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What Happened: Stop me if you’ve heard this one before: A gym that had to shut down temporarily under the governor’s COVID-19 emergency orders stopped paying rent in March. The landlord couldn’t evict because of the state-wide moratorium on commercial evictions. But it could still sue the tenant for damages. And that’s what it did. The tenant claimed frustration of purpose and impossibility and asked the court to dismiss the case.
“Within thirty (30) days after the Effective Date of the Lease, the parties shall agree upon a preliminary description of the Tenant's Work, which shall be attached to the Lease as Exhibit D. Within sixty (60) days following the Effective Date of the Lease, the parties shall agree upon final plans and specifications for each of Landlord's Work and Tenant's Work, provided that the parties shall use reasonable efforts to expedite such review and approval process (Plans and Specifications).”
What Happened: An airport tenant assigned its lease to an assignee. In June 2020, the owner and tenant signed an agreement terminating the lease. In August, the assignee filed for Chapter 11 bankruptcy. The owner asked for permission to bring a lawsuit to evict the assignee since the underlying lease was no longer in effect when the bankruptcy petition was filed.
Ruling: The Illinois federal bankruptcy court agreed and lifted the automatic stay.
What Happened: A county in a state with legalized marijuana adopted an ordinance banning cultivation. A tenant that got its license before the ban was adopted determined that it was exempt and kept on operating. But the tenant had never gotten the required permits and thus wasn’t a legally established cultivator exempt from the ban. Upon learning the news, the landlord asked a court to evict. The tenant contested the eviction because the landlord didn’t provide the required 10 days’ notice and opportunity to cure.
What Happened: A medical clinic signed a multi-year lease on a three-story building requiring major renovations. After faithfully paying monthly rent for two years, the clinic stopped making its rent payments. The landlord sent a default notice giving the clinic five days to cure. But the clinic denied any liability since it never actually took possession of the premises and asked the court to dismiss the landlord’s eviction suit. The court refused and granted judgment in the landlord’s favor. The clinic appealed.
What Happened: Six years into its 10-year term, an owner exercised its lease right to adjust a dental clinic tenant’s rent. But the clinic refused to pay the increase and moved out. The owner claimed the clinic was in default, terminated the lease, and demanded $1.5 million in accelerated rent due over the rest of the term. The clinic argued the accelerated rent clause was an unenforceable penalty and asked the court to dismiss the claim.
What Happened: A medical tenant repeatedly paid rent late without late fees or any other penalties. But then the building was sold. And the new owner wasn’t as forgiving or tolerant of the tenant’s personal stresses and “business ups and downs” as the previous one. Within months, the tenant was staring down the barrel of a lawsuit. The trial court sided with the tenant, and the owner appealed.
Ruling: The Texas appeals court reversed and ordered the tenant to pay the owner $34,109 for breach of contract.
What Happened: Only 10,000 of the tenant’s 560,000 square-foot recycling warehouse had fire department approval for occupancy. And while the tenants were advised to do so, they never installed the necessary, code-compliant sprinkler and water flow systems. So, when the warehouse burned down in a fire, neighboring property owners sued the tenant and its corporate owners for negligence, gross negligence, and public nuisance. We’re not responsible, the tenants claimed, because we only leased the building.
What Happened: After paying only partial rent in April, Bed Bath & Beyond (BB&B) paid no rent in May, claiming that the Louisiana governor’s COVID-19 order closing “all malls, except for stores in a mall that have a direct outdoor entrance and exit that provide essential services and products” triggered the force majeure clause of the lease. The landlord contended the order didn’t cover BB&B and began a summary eviction proceeding in Louisiana state court.
What Happened: A warehouse employee was killed when the hair care product he was handling exploded in his face. The victim had no idea that the product was dangerous because the container was improperly labeled. But while the employer that stored the product was clearly guilty of Cal-OSHA, fire code, and other violations, it was only a small business. So, the victim’s family sued the landlord instead. The trial court found the landlord not liable and tossed the case without a trial.
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