Shops Around Lenox is an upscale retail center in the heart of Atlanta’s shopping district, Buckhead. One of the tenants, a boutique, challenged the radius restriction in its lease by opening two other stores within five miles of Around Lenox. The tenant argued that the radius restriction was an unfair restraint on trade and, thus, unenforceable under Georgia law. Arnall Golden Gregory was enlisted to defend the radius restriction’s enforceability and protect the client’s interests.
When the clothier sought to extend its lease for another three years, the client pointed out that the tenant had defaulted under the lease by opening two other stores within five miles of Around Lenox. The client declined to extend the lease unless tenant cured the default. The tenant sued, alleging, among other things, that the radius restriction was invalid because it was overly broad. Arnall Golden Gregory’s team responded that the radius restriction was limited and necessary to serve the legitimate purpose of protecting the exclusivity of the high-end, destination shopping center. Notably, the lease did not contain a corresponding percentage rent or gross sales-based kick out provision that would have provided an even more compelling basis for the inclusion of the radius restriction.
The trial court granted summary judgment for the client, which the tenant appealed. The Georgia Court of Appeals affirmed the trial court’s ruling, after which the trial court entered judgment in favor of AGG’s client for $245,000.