author: McKEE, Circuit Judge. STAPLETON, Circuit Judge, NORRIS, Circuit Judge,

text:
    In the Matter of the COMPLAINT OF NAUTILUS MOTOR TANKER CO., LTD. as owner of the M/T BT NAUTILUS for Exoneration from or Limitation of Liability, Nautilus Motor Tanker Co., Ltd., Appellant.
    No. 95-5126.
    United States Court of Appeals, Third Circuit.
    Argued Oct. 10, 1995.
    Decided May 20, 1996.

      See also, 862 F.Supp. 1251.

      John J. Reilly (argued), Haight, Gardner, Poor & Havens, New York City, for Limitation Plaintiff-Appellant Nautilus Motor Tanker Co., Ltd.
    Richard H. Webber (argued), Hill Rivkins Loesberg O’Brien Mulroy & Hayden, New York City, for Limitation Defendant-Appellee Coastal Oil New York, Inc.
    Before: STAPLETON, McKEE and NORRIS , Circuit Judges.

       The Honorable William A. Norris, Senior United States Circuit Judge for the Ninth Circuit, sitting by designation.

   OPINION OF THE COURT

McKEE, Circuit Judge.

This dispute arises from the grounding of the tanker BT Nautilus, an 811 foot oil tanker owned by appellant Nautilus Motor Tanker Co., Ltd. (“Nautilus”). That grounding caused approximately 230,000 gallons of fuel oil to spill into the Kill van Kull waterway in Bayonne, New Jersey. Thereafter, Nautilus commenced a proceeding in the United States District Court for the District of New Jersey under the Limitation of Liability Act, 46 U.S.C. §§ 181-189, in an effort to escape liability from various potential claimants including Coastal Oil New York, Inc. (“Coastal”), the owner of the terminal. Coastal filed a counterclaim against Nautilus alleging that Nautilus was solely responsible for the grounding. Following a nonjury trial, the district court entered judgment for Coastal and against Nautilus on Coastal’s counterclaim.

In this appeal from that judgment, we are asked to determine whether the district court erred in admitting opinions and conclusions contained in a Coast Guard Report of the incident into evidence. We must also decide the relevance and possible application of a rather ancient rule of maritime law — the Pennsylvania Rule — to this controversy; and finally, we must decide whether the district court erred in concluding that Coastal’s failure to provide navigational aids and information about the limits of its ship berth did not contribute to the accident. For the reasons that follow, we will affirm the ruling of the district court.

I.

We need only briefly set forth the underlying facts as they are detailed in the district court’s opinion, In the Matter of the Complaint of Nautilus Motor Tanker Co., Ltd., 862 F.Supp. 1260 (D.N.J.1994), and largely uneontested. On the morning of June 7, 1990, Moran Towing & Transportation, Co., Inc. (“Moran”) dispatched two tugs and a docking pilot, Captain James Naughton, to assist BT Nautilus Captain Albert Frank Ainseough in docking his vessel at Coastal’s terminal in Bayonne, New Jersey. As the Nautilus neared the terminal, it ran aground.

On June 18, 1990, Nautilus filed a petition in the district court seeking exoneration and/or limitation of its liability under the Limitation of Liability Act, 46 U.S.C. §§ 181-189. Coastal responded by filing a claim against Nautilus, and Nautilus responded by seeking damages for Coastal’s alleged negligence in causing the grounding.

At the ensuing bench trial on Coastal’s counterclaim, Nautilus argued that Coastal “had breached its duty as a wharfinger because the vessel either grounded in the ship berth or, if it grounded outside the ship berth, the approach to the berth was unsafe.” Appellant’s Brief at 5. Coastal countered by arguing that the grounding was a direct consequence of negligent navigation by the vessel’s captain and the docking pilot.

On September 27, 1994, the district court issued its findings of fact and conclusions of law. The court found that the BT Nautilus ran aground “at least 125 feet east of the Coastal New York ship berth,” Nautilus, 862 F.Supp. at 1268, and that Nautilus had failed to prove by a preponderance of the evidence that any of Coastal’s alleged negligent acts were a proximate cause of the grounding. Accordingly, the district court entered judgment in Coastal’s favor, and this appeal followed.

Nautilus challenges that judgment on three grounds. First, Nautilus contends that the district court erred in admitting opinions and conclusions contained in a Coast Guard Report of this incident. Second, Nautilus argues that the Pennsylvania Rule created a burden-shifting presumption that Coastal’s statutory violations caused the grounding. Finally, Nautilus argues that the district court clearly erred in finding that Coastal’s failure to provide navigational aids and information on the limits of its ship berth did not contribute to the grounding.

We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(3), which authorizes an appeal from an interlocutory order determining the rights and liabilities of the parties to admiralty eases.

II.

A. The Admissibility of the Coast Guard Report.

Coast Guard regulations require Coast Guard personnel to conduct an investigation, and prepare a report following marine casualties and accidents. See 46 C.F.R. § 4.07 (1994). Accordingly, the United States Coast Guard investigated the June 7, 1990, grounding of the Nautilus and issued a public report that stated in part:

The apparent cause of this grounding was failure on the part of the Docking Pilot to maintain the BT NAUTILUS within the navigable limits of the channel ... [t]he docking pilot was not familiar with the shape or dimensions of the dredged underwater basin leading from the channel to the Terminal.
Except as noted above there is no evidence of ... misconduct, inattention to duty, negligence, or willful violation of law or regulation ... nor evidence that any personnel of the Coast Guard, or of any other federal agency, or any other person contributed to this casualty ...

Coast Guard Report (“Report”) ¶¶ 2, 18. At trial, Coastal offered the entire Report into evidence under the exception to the hearsay rule for public records, FRE 803(8)(C). The court received the report over the objection of Nautilus. That objection was based upon a provision in the Coast Guard regulations that states:

investigations of marine casualties ... are for the purpose of taking appropriate measures for promoting safety of life and property at sea, and are not intended to fix civil or criminal responsibility.

46 C.F.R. § 4.07-l(b). Nautilus argued that the foregoing portions of the Report held “no evidentiary relevance other than to fix liability ...”, Appellant’s Brief at 14, and should therefore be excluded under § 4.07-l(b).

The district court concluded that the entire Report fit within the confines of FRE 803(8)(C) and deemed it admissible irrespective of 46 C.F.R. § 4.07-l(b).

On appeal, Nautilus relies principally upon Huber v. United States, 838 F.2d 398 (9th Cir.1988), and its progeny to argue that the district court erred in admitting the Report into evidence. In Huber, two crew members drowned when their yacht sank north of San Francisco Bay. The surviving crew member joined decedents’ representatives in a suit against the Coast Guard for failure to assist the vessel. At trial, plaintiffs sought to admit two Coast Guard Reports prepared in the aftermath of the accident. The government objected and argued that the conclusions and recommendations in the Reports were barred by 46 C.F.R. § 4.07-l(b). The court overruled the government’s objection, and allowed the Reports into evidence as admissions of a party opponent under FRE 801(d)(2).

On appeal, the Court of Appeals for the Ninth Circuit reversed. The court held that, under section 4.07-l(b), “the Coast Guard investigating officers’ conclusions and recommendations ... [are] inadmissible as evidence in civil proceedings arising out of accidents covered by the investigation reports.” Huber, 838 F.2d at 402. In reaching this result, the court first emphasized the necessity of such a rule under the circumstances of the suit before it:

A Coast Guard investigator might feel less free to suggest appropriate measures ‘for promoting safety of life and property at sea’ if he thought that any suggestion of additional precautions might result in imposing pecuniary liability on the government.

Id. at 402-403 (citing Reliable Transfer Co. v. United States, 53 F.R.D. 24, 25 (E.D.N.Y.1971)). The court also noted a perceived similarity between 46 C.F.R. § 4.07-1(b) and federal enactments such as 49 U.S.C. § 1903(c) — which bars the admission into evidence of accident reports prepared by the National Transportation Safety Board. The court noted that the only difference between the latter statute, and the former regulation is that:

in one the Coast Guard acted pursuant to authority from Congress ... and in the other, Congress acted directly ... Either way, the result is the same: all or portions of the reports are excluded from evidence on authority of Congress.

Id. at 403. Other courts have relied on the reasoning of Huber to bar the admission of opinions and conclusions in Coast Guard Reports. See Petition of Cleveland Tankers, Inc., 67 F.3d 1200, 1208 (6th Cir.1995) (Barring opinions and conclusions in a Coast Guard Report); Yap v. Controlled Parasailing of Honolulu, Inc., 76 Hawai'i 248, 873 P.2d 1321, 1328 (1994) (Same).

Nautilus argues that since the Coast Guard acted pursuant to congressional authority, 46 C.F.R. § 4.07-l(b) must preclude the admissibility of paragraphs two and eighteen of the Coast Guard Report. Appellant’s Reply Brief at 2. We do not agree.

First, the government is not a party to this litigation. Thus, unlike in Huber, the Coast Guard has no interest in the outcome, and the policy justification for the regulation’s evidentiary bar — ensuring frank disclosure by Coast Guard investigators — is completely removed. The investigators here have no bias that may interfere with a full, fair, or accurate report of their findings or affect the course of their investigation.

Second, and more fundamentally, we affirm the ruling of the district court because it is axiomatic that federal regulations can not “trump” or repeal Acts of Congress. See e.g., McComb v. Wambaugh, 934 F.2d 474, 481 (3d Cir.1991) (“No regulation can override legislative intent ...”). 46 C.F.R. § 4.01-l(b) is not an Act of Congress; it is a federal regulation. In contrast, the Federal Rules of Evidence were enacted by Congress and must be regarded by this Court as any other federal statute. Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 585-87, 113 S.Ct. 2786, 2793, 125 L.Ed.2d 469 (1993); see also, 21 C. Wright & K. Graham, Federal Practice and Procedure: Evidence § 5013 at 120 (1977) (“Since the Rules of Evidence were enacted by Congress, no question of delegated power is involved.”).

Although initially proposed by the Supreme Court, the Federal Rules of Evidence were enacted into law by Congress, Act of Jan. 2, 1975, Pub.L. 93-595, 88 Stat.1926 (1975), and they “govern proceedings in the courts of United States.” FRE 101; see also Salas by Salas v. Wang, 846 F.2d 897, 904 (3d Cir.1988). Although promulgated pursuant to congressional authority, 46 C.F.R. § 4.07-l(b) remains a regulation. The delegation of congressional power that authorized its promulgation did not transform the regulation into an Act of Congress, nor allow it to prevail over contrary provisions of duly enacted statutes. Accordingly, the Coast Guard may not, through its regulations, limit the authority of Congress to prescribe and enforce rules for the admissibility of evidence in the federal courts. See e.g., Romero v. U.S., 153 F.R.D. 649, 652 (D.Colo.1994) (The Federal Rules of Evidence override an Army regulation, 32 C.F.R. § 516.42, purporting to limit an Army doctor’s expert testimony.).

FRE 402 provides the baseline for determining the admissibility of evidence in the federal courts. See e.g., Daubert, 509 U.S. at 585-87, 113 S.Ct. at 2793. That rule provides that:

All relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court pursuant to statutory authority ...

FRE 402. FRE 401 defines “relevant” evidence as evidence “having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Thus, the contents of the Coast Guard Report were directly relevant to the issues before the district court, and therefore admissible under FRE 402 unless barred by the Constitution, an Act of Congress, a Federal Rule of Evidence or a rule prescribed by the Supreme Court pursuant to statutory authority. Clearly, no Coast Guard regulation can claim such a status. The position urged upon us by Nautilus would cause us to judicially amend this enactment by replacing the phrase “by Act of Congress” with language similar to: “by Act of, or pursuant to the authority of, Congress.” Since the Report was prepared by a government agency, its admissibility was appropriately considered under Rule 803(8), the public record exception. See e.g., United States v. Versaint, 849 F.2d 827, 831 (3d Cir.1988). Accordingly, we decline the invitation to follow the lead of Huber, and its progeny.

In Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 109 S.Ct. 439, 102 L.Ed.2d 445 (1988), the Supreme Court considered whether the public records exception to the hearsay rule, Rule 803(8)(C), extended to conclusions and opinions in public reports. There, the court considered the admission into evidence of a Judge Advocate General Report on a United States Navy plane crash during a jury trial. The Court concluded that Rule 803(8)(C) did not preclude the introduction of opinions and conclusions in such reports so long as two criteria were met. First, all statements in such a report must be based on factual investigation. Id. at 167, 109 S.Ct. at 449. Second, any portion of the report that is admitted must be sufficiently trustworthy. Id. at 167, 109 S.Ct. at 449. The Supreme Court cited with approval four non-exhaustive factors to be used in determining whether a report is sufficiently trustworthy:

(1) the timeliness of the investigation; (2) the investigator’s skill and experience; (3) whether a hearing was held; and (4) possible bias when reports are prepared with a view to possible litigation.

Id. at 168 n. 11, 109 S.Ct. at 449 n. 11. Here, the district court properly applied these criteria, concluded that they were satisfied and admitted paragraphs two and eighteen of the Coast Guard Report under Rule 803(8)(C). We do not think that the court erred in that analysis. Moreover, we note that public reports are presumed admissible in the first instance and the party opposing their introduction bears the burden of coming forward with enough “negative factors” to persuade a court that a report should not be admitted. Beech Aircraft, 488 U.S. at 167, 109 S.Ct. at 448. Courts have routinely admitted conclusions and recommendations in Coast Guard Reports under Beech Aircraft, irrespective of 46 C.F.R. § 4.07 — 1(b). See Puerto Rico Ports Authority v. M/V Manhattan Prince, 897 F.2d 1, 8 (1st Cir.1990) (Affirming the district court’s admission of three conclusions in a Coast Guard Report); Fox v. United States and Robert Anderson, Civil No. C-94-0941, slip op. at 4 — 8 (N.D.Cal. February 14, 1996) (Coast Guard report admissible under Rule 803(8) so long as report meets trustworthiness standard of Beech Aircraft); Wright v. Daviesyndicate, Inc., 1993 WL 246020, *8,*9 n. 10 (E.D.Pa.1993) (Conclusions contained in Coast Guard Report admitted without comment); Complaint of Kenneth I. Munyan, 143 F.R.D. 560, 565-66 (D.N.J.1992) (Conclusions and opinions in Coast Guard Report deemed admissible under Rule 803(8)(C)); Taylor v. Bouchard, 1991 WL 107279, *4 (S.D.N.Y.1991) (Opinions and conclusions in Coast Guard Report admitted).

Accordingly, we affirm the district court’s evidentiary ruling that the challenged portions of the Report were admissible under Rule 803(8)(C).

B. The Pennsylvania Rule.

The Pennsylvania Rule is named for the famous admiralty ease in which it was first announced. The Rule provides that when:

a ship at the time of a collision is in actual violation of a statutory rule intended to prevent collisions, it is no more than a reasonable presumption that the fault, if not the sole cause, was at least a contributory cause of the disaster. In such a ease, the burden rests upon the ship of showing not merely that her fault might not have been one of the causes, or that it probably was not, but that it could not have been.

The Pennsylvania, 86 U.S. (19 Wall.) 125, 136, 22 L.Ed. 148 (1873). While the presumption that arises under the Rule is rebuttable, Id. at 130, it is by its very language, a weighty one. Although the Rule originally applied only to collisions between ships, it has been reformulated to apply to any statutory violator who is a party to a maritime accident. See e.g., Pennzoil Producing Co. v. Offshore Express, Inc., 943 F.2d 1465, 1471 (5th Cir.1991).

In United States v. Nassau Marine, 778 F.2d 1111 (5th Cir.1985), the court articulated a test for determining when to apply the presumption of the Pennsylvania Rule. That Court held that three elements must exist: (1) proof by a preponderance of the evidence of violation of a statute or regulation that imposes a mandatory duty; (2) the statute or regulation must involve marine safety or navigation; and (3) the injury suffered must be of a nature that the statute or regulation was intended to prevent. Id. at 1116-1117; Folkstone Maritime v. CSX Corporation, 64 F.3d 1037, 1047 (7th Cir.1995). If each of these criteria are satisfied, a party is entitled to a presumption that a statutory violation of a defendant caused, or at least contributed to, the injury or damage complained of. However, a statutory violator may rebut the presumption of the Rule by making a clear and convincing showing that the violation could not have been a proximate cause of the collision, Cliffs-Neddrill v. M/T Rich Duke, 947 F.2d 83, 86 (3d Cir.1991), or by demonstrating that the accident would have occurred despite the statutory violation. See e.g., Folkstone Maritime, 64 F.3d at 1047.

The Rule casts its shadow on this case because it is undisputed that in 1990, Coastal engaged in over-dredging in its barge berth beyond the scope of its U.S. Army Corps of Engineers permit in violation of Section 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 403. The dredged material was displaced into Coastal’s ship berth causing “high spots” or navigational obstructions in that area.

Nautilus theorizes that the forward part of the BT Nautilus entered Coastal’s ship berth on the morning of June 7, 1990 and struck one of these high spots, Transcript of Oral Argument at 23, thereby causing the vessel to rotate so that its midpoint struck bottom at a point outside of the ship berth. Id. at 23. However, Nautilus argues that, even assuming the BT Nautilus ran aground outside Coastal’s ship berth, a grounding within the limits of the Coastal Terminal should implicate the Pennsylvania Rule and require reversal of the burden of proof. Appellant’s Brief at 29.

The district court rejected Nautilus’ theory of the grounding and refused to apply the Pennsylvania Rule. The court concluded that the Rule did not apply since Nautilus had presented no evidence that any impact had occurred in or near Coastal’s ship berth — the location of the dredging violations.

If the BT Nautilus had hit “high spots” or some obstruction in the ship berth, then Coastal would have the burden of proving its statutory violation could not have caused the “high spots” or the obstruction. But the BT Nautilus did not ground in the ship berth. It grounded in an area well to the east, outside the federal channel and outside the ship berth. Nautilus has never contended this area was impacted by the dredging in the Coastal barge berth.

Nautilus, 862 F.Supp. at 1273. The district court thus required some “nexus between the statutory violation and the accident”, Id. at 1274, as a condition precedent to applying the Rule. In doing so, the court relied upon the holding in Gosnell v. United States, 262 F.2d 559 (4th Cir.1959).

In Gosnell, the United States Navy violated the Wreck Statute, 33 U.S.C. § 409, by towing a barge at too great a speed— causing it to sink in Delaware Bay. Eight days later and nearly four miles from the site of the casualty, a fishing vessel sunk after striking an unseen object in the same bay. The owner of the fishing vessel brought a claim against the United States, and the court of appeals affirmed the district court’s refusal to apply the Pennsylvania Rule in the absence of any evidence of a nexus between the statutory violation and the accident. Id. at 564. The court stated:

Any plaintiff ... who seeks to hold a defendant liable ... must show: (1) the physical cause of the harm; (2) fault on the part of the person sought to be held responsible; and (3) a causal connection between such fault and the physical cause

Gosnell, 262 F.2d at 563 (quoting The YFNX-6, 156 F.Supp. 325, 331 (D.Md.1957)). Thus, in cases where there is no clear link between the statutory violation and the casualty, the party seeking to take advantage of the Rule has been required to make some showing that the statutory violation may have had some relation to the accident.

Indeed, a contrary rule, such as is urged upon us by appellants, would result in a presumption of liability following any statutory violation no matter how remote or inconsequential such a violation may have been to the subsequent accident. Neither precedent nor logic compels such a drastic result. The Rule was clearly intended to aid those who had been injured as a result of the statutory violation of a defendant in admiralty. We do not believe it was intended to increase the likelihood of liability no matter how remote and unrelated an injury to a statutory violation.

The Pennsylvania Rule was not meant to be a hard and fast rule that requires a finding of fault for statutory violations no matter how speculative, improbable, or remote.

Cliffs-Neddrill, 947 F.2d at 88.

In another context we have stated “ ‘[w]here stops the reason, there stops the rule.’” Aetna v. Barthelemy, 33 F.3d 189, 193 (3rd Cir., 1994) (quoting Karl N. Llewellyn, JURISPRUDENCE: REALISM IN THEORY and Practice 217 (1962)).

Here, the district court found that the point of impact of the BT Nautilus was at least 125 feet east of Coastal’s ship berth where the illegal dredging operations had occurred. That finding was not clearly erroneous. See e.g., Haines v. Liggett Group, Inc., 975 F.2d 81, 92 (3d Cir.1992) (Under the clearly erroneous standard, findings of fact made in actions tried by the court without a jury may be reversed only if such findings are “completely devoid of minimum evidentiary support displaying some hue of credibility, or ... bear no rational relationship to the supportive evidentiary data.”). Here, expert commercial divers hired by both parties concluded that the vessel ran aground to the east of the Coastal ship berth and outside the federal channel. The eyewitness testimony of a Coastal doekworker, Theodore Rovatsos, supported that conclusion. No diver ever found any evidence of any kind to support Nautilus’ theory of impact in the Coastal ship berth. Moreover, Nautilus could not demonstrate that the forward 400 feet of the vessel were damaged in any way on the morning of June 7, 1990. Common sense suggests that, had the BT Nautilus first struck ground in the ship berth as Nautilus suggests, the forward part of the vessel would sustain some damage, or reflect some trace of the grounding. Yet, there was no evidence of even minor scratching of the paint on the forward part of the BT Nautilus.

Since the effects of Coastal’s statutory violation were limited to an area (i.e., the ship berth) nearly 125 feet from the only point of grounding impact, we refuse to require the mechanical application of the Pennsylvania Rule. Moreover, even assuming the Rule applied here, we believe Coastal rebutted the presumption of causation with overwhelming evidence that its illegal dredging could not have been a proximate cause of the June 1990 grounding because the grounding occurred outside that berth. See e.g., U.S. Fire Insurance Co. v. Allied Towing, 966 F.2d 820, 825 (4th Cir.1992) (Whether Pennsylvania Rule was applied is irrelevant since party proved at trial that his ship’s failure to have its lights on could not have been cause of collision); Alter Barge Line v. TPC Transportation, 801 F.2d 1026, 1029 (8th Cir.1986) (Even assuming that the overtaken tug committed a statutory fault, failure to apply the Pennsylvania Rule is irrelevant since evidence clearly indicated that overtaking tug was sole cause of collision).

C. Coastal’s Duty to Provide a Safe Approach.

Finally, Nautilus contends that Coastal breached its duty of reasonable diligence as a wharfinger. In particular, appellant argues that Coastal “breached its duty to provide a safe approach by failing to install navigational aids and provide information about the limits of its Ship Berth.” Appellant’s Brief at 33. However, the district court concluded that Coastal’s alleged omissions were not a proximate cause of the June 7,1990 grounding. Nautilus, 862 F.Supp. at 1276. We review that finding under a “clearly erroneous” standard. Fed.R.Civ.P. 52(a).

Under admiralty law, it is well-settled that a wharfinger who invites a party to use its dock facilities is not the guarantor of the vessel’s safety. However, the wharfinger is “bound to exercise reasonable diligence in ascertaining the condition of the berths and if there is any dangerous obstruction, to remove it, or to give due notice of its existence to vessels about to use the berths.” Smith v. Burnett, 173 U.S. 430, 433, 19 S.Ct. 442, 443, 43 L.Ed. 756 (1899). A wharfinger also has a duty to maintain a safe approach. Id. at 436, 19 S.Ct. at 444; Trade Banner Line, Inc. v. Caribbean Steamship Co., 521 F.2d 229, 230 (5th Cir.1975); Sonat Marine Inc. v. Belcher Oil Co., 629 F.Supp. 1319, 1327 (D.N.J.1985), aff'd 787 F.2d 583 (3d Cir.1986). However, there is no duty to ensure safe surroundings or warn of hazards merely in the vicinity. Trade Banner Line, 521 F.2d at 230. In short, a vessel should be able to enter, use and exit a wharfinger’s dock facilities without being exposed to dangers that cannot be avoided by reasonably prudent navigation and seamanship.

We do not find the district court’s determination as to causation to be clearly erroneous. First, marine navigational charts on board the BT Nautilus (British Admiralty Chart No'. 2753), and known to its docking pilot clearly and accurately depicted the area in which the BT Nautilus ran aground as a shallow area. Moreover, a moving vessel and her owner are subject to a presumption of negligence when the vessel strikes a well-charted, stationary object or obstruction. The Oregon, 158 U.S. 186, 197, 15 S.Ct. 804, 809, 39 L.Ed. 943 (1895); City of Boston v. S.S. Texaco, 773 F.2d 1396, 1398 (1st Cir.1985).

In addition, substantial evidence indicated that unofficial aids were sufficient for navigating a safe approach to the Coastal ship berth. Although Nautilus’ experts maintained that the absence of aids marking the boundary of the ship berth made the approach difficult, the district court explicitly credited the testimony of Coastal’s expert, Captain Jay D. Bolton, and eyewitness, Theodore Rovatsos, as to the existence and adequacy of unofficial aids. The district court’s conclusions regarding such testimony, based on assessments of witness credibility, are deserving of the highest degree of appellate deference. Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575, 105 S.Ct. 1504, 1513, 84 L.Ed.2d 518 (1985). Moreover, Coast Guard investigators, who would be expected to target such dangers, never mentioned any inadequacy of navigational aids here. Docking pilot Naughton even testified that a parallel dock (the IMTT Facility), similar in all relevant respects, was safe despite the absence of any aids to navigation beyond those existing at the Coastal Terminal. Furthermore, we cannot fail to note that throughout the period of the grounding, similar tankers docked without incident or objection to the absence of official navigational aids or information on the limits on Coastal’s ship berth.

Finally, it is undisputed that Captain Ainscough maintained a copy of The Guide to Tanker Ports on board the BT Nautilus at the time of the grounding. Although that Guide and its procedures for docking at the Coastal Terminal were well-known to both Ainscough and Naughton, neither chose to follow its instructions on the morning of the grounding. The BT Nautilus departed for the Coastal Terminal nearly three hours before the time recommended by the Guide. The evidence before the district court suggests that, had Ainscough simply left at the suggested time, his vessel would have encountered minimal tidal currents and superi- or docking conditions. Moreover, having arrived at a time of strong tidal currents, Naughton compounded the error when he failed to utilize the “breasting in” approach recommended by the Guide.

The district court’s conclusion that this grounding was not caused by a breach of duty on the part of Coastal is, therefore, firmly supported by this record.

IV.

For the foregoing reasons, we will affirm the judgment of the district court.

STAPLETON, Circuit Judge,

concurring:

I join the opinion of the court. I write separately only because I believe there is an additional, and equally persuasive, reason why § 4.07-1 of the Coast Guard Regulations did not bar the admission of the investigation report in this case. It seems apparent to me that the Secretary, in adopting this regulation, did not intend to prescribe a rule governing the admission of evidence in a court of law.

Section 6301 of Title 46 of the United States Code provides:

§ 6301. Investigation of marine casualties
The Secretary shall prescribe regulations for the immediate investigation of marine casualties under this part to decide, as closely as possible—
(1) the cause of the casualty, including the cause of any death;
(2) whether an act of misconduct, incompetence, negligence, unskillfulness, or willful violation of law committed by any individual licensed, certificated, or documented under part E of this subtitle has contributed to the cause of the casualty, or to a death involved in the casualty, so that appropriate remedial action under chapter 77 of this title [relating to license suspension and revocation proceedings] may be taken;
(3) whether an act of misconduct, incompetence, negligence, unskillfulness, or willful violation of law committed by any person, including an officer, employee, or member of the Coast Guard, contributed to the cause of the casualty, or to a death involved in the casualty;
(4) whether there is evidence that an act subjecting the offender to a civil penalty under the laws of the United States has been committed, so that appropriate action may be undertaken to collect the penalty;
(5) whether there is evidence that a criminal act under the laws of the United States has been committed, so that the matter may be referred to appropriate authorities for prosecution; and
(6) whether there is need for new laws or regulations, or amendment or repeal of existing laws or regulations, to prevent the recurrence of the casualty.

Section 6305 further provides that the Secretary shall prescribe regulations concerning the reports of such investigations and requires that those reports be “made available to the public, except to the extent that they contain information related to the national security.”

Pursuant to these directives, the Secretary has promulgated 46 C.F.R. § 4.07-1, the prefatory section to a Subpart relating to “Investigations.” It provides:

§ 4.07-1 Commandant or District Commander to order investigation.
(a) The Commandant or District Commander upon receipt of information of a marine casualty or accident, will immediately cause such investigation as may be necessary in accordance with the regulations in this part.
(b) The investigations of marine casualties and accidents and the determinations made are for the purpose of taking appropriate measures for promoting safety of life and property at sea, and are not intended to fix civil or criminal responsibility-
(c) The investigation will determine as closely as possible:
(1) The cause of the accident;
(2) Whether there is evidence that any failure of material (either physical or design) was involved or contributed to the casualty, so that proper recommendations for the prevention of the recurrence of similar casualties may be made;
(3) Whether there is evidence that any act of misconduct, inattention to duty, negligence or willful violation of the law on the part of any licensed or certificated man contributed to the casualty, so that appropriate proceedings against the license or certificate of such person may be recommended and taken under title 46, U.S.Code, section 239;
(4) Whether there is evidence that any Coast Guard personnel or any representative or employee of any other government agency or any other person caused or contributed to the cause of the casualty; or,
(5) Whether the accident shall be further investigated by a Marine Board of Investigation in accordance with regulations in subpart 4.09.

The purpose of §§ 4.07-l(b) and (c) is to explain, for the benefit of those conducting investigations and those reading and using investigation reports, the limited purposes for which Coast Guard investigations of casualties are conducted. The last clause of § 4.07-l(b) explains that they are “not intended to fix civil or criminal responsibility.” This means, among other things, that the ultimate determination of licensing issues is left to suspension or revocation proceedings, civil penalty issues to civil penalty proceedings, and criminal culpability issues to criminal proceedings. If there was any intent with respect to other civil liability issues, I am confident that the intent was to advise that the ultimate determination of issues of civil liability is reserved for civil judicial proceedings and that the information contained in a Coast Guard investigation report should be evaluated and utilized with the understanding that the focus of the investigation was not on assigning the responsibilities of the participants inter se.

I am also confident that, if the Secretary had meant § 4.07-l(b) to govern the admission of evidence in court, he would have chosen a far less tortuous way of saying so. The models available to him, as he is likely to have been aware, are numerous. See 42 U.S.C. § 2240 (“No report by any licensee [of the NRC] of any incident arising out of or in connection with a licensed activity made pursuant to any requirement of the Commission shall be admitted as evidence in any suit or action for damages growing out of any matter mentioned in such report.”); 49 U.S.C. § 1441(e) (repealed Pub.L. No. 103-272, § 7(b), July 5, 1994, 108 Stat. 1379) (“No part of any report or reports of the National Transportation Safety Board relating to any accident or the investigation thereof, shall be admitted as evidence or used in any suit or action for damages growing out of any matter mentioned in such report or reports.”); 45 U.S.C. § 33 (repealed Pub.L. No. 103-272, § 7(b), July 5, 1994, 108 Stat. 1379) (“[Neither reports of Railroad accidents by the director of locomotive inspection nor reports of his investigation] shall be admitted as evidence or used for any purpose in any suit or action for damages growing out of any matter mentioned in said report or investigation.”); see also H.R. 1361, 104th Cong., 1st Sess. § 414 (1995) (“Notwithstanding any other provision of law, any opinion, recommendation, deliberation, or conclusion contained in a report of a marine casualty investigation conducted under section 6301 of this title with respect to the cause of, or factors contributing to, the casualty set forth in the report of the investigation is not admissible as evidence or subject to discovery in any civil, administrative, or State criminal proceeding arising from a marine casualty, other than with the permission and consent of the Secretary of Transportation, in his or her sole discretion.”).

NORRIS, Circuit Judge,

concurring in part, dissenting in part, and dissenting from the judgment:

I join the majority opinion except in its holding that conclusions in a Coast Guard report of a marine casualty investigation are admissible as evidence in civil eases. In so holding, the majority creates a square conflict with the Sixth and Ninth Circuits, the only other circuits that have addressed and decided this question.

In In re Cleveland Tankers, Inc., 67 F.3d 1200, 1208 (6th Cir.1995), the Sixth Circuit held that under the Coast Guard regulation at issue, 46 C.F.R. § 4.07-1(b), conclusions in Coast Guard reports are not admissible. The Sixth Circuit reasoned that

the function of the Coast Guard reports is altogether different from that of fixing liability. The Coast Guard report is, to a great extent, forward-looking, since it is meant in part to aid in developing rules to make shipping safer. In a lawsuit, a court must look backward to facts and rules as known to the actors at the time of the accident. Introducing the Coast Guard’s conclusions may confuse the two sorts of inquiries.

Id. (citation omitted).

In Cleveland Tankers, the Sixth Circuit followed the Ninth Circuit’s decision in Huber v. United States, 838 F.2d 398, 403 (9th Cir.1988). The majority attempts to distinguish Huber on the ground that the Coast Guard was a party to that action. However, the Sixth Circuit expressly rejected that distinction and held that “Huber’s reasoning is sound” even in eases in which the Coast Guard has no interest. Cleveland Tankers, 67 F.3d at 1208.

In creating a conflict with the Sixth and Ninth Circuits, the majority relies on Puerto Rico Ports Auth. v. M/V Manhattan Prince, 897 F.2d 1, 8 (1st Cir.1990). That reliance is misplaced. In Manhattan Prince, the First Circuit neither addressed nor decided the question whether 46 C.F.R. § 4.07-1(b) bars the admission of conclusions in Coast Guard reports as evidence. The First Circuit made no reference to 46 C.F.R. § 4.07-1(b), apparently because it was not cited by either party. See id. (“Both sides agree that Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 109 S.Ct. 439, 102 L.Ed.2d 445 (1988) controls the admissibility of the report.”). Rather, the First Circuit analyzed the admissibility of conclusions in a Coast Guard report solely under Federal Rule of Evidence 803.

Other than Manhattan Prince, the only cases cited by the majority are four district court decisions, three of which are unpublished and only one of which addresses the question whether 46 C.F.R. § 4.07-1(b) bars the admission of conclusions in Coast Guard reports as evidence. In Complaint of Kenneth I. Munyan, 143 F.R.D. 560, 565-66 (D.N.J.1992), the only published decision cited by the majority, the court made no reference to 46 C.F.R. § 4.07-1(b), and analyzed the admissibility of a Coast Guard report solely under Federal Rule of Evidence 803.

The only district court decision cited by the majority that addresses the question whether 46 C.F.R. § 4.07-l(b) bars the admission of conclusions in a Coast Guard report is an unpublished order on a motion in limine in Fox v. United States, No. C-94-0941, slip op. at 4-8 (N.D.Cal. Feb. 12, 1996). There, the district court declined to apply Huber and decided that 46 C.F.R. § 4.07-1(b) did not bar the admission of Coast Guard conclusions under Beech Aircraft v. Rainey, 488 U.S. 153, 109 S.Ct. 439, 102 L.Ed.2d 445 (1988). Like the majority here, the district court decided that an agency regulation “cannot trump congressionally enacted rules of evidence.” Fox, slip op. at 7. With all due respect, I believe that a specific agency regulation can create an exception to a general rule of evidence, as long as the agency acts within the scope of the rulemaking authority granted to it by Congress. In promulgating 46 C.F.R. § 4.07-1(b), the Coast Guard was clearly acting within the scope of its authority. As the Ninth Circuit put it,

[t]he only difference between the Coast Guard regulation banning the use of accident reports as evidence and a statute such as 49 U.S.C. § 1441(e) banning the use of aviation accident reports as evidence is that in one the Coast Guard acted pursuant to authority from Congress to pursue safety on the high seas, and in the other, Congress acted directly in promoting air safety. Either way, the result is the same: all or portions of the reports are excluded from evidence on authority of Congress.

Huber, 838 F.2d at 403.

I respectfully dissent.

      . The parties dispute the exact location of the Nautilus when it ran aground.

      . The Limitation of Liability Act enables a shipowner to limit his liability for damage claims arising out of the voyage of his vessel, to the value of his investment in the vessel and pending freight (except as to claims of personal injury and death), provided the damage was incurred without the privity or knowledge of the owner. See T. Schoenbaum, Admiralty and Maritime Law, 2d. ed„ § 21-7 (1994).

      . Section 1292(a)(3) vests courts of appeals with jurisdiction of appeals from "[i]nterlocutoiy decrees of ... district courts ... determining the rights and liabilities of the parties to admiralty cases ...". 28 U.S.C. § 1292(a)(3). The purpose of this provision is to allow a parly found liable in an admiralty proceeding to take an immediate appeal without submitting to a protracted trial of the damage issues. See T. Schoenbaum, at § 21-13. To be appealable under section 1292(a)(3), an order in admiralty need not determine all rights and liabilities of all parties. See e.g., Kingstate Oil v. M/V Green Star, 815 F.2d 918, 921 (3d Cir.1987) ("the order appealed from must conclusively determine the merits of a claim or defense[]”); Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 945 n. 1 (3d Cir.1985). Accordingly, we have jurisdiction even though the order appealed from only decided Coastal's counterclaim.

      . 46 C.F.R. § 4.07 provides:
      The investigation will determine as closely as possible:
      (1) The cause of the accident;
      (2) Whether there is evidence that any failure of material (either physical or design) was involved or contributed to the casually, so that proper recommendations for the prevention of the recurrence of similar casualties may be made;
      (3)Whether there is evidence that any act of misconduct, inattention to duty, negligence or willful violation of the law on the part of any licensed or certificated man contributed to the casualty, so that appropriate proceedings against the license or certificate of such may be recommended and taken ...

      . FRE 803(8)(C) allows the court to admit as evidence of the truth of statements contained therein:
      "Records, reports, statements, or data compilations ... of public offices or agencies, setting forth ... (C) in civil actions and proceedings ... factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness."

      . In the district court, Nautilus’ evidentiary challenge was limited to paragraphs two and eighteen of the Coast Guard report. Accordingly, we only decide the admissibility of those challenged findings without making any determination as to the admissibility of the entire Report.

      . 49 U.S.C. § 1903(c) states that ‘‘[n]o part of any report of the [National Transportátion Safety] Board, relating to any accident or investigation thereof, shall be admitted as evidence or used in any suit or action for damages growing out of any matter mentioned in such report or reports.”

      . In 1949, Congress expressly provided that "[t]he Coast Guard shall ... promulgate and enforce regulations for the promotion of safety of life and property on and under the high seas ...” 14 U.S.C. § 2 (1949). Pursuant to that statutory grant, the Coast Guard promulgated 46 C.F.R. § 4.07.

      . Nor does Nautilus attack the trustworthiness, under Beech Aircraft, of the challenged portions of the Coast Guard report on this appeal.

      . Our dissenting colleague mistakenly suggests that our holding that 46 C.F.R. § 4.07-l(b) does not bar the admission of opinions and conclusions in Coast Guard Reports rests on the authority of Manhattan Prince, Fox, Wright, Munyan and Taylor. Although opinions and conclusions in Coast Guard reports were admitted in these cases, our holding rests squarely on the Federal Rules of Evidence in light of Beech Aircraft. In Beech Aircraft, the Supreme Court extended the public records exception, Rule 803(8)(C), to conclusions and opinions set forth in trustworthy investigation reports. 488 U.S. at 170, 109 S.Ct. at 450. Congress enacted 14 U.S.C. § 2 in 1949. Congress subsequently enacted the Federal Rules of Evidence in 1975. Federal Rule of Evidence 402 provides that “[a]ll relevant evidence is admissible except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court pursuant to statutory authority." Whatever power, if any, the Coast Guard had over the admissibility of evidence in a federal court in 1949, Congress took away in 1975 with the promulgation of Rule 402. Accordingly, we cannot agree with our colleague that 46 C.F.R. § 4.07-1 (b) precludes the admission of opinions and conclusions in Coast Guard reports otherwise admissible under Rule 803(8)(C).
      Nor is our analysis altered by our colleague’s suggestion that our holding may soon be “overruled” by a pending Act of Congress. To the contrary, today we hold that congressional action is necessary to achieve the result our colleague suggests is appropriate here. However, our role is not to anticipate legislative developments. Cf. United States v. Boling, 947 F.2d 1461, 1466, n. 5 (10th Cir.1991) (Holloway, J., dissenting) (“[t]he proper role of the judiciary should not be a race with Congress to amend a federal statute.”). Accordingly, we are content to await congressional action.

      . 33 U.S.C. § 403 states that: "The creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity of any of the waters of the United States is prohibited ... and it shall not be lawful to excavate or fill, or in any manner to alter or modify ... any navigable water of the United States, unless the work has been recommended by the Chief of Engineers and authorized by the Secretary of the Army ..." This maritime statute is intended to prohibit obstructions and hazards in navigable waters. See e.g., U.S. v. Logan, 676 F.2d 1216 (8th Cir.1982).

      . Nautilus’ own experts, Ernst Frankel and Herman Booze, testified that the effects of Coastal's illegal dredging were probably limited to high spots or obstructions in its ship berth. (Tr. 1296:3-1297:9; Tr. 1303:18-1304:10; Tr. 1307:1-13).

      . For purposes of this issue, Nautilus does not dispute the district court's finding as to the location of the grounding. Appellant's Brief at 33.

      . The Steam Tanker Cove Liberty docked on May 19, 1990 and July 9, 1990. The BT Nestor, the sister ship of the BT Nautilus, docked on July 19, 1990. Especially in the aftermath of the June 1990 grounding, we find it difficult to believe that experienced mariners would fail to object to a perceived danger (i.e., inadequacy of navigational aids) at the Coastal terminal.

      . The regulation provides:
      The investigations of marine casualties and accidents and the determinations made are for the purpose of taking appropriate measures for promoting safety of life and property at sea, and are not intended to fix civil or criminal responsibility.
      46 C.F.R. § 4.07-1 (b).

      . It appears that the majority’s holding that 46 C.F.R. § 4.07-1 (b) does not bar the admission of Coast Guard conclusions may soon be overruled by Congress. The Coast Guard budget authorization bill for the 1996 fiscal year, which is awaiting final vote in the Senate, expressly codifies 46 C.F.R. § 4.07-l(b), els interpreted and applied in Cleveland Tankers and Huber:

      Notwithstanding any other provision of law, any opinion, recommendation, deliberation, or conclusion contained in a report of a marine casualty investigation conducted under section 6301 of this title with respect to the cause of, or factors contributing to, the casualty set forth in the report of the investigation is not admissible as evidence or subject to discovery in any civil, administrative, or State criminal proceeding arising from a marine casualty, other than with the permission and consent of the Secretary of Transportation, in his or her sole discretion.
      H.R. 1361, 104th Cong., 1st Sess. § 414 (1995).

      . Two of the three unpublished district court decisions are also not on point. In Wright v. Daviesyndicate, Inc., No. CIV-A-91-3423, 1993 WL 246020 (E.D.Pa. June 30, 1993), the district court weighed the probative value of conclusions in a Coast Guard report after a bench trial, without discussing their admissibility. In Taylor v. Bouchard, No. 89-CIV-5965, 1991 WL 107279 (S.D.N.Y. June 12, 1991), the court did not consider whether 46 C.F.R. § 4.07-1(b) bars the admission of Coast Guard conclusions. Rather, it decided that a Coast Guard report was trustworthy and therefore admissible under Federal Rule of Evidence 803.

      . Congress has expressly provided that "[t]he Coast Guard shall ... promulgate and enforce regulations for the promotion of safety of life and property on and under the high seas....” 14 U.S.C. § 2; see 46 U.S.C. § 239(a) ("The Commandant of the Coast Guard shall prescribe rules and regulations for the investigation of marine casualties ..."). By this authority, the Coast Guard established a set of procedures to be followed by its personnel whenever a marine casualty or accident takes place, including a formal investigation of the incident. See 46 C.F.R. § 4.07-1 (1986). The Coast Guard has also directed, consistent with its statutory mandate to promote marine safety, that reports of such investigations shall not be used as evidence to assign civil or criminal responsibility for accidents. The reason for this is obvious: were post-accident investigation reports admissible evidence in a later civil proceeding for damages, the investigators might well be reluctant to be completely open and candid in the report, a result which could have adverse consequences for public safety.

        Huber, 838 F.2d at 402 (footnote omitted).


source: Caselaw Access Project

author: JOHN R. GIBSON, Senior Circuit Judge: STAPLETON, Circuit Judge,

license: Public Domain

text:
    J.C. PENNEY COMPANY, INC., Appellee, v. GIANT EAGLE, INC.; Giant Eagle Markets, Inc., and Stanley R. Gumberg, Individually and as Trustee under those certain Irrevocable Deeds of Trust dated May 9, 1969, Giant Eagle, Inc., Appellant.
    No. 95-3054.
    United States Court of Appeals, Third Circuit.
    Argued Oct. 27, 1995.
    Decided May 24, 1996.

      Ralph A Finizio (argued), Houston Harbaugh, Pittsburgh, PA, for appellee.
    Bernard D. Marcus, David B. Rodes (argued), Marcus & Shapira, Pittsburgh, PA, for appellant.
    Before: STAPLETON, McKEE, Circuit Judges, and JOHN R. GIBSON, Senior Circuit Judge.

       The Honorable John R. Gibson, United States Senior Circuit Judge for the Eighth Circuit Court of Appeals, sitting by designation.

   OPINION OF THE COURT

JOHN R. GIBSON, Senior Circuit Judge:

Giant Eagle, Inc. appeals from an order of the district court enjoining it from operating a pharmacy in its Quaker Village shopping center store for the duration of J.C. Penney Company’s 1978 lease, including renewals. Giant Eagle argues that Penney’s exclusive right to operate a pharmacy in Quaker Village ended when Penney’s 1962 lease ended, and that Penney’s exclusive right is unenforceable against it because it did not have notice of Penney’s exclusive right. We affirm.

In 1962 the Thrift Drug Company leased a store in the Quaker Village shopping center to operate a retail drugstore. The lease required that Thrift Drug use the premises only for operation of a retail drugstore, and gave it the right to display “such articles as are displayed and sold by it in its other retail drug stores.” The lease further provided that the owner of Quaker Village, as lessor, would not permit another tenant to operate a pharmacy or fill or sell prescriptions. The lease covenanted that other tenants would be Thorofare Markets, Inc., which would operate a supermarket, and Triple “A”, a national chain variety store. These tenants were allowed to sell merchandise customarily sold in drugstores, provided that they did not compound or sell prescriptions, or sell merchandise limited by state law to licensed pharmacies. The lease was for a term of fifteen years, and Thrift Drug was given the right to renew and extend the lease for three additional five-year terms. Thrift Drug recorded a memorandum of the lease which set forth a description of the premises, the term of the lease, and Thrift Drug’s right to renew, but made no mention of Thrift Drug’s obligation to operate only a retail drugstore, nor of the shopping center’s agreement prohibiting other tenants from operating a drugstore. In 1969 Penney acquired Thrift Drug and all of its rights, including the 1962 lease.

In 1977 Giant Eagle entered into a lease at Quaker Village, which provided that it was to operate a food and grocery supermarket for items “customarily sold in the markets which it operates in the Greater Pittsburgh area.” Giant Eagle’s lease also gave Giant Eagle the exclusive right to operate a grocery store in Quaker Village with the exception of the existing Thorofare store.

Stanley R. Gumberg, the owner of the Quaker Village shopping center, negotiated the lease with Giant Eagle, and stated that there was no reference to a pharmacy or drugstore in the lease provision describing Giant Eagle’s use of the premises. He also stated that at the time the lease was negotiated there was no thought or discussion of a pharmacy in Giant Eagle’s store.

In 1975 Penney began discussing with Gumberg the possibility of relocating its drugstore within Quaker Village. Throughout these discussions, Penney insisted on keeping its exclusive right to operate a pharmacy. In 1978 Penney and Gumberg agreed that Penney would relocate its drugstore within the shopping center and continue to have the exclusive right to operate a pharmacy. The 1978 lease gave Penney the exclusive right to operate a pharmacy in Quaker Village, and provided that the 1962 lease was to terminate one day after the new lease term started, thus providing an overlap between the 1962 and 1978 leases. The 1978 lease also covenanted that Giant Eagle was to operate a supermarket in the shopping center, which was a condition for Penney operating its new drugstore.

In 1990 Giant Eagle began to make plans to expand its supermarket in Quaker Village to include a pharmacy. To accommodate Giant Eagle’s plans, Gumberg asked Penney several times to waive its exclusive right to operate a pharmacy in the shopping center. Penney consistently refused to waive its exclusive right. Gumberg told Giant Eagle that Penney had the exclusive right to operate a pharmacy in Quaker Village and that Penney refused to waive that right. Despite this information, Giant Eagle began its construction of a pharmacy at its Quaker Village store. Shortly thereafter Penney told Giant Eagle and Gumberg that it intended to enforce its exclusive right. On August 13,1992 Giant Eagle opened its pharmacy in Quaker Village, and Penney sued Giant Eagle to enjoin Giant Eagle’s operation of the pharmacy.

The district court granted Penney a preliminary injunction. J.C. Penney Co. v. Giant Eagle, Inc., 813 F.Supp. 360 (W.D.Pa.1992). Giant Eagle appealed the preliminary injunction to this court, and we affirmed the injunction in an unpublished opinion. J.C. Penney Co. v. Giant Eagle, Inc., 995 F.2d 217 (3d Cir.1993). The district court later granted Penney a permanent injunction against Giant Eagle for the duration of Penney’s 1978 lease, including renewals. In granting the permanent injunction, the district court stated that under Penney’s 1962 and 1978 leases Penney continuously held the exclusive right to operate a pharmacy in Quaker Village. The court also stated that Penney could enforce its exclusive right against Giant Eagle because the memorandum of the 1962 lease, which was filed for record, gave Giant Eagle constructive notice of Penney’s exclusive right when Giant Eagle entered into its Quaker Village lease. Giant Eagle appeals from the district court’s grant of the permanent injunction.

I.

Giant Eagle argues that Penney cannot enforce its exclusive right against Giant Eagle because Giant Eagle obtained its lease in Quaker Village before Penney obtained its 1978 lease containing the exclusive right. Giant Eagle argues that the 1978 lease did not preserve Penney’s 1962 exclusive right for two reasons. First, Giant Eagle argues that Penney cancelled its 1962 lease and filed for record a lease cancellation agreement stating that the 1962 lease was null and void. Therefore, Giant Eagle argues, Penney cannot rely on an exclusive right contained in a lease which is null and void. Second, Giant Eagle argues that Penney’s exclusive right is a form of restrictive covenant or negative easement which cannot be transferred from one location within Quaker Village to another. Giant Eagle concludes that because Penney moved in 1978, it could not take its exclusive right with it.

A.

In this diversity case, we must determine and apply Pennsylvania law, and when the issues have not been authoritatively determined by the Pennsylvania Supreme Court, we must predict how it would decide those issues. Adams v. Madison Realty & Dev., Inc., 853 F.2d 163, 168 (3d Cir.1988). Our review is de novo without deference to the district court. Salve Regina College v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991).

For many years the Pennsylvania Supreme Court used principles of real estate law in interpreting restrictions in shopping center leases. In Siciliano v. Misler, 399 Pa. 406, 160 A.2d 422 (1960), the court stated, “In restricting real estate a scrivener acts at his peril: if his creation is not self-sustaining it is nothing.” Id. at 425. The court, rejected the argument that the intent of the parties should govern. Instead, it looked at the plain language of the restriction, gleaning the intent of the parties from the language alone. Id. See also Food Fair Stores, Inc. v. Kline, 396 Pa. 397, 152 A.2d 661, 663 (1959).

There were early rumblings of change in Great Atlantic & Pacific Tea Co. v. Bailey, 421 Pa. 540, 220 A.2d 1 (1966), which did not produce a majority opinion. See Mt. Lebanon v. County Bd. of Elections, 470 Pa. 317, 368 A.2d 648, 650-51 (1977) (non-majority opinions of the Pennsylvania Supreme Court are non-decisional); Vargus v. Pitman Mfg. Co., 675 F.2d 73, 74-75 (3d Cir.1982) (a majority of the justices on the Pennsylvania Supreme Court must join an opinion in its entirety or it is not binding precedent). In Great Atlantic & Pacific Tea Co., the Baileys, owners of a shopping center, granted A & P the exclusive right to operate a grocery store in their shopping center. 220 A.2d at 1-2. Later, the Baileys purchased land next to their shopping center and rented it to another grocery store operator. Id. at 2. A & P, relying on its exclusive right, sued to prevent the operation of the competing grocery store. Justice Eagen, with two justices joining his opinion and another only concurring in the result, wrote that courts must strictly construe exclusive rights granted in shopping center leases, because they restrict the use of land and such restrictions are traditionally not favored. Id. at 2-3. Following this reasoning, Justice Eagen concluded that A & P could not enforce its exclusive right against land acquired after its lease because A & P’s exclusive right did not state explicitly that it applied to after-acquired land. Id. at 3.

Justice Roberts, joined by two other justices, dissented in Great Atlantic & Pacific Tea Co. Id. at 4. Justice Roberts stated that exclusive rights are important for the development of modern shopping centers and that the modem approach was to realistically interpret the exclusive right so as to give effect to the intent of the parties. Id. at 5-6 (citing Cragmere Holding Corp. v. Socony-Mobil Oil Co., 65 N.J.Super. 322, 167 A.2d 825, 827 (1961) and other cases). Justice Roberts rejected the uncritical application of the doctrine of strict construction to defeat the obvious purpose for which a covenant was included in a lease agreement. In ascertaining the intention of the parties, he wrote, the restriction should be interpreted in light of the apparent purpose of the covenant and the conditions existing at the time the lease agreement was executed. Id. at 6. After considering the circumstances surrounding execution of the lease, Justice Roberts concluded that the parties intended for A & P to be the only grocery store in the shopping center and that A & P could enforce its exclusive right against land added to the shopping center after A & P’s lease. Id. at 6-7. In essence, Justice Roberts was arguing for the use of contract law, rather than the real estate law governing land use restrictions.

Shortly after Great Atlantic & Pacific Tea Co., the Pennsylvania Supreme Court, with one justice not participating, evenly split over the interpretation of exclusive rights in shopping center leases. Sun Drug Co. v. West Penn Realty Co., 439 Pa. 452, 268 A.2d 781 (1970). Again, three justices argued that exclusive rights should be strictly interpreted because they restricted the use of land. Id. at 783. Justice Roberts continued to state that exclusive rights contained in shopping center leases should be realistically interpreted so as to give effect to the intent of the parties to the lease. Id. at 785-86.

Exclusive rights in the shopping center lease context were again considered by the Pennsylvania Supreme Court in Teodori v. Werner, 490 Pa. 58, 415 A.2d 31 (1980). The issue in Teodori was whether a tenant had an independent continuing obligation to pay rent when the landlord violated the tenant’s exclusive right to sell jewelry. Justice Roberts wrote the court’s unanimous opinion. He recognized that the old common law of landlord and tenant relations based on real estate principles would recognize the independent obligation of the tenant to continue paying rent even though the landlord had violated the tenant’s exclusive right. Teodori, 415 A.2d at 33. Justice Roberts began his discussion by stating: “It is now clear, however, that this view of landlord-tenant relations, incorrectly resting more on notions of property law than on principles of contracts, has no place in modem jurisprudence.” Id. The court continued that the independent obligation approach must be rejected where the landlord breaks a promise in the lease which “is a significant inducement to the making of the lease by the tenant.” Id. at 34 (quoting Restatement (Second) of Property, Introductory Note to Chapter 7 (1977)). The opinion continues:

It is obvious that a landlord’s non-competition promise is critical to a commercial lease agreement like the one here. “The mere presence in a lease of a noncompetition promise by the landlord justifies the conclusion that it is essential that the promise be observed if the tenant is to conduct his business on the leased property profitably.”

Id. (quoting Restatement (Second) of Property § 7.2 cmt. b (1977)). In a lengthy footnote the court reiterated the importance of exclusive rights in shopping center leases in assuring the mix of quality businesses essential to a shopping center’s financial success. Id. at 34 n. 5 (citing Cragmere Holding Corp. v. Socony-Mobil Oil Co., 65 N.J.Super. 322, 167 A.2d 825 (1961)).

Teodori represents a substantial change in the Pennsylvania Supreme Court’s approach to shopping center leases with exclusive rights. Although the court’s holding is limited to the independent obligation for the tenant’s payment of rent, the court applied contract-law principles for determining the intent of the parties and rejected the strict approach of real estate law, which had been the law of Pennsylvania. See also Cimina v. Bronich, 517 Pa. 378, 537 A.2d 1355, 1358 (1988) (“[A] lease is in the nature of a contract and is controlled by principles of contract law.”) (citing Amoco Oil Co. v. Snyder, 505 Pa. 214, 478 A.2d 795 (1984), and Ezy Parks v. Larson, 499 Pa. 615, 454 A.2d 928 (1982)); Pugh v. Holmes, 486 Pa. 272, 405 A.2d 897, 903 (1979) (same). Teodori completed what Justice Roberts had argued for in Great Atlantic & Pacific Tea Co., and Justice Eagen’s joining in Justice Roberts’s Teodori opinion demonstrates the abandonment of the strict approach to exclusive rights which Justice Eagen adhered to in his Great Atlantic & Pacific Tea Co. plurality opinion.

Accordingly, we must analyze the relationships in this case under the rules announced in Teodori.

B.

Penney is attempting to enforce against Giant Eagle its exclusive right to operate a pharmacy in Quaker Village contained in its 1978 lease, and thus, we must examine the terms of the lease and the circumstances surrounding the lease. Sun Drug Co., 268 A.2d at 785-87 (Roberts, J., opinion in support of orders); Great Atl. & Pac. Tea Co., 220 A.2d at 5-6 (Roberts, J., dissenting).

In so doing, we begin with Giant Eagle’s 1977 lease, because Gumberg negotiated this lease at the same time he negotiated Penney’s 1978 lease. Giant Eagle’s lease stated that Giant Eagle “shall use the [rented] premises as a food and grocery supermarket for the sale of items customarily sold” in other Giant Eagle supermarkets in the greater Pittsburgh area. Giant Eagle’s lease also gave Giant Eagle, with one exception, the exclusive right to operate a grocery store in the Quaker Village shopping center. Gum-berg testified that he did not in any way contemplate giving Giant Eagle the right to operate a pharmacy. Joseph Faccenda, Giant Eagle’s Vice President, also testified that there were no pharmacies in any of Giant Eagle’s stores in 1977. This testimony, coupled with the clear language of Giant Eagle’s lease, shows that Gumberg intended to give Giant Eagle the exclusive right to operate only a supermarket in Quaker Village.

The negotiations behind the 1978 lease between Gumberg and Penney, on the other hand, show that Gumberg intended to grant Penney an exclusive right to operate a pharmacy. Throughout the negotiations concerning the move of its drugstore within Quaker Village, which began in the fall of 1975, Penney insisted on preserving its exclusive right from the 1962 lease, and insisted that the transaction be structured so as to maintain continuity with the 1962 lease. When Gum-berg submitted one draft of a lease to Penney that did not contain the exclusive right, Penney’s representatives promptly insisted that the exclusive right be included in the lease. Penney agreed to move on the condition that its exclusive right remain in full force. As a result, the lease not only contained the exclusive right Penney wanted, it also provided that the 1962 lease would terminate one day after the start of the 1978 lease. This overlap ensured the continuity in Penney’s tenancy and exclusive pharmacy right. Gumberg testified that Penney’s 1978 lease gave Penney the exclusive right to operate a pharmacy in the Quaker Village shopping center.

The terms of the 1978 lease are entirely consistent with the parties’ intent to grant Penney an exclusive pharmacy right. The lease stated that during the term of the lease Gumberg would “not use or occupy, or permit the use or occupancy of, any space” other than Penney’s for “the operation of a drug store, or a drug department, in which a registered pharmacist is in attendance or required by law to be in attendance for any period of time,” nor would Gumberg enter into any lease which would permit another tenant or sub-tenant to use space in Quaker Village for such purposes. The exclusive right provision concluded by stating that Gumberg “covenants and agrees that rights similar to the rights herein granted by [Gum-berg] to [Penney] are not held by any other tenant or occupant of space within” Quaker Village.

In addition, Penney’s 1978 lease acknowledged that Gumberg had entered into a new lease with Giant Eagle to operate a food supermarket. Penney’s lease provided that Penney “shall be under no duty or obligation to open [its] store for business ... unless and until the Giant Eagle food supermarket has opened or is about to open its store for business.”

The circumstances surrounding the negotiation of the 1978 lease and the language of the lease itself show that Gumberg and Penney intended to preserve and continue, in essentially the same terms, the exclusive right to operate a pharmacy which Penney acquired through the 1962 Thrift Drug lease.

The intention of the parties surrounding both leases is thus plainly expressed. As Giant Eagle’s 1977 lease shows, Giant Eagle obtained the exclusive right to operate a supermarket, and received Gumberg’s promise that, with the exception of the Thorofare store, such rights would not be granted to any other tenant. Gumberg granted Penney the existing pharmacy right in Penney’s 1978 lease in the context of Giant Eagle’s supermarket lease. Penney’s intent that it have an exclusive right to operate a pharmacy is clearly expressed. While Faccenda, on behalf of Giant Eagle, denied knowledge of Penney’s exclusive right when Giant Eagle executed its lease, he also stated that exclusive-right provisions were common in shopping center leases at that time, and that there were no pharmacies in Giant Eagle’s stores in 1977. In addition, Giant Eagle’s counsel conceded that Giant Eagle knew that there was a 1978 lease with Penney containing exclusive-right language. These expressions of intent amply demonstrate that Gumberg and Penney intended to preserve Penney’s exclusive right from the 1962 lease when they entered into the 1978 lease, and that the 1978 lease preserves and continues that preexisting exclusive right. Because Penney’s 1978 lease preserves its 1962 exclusive right, we hold that Penney’s exclusive right predates Giant Eagle’s 1977 lease.

Both of Giant Eagle’s arguments against extension of Penney’s 1962 exclusive right ignore Pennsylvania law which requires us to realistically interpret shopping center leases in light of the intent of the parties under contract principles. While the 1978 lease declared the 1962 lease null and void, this provision must be read with the other provisions in the 1978 lease and the circumstances surrounding the execution of the 1978 lease. The overlap of the two leases shows that although the 1978 lease cancelled the 1962 lease, the parties expressly intended to continue the exclusive pharmacy right from the 1962 lease.

Giant Eagle’s second argument is the type of traditional property-law argument which the Pennsylvania Supreme Court rejected in Teodori. 415 A.2d at 33-34. The court in Teodori decided that courts should realistically interpret shopping center leases under contract-law principles, rather than traditional property law, to give effect to the economic realities at work in shopping centers. Id. After Teodori, the intent of the parties governs the interpretation of shopping center leases and the traditional property-law restrictions on restrictive covenants and negative easements do not apply.

Thus, we conclude that the district court’s finding that the exclusive provisions in the 1962 and 1978 leases “have expressly, unambiguously, and continuously since 1962” prohibited the landlord from using or permitting “the operation of any other drugstore or drug department with a registered pharmacist in attendance” was a fact not clearly erroneous, and a conclusion well drawn from the intent of the parties as expressed in the language of the leases, and in the negotiations with respect to the execution of the leases. The district court did not err in its holding that Penney had the exclusive right to operate a pharmacy at the shopping center.

II.

Giant Eagle argues that even if Penney had an exclusive right to operate a pharmacy, it only had notice of the right by way of the 1962 lease which, by its terms, would end no later than 1993. Therefore Giant Eagle contends that to allow Penney to extend the exclusive right beyond 1993 violates the rights it acquired under its 1977 lease.

As long as Giant Eagle had notice of Penney’s exclusive right when it entered into its Quaker Village lease, it is bound by the proper interpretation of that right even though that is not the interpretation it placed on that right. 3 Milton R. Friedman, Friedman on Leases § 28.601 (3d ed.1990). Accordingly, to decide whether Penney could extend its exclusive right beyond 1993, we must again look to the parties’ intent. See Sun Drug Co., 268 A.2d at 785-87 (Roberts, J., opinion in support of orders); Great Atl. & Pac. Tea Co., 220 A.2d at 5-6 (Roberts, J., dissenting).

Looking at all the leases, it is evident that Gumberg intended to grant exclusive rights to tenants operating different kinds of retail establishments. The 1962 lease with Penney’s predecessor specifically warranted that Thorofare Markets, Inc. would operate a supermarket and that Triple “A” would operate a variety store. Giant Eagle’s 1977 lease granted Giant Eagle the exclusive right to operate a supermarket subject to the exception recognized for the existing Thorofare store, and specifically provided that Giant Eagle’s exclusive right would not cover restaurants or delicatessens. Penney’s 1978 lease provided that Gumberg had entered into a lease with Giant Eagle, and provided that Penney was under no duty or obligation to open, unless and until the Giant Eagle store was about to open. It is apparent that in each lease, the tenant undertook obligations concerning its business, but also received from the lessor assurances about the other tenants within the shopping center. Such an interrelationship is recognized, particularly in the footnotes, in Justice Robert’s opinion in Teodori, 415 A.2d at 34 n. 5, as well as in his dissent in Great Atlantic & Pacific Tea Co., 220 A.2d at 5-6 nn. 2-3.

There was just such an interrelationship between Gumberg, Penney, and Giant Eagle. Both the 1962 lease and the 1977 Giant Eagle lease provided for fixed terms, and gave the tenant the option to renew or extend for a stated number of five-year terms. Such renewals and extensions would, of course, include the exclusive rights granted to each tenant. There is no language in any of the leases, nor any testimony about the lease negotiations, indicating that any of the parties intended to restrict the parties’ ability to negotiate a new lease, whether it be referred to as a renewal or extension, at the end of the lease term. Indeed, the fact that Gum-berg and Penney negotiated the 1978 lease over a three-year period demonstrates that there was no such restriction.

Similarly, there is no indication in the record of any intent to restrict the landlord’s ability to grant exclusive rights to tenants, as he had granted in all the earlier leases, or to strip the landlord of the ability to control the mix of the shopping center, and to grant the exclusive rights to operate specific businesses as he chose. Indeed, the evidence about the interrelationship between the landlord and the several tenants demonstrates that the parties intended to allow the landlord to negotiate continuations of existing leases, preserving their exclusive rights. If there is any difficulty in reaching this conclusion, there is nothing in the 1962 lease, the 1977 Giant Eagle lease, or the 1978 Penney lease that permits a conclusion that the parties intended to allow Giant Eagle to operate a pharmacy, a right that Gumberg had previously granted to Penney.

Giant Eagle has failed to explain why the owner of Quaker Village would limit his ability to extend or renew an exclusive right within his shopping center. Likewise, there is no reason to suspect that Thrift Drug agreed to limit its ability to extend or renew its exclusive right in the future. The 1962 lease does not state that the exclusive right cannot be extended or renewed. On the contrary, the language in the lease states that the exclusive right shall continue through any extension or renewal of the lease. When the several leases in this ease are considered, it is evident that the landlord demonstrated a clear intent to control the mix of establishments in the shopping center, and that each of the tenants in entering into leases benefitted from this intent. The interrelationship between the tenants, as we have discussed, was part of the parties’ underlying intent. We see nothing in any of the leases that would permit any tenant to presume that after the expiration of another tenant’s lease, it would gain the right to enter into a competing business or a completely unrelated business. In light of these circumstances, we hold that the parties to the 1962 lease intended to allow extension of the exclusive right as they might see fit in the future, and that the proper interpretation of the 1962 exclusive right permits its extension. Gumberg and Penney intended Penney’s 1978 lease to extend and renew Penney’s 1962 exclusive right. Therefore, we also hold that Penney successfully extended its exclusive right for the duration of its 1978 lease, including any renewals. Our interpretation allowing the extension of Penney’s exclusive right beyond 1993 is binding on Giant Eagle.

III.

Finally, Giant Eagle argues that it did not have notice of Penney’s exclusive right when it entered into its Quaker Village lease in 1977 and, therefore, Penney cannot enforce that right against it.

Thrift Drug did not file for record the entire 1962 lease. Instead, it filed a memorandum of the lease as allowed by section 405 of title 21 of the Pennsylvania statutes. Section 407 of title 21 defines the effect of recording a lease memorandum. Section 407, which is titled “Effect of recording lease, sublease, agreement or memorandum,” provides:

The recording of any such lease, sublease, agreement or memorandum in accordance with the provisions of this act shall constitute constructive notice to subsequent purchasers, mortgagees and judgment creditors of the lessor of the making and of the provisions of such lease, sublease or agreement, including any purchase or refusal provisions set forth in the lease, sublease or agreement.

Pa. Stat. Ann. tit. 21, § 407 (Supp.1995) (emphasis added).

Giant Eagle argues that under section 407 the recording of a lease memorandum results in constructive notice only to “subsequent purchasers, mortgagees and judgment creditors of the lessor.” Giant Eagle contends that it is a lessee, not a subsequent purchaser, mortgagee or judgment creditor, and, therefore, it received no constructive notice from the recorded lease memorandum. Penney responds that Giant Eagle is a “purchaser” within the meaning of section 407 because a lease is really a sale of land for a term of years.

A close examination of section 407 shows that the legislature intended the recording of a lease memorandum to give constructive notice of the entire lease to subsequent lessees. Section 407 not only defines the effect of recording a lease memorandum, but also the effect of filing a lease, sublease or lease agreement. This is plainly reflected in the terms of section 407. If we were to accept Giant Eagle’s interpretation of section 407, not even the recording of the entire lease would constitute constructive notice to a subsequent lessee. Under Giant Eagle’s interpretation, there would be no way to give constructive notice of the terms of a lease to a subsequent lessee. A more reasonable interpretation of section 407 leads to the conclusion that the legislature intended the term “purchasers,” as used in section 407, to include lessees. Indeed, the Supreme Court of Pennsylvania has so held. Commonwealth v. Monumental Properties, Inc., 459 Pa. 450, 329 A.2d 812 (1974) (holding that a lease of real property is a sale under the Pennsylvania Consumer Protection Law). Consequently, the district court did not err in holding that Giant Eagle was at least constructively, if not actually, aware of the exclusive provision in Penney’s lease.

The record before us supports this conclusion. Giant Eagle’s Vice President, Faccenda, stated that while he was not involved with exclusive rights in 1977, Giant Eagle had a staff of real estate and legal people who were expected to handle these functions and to ensure that everything that Giant Eagle was doing was proper and legal. He would expect them to find a recorded document which restricted the use of the premises Giant Eagle was about to lease. He was aware when Giant Eagle moved into Quaker Village in 1977 that there was a Thrift Drug store there and that it was logical for Thrift to have a lease, but he would not have paid attention to details like exclusive rights in other leases. This testimony is sufficient to raise an inference that when Giant Eagle signed the lease in 1977 it knew of Penney’s exclusive right in the 1962 lease. Also, Faceenda’s knowledge that exclusive rights were common in 1977, as well as the exclusive right contained in Giant Eagle’s lease, support the inference that this is a subject about which Giant Eagle and its representatives would have been interested. The record makes clear that both Penney and Giant Eagle were sophisticated lessees, and indeed were involved in some three other disputes in which Giant Eagle was seeking to enforce exclusive rights to operate pharmacies in other leases. While Giant Eagle argues that a single lessee would have no right to obtain information from a landlord about other lessees, the record is to the contrary. In Penney’s letter to Gumberg’s attorney on January 12, 1978, Penney requested copies of the use and exclusive-right provisions from the leases of other tenants within the shopping center. There was strong evidence in the record to support the district court’s finding that Giant Eagle was constructively, if not actually, aware of the exclusive-right provisions in Penney’s leases.

We think it also follows that when Giant Eagle decided to open a pharmacy in 1990 it was bound by the exclusive rights granted to other tenants. Giant Eagle conceded that in 1977 it was not operating a pharmacy in any of its stores and its lease certainly did not give them a right to operate a pharmacy. In 1977 Giant Eagle knew of Penney’s rights under the 1962 lease. From 1978, well before Giant Eagle operated pharmacies in its supermarkets and in 1990 when it decided to open a pharmacy, it had constructive notice of Penney’s exclusive right as granted both in the 1978 and 1962 leases.

Accordingly, we affirm the order of the district court granting the permanent injunction.

STAPLETON, Circuit Judge,

dissenting:

I respectfully dissent.

I start with the proposition that restrictive covenants in prior conveyances are binding only against future lessees with actual or constructive notice before the lease is signed. See Finley v. Glenn, 303 Pa. 131, 154 A. 299, 301 (1931); see generally 3 M. Friedman, Friedman on Leases § 28.601 (3d ed.1990). J.C. Penney’s lease agreement thus will not support the district court’s injunction in the absence of actual or constructive notice to Giant Eagle.

I believe the record contains insufficient evidence to permit a finding that Giant Eagle had actual notice of J.C. Penney’s exclusive when Giant Eagle signed its lease in 1977. In any event, as the court acknowledges, the district court made no finding that Giant Eagle had actual notice at that time. Based on the particular facts of this case, however, we may assume, arguendo, that Giant Eagle had actual notice of the exclusive in 1977. We may also assume, without deciding, that 21 Pa. Stat. Ann. § 407 applies here and that Giant Eagle had constructive notice in 1977 of the existence and provisions of J.C. Penney’s 1962 lease, including the restrictive covenant. Finally, we may also assume without deciding that J.C. Penney’s 1978 lease effectively continued the 1962 pharmacy exclusive in the new location within the shopping center — that is, that the restrictive covenant runs with the restricted land retained by the landlord (the entire shopping center), not with the premises originally leased by J.C. Penney in 1962. Thus, had J.C. Penney merely moved to a new storefront within the shopping center in 1978 but otherwise retained all the provisions of the 1962 lease, including the original term and renewal rights provisions, we may assume that Giant Eagle could have been bound by the restrictive covenant for the maximum 30-year term of the 1962 lease.

While the 1978 lease alone, independently of the 1962 lease, may bind co-tenants who signed leases after 1978, it cannot bind a preexisting tenant such as Giant Eagle. The critical issue, then, is whether J.C. Penney’s 1978 lease could operate as an extension of the restrictive covenant in the 1962 lease beyond its original maximum term of 30 years.

In 1977, Giant Eagle had notice that J.C. Penney’s 1962 lease would expire, at the latest, 30 years from its effective date, or August 31, 1993. Giant Eagle cannot be bound by any extension of the restrictive covenant beyond that date because J.C. Penney’s lease did not include any such extension right at the time Giant Eagle signed its lease.

Pennsylvania’s lease recording statute explicitly requires that a memorandum of lease must contain the expiration date of the final period for any right of extension or renewal. 21 Pa. Stat. Ann. § 405. Notice of the maximum term of a lease is important because the term partly defines or circumscribes the rights of a purchaser, mortgagee, or judgment creditor — or, as I have assumed, a tenant to be bound by a co-tenant’s restrictive covenant. A purchaser with notice of a recorded lease takes the property subject to that lease only for the maximum term; that is, the purchaser has bought the right to hold the property free of the leasehold interest after the final expiration date indicated in the recorded lease agreement. Similarly, a tenant who enters into a shopping center lease agreement, with at least constructive notice of a co-tenant’s lease containing a restrictive covenant, has bought the right to be free from the restrictive covenant at the expiration of the co-tenant’s lease as recorded.

Allowing a tenant to extend a binding restrictive covenant by merely extending the term of its lease beyond the original, maximum term would operate to bind a co-tenant to a restrictive covenant for a period of time during which the co-tenant had no notice it could be bound. There is no principled difference between binding a co-tenant to such an extension and binding a co-tenant to a restrictive covenant of which it had no notice at all in the first instance: either way, a co-tenant’s property rights are more restricted than they were disclosed to be at the time the co-tenant entered into its lease agreement.

Giant Eagle signed its lease in 1977, halfway through the maximum 30-year term of J.C. Penney’s 1962 lease, with notice that J.C. Penney’s pharmacy exclusive would prohibit Giant Eagle from operating a pharmacy until 1993 at the latest. The district court’s holding necessarily implies that Giant Eagle had no right to expect, in 1977, that it could operate a pharmacy department after 1993 for the remaining 24 years of its lease. In other words, the district court’s rule would have given J.C. Penney and the landlord the right at any time prior to 1993 to decide between themselves to bind Giant Eagle to an extension of the restrictive covenant without obtaining Giant Eagle’s consent. Such a rule cannot be correct because it operates retroactively to restrict a tenant’s property rights under its lease agreement.

I would accordingly decide that, at least with respect to pre-existing tenants such as Giant Eagle, J.C. Penney’s 1978 lease did not extend the pharmacy exclusive beyond the expiration of the maximum term of the 1962 lease on August 31, 1993. We may assume that Giant Eagle was thus in violation of the restrictive covenant when it opened its pharmacy department in August 1992, and when the district court granted J.C. Penney’s motion for a preliminary injunction the following month. However, by the time the district court ordered permanent injunctive relief in January 1995, J.C. Penney’s exclusive was no longer binding against Giant Eagle. J.C. Penney’s exclusive, therefore, cannot be a basis for affirming the permanent injunction. I would reverse the judgment of the district court, thereby vacating the permanent injunction.

      . That restriction provided:
      A. Landlord covenants and agrees that no other space in the Shopping Center of which the demised premises are a part, ... will be leased to a store doing business exclusively as a food or groceiy supermarket, or to a store primarily selling fresh foods, meats, vegetables or fruits, and that a general food department or department selling fresh meats or vegetables will not be permitted in any store in the Shopping Center, provided, however, that said restriction ... will not apply to the existing Thorofare Market ... or any future substitute food operation in said space, nor to the operation of a restaurant or the sale of specialized food items, such as delicatessen foods ... candy, baked goods, dairy products, cheeses, health foods, epicure shops and the like, but shall apply to the sale of fresh meats and produce in any type of store excepting the said Thorofare space as aforementioned.

      . The exclusive provision in the 1978 lease provides:
      Landlord covenants and agrees that during the term of this lease Landlord will not use or occupy, or permit the use or occupancy of, anyspace not hereby demised to Tenant, which is located within the Entire Premises for (i) the operation of a drug store, or a drug department, in which a registered pharmacist is in attendance or required by law to be in attendance for any period of time or (ii) the operation of any store primarily engaged in the sale of health and/or beauty aids, nor will Landlord enter into any lease of such space which will permit the tenant or any subtenant thereunder or assignee thereof to use or occupy the space so leased for any of said purposes during the term hereof. The foregoing provisions, however, shall not be construed to prevent the sale by Landlord's supermarket or variety store tenants, as an incident to their regular business, of some articles of merchandise customarily sold in drug stores, provided said supermarket or variety store tenants shall not compound or sell prescription drugs or sell any merchandise which is limited by federal, state or local law or by regulation of the State Board of Pharmacy to sale in licensed pharmacies.
      Landlord further covenants and agrees that Landlord will not sell or otherwise dispose of any property constituting all or part of the Entire Premises not hereby demised to Tenant without effectively and adequately restricting the subsequent use and occupancy of such property during the term of this lease to purposes other than the operation of retail businesses of the type described in the immediately preceding paragraph. It is the intention of Landlord to hereby grant to Tenant the exclusive right to operate and conduct within the Entire Premises the aforesaid types of retail businesses so long as this lease remains in effect. Landlord covenants and agrees that rights similar to the rights herein granted by Landlord to Tenant are not held by any other tenant or occupant of space within the Entire Premises.

      (Emphasis added).

      .John Kramer, representing Gumberg, stated that discussions on expansion began in 1986 and 1987, but that Giant Eagle did not mention a pharmacy before 1988.

      . As an alternative basis for the preliminary injunction, the district court stated that Giant Eagle’s lease did not permit it to operate a pharmacy. Because we hold that Penney’s exclusive right prevents Giant Eagle from operating a pharmacy, we do not reach the issues arising from Giant Eagle's lease.

      . Gumberg and Penney also intended Penney's 1978 lease to continue and extend Penney's leasehold under the 1962 lease. Therefore, even if we were to accept the argument that Gumberg and Penney could only extend the exclusive right in an extension of the 1962 lease, we would conclude that they have done so.

      . Pennsylvania’s recording statute only protects subsequent bona fide purchasers, mortgagees, and judgment holders from unrecorded conveyances. Pa. Stat. Ann. tit. 21, § 351 (1955). Giant Eagle's interpretation of "subsequent purchasers, mortgagees, and judgment creditors,” coupled with section 351, leads to the conclusion that unrecorded conveyances, including unrecorded leases, are enforceable against subsequent lessees. Consequently, if we adopted Giant Eagle’s interpretation of section 407 and concluded that it did not have notice of Penney’s exclusive right, the exclusive right would still be enforceable against Giant Eagle because unrecorded leases would be enforceable against subsequent lessees under section 351.

      . It is, of course, true as the court observes that J.C. Penney and the landlord were free to negotiate and enter a new lease at the end of the term of the 1962 lease in 1993. But the landlord was not free at that time to grant J.C. Penney something it had previously sold to Giant Eagle. If, as I believe to be the case and the court does not dispute, Giant Eagle’s 1977 lease granted it the right to operate a pharmacy, the landlord’s retained interest was not sufficient to allow it to grant someone else in 1993 the exclusive right to operate a pharmacy in the same shopping center. The court holds that J.C. Penney and the landlord intended in 1962 "to allow extension of the exclusive right as they might see fit in the future,” and in 1978 "to extend and renew Penney’s 1962 exclusive right.” (Maj. Op. at 128.) But, whatever the parties' intent, the 1962 lease did not grant J.C. Penney the right to extend its exclusive beyond the 30-year maximum term of the lease, and the 1978 lease is thus unable to invoke such a nonexistent right. It is elementary that, no matter how clear their intent, two parties cannot contract away the existing property rights of a third party.

      . J.C. Penney urges that we could affirm the judgment of the district court on the ground that Giant Eagle's own lease agreement does not permit Giant Eagle to operate a pharmacy department. Under Pennsylvania law, however, ambiguities in land use restrictions are resolved in favor of the least restrictive interpretation. See, e.g., Great Atlantic and Pacific Tea Co. v. Bailey, 421 Pa. 540, 220 A.2d 1, 3 (1966); Burns v. Baumgardner, 303 Pa.Super. 85, 449 A.2d 590, 593 (1982); Carousel Snack Bars of Minn., Inc. v. Crown Constr. Co., 439 F.2d 280, 283 (3d Cir.1971) (applying Pennsylvania law). This is, of course, the general rule elsewhere. See, e.g., Robert Schoshinski, American Law of Landlord and Tenant § 5:6, at 242 (1980). Based primarily on this rule, I would hold that the use provision in Giant Eagle’s lease is not limited to non-pharmacy uses. Even if I were not so persuaded, however, I would hold that J.C. Penney is not a third party beneficiary of the Giant Eagle lease and, accordingly, lacks standing to enforce any use restrictions that might be found therein. See Scarpitti v. Weborg, 530 Pa. 366, 609 A.2d 147, 150-51 (1992). Thus, I find no alternative basis for affirming the judgment of the district court.