WILKES-BARRE — Plans to build a new Burger King in the city’s downtown have prompted dueling litigation, according to Luzerne County Court filings.
Market Square Properties Development LLC wants to include a new Burger King in its revitalization of a 6.36-acre property at the corner of Market Street and Wilkes-Barre Boulevard that it purchased in June. The company also is renovating a strip mall on the property and plans to restore the historic former New Jersey Central train station at the site.
However, the owners of an adjacent parcel leased to McDonald’s on Northampton Street — Thom Greco and his company, TGRG L.L.P. — maintain a Burger King is not permitted on the Market Square lot due to a no-competition covenant.
Hoegen & Associates P.C., filed a complaint Monday afternoon on Market Square’s behalf against Greco and TGRG, arguing the covenant was implemented without authority and should be declared unenforceable.
On Tuesday, Greco and TGRG also filed a complaint through Grabowski Law Offices LLC against Market Square and the prospective Burger King owner, Four One Company LP, maintaining the covenant was lawfully implemented and publicly recorded and should be enforced to prevent the eatery’s construction.
Both sides are seeking declaratory judgements, or a judicial decision to resolve the matter.
The Burger King is planned for one of four parcels acquired by Market Square — a corner parcel that once housed Palooka’s Diner, which was sold and relocated around 1996, filings say.
According to Market Square’s filing, Greco and Eric and Mitchell Kornfield executed the covenant in April 1991, when they were subleasing the McDonald’s site from Revel Railroad, Inc.
The filing maintains the covenant was not valid or perpetually tied to the complex because the prior owners of the real estate at that time were not parties to the sublease.
The covenant says the property now owned by Market Square can’t be used or occupied as a restaurant, except for the diner that was there, filings show. Restaurant was defined as a food service establishment of any type deriving 25 percent or more of its gross annual receipts from the sale of hamburgers, ground beef products and fries, including Burger King, Wendy’s, Jack in the Box, Hardee’s, White Castle and Roy Rogers.
While Market Square says the covenant should not apply to any part of its property, it maintains the prospective Burger King site must be carved out as an exception if the covenant is deemed valid because the diner was permitted there in the past.
In Greco’s filing, he said the Greco/Kornfield sublease, which was executed in 1989, included written consent from then-owner Marvin Roth and that the non-competition provisions “run with the land” and preclude any restaurant at the Market Square site.
After Roth died in May 1990, McDonald’s entered into an agreement with Roth’s estate and others involved in the property ownership to “not disturb, modify, enlarge or otherwise affect McDonald’s rights,” Greco’s filing said. The 1991 covenant’s allowance of the diner was limited to the Palooka’s establishment that is no longer there, it said.
Greco and his companies assumed ownership of the complex from the Roth estate by 1997 and sold all but the McDonald’s and Citizens Bank lots to the county Redevelopment Authority in 2006, its filing said. The authority paid $5.8 million for the property.
The operation of a Burger King or other restaurant meeting the no-competition definition will cause Greco “great harm,” including “loss of goodwill” with McDonald’s, a rent reduction and eventual termination or non-renewal of the McDonald’s lease, his filing said.
George Albert, who purchased the train station site with other investors from the Luzerne County Redevelopment Authority last year for $1.2 million, told downtown business leaders earlier this month $8 to $10 million will be invested in the redevelopment project, which also will include the addition of Domino’s Pizza and other businesses. He estimated the Burger King would open in 2017.
