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March 16, 2026 Get Citation Alerts Download PDF Add Note

Krg Bayonne Urban Renewal, LLC v. Wal-Mart Stores East, Lp

New Jersey Superior Court Appellate Division

• Citations: None known
• Docket Number: A-2496-23

• Precedential Status: Non-Precedential

• Opinion

• Authorities (9)

• Cited By (0)

• Summaries (0)

• Similar Cases (26.7K)

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Combined Opinion

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2496-23

KRG BAYONNE URBAN
RENEWAL, LLC,

Plaintiff-Respondent,

v.

WAL-MART STORES EAST, LP,

Defendant-Appellant.

---

Submitted October 28, 2025 – Decided March 16, 2026

Before Judges Sumners, Susswein and Augostini.

On appeal from the Superior Court of New Jersey,
Chancery Division, Hudson County, Docket No. C-
000070-23.

McDonnell & Associates PC, attorneys for appellant
(Patrick J. McDonnell and Brandon H. Zanan, on the
briefs).

Sills Cummis & Gross, PC, attorneys for respondent
(Mark E. Duckstein and Joshua N. Howley, of counsel
and on the brief).

PER CURIAM
Defendant Wal-Mart Stores East, LP (Walmart) appeals three Chancery

Division orders: (1) March 15, 2024, granting summary judgment to plaintiff

KRG Bayonne Urban Renewal, LLC declaring that it can "lease space at

Bayonne Crossing [Shopping Center] to any tenant for the principal use as a

supermarket selling food in not more than 10,000 square feet" in accordance

with the Exclusive Covenant in (exclusivity provision) in the parties' lease

agreement; (2) March 15, 2024, denying Walmart's cross-motion for summary

judgment seeking a determination that KRG's lease agreement with Aldi to

operate a supermarket violates the exclusivity provision as well as the

Declaration Concerning Easements, Covenants and Restrictions By Cameron

Bayonne Urban Renewal, LLC For The Route 440 East Corridor Redevelopment

Area (Declaration); and (3) June 20, 2024, granting KRG's reconsideration

motion and declaring that the lease with Aldi conforms with the exclusivity

provision and Declaration. We reverse.

I.

On June 15, 2005, the city of Bayonne adopted a redevelopment plan that

included the construction of Bayonne Crossing on former industrial properties

comprising a brownfield site. The plan initially prohibited "food/grocery

supermarkets" whether operated in "stand-alone facilities or part of a general

A-2496-23
2
merchandise retail use." But the plan was later modified to permit a supermarket

or grocery store to encourage interest from general merchandise retailers whose

stores included a grocery component.

About two years later, in January 2009, the redevelopment plan's list of

prohibited uses was amended by deleting supermarkets, whether stand-alone or

part of a general merchandise use. Accordingly, the redevelopment plan

changed the first permitted principal use to "[c]ommercial retail sales and

services consistent with North American Industrial Classification System

(NAICS) Sectors 44-45, Retail Trade," which expressly included

"establishments generally known as supermarkets and grocery stores" that are

"primarily engaged in retailing a general line of food" with no reference to the

establishments' size. These changes were the result of negotiations between

Bayonne's City Planner, John D. Fussa, and Bayonne Crossing's developer,

Cameron Bayonne Urban Renewal LLC, KRG's predecessor.

In June 2009, the redevelopment plan was amended again. NAICS's

definition of grocery retailing was incorporated into the redevelopment plan's

limited provision for grocery retailing as a principal use, stating: "Food/Grocery

Supermarket: A permitted principal use involving the retail sale of food,

groceries, packaged convenience items and household goods as defined at

A-2496-23
3
subsection 445110 of the NAICS when part of a general merchandise retail

use."1

In October 2009, Cameron Bayonne Urban Renewal and Walmart

executed a lease whereby Walmart would lease approximately 90,000 square

feet to "develop and erect" a "retail store" in Bayonne Crossing. Walmart could

engage in "any legal retail use, including typical general merchandise and

supermarket uses," although that was subject to the Declaration, which was

annexed to the lease. The lease defined "floor area" as:

. . . the actual number of square feet of space contained
on any or all floors within any building in the Shopping
Center as shown on Exhibit "A" for which a certificate
of occupancy has been issued, measured from the
exterior of outside walls or store front and/or to the
centerline of any common walls. Floor Area shall not

1
Subsection 445110 of the NAICS manual states in relevant part:

445110 Supermarkets and Other Grocery Retailers []
This industry comprises establishments generally
known as supermarkets and other grocery retailers
(except convenience retailers) primarily engaged in
retailing a general line of food, such as canned and
frozen foods; fresh fruits and vegetables; and fresh and
prepared meats, fish, and poultry.

Off. of Mgmt. & Budget, Exec. Off. of the President,
North Am. Indus. Classification Sys., 346 (2022),
https://www.census.gov/naics/reference_files_tools/2022
NAICSManual.pdf.

A-2496-23
4
include any non-selling storage/office area in the
mezzanine.

The "Exclusive Covenant," which as noted, we refer to as the exclusivity

provision, states:

1. EXCLUSIVE

Provided Lessee is open and operating as a Wal-
Mart Super Center during the term of this Lease, subject
to the applicable provisions of the Declaration, Lessor
agrees that it has not and will not enter into a lease of
other space within the Shopping Center which
expressly authorizes or permits as its principal use a
supermarket (selling food in more than 10,000 square
feet of Floor Area), wholesale club, or discount
department store exceeding 35,000 square feet of Floor
Area full line (except for a Kohl's) (the "Exclusive
Covenant"). Should any occupant of the Shopping
Center operate in violation of the Exclusive Covenant,
in addition to any and all remedies Lessee may have at
law or in equity, Lessee shall have the right to: (i)
compel Lessor to bring any appropriate legal action to
enjoin any occupant of the Shopping Center from
violating Lessee's Exclusive Covenant, or (ii) terminate
this Lease upon not less than thirty (30) days written
notice to Lessor . . . .

[(First emphasis added).]

The Declaration's requirements, which covered the entire redevelopment

plan, were "perpetual . . . covenants running with the land." However, the

Declaration specifically provided that the terms of the lease would prevail "in

the event of any conflict or ambiguity between the terms, covenants, conditions

A-2496-23
5
and provisions" of a lease and those of the Declaration.

Apart from Walmart, or any enterprise operating on the Lowe's Home

Improvement premises, the Declaration prohibits:

(a) a grocery or supermarket use selling food in more
than 12,000 s.f., (b) wholesale clubs (e.g. Costco), and
(c) discount full line department stores exceeding
40,000 s.f., provided that the exclusion in this sub-
paragraph (xxviii) shall not preclude a Kohl's store, or
such like store as may then exist

The Declaration's definition of "floor area" contained a partial exclusion

for "non-selling or storage space areas" that were not on a building's main floor:

(iv) "Floor Area" shall mean the actual number
of square feet of space contained on all floors within
any Building (excepting non-selling mezzanine areas,
but with regard to the Demised Premises of Building
"J," Floor Area shall include the Floor Area contained
in the mezzanine of Building "J") within the Project, as
applicable, and, with respect to exterior areas,
including all exterior areas leased to or exclusively used
by one or more Tenants (other than loading dock areas,
trash compactor areas, trash container areas,
unenclosed seasonal outdoor seating areas, and
temporary sales areas). All measurements shall be from
the exterior of outside walls or store front and/or to the
centerline of any common walls, but in no event shall
Floor Area include any non-selling or storage space
areas within (1) any mezzanine (except as to Building
"J"), (2) lower floor, (3) second floor or, (4) except as
set forth above, any exterior areas.

A-2496-23
6
The Declaration required waivers to be in writing, prohibiting waiver by

implication or by inaction.

In 2014, KRG acquired ownership of Bayonne Crossing and Walmart's

new lessor. In September 2022, KRG executed a lease with Aldi for

"approximately 19,591 square feet of floor area" in the shopping center. The

lease declared that all calculations of floor area were to be made "as described

in the Walmart lease."

The Aldi lease provided that its permitted use was "the operation of a

select assortment retail grocery store" and "any other lawful retail purpose,

subject to any use restrictions encumbering the [Shopping] Center ." It also

related that "the Floor Area (as described in the Walmart lease) in which [Aldi]

sells food shall never exceed 10,000 square feet of space," and that the

"calculation of the 'Floor Area' (such term as described in the Walmart lease) of

[Aldi's] Premises . . . is 9,766 square feet." The Aldi lease ostensibly granted it

exclusivity as a "retail grocery store," defined as "a supermarket, a meat market,

a grocery store, a fruit and vegetable store or stand, a frozen or otherwise

processed food store, 'dollar stores' and any other store where more than 50

grocery items are sold for off-premises consumption."

Exhibit G of the Aldi lease expressly excluded Walmart from the

A-2496-23
7
restriction against another tenant's operating "a grocery or supermarket use

selling food in more than 12,000 square feet." It also acknowledged the

exclusivity provision in the lease by setting forth: "Exclusive Use. Landlord

will not lease space within the Shopping Center permitting as its principal use a

supermarket (selling food in excess of 10,000sf of Floor Area), wholesale club

or discount department store exceeding 35,000sf of Floor Area full line ."

A month later, Walmart objected to the Aldi lease because Aldi was a

grocery store which violated the exclusivity provision because the floor area

leased to Aldi was greater than 10,000 square feet. Walmart emphasized that

"floor area" in the lease had the same "plain meaning" provided by the

Declaration, namely, that it "does not just mean 'where food items are displayed,'

but also includes the areas where food is stored, and the register areas where

food is sold." Walmart also invoked the Declaration's prohibition of implied

waivers, noting that it "clearly and unequivocally" informed KRG that it would

"never waive a food restriction." Aldi disagreed and later amended its lease in

July 2023, to reflect a "concept floor plan" of 9,999 square feet for the "total

food sales area": 9,435 square feet for the "regular sales" area and 564 square

feet for the coolers and freezers accessible to customers. The remainder of the

Aldi lease's 1,480 square feet floor space interior was designated for "Aldi Finds

A-2496-23
8
non-food" area; comprising the entire center aisle with all the displays on both

sides facing it.

Months before the Aldi lease was amended, KRG filed a Chancery

Division complaint seeking declaratory judgment that the exclusivity provision's

restriction on other tenants in Bayonne Crossing was "to be measured based on

the square footage of the area in which food products are made available for

purchase" there. More specifically, KRG sought a further finding that "the floor

plan(s) which KRG intends to present to the [c]ourt in connection with any

existing or proposed supermarket lease at the shopping center does/do not

violate any applicable use restrictions."

Following discovery, KRG moved for summary judgment. Walmart

cross-moved for summary judgment. At the conclusion of oral argument on

March 15, 2024, the trial court granted plaintiff's motion in part and denied

defendant's cross-motion. The court entered declaratory judgment that "KRG or

any successor-in-interest to KRG shall be entitled to lease space at Bayonne

Crossing to any tenant for the principal use as a supermarket selling food in not

more than 10,000 square feet." The court's order declined "to review and

approve any future leases or floor plans as requested in the prayer for relief in

the [c]omplaint." A separate order was issued on the denial of defendant's cross-

A-2496-23
9
motion for summary judgment.

KRG moved for reconsideration. In the meantime, Walmart appealed the

grant of summary judgment to KRG and the denial of its cross-motion for

summary judgment. KRG then cross-appealed. In response, our court remanded

the matter so that the trial court could decide KRG's reconsideration motion.

On June 20, 2024, the trial court entered an order granting KRG relief.

The court found that Aldi's floor plan was "compliant with the restrictive use

provisions of [Walmart's] Ground Lease and the Declaration." However, it

denied the motion to the extent that KRG again requested a declaration

concerning the application of the exclusivity provision to future tenants or other

floor plans.

Walmart subsequently amended its appeal to challenge the June 20

reconsideration order. Plaintiff withdrew its cross-appeal.

II.

Based upon our de novo review, Davis v. Brickman Landscaping, Ltd.,

219 N.J. 395, 405 (2014), and applying "the same standard governing the trial

court," Oyola v. Liu, 431 N.J. Super. 493, 497 (App. Div. 2013), we conclude

the trial court erred in: (1) granting KRG summary judgment that the Aldi lease

did not violate the exclusivity provision of Walmart's lease; and (2) denying

A-2496-23
10
Walmart's cross-motion for summary judgment that the Aldi lease violated the

exclusivity provision. Our decision is governed by our interpretation of the

exclusivity provision, as well as the redevelopment plan's Declaration, as guided

by our contract interpretation principles.

Like our summary judgment standard, appellate review of contract

interpretation is de novo. Manahawkin Convalescent v. O'Neill, 217 N.J. 99,

115 (2014) (citation omitted). The cornerstone of contract interpretation is that

"when the intent of the parties is plain and the language is clear and

unambiguous, a court must enforce the agreement as written, unless doing so

would lead to an absurd result." Barila v. Bd. of Educ. of Cliffside Park, 241

N.J. 595, 616 (2020) (quoting Quinn v. Quinn, 225 N.J. 34, 45 (2016)).

"[U]nambiguous contracts will be enforced as written unless they are illegal or

otherwise violate public policy." Leonard & Butler, P.C. v. Harris, 279 N.J.

Super. 659, 671 (App. Div. 1995). The "court's task i[s] not to rewrite a contract

for the parties better than or different from the one they wrote for themselves."

Globe Motor Co. v. Igdalev, 225 N.J. 469, 483 (2016) (internal quotations and

citation omitted). "It is well-settled that [c]ourts enforce contracts based on the

intent of the parties, the express terms of the contract, surrounding

circumstances and the underlying purpose of the contract." In re County of

A-2496-23
11
Atlantic, 230 N.J. 237, 254 (2017) (alteration in original) (internal quotation

marks and citation omitted). "[T]he burden of establishing a breach of contract

rests with the party who asserts the breach." Nolan v. Control Data Corp., 243

N.J. Super. 420, 438 (App. Div. 1990).

Walmart is correct in asserting that KRG violated the exclusivity

provision by leasing space at Bayonne Crossing to Aldi to operate a supermarket

since its principal use as a supermarket occupied a "building or leasehold" of

more than 10,000 square feet. We agree with the trial court that there is no need

to consider evidence of Walmart's intent, or extrinsic evidence such as

redevelopment plan provisions. Thus, we place no emphasis on the deposition

testimony of the parties' representatives who were involved negotiating

Walmart's lease or Aldi's lease. We need only look at the plain meaning of the

lease and the Declaration.

The exclusivity provision's plain meaning definition of the "floor area" of

a competing grocery store or supermarket –– which must be no more than 10,000

square feet –– includes portions of the premises like storerooms that are not

accessible to customers, and not just the selling space open to the public. There

is no language in the lease to support the court's holding that it is "very clear"

that the exclusivity provision's reference to 10,000 square feet was a limitation

A-2496-23
12
on how much of Aldi's premises could be used to "sell food or offer food for

sale by display or otherwise" without violating the lease. The court's definition

of floor area being measured solely by the size of the food displays accessible

to customers, is neither stated nor implied in the lease or the Declaration. To

apply this interpretation would rewrite the unambiguous terms of the lease and

the Declaration, which we cannot do.

Interpreting the exclusivity provision to conclude that it is breached by

the Aldi lease is consistent with the restrictive covenant's purpose, agreed to by

KRG's predecessor, to prevent unwanted supermarket competition to Walmart

and must be enforced. See Barr & Sons, Inc. v. Cherry Hill Ctr., Inc., 90 N.J.

Super. 358, 372 (App. Div. 1966) (finding that restrictive covenant in shopping

center tenant's lease prohibiting other tenants from offering particular services

to be "valid as a reasonable protection" for the portion of the tenant's business

so affected). The unambiguous exclusivity provision was negotiated by

sophisticated parties and provides a reasonable protection of Walmart's interest

without creating an absurd result.

Consequently, we reverse summary judgment to KRG and the denial of

Walmart's cross-motion for summary judgment to the extent that Walmart

sought to invalidate the Aldi lease as violating the exclusivity provision's 10,000

A-2496-23
13
square foot limitation. The same reasoning that supports reversal of summary

judgment to KRG applies to grant summary judgment to Walmart. The

exclusivity provision does not prohibit all supermarket or grocery store uses;

such use is permitted if it does not comprise more than 10,000 square feet as we

have interpreted Walmart's lease and redevelopment plan's Declaration. The

trial court is directed to enter an order consistent with this opinion.

Reversed and remanded. We do not retain jurisdiction

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