A pizzeria owner claims that Kmart was allowed to open a Little Caesars in the Crossroads Shopping Center in Greenburgh despite an agreement not to allow a competing pizza parlor in the plaza.
Henry J. Cerbone and Bonnie H. Cerbone sued the shopping center owners and operators, Acadia Realty Trust of Rye; Heyman Properties LLC of White Plains; and Crossroads II LLC of Rye for $5 million this month in Westchester Supreme Court. The lawsuit also names Little Caesar Enterprises and Kmart”™s owner, Sears Holdings Management Corp., as defendants.
The shopping center cannot deliberately breach a restrictive covenant, the Cerbones argue, “simply because they wish to remain on good terms with their cash-cow tenant, Kmart.”
The defendants did not respond to email and telephone messages requesting comment.
Henry J. Cerbone, a retired police officer from Yonkers, had dreamed of opening a pizzeria and Italian restaurant. In 2010, he looked for a suitable location: a place with an anchor tenant that would attract many shoppers and with no competing pizzeria.
Crossroads Shopping Center at 423 Tarrytown Road fit the bill, according to his complaint. Kmart anchored the middle of the plaza. There was no other Italian eatery. Kmart offered food, but all it sold was popcorn, cotton candy and hot dogs.
When Henry Cerbone met with officials from Heyman Properties, the complaint states, he insisted on and was granted a restrictive covenant that gave him exclusive rights to selling pizza and Italian foods.
He leased 3,300 square feet and spent $550,000 building out the space, using his life savings and loans from family and friends.
In 2011, Cerbone of Naples Pizza opened.
The shopping center began to lose tenants, he claims, and by the end of 2012 his pizzeria was the only business left on his side of the complex.
Then Little Caesars opened inside Kmart. Cerbone”™s sales dropped dramatically, the Cerbones claim. Some shoppers and Kmart employees even used their restaurant to sit down and eat food from Little Caesars.
The Cerbones are accusing the defendants of breach of contract, breach of covenant of good faith and fair dealing, tortious interference with contractual relations and unjust enrichment. They are demanding $2 million for most of their causes of action and $5 million “to punish all defendants”™ willful, wanton and malicious conduct.”
Events may have overtaken the lawsuit. Sears Holdings filed for Chapter 11 protection today in federal bankruptcy court in White Plains. The company got $300 million in loans that will help Sears and Kmart stores stay open through the crucial holiday season. But it also plans to shut down unprofitable stores by the end of the year.
If the Crossroads Kmart closes, the Cerbones could achieve their goal of eliminating competition from Little Caesars, but they would also lose the anchor tenant that attracts shoppers to the center.
The Cerbones are represented by Adeyinka A. Ojo and David J. Wood of New York City.
