A recent appellate court decision has determined that a shopping center owner’s lease agreement with a new supermarket tenant violated an existing exclusivity provision, impacting how retail spaces can be leased and operated in the Bayonne Crossing Shopping Center. The case highlights the importance of contract language in commercial real estate and its effect on business competition within shared retail environments.
The complaint was filed by KRG Bayonne Urban Renewal, LLC in the Superior Court of New Jersey, Chancery Division, Hudson County, against Wal-Mart Stores East, LP. The Appellate Division issued its opinion on March 16, 2026, after hearing arguments submitted on October 28, 2025.
According to the court document, the dispute centers around whether KRG Bayonne Urban Renewal’s lease agreement with Aldi for approximately 19,591 square feet violated an exclusivity clause in Walmart’s existing lease. This clause restricted leasing space to other supermarkets selling food in more than 10,000 square feet within the shopping center. The background traces back to redevelopment plans adopted by the city of Bayonne in June 2005 and subsequent amendments allowing grocery stores as principal uses within certain size limitations.
In October 2009, Walmart signed a lease for about 90,000 square feet at Bayonne Crossing with provisions permitting it to operate as a general merchandise or supermarket retailer. However, this was subject to an ‘Exclusive Covenant’ that stated: “Lessor agrees that it has not and will not enter into a lease of other space within the Shopping Center which expressly authorizes or permits as its principal use a supermarket (selling food in more than 10,000 square feet of Floor Area)…” The Declaration associated with the redevelopment plan further clarified definitions and restrictions related to floor area and permitted uses.
KRG acquired ownership of Bayonne Crossing in 2014 and became Walmart’s lessor. In September 2022, KRG entered into a lease with Aldi for nearly 20,000 square feet but specified that only up to 9,999 square feet would be used for food sales based on their interpretation of ‘floor area.’ Walmart objected soon after signing of this lease. It argued that ‘floor area’ should include all areas used by Aldi—not just those accessible to customers—thus exceeding the exclusivity limit set forth in their own agreement.
The disagreement led KRG to seek declaratory judgment from the Chancery Division stating that only customer-accessible food sales areas should count toward the restriction. After discovery and oral argument on March 15, 2024, the trial court granted summary judgment to KRG and denied Walmart’s cross-motion for summary judgment. The order declared KRG could “lease space at Bayonne Crossing…to any tenant for the principal use as a supermarket selling food in not more than 10,000 square feet,” without reviewing future leases or floor plans.
KRG later moved for reconsideration while Walmart appealed both this grant of summary judgment and denial of its own motion. On June 20, 2024, following remand from the appellate court so that reconsideration could be addressed first by the trial court, another order was entered declaring Aldi’s floor plan compliant with restrictive covenants but again declining to address future tenants or layouts.
Upon review of these decisions and contract documents—including definitions provided by both parties’ leases—the Appellate Division concluded that “the trial court erred in: (1) granting KRG summary judgment that the Aldi lease did not violate the exclusivity provision…and (2) denying Walmart’s cross-motion.” The opinion emphasized enforcing contracts based on clear language: “when the intent of the parties is plain and the language is clear and unambiguous, a court must enforce the agreement as written.” It found no support for limiting measurement solely to customer-accessible sales areas as argued by KRG.
The appellate panel determined that including storerooms and non-customer areas within ‘floor area’ was consistent with both contract terms and purpose—to prevent unwanted competition against Walmart from large supermarkets within Bayonne Crossing. As such: “we reverse summary judgment to KRG and [reverse] denial of Walmart’s cross-motion…to invalidate the Aldi lease as violating…the exclusivity provision’s 10,000 square foot limitation.” The matter is remanded for entry of an order consistent with this interpretation.
Attorneys representing Wal-Mart Stores East were Patrick J. McDonnell and Brandon H. Zanan from McDonnell & Associates PC; Mark E. Duckstein and Joshua N. Howley from Sills Cummis & Gross PC represented KRG Bayonne Urban Renewal. The case was heard before Judges Sumners, Susswein and Augostini under Docket No. A-2496-23.
