lease specifically provides that it has the right to use the area which is the outlot in question, that is, the area upon which the Panda Express is being constructed, as its nonexclusive parking area,” he wrote.
Even if easement language didn’t exist in the lease, the contract language “appears to amount to an easement appurtenant,” Jasica wrote, meaning the easement could apply even if the property changed owners.
Jasica cited several Illinois cases that found “the loss of bargained for parking areas in a commercial shopping center constitutes irreparable harm.”
“Hobby Lobby has demonstrated the irreparable injury by the loss of some of the common parking area on par with this line of cases,” Jasica wrote.
Even if NARE can ultimately prove a different part of the parking lot was slated for “future expansion,” that wasn’t the arrangement under the “clear terms” of Hobby Lobby’s lease.
Jasica wrote the store raised a fair question about its rights and that “it will probably be entitled to the relief requested if the proof sustains the allegations.”
The temporary restraining order prohibits NARE and the developer or Panda Express from continuing construction, creating construction-related traffic or parking any additional construction vehicles in the parking lot.
Jasica ordered Hobby Lobby to post a $250,000 injunction bond by this Friday. The parties have a hearing scheduled for Feb. 10.
Hobby Lobby is represented by Charles A. Valente and Heather Kuhn O’Toole of Kaplan Saunders Valente & Beninati LLP. Valente declined comment before press time.
The shopping center is represented by attorney Thomas M. Paris. He could not be immediately reached for comment.
The case in Illinois’ 19th Judicial Circuit Court is Hobby Lobby Stores Inc., v. NARE Hawthorn Village Commons, LLC, et al., 19 CH 1343.