PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

EASTERN SHORE MARKETS,
INCORPORATED,
Plaintiff-Appellant,

v.

J.D. ASSOCIATES LIMITED
PARTNERSHIP; DORCHESTER CENTER II
                                                                        No. 99-1554
LIMITED PARTNERSHIP; WWM,
INCORPORATED; ERWIN L. GREENBERG
DEVELOPMENT CORPORATION II; ERWIN
L. GREENBERG & ASSOCIATES,
INCORPORATED; G.H. CAMBRIDGE
LLC,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-98-2994-S)

Argued: March 1, 2000

Decided: May 22, 2000

Before WILKINS, NIEMEYER, and KING, Circuit Judges.

_________________________________________________________________

Affirmed in part and vacated in part by published opinion. Judge Nie-
meyer wrote the opinion, in which Judge Wilkins and Judge King
joined.

_________________________________________________________________
COUNSEL

ARGUED: John E. McCann, Jr., MILES & STOCKBRIDGE, P.C.,
Baltimore, Maryland, for Appellant. William Alden McDaniel, Jr.,
MCDANIEL & MARSH, Baltimore, Maryland, for Appellees J.D.
Associates, et al.; Kathleen L. Beggs, WILLIAMS & CONNOLLY,
Washington, D.C., for Appellee G.H. Cambridge. ON BRIEF: Timo-
thy L. Mullin, Jr., MILES & STOCKBRIDGE, P.C., Baltimore,
Maryland, for Appellant. Jo Bennett Marsh, MCDANIEL & MARSH,
Baltimore, Maryland, for Appellees J.D. Associates, et al.; Charles T.
Kimmett, WILLIAMS & CONNOLLY, Washington, D.C., for
Appellee G.H. Cambridge.

_________________________________________________________________

OPINION

NIEMEYER, Circuit Judge:

Eastern Shore Markets, Inc. sued its shopping center landlord
under Maryland law for (1) breach of an express covenant not to
interfere with Eastern Shore's reasonable access to its grocery store
premises, (2) breach of an implied covenant to refrain from destruc-
tive competition, which allegedly was committed when the landlord
introduced a competing grocery store into the shopping center, and
(3) related torts. The district court dismissed Eastern Shore's com-
plaint under Federal Rule of Civil Procedure 12(b)(6). For the reasons
that follow, we affirm the district court's dismissal of the claim for
breach of an express covenant, vacate its dismissal of the remaining
claims of the complaint, and remand for further proceedings.

I

Eastern Shore Markets, Inc. ("Eastern Shore"), a Virginia corpora-
tion, operates a 28,569-square-foot grocery store in the Dorchester
Square Shopping Center in Cambridge, Maryland, on premises leased
from J.D. Associates Limited Partnership, formerly known as Dor-
chester Center Limited Partnership ("J.D. Associates"). The Dorches-
ter Square Shopping Center, a strip mall, was constructed in 1987.
The "anchor" at one end of the mall was "JamesWay" department

                    2
store; the anchor at the other end was designated for a "future depart-
ment store." Eastern Shore's grocery store and a smaller drug store
were located between the anchors, along with other smaller retail
stores. Under the lease between Eastern Shore and J.D. Associates,
which provides for an initial term of 20 years, Eastern Shore agreed
to pay a base rent plus a "percentage rent" of 1.25% of the store's
annual gross sales in excess of $10 million.

Although the lease between Eastern Shore and J.D. Associates does
not explicitly give Eastern Shore an exclusive right to be the only gro-
cery store in the shopping center, the lease does incorporate a site
plan that was "approved by the parties." This site plan outlines and
labels the premises of each facility in the center, designating the
larger spaces for the JamesWay department store (61,420 square feet);
a "future department store" (30,000 square feet); Eastern Shore's gro-
cery store (28,569 square feet); and a similarly sized area designated
"future retail." The lease also provides that Eastern Shore operate only
a "[s]upermarket primarily for sale of food" in the mall and that, if it
were to operate another grocery store within a three-mile radius of the
mall, it would have to include that store's gross sales "in the computa-
tion of the percentage rent" payable to J.D. Associates under the
lease.

The lease gives J.D. Associates wide discretion in the management
of the common areas, including parking spaces, which are placed
under its "exclusive control and management." The lease provides
expressly that J.D. Associates is authorized to

          change the area, level, location and arrangement of the park-
          ing areas . . . reduce some by erecting buildings or improve-
          ments . . . to close temporarily all or any portion of the
          parking areas . . . and perform such other acts in and to said
          areas . . . as, in the use of good business judgment, Landlord
          shall determine to be advisable with a view to the improve-
          ment of the convenience and use thereof by Tenants .. . and
          [their] customers.

The lease gives Eastern Shore a revocable license to use the common
areas, but the license provides that the common areas may be "dimin-

                    3
ished" without consequence, "provided reasonable access remains for
Tenant, its employees and customers."

The disputes giving rise to Eastern Shore's complaint in this action
arose from (1) the construction of a Wal-Mart store in 1995-96 after
JamesWay went out of business and J.D. Associates conveyed the
"JamesWay" property to Wal-Mart and (2) the competition created by
J.D. Associates' sale of the "future department store" site to a devel-
oper who constructed a 52,000 square-foot Metro Food Store, which
opened in September 1996. As a consequence of these actions, on
August 31, 1998, Eastern Shore commenced this action based on
diversity jurisdiction against J.D. Associates, its affiliates,1 and G.H.
Cambridge, LLC, the entity to which J.D. Associates and its affiliates
transferred the "future department store" property for the construction
of the Metro Food Store.

Eastern Shore's complaint alleges that during the construction of
the Wal-Mart store on the "JamesWay" property, the east entrance of
the shopping center was blocked, requiring Eastern Shore's customers
who approached the shopping center on U.S. Route 50 from the east
to proceed past the shopping center almost two miles, turn around,
and drive back to an entrance accessible only from the eastbound side
of U.S. Route 50. Similarly, Eastern Shore alleges that the construc-
tion of the Metro Food Store on the "future department store" site
resulted in construction trailers and other vehicles being parked
directly in front of Eastern Shore's store, obstructing views of the
store and denying its customers reasonable access to the store. The
complaint also alleges that the parking lot in front of Eastern Shore's
store was relined and reconfigured so that the parking spaces "faced"
Metro Food Store. In addition, as part of the parking reconfiguration,
a concrete island was constructed across the front of Eastern Shore's
_________________________________________________________________
1 J.D. Associates' affiliates include Dorchester Center II Limited Part-
nership; WWM, Inc.; Erwin L. Greenberg Development Corporation II;
and Erwin L. Greenberg & Associates, Inc. The complaint alleges that
Erwin L. Greenberg & Associates, Inc. is affiliated with and/or controls
WWM, Inc. and Erwin L. Greenberg Development Corporation II.
WWM, Inc. is the general partner of J.D. Associates, Inc., and Erwin L.
Greenberg Development Corporation II is the general partner of Dor-
chester Center II Limited Partnership.

                     4
store. The complaint alleges that these interferences with the common
areas breached the explicit terms of the lease by denying Eastern
Shore's customers "reasonable access" to the store and by benefiting
Metro Food Store at Eastern Shore's expense.

Eastern Shore's complaint also alleges that, by allowing the con-
struction of a Metro Food Store in competition with Eastern Shore's
grocery store, J.D. Associates violated "an implied duty of good faith
and fair dealing." It alleges that the defendants constructed a modern,
warehouse-style Metro Food Store in excess of 52,000 square feet
that "dwarfed" Eastern Shore's much smaller store, introducing
destructive competition.

The complaint alleges that the effect of the interference with park-
ing and reasonable access and the competitive activity from Metro
Food Store was "devastating," causing the monthly sales at Eastern
Shore's store to "plummet[ ] approximately 30%, thereby threatening
the Store's economic viability." Eastern Shore demands $8 million in
damages.

In addition to the breach-of-lease claims, the complaint alleges that
the affiliates of J.D. Associates and G.H. Cambridge conspired to
induce, and indeed induced, J.D. Associates to breach its express and
implied obligations under Eastern Shore's lease and that those parties
are liable for tortious interference with contract, tortious interference
with business relations, and civil conspiracy.

The defendants filed two separate motions to dismiss the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alter-
native, relying on submitted affidavits, for summary judgment. The
district court refused to rely on the submitted affidavits and dismissed
the complaint under Rule 12(b)(6). The court concluded that "Mary-
land law does not imply a covenant in retail development leases that
the developer will not lease space to a competitor of the lessee, even
where the rent is partially dependent upon gross sales of the lessee."
The court also concluded that under the lease, Eastern Shore could not
complain that the reconfiguration of the parking lot during the con-
struction of the Metro Food Store favored Metro Food. It noted that
"[t]here is no dispute that customers still could get to and park near
[Eastern Shore's grocery store] in a reasonable fashion." Finally, the

                     5
court dismissed Eastern Shore's complaint arising out of the Wal-
Mart construction as time-barred, either by operation of the relevant
three-year statute of limitations or by laches.

This appeal followed.

II

In reviewing a district court's order dismissing a complaint under
Federal Rule of Civil Procedure 12(b)(6) for plaintiff's "failure to
state a claim upon which relief can be granted," we determine de novo
whether the complaint, under the facts alleged and under any facts
that could be proved in support of the complaint, is legally sufficient.
See Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991); see also
Fed. R. Civ. P. 8(a)(2) (establishing as a pleading requirement that a
claim contain "a short and plain statement of the claim showing that
the pleader is entitled to relief"). Because only the legal sufficiency
of the complaint, and not the facts in support of it, are tested under
a Rule 12(b)(6) motion, we assume the truth of all facts alleged in the
complaint and the existence of any fact that can be proved, consistent
with the complaint's allegations. See Hishon v. King & Spalding, 467
U.S. 69, 73 (1984); Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
While we must take the facts in the light most favorable to the plain-
tiff, we need not accept the legal conclusions drawn from the facts.
See Schatz, 943 F.2d at 489. Similarly, we need not accept as true
unwarranted inferences, unreasonable conclusions, or arguments. See
generally 5A Charles Alan Wright & Arthur R. Miller, Federal Prac-
tice and Procedure § 1357 (2d ed. 1990 & 1998 Supp.).

With these standards in hand, we now turn to the complaint at issue
in this case.

III

We first address Eastern Shore's claim that J.D. Associates
breached express covenants of the lease. Eastern Shore's complaint
alleges that J.D. Associates promised in the lease to manage the park-
ing lot so as not to deny Eastern Shore's customers reasonable access
to Eastern Shore's store and in a manner beneficial to the store and

                    6
its customers. Eastern Shore alleges that J.D. Associates breached
these express promises in three ways: (1) by allowing the east
entrance of the shopping center's parking lot to be blocked during the
Wal-Mart construction; (2) by allowing construction vehicles to park
in front of its store during the Metro Food Store construction; and (3)
by relining and reconfiguring the parking lot to benefit Metro Food
Store at Eastern Shore's expense.

The lease, a copy of which was attached to the complaint, grants
J.D. Associates discretion to control and manage the parking lot and
the entrances and exits thereto, providing that J.D. Associates "shall
have the right from time to time" to "change the area, level, location,
and arrangement of parking areas" and "to close temporarily all or any
portion of the parking areas or facilities." Moreover, J.D. Associates'
conferred discretion to close a parking-lot entrance temporarily and
to rearrange the parking lot is not limited by any express provision in
the lease. In addition, the lease permits J.D. Associates to "reduce [the
parking areas and facilities] by erecting buildings or improvements of
any kind."

We conclude that these provisions of the lease between Eastern
Shore and J.D. Associates give J.D. Associates broad discretion over
the management and control of the parking lot and that J.D. Asso-
ciates' actions in temporarily blocking access to and customers' view
of Eastern Shore's store fall within this conferred discretion. We also
conclude that the reconfiguration of the parking spaces falls within
J.D. Associates' right to "change the area, level, location, and
arrangement of parking areas."

Eastern Shore argues that two provisions in the lease limit J.D.
Associates' discretion over the control and management of the park-
ing lot. First, it points to language in the lease that

          Landlord shall have the right to . . . perform such other acts
          in and to said areas and improvements as, in the use of good
          business judgment, Landlord shall determine to be advisable
          with a view to the improvement of the convenience and use
          thereof by Tenants, their officers, agents, employees and
          customers.

                     7
This provision of the lease, however, does not advance Eastern
Shore's argument, because "such other acts" do not include the speci-
fied acts of "chang[ing] the area, level, location, and arrangement of
parking areas," of "clos[ing] temporarily all or any portion of the
parking areas or facilities," or of reducing the parking area by "erect-
ing buildings or improvements." The right to rearrange the parking
lot, temporarily close an entrance thereto, and reduce the size of the
lot in connection with the construction of new buildings is expressly
and unconditionally reserved by J.D. Associates in the lease and
therefore is not covered by the "such other acts" language.

Eastern Shore also seeks support from language in the lease provid-
ing that

          if the amount of [common areas] be diminished, Landlord
          shall not be subject to any liability nor shall Tenant be enti-
          tled to any compensation or diminution or abatement of rent,
          nor shall diminution of such areas be deemed constructive
          or actual eviction, provided reasonable access remains for
          Tenant, its employees and customers.

(Emphasis added). This provision similarly provides no assistance to
Eastern Shore, because the language is qualified. The reasonable-
access provision comes into play only "if the amount of [common
areas] be diminished." Eastern Shore does not assert that it was dam-
aged by any diminution in the size of the parking area. Rather, it com-
plains that its customers were denied reasonable access to the store as
the result of the temporary blocking of a parking lot entrance, the
presence of construction vehicles, and the reconfiguration of the park-
ing lot.

Because the lease expressly gives J.D. Associates the right to take
the actions alleged by Eastern Shore in the complaint, the district
court properly dismissed Eastern Shore's claim related to these
express provisions.2 Cf . Schuster v. White Coffee Pot Family Inns,
_________________________________________________________________
2 Eastern Shore also contends that the district court erred in dismissing
its claim for the parking-lot obstruction associated with the Wal-Mart
construction based on the applicable statute of limitations and laches.
Because we have ruled that the complaint in this regard fails to state a
claim upon which relief can be granted, we not need reach these limita-
tions and laches questions.

                     8
Inc., 406 A.2d 452, 453-54 (Md. Ct. Spec. App. 1979) (holding that
landlord, who promised restaurant nonexclusive use of "all" of a park-
ing area "during the term of the lease," could not eliminate part of res-
taurant's parking area upon the justification that lease reserved
landlord's right "from time to time to change the area, location and
arrangement of parking areas").

IV

Eastern Shore next contends that the district court erred in dismiss-
ing its claim for breach of the lease's implied covenant of good faith
and fair dealing. In its complaint, it alleges that (1) its rent in part is
calculated as a percentage of its gross sales; (2) the lease prohibits
Eastern Shore from using its premises for any purpose other than a
grocery store; (3) J.D. Associates allowed the construction of a "com-
peting Metro Food Store"; and (4) as a result, Eastern Shore suffered
"severe injury to its economic and financial interests." It concludes
with an allegation that through this conduct, J.D. Associates "directly
and materially breached its implied duty of good faith and fair dealing
to Eastern Shore."

In its brief on appeal, Eastern Shore alternatively refers to an
implied covenant of exclusivity and an implied covenant not to
engage in destructive competition, which it claims are aspects of the
broader covenant of good faith and fair dealing. It asserts that Mary-
land law explicitly recognizes a covenant against destructive competi-
tion as part of the covenant of good faith and fair dealing and that the
covenant against destructive competition is tantamount to an expecta-
tion of exclusivity, i.e., the right to be the only grocery store in the
shopping center.

The district court treated Eastern Shore's claim as one alleging a
breach of an implied covenant of exclusivity and dismissed the com-
plaint on that basis. The court stated:

          In the absence of any direct Maryland authority implying an
          exclusivity clause in leases akin to the one in this case, the
          Court holds that the governing (under Erie[R. R. Co. v.
          Tompkins, 304 U.S. 64 (1938)]) Maryland law bars all
          claims grounded on the existence of an implied exclusivity

                     9
          clause, which includes the idea that the same result (implied
          exclusivity) is compelled by the general duty of good faith
          and fair dealing.

In distinguishing Automatic Laundry Service, Inc. v. Demas, 141 A.2d
497, 501 (Md. 1958), which held that an implied covenant exists
under Maryland law not to render a contract valueless by permitting
destructive competition, the district court said:

          The Automatic case involved -- quite literally -- a nickel-
          and-dime concession for coin-operated washing machines in
          a trailer park -- obviously with a location-driven, limited
          clientele -- a matter far different from the complex real
          estate development lease in this case, which contained an
          integration clause and spelled out many, many details of the
          duties and rights of the parties.

A

Maryland law recognizes an implied covenant of good faith and
fair dealing in all negotiated contracts. See , e.g., Julian v. Christo-
pher, 575 A.2d 735, 739 (Md. 1990); Food Fair Stores, Inc. v. Blum-
berg, 200 A.2d 166, 173-74 (Md. 1964) ("[I]n every contract there
exists an implied covenant that each of the parties thereto will act in
good faith and deal fairly with the others"); cf. Suburban Hosp., Inc.
v. Dwiggins, 596 A.2d 1069, 1076-77 (Md. 1991) ("Although we
have generally implied a covenant of fair dealing in negotiated con-
tracts, there is no implied covenant of fair dealing with regard to ter-
mination by either side in an employment-at-will") (footnote omitted).
But the covenant of good faith and fair dealing"does not obligate a
[party] to take affirmative actions that the[party] is clearly not
required to take under [the contract]." Parker v. Columbia Bank, 604
A.2d 521, 531 (Md. Ct. Spec. App. 1992) (addressing duty of good
faith and fair dealing in contracts between lender and borrower).
Rather, the duty "simply prohibits one party to a contract from acting
in such a manner as to prevent the other party from performing his
obligations under the contract." Id.

Under certain circumstances, the covenant of good faith and fair
dealing as recognized in Maryland includes an implied duty to refrain

                    10
from destructive competition. See Food Fair, 200 A.2d at 173-74;
Automatic Laundry, 141 A.2d at 500-01; cf . Dupont Heights Ltd.
Partnership v. Riggs Nat'l Bank, 949 F. Supp. 383, 389 & n.3 (D.
Md. 1996) (noting that Automatic Laundry, in recognizing an implied
covenant prohibiting destructive competition, addressed contracts
involving profit sharing and suggesting that its principles do not apply
to other types of contracts). The duty to refrain from destructive com-
petition obligates each party "not to render valueless his contract with
[the other party] by permitting . . . destructive competition." Auto-
matic Laundry, 141 A.2d at 501.

In Automatic Laundry, a laundry-service company leased several
coin-operated washing machines to a trailer park. Under the lease
agreement, the laundry service was to install and maintain the
machines and to retain 75% of the receipts from the machines, remit-
ting 25% of the receipts to the trailer park. When the son of the trailer
park's owner subsequently installed additional machines at the trailer
park and operated them in competition with the leased machines, the
laundry service sued, seeking an injunction and damages. The Mary-
land Court of Appeals found that a duty of loyalty to refrain from
destructive competition was implied in the lease agreement and held
that the son of the owner of the trailer park could be "properly held
accountable . . . for any profits which he may have derived from the
improper competition." 141 A.2d at 501. The court noted that two
factors supported the implication of a duty to refrain from destructive
competition. First, the parties to the lease agreed to share profits on
the basis of gross receipts; second, the laundry service was obligated
under the agreement to install enough machines to render adequate
service to the trailer park, and did so. The court deduced that the pre-
cipitous plunge in the leased machines' earnings upon the installation
of the new machines provided evidence that the new machines made
performance of the lease agreement impossible. The court quoted 3
Corbin on Contracts § 568, at 200-01 (1951):

          In any commercial agreement in which the compensation
          promised by one to the other is a percentage of profits or
          receipts, or is a royalty on goods sold, manufactured or
          mined, there will nearly always be found an implied promise
          of diligent and careful performance in good faith and a for-

                     11
          bearance to make performance impossible by going out of
          business or otherwise.

141 A.2d at 500.

In different circumstances, the Maryland Court of Appeals in Food
Fair similarly recognized the covenant of good faith and fair dealing,
although it found no breach of the duty when a shopping-center lessee
opened additional stores outside of the center that could drain sales
from the lessee store. See 200 A.2d at 173-74. In Food Fair, the les-
see grocery store agreed to pay a base rent plus a rent calculated as
a percentage of gross sales. After entering into the lease, the grocery
store opened additional stores in the area, which the lessor claimed
was a breach of the lease's implied covenant of good faith and fair
dealing. In determining whether the covenant had been breached, the
Maryland court rejected a categorical rule and turned to "the intention
with which the parties entered into the contract of lease, as expressed
in the contract, construed in the light of the circumstances in which
the contract was made." 200 A.2d at 174. Declining to impose a duty
that would interfere with grocery store's good faith conduct of its
business, the court relied on several relevant factors: (1) the lessor did
not allege a willful intent on the part of the grocery store to under-
mine the sales of the store; (2) the grocery store did not abandon its
business in the shopping center; (3) the grocery store was engaged in
a highly competitive business; (4) the lease was quite long and the
product of prolonged negotiations; and (5) the lease for the grocery
store included a provision for an increased base rent if the store
ceased operation.

In short, while the implied duty of good faith and fair dealing as
recognized in Maryland requires that one party to a contract not frus-
trate the other party's performance, it is not understood to interpose
new obligations about which the contract is silent, even if inclusion
of the obligation is thought to be logical and wise. An implied duty
is simply a recognition of conditions inherent in expressed promises.
Thus, if a party promises to pay for its purchase of a business from
the profits of a business, inherent in this promise is the agreement that
the promisor will exercise reasonable diligence in continuing to con-
duct the business. See Automatic Laundry, 141 A.2d at 501. In the
same vein, a promisor who undertakes to distribute products for the

                     12
promisee impliedly agrees to exercise best efforts, see Foster-Porter
Enterprises v. De Mare, 81 A.2d 325, 332-33 (Md. 1951), and a
promisor who undertakes to exercise judgment on behalf of a prom-
isee impliedly agrees to exercise good judgment, see Julian, 575 A.2d
at 738-39. Stated otherwise, under the covenant of good faith and fair
dealing, a party impliedly promises to refrain from doing anything
that will have the effect of injuring or frustrating the right of the other
party to receive the fruits of the contract between them. See Automatic
Laundry, 141 A.2d at 500-01; Restatement (Second) of Contracts
§ 205 (1990); 13 Williston on Contracts , § 38:15, at 437 (2000); cf.
Md. Code Ann., Com. Law (U.C.C.) § 1-203.

B

Eastern Shore claims that three attributes of its lease give rise to
either an implied covenant of exclusivity or an implied duty not to
engage in competition deliberately destructive of the mutual benefit
contemplated by the contract. First, Eastern Shore points to the lease's
provision for the calculation of rent based in part on the gross sales
made by Eastern Shore. Second, Eastern Shore notes that, under the
lease, it agreed to operate only a grocery store on the leased premises.
Third, Eastern Shore highlights the shopping-center site plan, which
was made part of the lease, and its inclusion of Eastern Shore's store
as the only grocery store in the tenant mix. Eastern Shore asserts that
these attributes of the lease illustrate the parties' understanding that
Eastern Shore's grocery store would be the only grocery store in the
shopping center, or, alternatively, that J.D. Associates would not
deliberately thwart Eastern Shore's ability to attract customers and be
profitable.

To the extent that Eastern Shore alleges a breach of an implied cov-
enant of exclusivity, we agree with the district court that such an alle-
gation fails to state a claim upon which relief can be granted. A
covenant of exclusivity is a valuable benefit for which parties to
agreements traditionally bargain and on which they generally either
reach or deliberately decide not to reach agreement. Therefore, when
parties do not include such a clause in their agreement, we are not free
to insert one by implication. Even when the parties include an express
restrictive covenant in a deed or lease, under Maryland law the cove-
nant is generally "strictly construed so as to favor the unrestricted use

                     13
of property." Maryland Trust Co. v. Tulip Realty Co., 153 A.2d 275,
282 (Md. 1959). We have found no published opinion in which a
court has held that, in Maryland, a restrictive covenant of exclusivity
arises out of the implied covenant of good faith and fair dealing.

But this conclusion does not end the analysis in this case. Eastern
Shore has not limited its complaint to breach of an implied covenant
of exclusivity, although it has confusingly styled its arguments to
include such a claim. In its arguments, Eastern Shore has treated as
interchangeable its claim for breach of a covenant of exclusivity and
its claim for breach of an implied covenant against destructive compe-
tition, and it has used both labels to describe aspects of the implied
covenant of good faith and fair dealing. Significantly, however, East-
ern Shore's complaint, on which our decision must be based, explic-
itly couches its claim in terms of a breach of the implied covenant of
good faith and fair dealing, which Maryland clearly recognizes. Giv-
ing the claim its asserted scope, we cannot say that it fails under any
probable set of facts to state a claim upon which relief can be granted.
Food Fair and Automatic Laundry together establish that, under
Maryland law, the intentions of parties as expressed in the lease pro-
viding for rent calculated in part as a percentage of sales, combined
with the circumstances surrounding the lease's formation, may give
rise to an implied covenant to refrain from competition that is destruc-
tive to the mutual benefit of the contracting parties. See Food Fair,
200 A.2d at 173-74; Automatic Laundry, 141 A.2d at 500-01.

Eastern Shore alleges in its complaint that J.D. Associates willfully
undermined its profitability and threatened its viability. It asserts that
certain features of its lease agreement contemplate a particular tenant
mix and an important role for its store as the only grocery store within
the shopping center. Viewing the complaint in the light most favor-
able to Eastern Shore, as we are required to do on review of a
12(b)(6) motion, we cannot conclude that Maryland courts would cat-
egorically refuse to recognize an implied covenant to refrain from
destructive competition in the lease between Eastern Shore and J.D.
Associates. We recognize that further proceedings below may reveal
facts and defenses counseling against the implication of such a cove-
nant. But without the benefit at this stage of the right to evaluate facts,
we conclude that this claim should not have been dismissed under the
rigid standards that control the disposition of 12(b)(6) motions.

                     14
Accordingly, we vacate the judgment as to this claim and remand for
further proceedings.

V

Having dismissed Eastern Shore's claims alleging breaches of
express and implied covenants of the lease, the district court also dis-
missed the claims against J.D. Associates' affiliated entities and G.H.
Cambridge for tortious interference with contract, tortious interfer-
ence with business relations, and civil conspiracy. Because we have
recognized a potential claim for breach of the implied covenant of
good faith and fair dealing, we must conclude that Eastern Shore's
allegations of these torts are legally sufficient.

G.H. Cambridge asserted in its motion to dismiss that Eastern
Shore's claims are barred by the doctrine of estoppel and that its
actions were protected by a competitive privilege recognized under
Maryland law. A Rule 12(b)(6) motion, however, does not generally
invite an analysis of potential defenses to the claims asserted in the
complaint. See Brooks v. City of Winston-Salem , 85 F.3d 178, 181
(4th Cir. 1996). A court may consider defenses on a 12(b)(6) motion
only "when the face of the complaint clearly reveals the existence of
a meritorious affirmative defense." Id.; see also 5A Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure § 1357,
at 348-49 (2d ed. 1990). The defense of estoppel derives from specific
factual inquiry and its existence is not clearly indicated in Eastern
Shore's complaint. G.H. Cambridge's defense of competitive privi-
lege is similarly unsuited for review at this stage of the proceedings,
because the existence of that defense is also not readily apparent from
the face of the complaint. Moreover, such a defense would appear to
be available only where a party induces the breach of an at-will con-
tract. See Macklin v. Robert Logan Assocs., 639 A.2d 112, 120 (Md.
1994) ("[W]hen the existing contract is not terminable at-will, induc-
ing its breach, even for competitive purposes, is itself improper and,
consequently, not `just cause' for damaging another in his or her busi-
ness").

Accordingly, we must also vacate the judgment insofar as it dis-
misses these tort claims.

                     15
In sum, we affirm the district court's dismissal of Count I of the
complaint, vacate its order dismissing Counts II - V, and remand the
case for further proceedings.

AFFIRMED IN PART, VACATED IN PART,
AND REMANDED FOR FURTHER PROCEEDINGS

                    16
