Tenant Must Pony Up Unpaid COVID-19 Rent

What Happened: A landlord cut a break to a fitness center tenant that had to shut down during the COVID pandemic by allowing it to defer 2020 rent until Jan. 1, 2021. The tenant remained in its lease but never made any of the installment repayments. So, the landlord sued and won over $800,000 in damages and interest. The tenant appealed.

Ruling: The California appeals court upheld the lower court’s ruling.

Reasoning: The tenant asserted a number of defenses, but the court shot them all down: 

• The force majeure clause in the lease didn’t excuse the COVID nonpayments because it carved out “financial inability” and “lack of funds”;
• There was no frustration of purpose because the tenant was capable of performing its rent payment obligations under the lease but chose not to do so because performance was financially unfavorable; and
• The landlord didn’t violate the various lease warranties ensuring the tenant’s “right to be free of interference from operation by landlord” (emphasis added) because the government COVID closure orders didn’t constitute interference by the landlord.  

• Los Portales Associates, LP v. Fitness International, LLC, 2024 Cal. App. Unpub. LEXIS 7012