## Facts

- K-Mart, a shopping-center tenant, leased premises from Oriental Plaza, Inc. (OPI), the landlord, under a written lease executed in 1983.
- The lease limited OPI to building no more than 10,000 square feet of retail space in the parking area north of K-Mart and required conformity to an agreed site plan; changes required K-Mart’s express written consent.
- The lease contained an integration clause requiring modifications to be in writing.
- In 1986, OPI proposed site plans deviating from the lease plan; K-Mart refused an initial proposal but expressly approved a later revised plan in April 1986.
- The April 1986 plan was rejected by a government planning board and was not implemented.
- In December 1986, OPI submitted another plan referencing a small bank building but also depicting additional retail construction closer to K-Mart than allowed; K-Mart did not give written approval for the retail changes, and the bank project never proceeded.
- On March 20, 1988, without K-Mart’s consent or prior notice, OPI began constructing three retail buildings in the parking area totaling about 10,800 square feet, exceeding the square-foot cap and encroaching toward K-Mart, reducing parking.
- Construction continued for roughly eleven weeks before K-Mart objected; K-Mart notified OPI on June 13, 1988 that the work violated the lease and the approved plan.
- Evidence supported findings that the buildings blocked K-Mart’s visibility and signage from a nearby highway, reduced parking and maneuverability, increased congestion and pedestrian-safety risks, and impaired the store presence K-Mart had negotiated.

## Issues

1. Whether mandatory injunctive relief, including an order to demolish part of the construction, was permissible given arguments that money damages were adequate.
2. Whether laches, estoppel, or unclean hands barred equitable relief based on K-Mart’s alleged delay and prior dealings over site plans.
3. Whether procedural objections (Rule 65(a)(2) consolidation, jury-trial entitlement, and nonjoinder of alleged necessary parties) required reversal or modification of the injunction.

## Decision

- The First Circuit affirmed the judgment granting a mandatory injunction.
- The court upheld findings that OPI breached the lease by exceeding the square-foot limit and deviating from the required site plan without K-Mart’s written consent.
- The court agreed that K-Mart demonstrated irreparable harm not readily measurable or fully compensable by money damages, including loss of visibility, parking, traffic flow, and goodwill over a long lease term.
- The court rejected laches, estoppel, and unclean hands, finding no clear notice or consent to the encroaching retail construction and no inequitable conduct by K-Mart.
- The court rejected procedural challenges, concluding consolidation was permissible with notice and opportunity to present evidence, no jury right was preserved or required for equitable relief, and effective relief could be granted without joining third parties.
- The injunction requiring demolition of the southernmost building, restoration of at least 30 parking spaces within 60 days, and compliance with the lease for future development remained in effect.

## Legal Principles

- A court may award mandatory injunctive relief for breach of a commercial lease when the breach causes ongoing harms—such as loss of visibility, access, parking, and goodwill—that are difficult to quantify and not adequately remedied by damages.
- In assessing injunctive relief, courts consider likelihood of success, irreparable harm, balance of hardships, and public interest; factual findings supporting those factors are reviewed deferentially.
- Equitable defenses such as laches and estoppel require proof of unreasonable delay and prejudice or justified reliance; lack of clear notice or consent defeats claims of acquiescence.
- Rule 65(a)(2) allows consolidating a preliminary-injunction hearing with a trial on the merits when parties receive clear notice and a fair chance to present their cases.
- Where the primary remedy is equitable and no timely jury demand is made, denial of a jury trial does not warrant reversal.
- Nonjoinder does not require dismissal when complete, workable relief can be granted between existing parties and the decree is limited to avoid impairing absent parties’ interests.

## Conclusion

The court enforced explicit lease-based development restrictions through a mandatory injunction, concluding that the landlord’s unauthorized construction caused continuing, hard-to-measure harms to the tenant’s negotiated visibility and parking rights, and that neither equitable defenses nor procedural objections justified denying or undoing that relief.


K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907 (1st Cir. 1989)