## Facts

- Lessors leased a supermarket site in Glen Burnie, Maryland, to Food Fair under a percentage-rent arrangement with a fixed minimum annual rent plus a percentage of gross sales.
- After commencing operations at the leased premises, Food Fair opened other supermarkets in the general trade area; the lessors claimed this diverted sales and reduced percentage rent.
- The lease contained an assignment provision (paragraph 12) addressing assignments and additional rent obligations in specified transfer situations.
- On April 30, 1956, Food Fair executed a set of corporate assignments among related Food Fair entities, which the lessors asserted triggered additional rent under paragraph 12.
- Lessors sued in equity seeking termination and damages, including damages based on an alleged implied covenant requiring Food Fair to use best efforts to maximize sales at the leased store.
- The trial court dismissed the implied-covenant theory on demurrer, later ordered specific performance of Food Fair’s renewal option, and awarded the lessors \$28,234.03 as additional rent under the lease.
- Both sides appealed: lessors challenged dismissal of the implied-covenant claim; lessees challenged the additional-rent award.

## Issues

1. Whether the April 30, 1956 lease assignments fell within paragraph 12 and triggered additional rent.
2. If paragraph 12 applied, whether the parties’ conduct showed modification, waiver, or estoppel barring the lessors’ claim to additional rent.
3. Whether a percentage lease with a fixed minimum rent supports an implied covenant requiring the tenant to use best efforts to maximize sales (or effectively to avoid diverting sales to nearby stores).

## Decision

- The court held the April 30, 1956 assignments were within paragraph 12 and supported an award of additional rent.
- The court rejected defenses of modification, waiver, and estoppel; the record did not show clear and unequivocal conduct relinquishing the lessors’ contractual right, nor detrimental reliance sufficient for estoppel.
- The court affirmed dismissal of the implied-covenant claim, declining to imply a best-efforts or anti-diversion obligation from the percentage-rent structure.
- The decree was affirmed in part and modified in part, leaving in place specific performance of the renewal option and the lessors’ recovery based on express lease terms rather than an implied covenant.

## Legal Principles

- Written lease provisions are construed to effect the parties’ intent as shown by the instrument as a whole; courts enforce assignment and additional-rent clauses according to their terms.
- Contract modification or waiver of a significant lease right requires clear and unequivocal evidence; estoppel requires proof of detrimental reliance.
- An implied covenant will not be inserted lightly; it must arise from the lease language and circumstances of execution.
- A percentage lease does not, by itself, imply a tenant duty to use best efforts to maximize gross sales or to refrain from opening nearby competing stores, particularly where the lease provides a fixed minimum rent and contains no exclusivity or noncompetition restrictions.

## Conclusion

The court enforced the lease’s express assignment-based additional rent provision and refused to imply a broad best-efforts/continuous-sales covenant from a percentage-rent arrangement, holding that protections against reduced percentage rent must be negotiated and stated in the lease.


Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, 200 A.2d 166 (Md. 1964)