Owner Wins

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What Happened: It’s become a familiar pattern. A landlord sues to evict a restaurant tenant for not paying rent. The restaurant cites COVID-19 as an excuse and asked the court to dismiss the case.

What Happened: A doctor had a longstanding personal relationship with one of the principles of the company from which he leased office space. In 2019, after contemplating retirement, he reluctantly re-upped for another five years. And then the pandemic hit. Unable to see patients in his office, he decided the time had come to retire. So, he stopped paying rent and asked the landlord to let him out of his lease. He also thought his old friend had agreed to cut him a break. But the lawsuit for rent nonpayment shattered his complacency.

What Happened: One nonpaying tenant that didn’t catch a break from the courts was the one that leased store space for use as a boxing studio. The lease obligated the tenant to “pursue and diligently prosecute a change” in zoning that would allow the property to be used for such purposes. Alas, the zoning board never issued the necessary certificate of occupancy. With the tenant now in bankruptcy, the landlord asked the court to declare the tenant in default so it could sue for money damages later.  

What Happened: Another retail tenant has failed in its bid to use COVID-19 as an excuse for not paying rent. The tenant in this case was a New York City outlet of national retail chain The Gap, which claimed, among other things, that the pandemic and its resulting shutdowns constituted a “fire or other casualty” event rendering the premises unusable and relieving the tenant of its rent duties under the lease.

Ruling: The New York federal court disagreed and awarded summary judgment—that is, victory without trial, to the landlord.

What Happened: Another retail tenant has failed in its bid to use COVID-19 as an excuse for not paying rent. The tenant in this case was a New York City outlet of national retail chain The Gap, which claimed, among other things, that the pandemic and its resulting shutdowns constituted a “fire or other casualty” event rendering the premises unusable and relieving the tenant of its rent duties under the lease.

Ruling: The New York federal court disagreed and awarded summary judgment—that is, victory without trial, to the landlord.

What Happened: Upon arriving at his office, a tenant who was behind in his rent discovered that the landlord had changed the locks and left a paper notice taped to the inside glass door facing out. Its basic message: We’ve changed your lock. But we’re not terminating your lease, and you’re still obligated to pay rent. Contact the managing agent at XYZ address to get the key to the new lock.

What Happened: An employee coming to work in the morning suffered serious injuries after slipping on ice in the office parking lot. Whether due to workers’ comp or just professional self-preservation, the employee decided that suing the landlord made a lot more sense than suing her employer. The landlord denied any liability for the incident.

Ruling: The Pennsylvania federal court agreed and tossed the employee’s negligence case.

What Happened: Like so many tenants affected by COVID-19, Saks Fifth Avenue stopped paying rent at its flagship New York City store. The landlord sued Saks’ parent company, the lease guarantor, for $2.7 million in unpaid rent. If these were normal times, we’d be liable for the tenant’s default, the guarantor acknowledged. But given the “unprecedented circumstances” of the pandemic, we didn’t breach the guaranty, it argued.

What Happened: Like so many tenants affected by COVID-19, Saks Fifth Avenue stopped paying rent at its flagship New York City store. The landlord sued Saks’ parent company, the lease guarantor, for $2.7 million in unpaid rent. If these were normal times, we’d be liable for the tenant’s default, the guarantor acknowledged. But given the “unprecedented circumstances” of the pandemic, we didn’t breach the guaranty, it argued.

What Happened: If there are any disputes under this lease, we’ll try to resolve them via mediation. If that doesn’t work, we’ll go to binding arbitration. Those were the essential terms of a commercial lease between a landlord and gas station owner. Sure enough, a dispute arose over the landlord’s failure to consent to the tenant’s assignment of the lease. But instead of going to mediation, the tenant started a lawsuit against the landlord. A few months later, mediation was tried and failed. All the while, the lawsuit continued.