COVID-19 Isn't an Excuse
In Fives 160th LLC v. Zhao, a commercial tenant was unable to remit all rent due starting from March 2020, through the end of its lease term, (July 31, 2020), claiming that its payment obligations (some $35,803.49) were excused because of the pandemic -- an unprecedented occurrence which triggered “frustration of purpose” and “impossibility” defenses.
After the New York County Supreme Court concluded that COVID didn’t forgive or negate the tenant's lease-performance requirements, an appeal to the Appellate Division, First Department, ensued.
While the AD1 acknowledged that the pandemic made operating a business challenging, because the tenant wasn’t prevented from using its space or from operating its restaurant, the lower court's determination was affirmed. (And since there wasn’t a lease clause (like a “force majeure” provision) which excused payment in the event of a pandemic, the tenant’s defenses were found to have been properly disregarded.)
Now how infirm is that? (Who was going out to a restaurant just as the quarantine restrictions were being implemented. And how were you supposed to get employees to report to work right when all that "stay in place" gloom and doom were underway? This rationale strikes us as utterly nonsensical and insensitive.)
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Source:
Fives 160th, LLC v Qing Zhao (New York County Supreme Court)
Fives 160th, LLC v Qing Zhao (Appellate Division, First Department)