This month, in Martin Quintana v. Fort Wayne Plan Commission, No. 02D02-2212-PL-414 (Ind. Super. Ct. May 13, 2024), a Superior Court judge in Fort Wayne, Indiana, issued a ruling that permitted a Mexican restaurant called Famous Taco to serve tacos and burritos despite a use restriction that prohibited restaurants from operating in a commercial development.  The judge based his decision on an exception to the use restriction that permitted some restaurants in the development so long as they primarily sold sandwiches.  The judge determined that tacos and burritos are considered sandwiches and therefore fall under the exception to the use restriction.

In 2019, the developer sought zoning approvals to convert a residential project into a commercial development.  As part of that process, the developer agreed to a restriction that prohibited restaurants with one exception, as follows:

“A sandwich bar-style restaurant whose primary business is to sell ‘made-to-order’ or ‘subway-style’ sandwiches (which by way of example includes, but is not limited to, ‘Subway’ or ‘Jimmy John’s’, but expressly excludes traditional fast food restaurants such as ‘McDonald’s’, ‘Arby’s’, and ‘Wendy’s’), provided that any such restaurant shall not have outdoor seating or drive-through service.  For the avoidance of doubt, the sale of alcoholic beverages is expressly prohibited upon the Real Estate.”

The developer sought approval to lease space in the development to Famous Taco, and the local planning commission objected based on the use restriction.  The developer sought judicial review to overrule the planning commission’s decision.  Ruling in favor of the developer, the court held,  “The Court agrees with [the developer] that tacos and burritos are Mexican-style sandwiches, and the original [restriction] does not restrict potential restaurants to only American cuisine-style sandwiches.  The original [restriction] would also permit a restaurant that serves made-to-order Greek gyros, Indian naan wraps, or Vietnamese banh mi if these restaurants complied with the other enumerated conditions.”

It should be noted that not all judges agree on this point – there are cases in other jurisdictions that have decided that tacos and burritos are not sandwiches.  For example, before the Famous Taco case, a judge in Massachusetts reached the opposite conclusion, determining that a burrito is not a sandwich, and thus Panera Bread’s exclusive use clause, which prevented its landlord from leasing to other restaurants reasonably expected to generate more than ten percent (10%) of their revenue from sandwiches, did not preclude Landlord from leasing to Qdoba (White City Shopping Center, LP v. PR Restaurants, LLC, No. 2006196313, 2006 WL 3292641 (Mass. Super. Ct. Oct. 31, 2006)).

These decisions highlight the importance of carefully drafting exclusive use provisions in leases to reflect the parties’ intent on what should and shouldn’t be covered. 

For more on exclusive uses, please see Exclusive Uses: Clean Up, Aisle 2018.