CASE NO. A-01-0128
IN THE COURT OF APPEALS FOR THE STATE OF NEBRASKA
GARY L. REICHERT, an individual,
FRED REICHERT, JR., an individual, also d/b/a MONUMENT JEWELERS and REICHERT JEWELERS, INC. ,
Plaintiffs/Appellees, vs.
RUBLOFF HAMMOND, L.L.C.,
Defendant/Appellant.
ILED
JUN 14 2001
APPEAL FROM THE DISTRICT COURT
OF SCOTTS BLUFF COUNTY, NEBRASKA
CLERK
THE HONORABLE RANDALL L. L1PPSTREU
DISTRICT JUDGE
BRIEF OF PLAINTIFFS/APPELLEES
Michael J.
Javoronok, NSBA #12027
MICHAEL J.
JAVORONOK LAW FIRM
1110 Circle Drive, Suite 200
Scottsbluff, NE 69361
Telephone: 308/630-0808
Fax: 308/630-0771
Attorney for Plaintiffs/Appellees

TABLE OF CONTENTS .
.
i
TABLE OF AUTHORITIES
STATEMENT OF THE CASE
A.
B.
C.
D.
E.
.
Nature of the Case
Scope of Review
.
Issues Tried in the Court Below
How the Issues Were Tried
Jurisdiction of the Court i i
PROPOSITIONS OF LAW 4
I.
THE PURPOSE OF INJUNCTION IS TO RESTRAIN ACTIONS
THAT HAVE NOT YET BEEN TAKEN .
.
.
.
.
.
.
.
.
.
. 4
II.
DAMAGE CAUSED BY A BREACH OF RESTRICTION ON
COMPETITION CONTAINED IN A LEASE IS RARELY
SUSCEPTIBLE OF ACCURATE PROOF 5
STATEMENT OF FACTS
ARGUMENT
CONCLUSION
5
14
24
2
3
4
1
1
2
-i-

FEDERAL CASES
American Dairy Queen v.
Brown-Port CO' r
631 F.2d 255, 258
(7th
Cir.
1980) 5, 23
K-Mart Corp.
v.
OrientaL PLaza r Inc.,
875 F.2d 907, 916 (pt Cir.
1989) .
.
.
.
5, 24
Tri-State Generation & Transmission Assoc' r Inc. v.
Shoshone River Power, Inc' r 805 F.2d 351
(10 th
C i r.
198 6) .
.
.
.
.
.
5, 23
WaLgreen Co.
v.
Sara Creek Property Co., 775 F.
Supp.
1992,
97 A.L.R.2d
(Supp.) (1991) .
5, 22, 23
STATE CASES
Andersen v.
BLondo PLaza, Inc., 186 Neb.
682,
186 N.W.2d 114 (1971) . . . . .
.
.
.
5, 22
C & L Co.
v.
Nebraska Liquor ControL Comm'n,
19 0 Neb.
91 , 206 N. W. 2 d 4 9 ( 1973 ) .
.
.
.
.
.
.
.
.
4
CentraL States Found.
v.
BaLka, 256 Neb.
369,
377, 590 N.W.2d 832, 839 (1999)
Conrad v.
Kaup, 137 Neb.
900, 902, 291 N.W.
687, 688
(1940) .
.
.
.
. . .
4,
4,
21
18
CrowLey v. McCory, 234 Neb.
88, 449 N.W.2d
(1989)
GaLLagher v.
VogeL r 157 Neb. 670, 61 N.W.2d 245 (1953)
GreenwaLt v.
WaL-Mart Stores, Inc' r 253 Neb. 32,
567 N.W.2d 560 (1997)
24
5, 22
. 4
Nebraska Wheat Grower's Ass'n v.
Norquest, et aL.,
113 Neb.
731, 204 N. W. 798 ( 1925) .
.
.
.
5, 19
Putnam v.
FortenberrYr 256 Neb 266, 589 N.W.2d 838,
842-843 (1999) .
.
.
. .
.
5, 15, 17
- i i -

Schwartz v.
P2atte Va22ey Exterminating, Inc.,
258 Neb.
841, 606 N.W.2d 85 (2000)
Vi22age of Wins20w v.
Sheets, 261 Neb.
203,
622 N.W.2d 595 (2001)
STATUTES
Neb.Rev.Stat.
§ 25-1067
Neb.Rev.Stat.
§ 25-1925
AUTHORITIES
NJI2d Civ.
15.40
.
.
.
.
.
.
.
.
.
.
5,
5,
24
4
14
.
3
24
- i i i -

STATEMENT OF THE CASE
A. NATURE OF THE CASE
This is a civil action for injunctive relief by appellees, a family owned jewelry store, to enforce exclusive rights in a lease contract (dated August 1, 1999), to be the only fine jewelry stores, apart from magnet stores, at defendant/appellant's mall in
Scottsbluff, Nebraska. (T103, T115). On September 14, 2000, the mall manager told the appellees that the owners were here to make money, and that (the competitor)
Riddles Jewelry (a/kJa Ridco), a chain of stores, has the history to prove they can make a lot of money for the mall (thus showing appellant's intent to violate the exclusive lease agreement). (E13,42:4, 4). On September 16, 2000, appellant contracted with Riddles to lease space in the mall to begin approximately in April, 2001. (T107). Suit was filed by appellees seeking injunctive relief on September 18, 2000, for anticipatory breach of the exclusivity clause. (T1-106).
The exclusivity clause in the lease, for which the plaintiffs/appellees had paid a higher rental price, was drafted by appellant, and obligated appellant to use "all diligence to remedy such violation." (T103). Appellant claimed that even for its own anticipatory breach, the only contractual remedies available to appellees were a 270-day fixed rent reduction or termination of the lease.
(T103). At trial, the court found these remedies inadequate or that no adequate remedy at law existed; that without injunctive relief, the appellees would suffer an irreparable injury, and granted a permanent injunction prohibiting entry of the competitor fine jewelry store in violation of the contract's exclusivity clause during the remainder of the lease term. (T111-122).
1

B. ISSUES TRIED IN THE COURT BELOW
The issues tried below were: a.
Does the lease contract provide the plaintiffs with an adequate remedy at b.
law by way of liquidated damages?
Are the plaintiffs entitled to injunctive relief if the remedies at law are c.
d.
e.
f.
inadequate?
What obligation of good faith does the defendant have to protect the plaintiffs and to enforce the exclusivity clause?
Are the plaintiffs entitled to enforce the exclusivity clause of 2.01 (g) of
Article II of the Amendment to the lease dated August 1, 1999, by seeking injunctive relief?
Is the liquidated damage or remedy as stated in paragraph 2.01(g) of
Article II of the Amendment to the lease dated August 1, 1999, the sole and exclusive remedy available to the plaintiffs?
Will the plaintiffs suffer an irreparable injury if Ridco is allowed to open a competing fine jewelry store in the Monument Mall in Scottsbluff,
Nebraska? (E6, 1-3:2, 2)
C. HOW THE ISSUES WERE TRIED
The case was tried to the court without a jury. The court found that the lease remedies were not the exclusive remedies available to appellees; that the purpose of an injunction was to prevent further misdeeds; that appellants would have engaged in future mischieformisdeeds L//l)ess )!jL//lC..7Y8/8))8/JP'aS§/a/7/ed /7}}}}2~ 7~.8
court found that althoL/gh the RJddJes JeJP'8J/y3/0/8 JP'0~t7 occl.p/ 4L7/7/0A7$d'7.8(!Y»7.8
2

same square footage as the appellant's two stores, the reduced rent offered to Riddles would allow it to unfairly compete by paying a lower per square foot rent, and a lower percentage rent. (T119-121).
The court found a substantial volume of Riddles Jewelry sales would come from Reicherts' potential customers, and would cause a substantial decrease in Reicherts' sales. (T121). Due to flat growth in the area, the addition of an additional fine jewelry store would not create substantially more business volume, rather it would divide the potential sales between three stores rather than two. (T121).
Reicherts' gross sales for 1999 were approximately $985,000. (T121). Riddles' anticipated gross sales during the first four years of its lease were from $600,000 to
$800,000, which would substantially decrease Reicherts' sales volume. (T121). Thus, without injunctive relief, the Reicherts would suffer irreparable harm, i.e., the reasonable expectation that one of its two stores would go out of business before
July 31, 2004. (T121).
For the above reasons, the court found that a permanent injunction should issue restraining appellant from leasing or allowing to be leased, other than to plaintiffs, for a fine jewelry store as long as appellants continued to operate its existing stores and was not otherwise in default through July 31,2004.
(T121-122).
After judgment was entered by the court, the defendanUappellant timely filed a
Motion for New Trial, which was overruled, and timely perfected its appeal.
D. SCOPE OF REVIEW
In equity cases, as the appellant has requested a review of some of the factual determinations, the duty of the Appellate Court is to retry those issues of fact complained of and preserved in the Bill of Exceptions.
Neb. Rev. Stat.
25-1925.
3

Where the testimony of witnesses orally examined before the court is conflicting, the
Appellate Court will consider and may give weight that the trial court heard and observed the witnesses and their manner of testifying and must have accepted one version of the facts rather than another.
Village
Winslow v. Sheets, 261 Neb. 203,
622 N.W.2d 595 (2001). Where the trial court has only a cold record before it (for example the testimony of Rudolph Gatti by deposition), the rule of considering the trial court's opportunity to observe the witnesses is inapplicable. C & L Co.
v, Nebraska
Liquor Control Comm'n, 190 Neb. 91, 206 N.W.2d 49 (1973). For review of procedural matters, the judgment will stand unless the court has abused its discretion; the court's selected option is untenable and unfairly deprives a litigant of a substantial right or a just result. Greenwalt v, Wal-Mart Stores, lnc., 253 Neb. 32, 567 N.W. 2d
560 (1997).
E. JURISDICTION OF THE COURT
Appellees do not dispute the jurisdiction of the Court, nor appellant's Statement of Jurisdiction.
PROPOSITIONS OF LAW
I.
THE PURPOSE OF INJUNCTION IS TO RESTRAIN ACTIONS THAT HAVE
NOT YET BEEN TAKEN.
Central States Found. v. Balka, 256 Neb. 369, 377, 590 N.W.2d 832,839
(1999)
Conrad v. Kaup, 137 Neb. 900, 902, 291 N.W. 687, 688 (1940)
4

Nebraska Wheat Grower's Ass'n v. Norquest, et el., 113 Neb. 731, 204 N.W.
798 (1925)
Putnam v. Forlenberry, 256 Neb. 266, 589 N.W.2d 838, 842-843 (1999)
II.
DAMAGE CAUSED BY A BREACH OF RESTRICTION ON COMPETITION
CONTAINED IN A LEASE IS RARELY SUSCEPTIBLE OF ACCURATE PROOF.
American Dairy Queen v. Brown-Port
631 F.2d 255, 258 (7 th Cir. 1980)
Andersen v, Biondo Plaza, Inc., 186 Neb. 682,186 N.W.2d 114 (1971)
Gallagher v.
Vogel, 157 Neb. 670, 61 N.W.2d 245 (1953)
K-Marl Corp. v. Oriental Plaza, lnc., 875 F.2d 907, 916 (1 st Cir. 1989)
Schwarz v. Platte Valley Exterminating, lnc., 258 Neb. 841,606 N.W.2d 85
(2000)
Tri-State Generation & Transmission Assoc., Inc.
v, Shoshone River Power,
805 F.2d 351 (10 th
Cir. 1986)
Walgreen
v, Sara Creek Properly co., 775 F. Supp. 1192, 97 A.L.R. 2d
(Supp.) (1991)
NJI2d
STATEMENT OF FACTS
A. THE LEASES
The appellees, Gary L. Reichert and Fred Reichert, opened Reichert Jewelers in
Monument Mall, Scottsbluff, Nebraska, in approximately 1986. (T2, T107). Ridco, Inc.,
5

d/b/a Riddles Jewelry, first sought to lease space for a fine jewelry store in Monument
Mall in 1994. (T2). At that time, the appellees, Reichert brothers, negotiated with the appellant to open a second fine jewelry store in Monument Mall, known as Monument
Jewelers, to prevent appellant from executing such a lease with Riddles. (T2; 37:8-
25;38:1-2). The appellees, d/b/a Reichert Jewelers and Monument Jewelers, have operated two fine jewelry stores in Monument Mall continuously since 1994. (T1-106).
In 1999, Riddles Jewelry again sought to lease space for a fine jewelry store in
Monument Mall. (T3; 38:3-25; 39:1-4). On August 1, 1999, the appellant and appellees executed two documents entitled "First Amendment to Lease", amending the existing leases for both Reichert Jewelers and Monument Jewelers, providing as set out below that appellees would operate the only fine jewelry stores in appellant's mall.
(T90-106). However, on September 16,2000, appellant, Rubloff Hammond, contracted with Ridco, Inc., a/k/a Riddles Jewelry, to lease store space in Monument Mall for a
Riddles Jewelry fine jewelry store. (E7, attached Exhibit "A":2, 3). Ridco, Inc.
contemplated opening its Riddles Jewelry Store in approximately April of 2001. (T107).
On September 18, 2000, Reicherts filed suit seeking to enjoin Rubloff Hammond from leasing store space in Monument Mall to Ridco, Inc., or to others whose primary business is selling fine jewelry (other than anchor stores as described in the lease).
(T1-106).
The lease amendments extended the leases of Reichert Jewelers and
Monument Jewelers through July 31,2009. (T1-106). Both lease amendments provided:
6

Exclusive for the Period August 1, 1999 to July 31, 2004.
So long as Tenant is open and operating its business as provided for in the Lease (condemnation and casualty excepted) and is not otherwise in default under the Lease (after the expiration of any applicable cure periods), then Landlord covenants and agrees that during the period commencing
August 1, 1999 and expiring on July 31, 2004, no space in the Shopping
Center will be leased or allowed to be leased other than Tenant's operation, for the primary business of the operation of a jewelry store selling fine jewelry....
Landlord and Tenant acknowledge that in the event of a breach of this restriction, Tenant shall give Landlord written notice of such breach and
Landlord shall have thirty (30) days from the date of said notice (or such longer period as may be reasonably required if Landlord is diligently attempting to remedy same) to remedy same. If Landlord fails to remedy such breach within said thirty (30) day period (or such longer period as may be reasonably required if Landlord is diligently attempting to remedy same),
Tenant shall have the rights set forth in the next paragraph as its sole and exclusive remedy because of such breach. So long as Landlord is diligently attempting to remedy the breach of said restriction, Tenant's remedies shall be postponed.
In the event Landlord fails to proceed with all diligence to remedy such violation, then, upon the expiration of thirty (30) days from the date of
Tenant's notice, Tenant shall have, as its sole and exclusive remedy under
7

the Lease, the right to either (i) decrease annual fixed minimum rent by 50% during the period such store (the "Competing Store") is open and operating
(although Tenant shall still pay Landlord all percentage rent, Additional Rent and all other monies due under the Lease), or (ii) terminate the Lease, which right Tenant shall elect by delivering to Landlord further written notice of its intention. If Tenant elects (ii) above, then the Lease shall terminate as of the
90 th day after Tenant's election, and neither Tenant nor Landlord shall have any further obligation under the Lease.
If Tenant elects (i) above, then
Tenant shall resume paying full fixed minimum rent on the date such
Competing Store ceased violating the restriction. If such Competing Store continues to violate the restriction for 270 days after the date said Competing
Store opened for business, then Tenant shall have the further right to terminate the Lease by delivering to Landlord, no earlier than 270 days, and no later than 290 days after the date the Competing Store opened for business, written notice of its intention to terminate and the Lease shall terminate on the 90 th day after Tenant's notice to Landlord. If Tenant fails to provide Landlord with written notice of its intention to terminate the Lease under this Section by the 290 th day after the date the Competing Store opens for business, then Tenant's right to terminate the Lease under this Section shall be null and void and Tenant shall immediately begin paying to Landlord full fixed minimum rent. (T103).
The lease amendments granted Reicherts the exclusive right to operate fine jewelry stores in Monument Mall through July 31, 2004 (subject to the exception for mall
8

anchor stores). (T103). Once the exclusivity restriction was breached, and if Rubloff
Hammond failed to remedy the breach, then Reicherts' "exclusive remedy" for such breach was to either terminate the lease agreement or accept a temporary partial reduction of the fixed minimum rent for 270 days. (T103).
B. APPELLANT'S REASONS AND THE TRIAL COURT'S ANALYSIS
Rubloff Hammond did not wish to honor Reicherts' exclusive right to operate fine jewelry stores in Monument Mall through July 31, 2004. (T107). Rubloff Hammond's reasons were clear. The September 14, 2000, e-mail of Monument Mall property manager, Patricia Mackie, to Rubloff Hammond's corporate counsel, Mark Vondrak.
regarding the proposed lease with Ridco, Inc., stated, "I told him [Reicherts] that the owners are here to make money and that Riddles has the history to prove to them they can make a lot of money for the mall". (E13,42:4, 4) . As a result of this conversation, appellant received notice of appellees' complaints before the Ridco lease was signed in a letter dated September 15, 2000, but faxed and received by appellant on September
14, 2000. (E8, 11:3, 3). Appellant signed the Ridco lease in a knowing violation of appellees' contentions of rights of exclusivity. (E13,38:4, 4; T107).
The dispute concerned the remedy or remedies afforded to Reicherts as a result of Rubloff Hammond's actions. The court summarized these issues as follows:
1. Is the "exclusive remedy" contained in the lease amendments the sole and exclusive remedy available to Reicherts? Stated differently, is it exclusive of all other remedies allowed by law?
2. If not, may Reicherts pursue injunctive relief to prevent further breach of their
"exclusive right" to operate fine jewelry stores?
9

3. If so, have Reicherts met their burden of proof for injunctive relief? (T115).
C. EXCLUSWEREMEDY
The court opined that the interpretation of a contract is controlled by the intention of the parties. (T115). Originally, Rubloff Hammond intended that between August 1,
1999, and July 31, 2004, Reicherts would have the exclusive right to operate fine jewelry stores in Monument Mall. (T115-116). From the language and structure of the amended lease agreements, appellant, Rubloff Hammond, reasonably knew the exclusive right to operate fine jewelry stores in Monument Mall constituted an important economic lease provision for Reicherts. (T116). Moreover, Rubloff Hammond conclusively knew that it had obligated itself to exclude other fine jewelry stores in
Monument Mall through July 31, 2004. (T116). Finally, Rubloff Hammond knew that if any such stores did commence operation during the restrictive time period, Rubloff
Hammond had an implied obligation to "diligently" attempt to remedy the situation.
(T116).
D. REICHERTS VERSUS RIDDLES: AN UNFAIR MATCH
The first five years of the lease agreements assured Reicherts that they exclusively would operate fine jewelry stores in the mall. (T103). Reichert Jewelers and Monument Jewelers are small, family-owned enterprises. (T119). Riddles Jewelry is the twenty-fourth largest jewelry chain in America with 37 jewelry stores located primarily in Midwestern shopping malls. (T119). The court found the following terms, which were in effect through July 31, 2004, provided pertinent comparisons:
Store Size/Rent
10

1.
2.
Reichert Jewelers (634 sq. ft. store)
Rent: $1585 monthly plus 5.5% of yearly gross sales exceeding
$425,000.00. (minimum monthly rent is based on $30.00 per sq. ft.)
Monument Jewelers (1140 sq. ft. store)
3.
Rent: $2294.25 monthly plus 5.5% of yearly gross sales over
$500,564.00. (minimum monthly rent is based on 24.15 per sq. ft.)
Riddles Jewelry (1751 sq. ft. store)
Rent: $2772.42 monthly plus 5.0% of yearly gross sales over
$665,380.00. (minimum monthly rent is based on $19.00 per sq. ft.)
(T119-121).
Rudolph M. Gatti, the executive vice president and chief financial officer of
Ridco, Inc., testified by deposition that mall leases are based on a minimum rent plus a percentage of gross sales over a threshold level. (E16,43:45, 45). The threshold level represents the estimated yearly gross sales for the store. The Riddles Jewelry lease provided that during the term of the Riddles lease, if one of the existing fine jewelry stores left Monument Mall, the mall would thereafter limit the number of fine jewelry stores to two. (E7, 50:2, 3). Mr. Gatti agreed that such a lease provision indicated that the demographics would support only two fine jewelry stores in Monument Mall.
(E16,53:45, 45). Thus, the trial court found it a reasonable conclusion based upon the totality of the evidence that Reicherts, Riddles Jewelry, and Rubloff Hammond all believed Monument Mall would support only two fine jewelry stores. (T121).
The proposed Riddles Jewelry Store would approximate the combined size of
Monument Jewelers and Reichert Jewelers. Yet, Riddles Jewelry would have a
11

financial advantage by paying considerably less rent on a square foot basis and on a percentage basis.
Reicherts' combined two stores
Riddles Store
Difference
Square Foot
1774
1751
Minimum monthly rent
$3879.25
$2272.42
$1106.83
As Riddles Jewelry anticipated opening on April 1, 2001, there were 40 calendar months from that date through July 31, 2004, when Reicherts' "exclusive right" would expire. Thus, the total minimum rent due under the leases for that time period would be:
Reicherts: 40 months x $3879.25
=
$155,170.00
Riddles: 40 months x $2772.42
= $110,896.80
difference $ 44,273.20
(T119-120).
Appellant's claimed "exclusive remedy" called for a 50% reduction of the minimum monthly rent for approximately nine months, or a total reduction of
$17,456.62. (T103;T120-121). Pursuant to this claimed "exclusive remedy," Reicherts would still pay $26,816 more minimum rent through July 31,2004, than would Riddles
Jewelry for comparable store space. (T121). Yet, the Reicherts would lose the exclusive competitive advantage for which they had paid more rent, and the 1999 lease amendments assured Rubloff Hammond that there would be at least two fine jewelry stores in its Monument Mall for ten years. (T119).
According to CPA and financial planner, Fred A. Lockwood, who appeared live at
12

trial, the Nebraska Panhandle economy has been flat for the last ten years. (25:6-21).
Thus, a substantial volume of Riddles Jewelry's sales necessarily would come from
Reicherts' potential customers. Riddles Jewelry would cause a substantial decrease in
Reicherts' volume of sales. (27:7-20). Due to the flat growth rate of the geographic area, the addition of another fine jewelry store would not create substantially more business volume, i.e., enough to support three fine jewelry stores in Monument Mall.
(25:6-21 ;27:7-2;28: 10-20). Rather, it would divide the potential sales between three stores, rather than two. (25:6-21 ;27:7-2;28: 10-20; 45:7-21; E16,53:45, 45). That was the conclusion of both Mr. Lockwood and Mr. Gatti. (25:6-21;27:7-2;28:10-20; 45:7-21;
E16,53:45,45).
As neither Reicherts' expert, Fred Lockwood, nor Riddles' chief financial officer,
Rudolph M. Gatti, opined that Monument Mall could support three fine jewelry stores, the trial court found that there would be an irreparable loss to the appellees during the shakedown. (T121). The reduced rent lease given to Riddles Jewelry would allow it to unfairly compete against Reicherts. (T121). Even with a temporary partial rent reduction, Reicherts would pay to the mall over $26,000 more in rent than Riddles
Jewelry through July, 2004. (T121). Riddles Jewelry would be selling the same or similar fine jewelry as Reicherts in the near vicinity of Reicherts' mall stores while paying a lower per square foot rent and a lower percentage rent. (T121).
Reicherts' gross sales for 1999 were approximately $985,000.00.
(39:18-19).
As mentioned, Riddles Jewelry anticipated yearly combined store gross sales of
$600,000 to $800,000 during the first four years of its lease. (52:11-23). Thus, a substantial portion of Riddles Jewelry's volume of sales necessarily would substantially
13

1 r.
decrease Reicherts' volume of sales. (27:7-20; T121). Based in part on Riddles
Jewelry's more favorable lease terms, Rubloff Hammond and Riddles Jewelry anticipated Riddles Jewelry would force a closure of at least one of Reicherts' fine jewelry stores. (25:6-21 ;27:7-2;28:10-20; 45:7-21; E16,53:45, 45; T121). A 270-day temporary partial reduction in Reicherts' future rent would provide an inadequate remedy at law under the circumstances. Moreover, without injunctive relief, Reicherts would incur irreparable harm, i.e., the reasonable expectation that at least one of its stores would go out of business prior to July 31, 2004, as was the contemplation of all of the parties and Riddles. (25:6-21;27:7-2;28:10-20; 45:7-21; E16,53:45, 45; T121).
THE TRIAL COURT'S CONCLUSION
For all the above reasons, the trial court found that a permanent injunction should be entered restraining Rubloff Hammond, L.L.C., and its officers and agents, from leasing or allowing to be leased, space in Monument Mall, Scottsbluff, Nebraska, other than to appellees for a fine jewelry store, so long as Reicherts continue to operate their existing stores and are not otherwise in default under their lease agreements, as amended, through July 31, 2004 (except for "Anchor Tenants" as described in the lease documents). (T121-122). The court later found no appellate bond to be necessary under Neb.Rev.Stat.
25-1067. (T123).
ARGUMENT
I.
THE PURPOSE OF INJUNCTION IS TO RESTRAIN ACTIONS THAT HAVE
NOT YET BEEN TAKEN.
14

Omitted from the appellant's Brief is an analysis of the trial court's thoughtful twelve page decision.
Rather than provide the Appellate Court with an understanding of the case as it was decided by the trial court, the appellant, in its Brief, reframed the case as a "breach of contract" case then claimed that there was no breach (appellant's
Brief, page 22) and, thus, no applicable remedy. This is not the case that the trial court decided nor does appellant follow or address the trial court's analysis. The trial court specifically stated, "However, the case at bar is not a suit for breach of contract.
(T116). Rather, it is an equitable action for injunctive relief to prevent a breach, or further breach, of the lease agreements. (T116). The purpose of injunction is to restrain actions that have not yet been taken ...Putnam v. Fortenberry, 256 Neb. 266,
589 N.W.2d 838, 842-843 (1999)".
(T116).
The trial court started its analysis by noting that it is without dispute that Rubloff
Hammond did not wish to honor Reicherts' exclusive right to operate fine jewelry stores in Monument Mall through July 31, 2004. (T115). Rubloff Hammond's reasons were also clearly stated in the September 14, 2000, e-mail from Monument Mall property manager, Patricia Mackie, to Rubloff Hammond's corporate counsel, Mark Vondrak, regarding the proposed lease with Ridco, Inc., which stated, "I told him [Reicherts] that the owners are here to make money and that Riddles has the history to prove to them they can make a lot of money for the mall". (4;18-22; E13 next to last page; T115).
The court summarized the issues as follows:
1. Is the "exclusive remedy" contained in the lease amendments the sole and exclusive remedy available to Reicherts? Stated differently, is it exclusive of all other remedies allowed by law?
15

1 "
2. If not, may Reicherts pursue injunctive relief to prevent further breach of their
"exclusive right" to operate fine jewelry stores?
3. If so, have Reicherts met their burden of proof for injunctive relief? (T115).
EXCLUSIVE REMEDY
The trial court then focused on the remedy or remedies afforded to Reicherts as a result of Rubloff Hammond's actions. (T115). The trial court reasoned that as the interpretation of a contract is controlled by the intention of the parties, both Rubloff
Hammond and Reicherts intended that between August 1, 1999, and July 31,2004,
Reicherts would have the exclusive right to operate fine jewelry stores in Monument
Mall. (T115-116).
Thus, from the language and structure of the amended lease agreements, Rubloff Hammond reasonably knew the exclusive right to operate fine jewelry stores in Monument Mall constituted an important economic lease provision for
Reicherts. (T116). The trial court found that Rubloff Hammond conclusively knew that it had obligated itself to exclude other fine jewelry stores in Monument Mall through
July 31,2004.
(T116). The final premise in the trial court's initial contractual analysis held that Rubloff Hammond knew that if any such stores did commence operation during the restrictive time period, Rubloff Hammond had an implied obligation to
"diligently" attempt to remedy the situation. (T116).
Rubloff Hammond attempted a similar tactic (the breach/no breach sleight of hand argument) to the trial court as it did in its appellate Brief. The trial court rejected this argument, but showed its understanding of it by echoing the appellant's argument in its Memorandum Opinion, noting that while parties may stipulate to a particular remedy for a breach of contract under proper circumstances, that breach must first
16

1 , occur, which breach had not yet occurred here. The court reasoned as follows:
Kozlik v.
Emelco, Inc., 240 Neb. 525,483 N.W.2d 114 (1992), the court noted at page 535, as follows (emphasis added):
It is equally true, however, that parties to a contract may override the application of the judicial remedy for breach of a contract by stipulating, in advance, to the sum to be paid in the event of a breach ....This court has consistently upheld the right of contracting parties to privately bargain for the amount of damages to be paid in the event of a breach of contract, provided the stipulated sum is reasonable in light of the circumstances. (T116).
The court noted that in the event of breach, Reicherts and Rubloff Hammond stipulated to a particular remedy for the amended lease agreements which clearly state that
"Tenant shall have the rights set forth in the next paragraph as its sale and exclusive remedy because of such breach".
(Emphasis added by the court). (T116).
To repeat, the trial court held that the case at bar is not a suit for breach of contract. (T116). Rather, the trial court found this case was an equitable action for injunctive relief to prevent a breach, or further breach, of the lease agreements. (T116).
The trial court reasoned that the purpose of injunction is to restrain actions that have not yet been taken, citing Putnam v. Fortenberry, 256 Neb. 266, 270-271,589 N.W.
838, 842-843 (1999), as follows:
It is well established that injunctive relief is preventative, prohibitory, or protective, and equity usually will not issue an injunction when the act complained of has been committed and the injury has been done...
Since the purpose of an injunction is not to afford a remedy for what is past
17

but to prevent future mischief, not being used for the purpose of punishment or to compel persons to do right but merely to prevent them from doing wrong, rights already lost and wrongs already perpetrated cannot be
.corrected by injunction.
Conrad v. Kaup, 137 Neb. 900, 902, 291 N.W.
687,688 (1940). (T116-117).
While equity will not issue an injunction where the act to be prevented has already occurred and the injury has been done, it will intervene to prevent the breach of an executory contract where the breach by one party will work irreparable injury to the non-breaching party. (T117). The "exclusive remedy" entitled Reicherts to a partial rent reduction commencing on or about April 1, 2001, when the competing store was open and operating. (T117). The "exclusive remedy" would not be applicable when the store had not yet opened. Thus, the appellant's sleight of hand breach/no breach argument would not be applicable.
The trial court reasoned that the purpose of an injunction is to prevent future misdeeds, not to punish a past wrong, and to prevent others from doing wrong, citing
Conrad v. Kaup, 137 Neb. 900,291 N.W. 687 (1940). (T117). The court held that
Rubloff Hammond's actions clearly demonstrate that unless the court granted injunctive relief, Rubloff Hammond would engage in future misdeeds or mischief, i.e., allowing a competing fine jewelry store into Monument Mall before July 31, 2004, in contradiction to its agreement with Reicherts. (T117).
The court concluded that while stipulated remedies for breach do not preclude a party from pursuing injunction to prevent a future breach where the breach has not yet occurred, or is a continuing breach, the stipulated remedy for future breach is
18

inapplicable. (T117). The court reviewed the applicable Nebraska case law to check the consistency of above analysis with those cases. (T117). The trial court's legal analysis started with Nebraska Wheat Grower's Ass'n v. Norquest, et el., 113 Neb.
731, 204 N.W. 798 (1925). (T117). The association members had contracted to sell their wheat crop to the association for five years and specified liquidated damaged of
25¢ per bushel for wheat not sold to the plaintiff. (T117).
Despite this, in 1924, several members sold a portion of their wheat crop elsewhere, and intended to do the same with the balance of their crops, unless prevented from doing so. The case was tried on stipulated facts, one of which was that "25 cents a bushel is a reasonable amount for plaintiffs damages for the wheat sold." (T117). 204 N.W. at 799. Regardless, the plaintiff pursued an equitable remedy for injunction. The trial court found for the plaintiff. (T118).
On appeal, the Nebraska Supreme Court inquired, "Does the contract provide plaintiff with an adequate remedy at law?" /d.
at 733. The court answered its own question at 113 Neb. 734-35, 204 N.W. at 799, as follows (emphasis added):
(W)hen the scope and purpose of the plaintiff association is considered, the liquidated damages provided for by the contract do not afford plaintiff an adequate remedy at law. As is well said in Kansas Wheat Growers
Ass'n v. Schulte, supra:
"This association was organized for the sole purpose of marketing the wheat raised by its members, and performing such functions as are incidental thereto. From the very nature of things it must have the wheat or it cannot exist. It has no power to buy wheat, hence it cannot go into the
19

"
' open market and purchase wheat to fill its contracts of sale and sustain its existence or recoup its loss, if the members fail to deliver. Even the payment of damages of 25 cents a bushel, stipulated to be paid by a member for each bushel he produces and sells elsewhere, would not sustain the association and enable it to do the business for which it is incorporated. Hence, as a practical matter, it is of little consequence that the member is solvent and able to respondent in damages. If the association received damages from all, or a substantial portion, of it members, it would cease as a going concern, or be so seriously handicapped as to destroy its usefulness. Wheat is the only commodity the association can use as a going concern. All it can do with money is to pay its expenses and disburse the balance among its members.
It necessarily follows that there is no adequate remedy at law.
The only adequate remedy is injunction, preventing the member from selling to others, and thus forcing the delivery of the wheat to the association."
This succinctly states the facts under consideration, as well as the law applicable.
The court awarded the Wheat Growers Association a stipulated liquidated damage of
$12.50 for the 50 bushels of defendants' wheat already sold; and injunctive relief to prevent a further breach of the contract, i.e.
to prevent defendants from selling the balance of their wheat crops to some one other than the plaintiff. (T119). 204 N.W. at
799.
20

ADEQUACY OF THE LEGAL REMEDY
The trial court then acknowledged the well established principle that an injunction should not be granted unless the right is clear, the damage is irreparable, and the remedy at law is inadequate to prevent a failure of justice, citing Central States
Found. v. Balka, 256 Neb. 369, 377, 590 N.W.2d 832, 839 (1999). The trial court concluded that no adequate remedy at law existed. (T121-122). The analysis considered that Reicherts' gross sales for 1999 were approximately $985,000.00.
(T121).
Riddles Jewelry anticipated yearly combined store gross sales of $600,000 to
$800,000 during the first four years of its lease. (T121). In an area of flat economic growth such as the Panhandle of Nebraska, a substantial portion of Riddles Jewelry's volume of sales necessarily would substantially decrease Reicherts' volume of sales.
(T121). By giving Riddles Jewelry more favorable lease terms, Rubloff Hammond and
Riddles Jewelry anticipated that Riddles Jewelry would force a closure of at least one of
Reicherts' fine jewelry stores. (T121). A 270-day temporary partial reduction in
Reicherts' future rent would provide an inadequate remedy at law under the circumstances; thus, without injunctive relief, Reicherts would incur irreparable harm,
i.e., the reasonable expectation that at least one of its stores would go out of business prior to July 31,2004, as was the contemplation of all the parties and Riddles. (T121).
For the above reasons, the court ordered that a permanent injunction be entered, restraining Rubloff Hammond, L.L.C. from leasing space in the Monument Mall in Scottsbluff, Nebraska, for a fine jewelry store other than to Reicherts, so long as the
Reicherts continue to operate their existing stores and are not otherwise in default undertheir lease agreements as entered through July 31, 2004, (except for "Anchor
21

Tenants" as described in the lease documents). (T121-122).
II.
DAMAGE CAUSED BY A BREACH OF RESTRICTION ON COMPETITION
CONTAINED IN A LEASE IS RARELY SUSCEPTIBLE OF ACCURATE PROOF
In Andersen v. Blando Plaza, Inc., 186 Neb. 682,186 N.W.2d 114 (1971), a shopping center tenant brought an action against the owner-lessor of the shopping center for breach of a covenant against competition. The Supreme Court agreed that leasing an area which was adjacent to tenant's retail bakery, donut shop, and snack bar to a Mexican restaurant breached a covenant not to operate another store similar to tenant's within 4,000 feet of the shopping center. However, the court reversed and remanded, finding prejudicial error in the trial court's refusal to admit evidence or allow interrogation concerning tenant's other stores' profits, losses, or trend lines.
Without much discussion, the court asserted, "Damage caused by a breach of a restriction on competition is rarely susceptible of accurate proof." (Syllabus by the Court, note 2).
The discussion in the text cites Gallagherv. Vogel, 157 Neb. 670, 61 N.W.2d 245
(1953), for the proposition that such damage is rarely susceptible of accurate proof.
(186 Neb. At 689,186 N.W.2d at 688).
Appellant acknowledges that non-competition "agreements are frequently found in shopping mall leases, and have generally withstood legal challenge." (appellant's
Brief, page 25). Yet, appellant has not discussed any of these cases. Perhaps, some discussion of those cases may put this case in a broader perspective. The appellee requested similar relief to that which the court awarded in Walgreen Co. v. Sara Creek
22

Property Co., 775 F. Supp.1192, 97 A.L.R. 2d (Supp.) (1991). In Walgreen, supra, a commercial lessee, a Walgreen drug store, brought an action against lessor for breach of lease agreement by renting mall space to another pharmacy. The court upheld the lease's exclusivity clause, found an intentional violation of the lease by the lessor, and gave the lessee permanent injunctive relief. The tenant held a lease which granted it exclusive rights to sell health and beauty aids and drug sundries in a mall. Walgreen at
1194.
The tenant, Walgreen, signed a lease contract with a previous owner of the mall and the subsequent owner believed it could lease space to a competing business.
Walgreen at 1195. The district court stated that under Wisconsin law, a tenant can obtain injunctive relief to enforce an exclusivity clause in a lease. Walgreen at 1197.
The court cited American Dairy Queen v. Brown-Port Co., 631 F.2d 255, 258 (7 th Cir.
1980), which held that a tenant under a lease containing an exclusivity clause expects that the use to which it puts the premises will be exclusive within the limits of the clause.
The violation of that expectancy constitutes the breach. Walgreen, supra. The
Walgreen court cited Tri-State Generation & Transmission Assoc., Inc. v.
Shoshone River Power, Inc., 805 F.2d 351 (10 th Cir. 1986), stating that damages are not an adequate remedy when a wrong will be of a continuing nature and effective legal relief cannot be obtained without multiple lawsuits. Walgreen at 1198. There is a strong public interest in fair dealing and the solemnity of contracts; if commerce is to function in our capitalistic system, entrepreneurs must play by the rules. K-Mart Corp.
v. Oriental Plaza, Inc., 875 F.2d 907, 916 (1 st
Cir. 1989), as found in Walgreen, supra.
There was no fair play by the appellant in Walgreen, and there was no fair play
23

by the appellant in this case. NJI2d Civ. 15.40 "Terms Imposed by Law" states that accompanying every contract is a common-law duty to perform with care, skill, reasonable expedience, and faithfulness to the thing agreed to be done. Thus, in
Schwarz v. Platte Valley Exterminating, lnc., 258 Neb. 841, 606 N.W.2d 85 (2000), the court held that a failure to observe any of these conditions was a breach of contract.
The appellant in this case drafted the lease agreement, which obviously sets up a competing principle that should be construed against the drafting party. The appellant cynically weighed what it wanted to see as the "sole" remedy in this case, against its anticipated profit with Riddles. The appellant now cynically urges this Court to believe that there is no breach of contract (appellants' Brief, page 30). Appellant ignored its contractually bargained for exclusivity or obligation to diligently protect the Reicherts under Article II (e) Exclusive for the period August 1, 1999 to July 31,2004. (T103).
CONCLUSION
When construction of a contract is necessary, the court must construe the contract as a whole, giving effect to every part thereof, if possible. Crowley v. McCoy,
234 Neb. 88,449 N.W.2d 221 (1989). The appellant sought to defeat the above exclusivity provision and failed.
Appellant's conduct is not the kind of conduct a court should approve or condone in any case, let alone an equity case. The trial court sought to give effect to the parties' intent, looking at the contract as a whole. It does not make sense to give an illusory right of exclusivity in a mall contract for a higher rent, and then defeat that provision with a remedy that provides no substantial relief as appellant urges this Court to do. The decision of the trial court should be affirmed.
24

" : I
Respectfully submitted,
GARY L. REICHERT, an individual, FRED
REICHERT, JR., an individual, also d/b/a
MONUMENT JEWELERS and REICHERT
JEWELERS, INC., Plaintiffs/Appellees
Michael J ranok, NSBA #12027
MICHAEL J. JAVORONOK LAW FIRM
1110 Circle Drive, Suite 200
Scottsbluff, NE 69361-2781
Phone: 308/630-0808
Fax: 308/630-0771
25

Case No. A-01-0128
IN THE COURT OF APPEALS FOR THE STATE OF NEBRASKA
GARY L. REICHERT, an individual, FRED REICHERT,
JR., an individual, also d/b/a MONUMENT JEWELERS, and
REICHERT JEWELERS, INC.,
Plaintiff, vs.
RUBLOFF HAMMOND, L.L.C.,
Defendant.
PROOF OF SERVICE
The undersigned certifies that the Brief of Plaintiffs/
Appellees was served upon defendant to the above cause by depositing two copies thereof on the I q Hr day of June, 2001, as follows:
John F.
Simmons
1502 Second Avenue
Scottsbluff, NE 69361
[ ] Certified U.S. Mail
[~] Hand Delivery
[ ] Facsimile
[ ] Personal Service
GARY L.
REICHERT, an individual, FRED
REICHERT, JR., an individual, also d/b/a
MONUMENT JEWELERS and REICHERT
JEWELERS, INC., Plaintiffs/Appellees
By
-~~~~
Michael oronok, NSBA #12027
MICHAEL J.
VORONOK LAW FIRM
1110 Circle Drive, Suite 200
Scottsbluff, NE 69361-2781
Phone: 308/630-0808
Fax: 308/630-0771