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Wednesday, May 22, 2024

Lawsuit: Harris Teeter never wanted Carolina Beach store, only to force residents across the bridge

The owners of the proposed Harris Teeter property had an agreement with the owners of the adjacent Federal Point Shopping Center which, according to Federal Point lapsed when the company failed to construct a store. In a lawsuit, the Federal Point owners claim Harris Teeter never intended to build in Carolina Beach, only to protect another Harris Teeter location across Snow's Cut Bridge.

A new grocery store planned for the Federal Point Shopping Center is still held up in court thanks to competitor Harris Teeter (Port City Daily/File)
A new grocery store planned for the Federal Point Shopping Center is still held up in court thanks to competitor Harris Teeter. (Port City Daily/File)

CAROLINA BEACH — Residents of Carolina Beach have been patiently waiting for the arrival of a new grocery store on the island but thanks to a drawn-out legal battle between Harris Teeter and a proposed Publix, it could be some time before anything is built.

Harris Teeter is currently fighting the development of a Publix at the Federal Point Shopping Center; according to court documents related to that fight, the property owners allege Harris Teeter has to right to protest the Publix because it failed to live up to its end of an agreement and construct a store by 2016.

The corporation behind the planned Harris Teeter filed the first legal motions against the new development, but now the defendants in the case are making their own counterclaims — including that Harris Teeter has no intention of constructing a store on the island and their only goal was to protect the Harris Teeter on Carolina Beach Road from competition.

The Players

Wilmington Holding Company owns the property known as Federal Point Shopping Center; it was previously home to a Food Lion which later moved. Currently, a Publix is planned for the property.

Jubilee Carolina owns the property south of the WHC property where a proposed Harris Teeter has been planned for almost a decade. During a public hearing Michael Lee, State Senator and lawyer represented Jubilee Carolina.

Carolina Beach Development Company entered into an agreement in 2017 to construct a grocery store at the Federal Point Shopping Center with the Town of Carolina Beach.

A quick recap

The vacant property in Carolina Beach which is to be the site for a new Harris Teeter (Port City Daily photo/COURTESY GOOGLE)
The vacant property in Carolina Beach which is to be the site for a new Harris Teeter, behind it sits Federal Point Shopping Center. (Port City Daily photo/Courtesy Google)

The property located at 1000 and 1010 North Lake Park Blvd. belongs to Harris Teeter, represented in court documents as Jubilee Carolina.

Wilmington Holding Company owned the property that contains Federal Point Shopping Center where the proposed Publix would be constructed.

The two properties are adjacent, but not connected.

In January, the Town of Carolina Beach granted a conditional use permit to developers to construct a grocery store at the Federal Point Shopping Center — Jubilee protested the granting of the permit unless the town required interconnectivity between the two stores. “Interconnectivity” essentially means connecting the parking lots of the two stores, allowing Jubilee access to North Lake Park Blvd.

Publix’s representatives said they would not consider constructing their store if the town required interconnectivity.

Ultimately the town agreed to the permit without requiring access between the two centers parking lots and driveways.

Related: Builder of Wilmington’s Publix plans redevelopment of Carolina Beach’s Federal Point Shopping Center

In response, Jubilee filed a writ of certiorari asking a judge to review the permit and send it back to Town Council for revocation, and if it would not be revoked, only approve it with the interconnectivity requirement.

The conditional use permit was upheld by a judge — following the court’s decision, Jubilee once again sought legal remedy and filed an appeal in appellate court.

The WHC agreement

There is more that meets the eye when it comes to the two opposing parties, both Jubilee and Wilmington Holding Company actually entered into an agreement almost 10 years ago.

According to court documents, on Oct. 1, 2009, the two entities entered into a lease restriction agreement; essentially, WHC agreed it would not lease the property at Federal Point Shopping Center to any grocery stores provided Jubilee construct a Harris Teeter on the adjacent property.

At the time of the agreement, Food Lion grocery store also had a lease with WHC that restricted the uses that WHC could lease its property to — mainly, no other grocery stores.

According to court documents, WHC and Jubilee agreed that if and when Food Lion vacated the premiss Jubilee would construct a Harris Teeter on its property adjacent to the Federal Point Shopping Center. WHC would restrict any competing grocery store, a move that benefited both parties.

“Once the Harris Teeter grocery store was constructed, WHC would get the benefit of, in essence, having an anchor tenant next door to the WHC property, and the parties would cooperate in the operations of the two properties. This would result in increased business traffic on the WHC Property and the Jubilee Property,” according to court documents.

But there was a caveat in the agreement, according to the court documents, “The parties agreed that Jubilee was to construct a Harris Teeter grocery store within a set period of time because without this time restriction, Jubilee would be tying up the WHC Property for an indefinite period of time.”

It should be noted that the proposed Harris Teeter property was not even owned by Jubilee at the time the agreement was signed.

Too little, too late

Even though Jubilee signed the agreement with WHC, according to WHC, it has breached the two parties contract by not building a store within the allotted time frame.

“… in exchange for, and contingent on, WHC agreeing to not lease or rent the WHC property for the use by a grocery store, Jubilee will construct a 40,000 square foot concrete foundation by January 20, 2015, and will “open a full staffed, stocked, and fixtured, high end grocery store similar in quality to a Harris Teeter grocery store of at least 40,000 square feet” by April 30, 2016,” according to the documents.

Along with restricting the uses allowed at the WHC property, the parties agreed to cooperate with access to the properties. The agreement would have allowed Jubilee to construct an access drive connecting the two properties.

The “protected” grocery store

WHC alleges Jubilee and Harris Teeter have no intention of building a store on the island, instead it only wants to protect Harris Teeter off the island (Port City Daily/Courtesy Google)
WHC alleges Jubilee and Harris Teeter have no intention of building a store on the island, instead it only wants to protect Harris Teeter off the island. (Port City Daily/Courtesy Google)

The closest Harris Teeter to Carolina Beach is located at 5920 Carolina Beach Road, across Snow’s Cut Bridge, about 1 mile away from the WHC property. WHC refers to this store as the “protected grocery store.”

According to WHC’s claims, “Once the Food Lion grocery store closed, the Protected Grocery Store became one of the closest grocery stores to Carolina Beach and the only high end grocery store in the area.”

WHC asserts that the protected grocery store generates a large portion of its revenue from residents of Carolina Beach and visitors to the island.

Another allegation from WHC is that Jubilee has no intention of ever opening a grocery store on the island, instead, it is opposing the construction of any grocery store at Federal Point Shopping Center to “prevent competition of the Protected Grocery Store.”

Behind Food Lion’s back, out of the public eye

One of the requirements outlined in the agreement was confidentiality — mostly, because Food Lion was a lessee of the property in question and public disclosure could have influenced its decision not to renew its lease.

“Because the parties were negotiating and executing the Restriction Agreement while a Food Lion grocery store was still operating on the WHC Property, confidentiality was important to the parties. According, both Section 5 and Section 6 of the Restriction Agreement prohibit the parties from disclosing the terms of the agreement. Section 6 of the Restriction Agreement prohibits the parties from recording the Restriction Agreement or any document that references the Restriction Agreement in a public record,” according to the documents.

The conditional use permit

What started as a mutually beneficial relationship has since turned into a hostile one. WHC is claiming that Jubilee has breached the Restriction Agreement by not constructing the store within the allocated period of time. The only progress Jubilee has made was in 2015 when the town issued it a conditional use permit.

“The only progress Jubilee has made towards developing the Jubilee Property has been its application for, and receipt of, a conditional use permit (CUP) from the Town of Carolina Beach for the site in 2015. When the CUP was issued in 2015, there was much fanfare because the Town of Carolina Beach wanted a new grocery store. Accordingly, the Town of Carolina Beach and WHC worked closely with Jubilee and Harris Teeter to the the CUP issued,” the documents state.

In 2017, the town agreed to approve a modified CUP for Jubilee. Even though it was two years later, WHC claims it was still cooperating with Jubilee because they hoped Jubilee would finally construct its promised grocery store.

The modified CUP showed interconnectivity in three locations to the WHC property, even though, Jubilee did not have rights to connect to the WHC property under the Restriction Agreement. In September of 2017, Jubilee notified WHC that it might be going back to its original plans from the 2015 CUP.

The CBDC contract

In August of 2017, WHC entered into an agreement with a company related to Carolina Beach Development Company (CBDC) to purchase the property in question — CBDC has the intention of building a grocery store on the property.

WHC notified Jubilee that the property was under contract with a third-party, Keith Costenoble who, according to the court documents, is a representative from Harris Teeter.

“On November 8, 2017, Keith Costenoble sent an email to WHC and acknowledged that Jubilee and/or Harris Teeter had put WHC in a “precarious position” because Harris Teeter “continued to kick the can” and wished WHC “[g]ood luck on your endeavors,” according to documents.

Costenoble then said he would be redrawing the plans for Harris Teeter to exclude WHC’s property, instead, Harris Teeter and Jubilee have been dragging the lawsuit out for almost a year — neither store have broken ground.

Motion to dismiss and recover damages

A motion to dismiss the case against WHC (Port City Daily/ Ben Schachtman)
A motion to dismiss the case against WHC (Port City Daily/ Ben Schachtman)

Ultimately WHC is requesting the judge dismiss the case as well as filing its own claims against Jubilee including, “tortious interference” with prospective economic relations. This alleges that Jubilee and Harris Teeter filed its appeals and writ in an effort to interfere with the CBDC contract with WHC.

“… With knowledge of the CBDC contract, Jubilee has taken the actions set forth in this Answer to interfere and get CBDC to terminate the CBDC Contract with WHC. The actions of Jubilee are willful and malicious,” the documents allege.

WHC goes on to further argue that Jubilee’s actions are not to enforce any rights in the Restriction Agreement, rather, it is to protect the other grocery store by stifling competition — even after admitting it had no rights under the restriction agreement or intentions of using the WHC property any longer.

WHC claims it has been damaged in excess of $25,000 due to the actions of Jubilee.

Unfortunately, the residents of Carolina Beach will likely not see a new grocery store for some time until litigations are complete. According to court documents signed Nov. 5, 2018, a trial is planned for April of 2019.

Editor’s note: This is part one of a two-part look at the lawsuit and allegations between the two companies. In the next installment, we examine Jubilee’s claims, and what’s next.

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