Tour de Force: Evolving Force Majeure Considerations One Year into the Pandemic

Pillsbury Winthrop Shaw Pittman LLP

As the pandemic has evolved, so too has the number and complexity of the questions arising in force majeure disputes. Regardless of whether a party is seeking to invoke, or defend against invocation of, a force majeure clause, the answers to those questions will vary across jurisdictions, and will require a careful analysis of the governing contract language, causation, and adherence to notice requirements.

When the pandemic started in the spring of 2020, most force majeure disputes revolved around relatively straightforward questions: did the clause in question cover pandemics and/or governmental shutdown orders (or, in some instances, the resulting economic fallout)?

One year in, this discrete set of questions has fractured into multiple, more nuanced and complex questions. For example:

  • If a party has not yet invoked a force majeure clause based on COVID-19, can it do so now based on a spike in infection or hospitalization rates?
  • Likewise, if a party did not invoke the clause based on an initial shutdown order, can it do so now, based on a more restrictive or reinstated order, or the prolonged impact of the initial order?

The overwhelming majority of early pandemic/force majeure cases, moreover, involved force majeure clauses drafted pre-COVID-19.1 It remains to be seen how will courts evaluate and rule on force majeure arguments made in connection with contracts drafted after the pandemic had been declared.

The answers to these questions will likely vary significantly across jurisdictions, because they depend on a number of variables, including whether or not the contract language addresses “foreseeability” as a condition to invoking a force majeure provision and how the governing law treats the foreseeability of a force majeure event at the time of contracting. Under Texas law, for example, the party claiming force majeure is not always required to demonstrate that the event in question was unforeseeable, unless the clause expressly requires a lack of foreseeability: in other words, Texas courts are reluctant to imply a lack-of-foreseeability requirement unless the clause demonstrates that the parties intended one. See TEC Olmos LLC v. ConocoPhillips Co., 555 S.W.3d 176, 183 (Tex. App. 2018) (“[W]hen parties specify certain force majeure events, there is no need to show that the occurrence of such an event was unforeseeable.”). In the majority of New York cases, however, lack of foreseeability is treated as prerequisite, regardless of whether the clause expressly requires it. See Goldstein v. Orensanz Events LLC, 146 A.D.3d 492, 493 (1st Dep’t 2017) (holding that the force majeure clause “must be interpreted as if it included an express requirement of unforeseeability or lack of control”). Accordingly, a Texas court would likely interpret a force majeure clause drafted post-pandemic very differently than a New York court.

As for parties that have not previously invoked their rights under a force majeure clause but are now attempting to do so—perhaps based on an infection surge or the prolonged impact over time of the shutdown orders—the outcome may turn on contractual notice requirements. Force majeure clauses typically require that the party seeking to avail itself of protection must provide its counterparty with prompt notice of the event or circumstance being asserted that is impairing its performance, together with a description of the obligations for which relief is being sought. The party seeking force majeure protection at this time (after COVID-19 has been in the public consciousness for a year) must therefore carefully consider (and articulate in its notice) the basis on which the circumstances or change in circumstances support their assertion. Failure to formulate a sound rationale in a notice could defeat the assertion or result in waiver. Parties seeking to refute the merits of a force majeure assertion will likely point out that the notice is delinquent and surely should have been provided at an earlier time, given the duration of the pandemic.

Developing COVID-19 Force Majeure Case Law

(Updates since the last issue are bolded below.)

FEDERAL

Central District of California (Extension of closing date

Pacific Collective LLC v. Exxonmobil Oil Corp., No. 2:20-cv-03887-ODW-RAO (C.D. Cal. 2020) (Commercial real estate buyer seeks to extend closing date of real estate purchase on basis that Safer-At-Home orders constitute force majeure as defined in purchase agreement; Removed from California state court on April 29, 2020; Case transferred from Judge John A. Kronstadt due to self-recusal; Case ordered referred to ADR.) (04/03/2020 Complaint; 04/30/2020 Order to Reassign Case; 05/05/2020 Order Returning Case For Reassignment Upon Recusal; 11/05/2020 Order/Referral to ADR)

Southern District of Florida (Excuse from rent payment)

Palm Springs Mile Assocs. LTD. v. The Men’s Wearhouse Inc., No. 20-cv-21965 (S.D. Fla. 2020) (Men’s Warehouse invokes force majeure defense against breach of contract claim, alleging its obligation to pay rent was excused by COVID-19; Suit voluntarily dismissed on June 1, 2020.) (05/11/2020 Complaint; 06/01/2020 Notice of Voluntary Dismissal)

Northern District of Illinois (Excuse from rent payment)

In re Hitz Rest. Grp., No. 1:20-br-05012 (Bankr. N.D. Ill. 2020) (Restaurant-group tenant invokes “governmental action” phrase of force majeure clause, arguing rent obligation was excused by the Illinois Governor’s Coronavirus Order shutting down on-premises dining, theorizing that the Order prevented it from operating its business; Court agrees in part, holding tenant’s rent obligation would be reduced on a pro rata basis in accordance with the decrease in revenues from its inability to offer on-premises dining; Case dismissed on July 21, 2020.) (04/27/2020 Creditors’ Motion for Relief from Automatic Stay; 05/12/2020 Debtor’s Response; 05/26/2020 Creditors’ Reply; 06/02/2020 Memorandum Opinion) (See our prior article on this decision and an in‑depth analysis of this decision.)

Eastern District of New York (Excuse from transaction closing; Excuse from contract performance)

Gomel Capital Partners LLC v. 601 NE 29 Drive LLC, et al., No. 1:20-cv-01922-FB-JO (E.D.N.Y. 2020) (Plaintiff seeks to terminate real property purchase contract and to recoup $275,000 deposit, alleging that the “outbreak of the COVID-19 global pandemic is a Force Majeure event, a quintessential ‘act of God’,” and invoking contractual provision that permits termination when a Force Majeure event prevents performance of the contract for “more than 30 days beyond the Closing Date”; Case voluntarily dismissed on July 13, 2020.) (04/27/2020 Complaint; 07/13/2020 Letter Motion by Plaintiff Informing Court of Settlement; 07/13/2020 Notice of Voluntary Dismissal with Prejudice)

Williamsburg Climbing Gym Co. LLC and Fifth Concerto Holdco Inc. v. Ronit Realty LLC, No. 1:20-cv-02073 (E.D.N.Y. 2020) (Tenant seeks rescission and declaration that it lawfully terminated lease pursuant to common law doctrines of impossibility and frustration of purpose because COVID-19 pandemic and Governor’s executive orders mandated business closure and stoppage of construction; landlord asserts breach of contract counterclaim on basis that that lease’s force majeure clause expressly carves out rent payment obligations; tenant argues that force majeure clause is inapplicable because pandemic is not an enumerated event and frustration/impossibility are separate doctrines; counterclaims and answer amended on other grounds; Defendants agree with Plaintiffs to participate in mediation.) (05/06/2020 Complaint; 06/24/2020 Answer and Counterclaims; 06/24/2020 Defendant’s Pre-Motion Letter to the Court Re: Judgment on the Pleadings; 07/01/2020 Plaintiff’s Pre-Motion Response Letter to Court re: Judgment on the Pleadings; 07/23/2020 Amended Counterclaims; 08/06/2020 Answer to Amended Counterclaims; 08/14/2020 Plaintiff’s Pre-Motion Letter to the Court Re: Intent to file a Motion for Summary Judgement; 8/20/2020 Defendant’s Pre-Motion Letter to the Court Re: Plaintiff’s Intent to file a Motion for Summary Judgement; 10/23/2020 Defendant’s Letter Agreeing to Mediation)

Banco Santander (Brasil) S.A. v. American Airlines Inc., No. 20-cv-3098 (E.D.N.Y. 2020) (Plaintiff seeks declaration that it is entitled to terminate pursuant to force majeure clause that covers “act of God” and “act of government”; Defendant argues that Plaintiff failed to state a claim because the agreement contemplated the force majeure event and those provisions govern; Plaintiff argues that it sufficiently plead that the agreement does not contemplate the force majeure event and is entitled to such declaration.) (07/10/2020 Complaint; 0/8/24/2020 Supplemental Complaint; 09/04/2020 Defendant’s Motion to Dismiss for Failure to State a Claim; 09/25/2020 Plaintiff’s Memorandum in Opposition to Motion to Dismiss for Failure to State a Claim, refiled under seal 10/07/2020; 10/09/2020 Defendant’s Reply in Support of Motion to Dismiss)

Southern District of New York (Excuse from contract performance; Excuse from payment obligation)

D’Amico Dry D.A.C. v. McInnis Cement Inc., No. 1:20-cv-03731-VEC (S.D.N.Y. 2020) (Shipping company alleges breach of contract against cement supplier and seeks maritime attachment of assets pending arbitration on the basis that supplier defaulted prior to COVID-19 and then invoked force majeure clause as a pretense to terminate; Court enters ex parte order of attachment and denied cement supplier’s motion to vacate same; Parties entered into a confidential settlement agreement.) (05/14/2020 Complaint; 05/25/2020 Defendant’s Motion to Vacate the Process of Maritime Attachment; 06/03/2020 Plaintiff’s Opposition to Defendant’s Motion to Vacate the Process of Maritime Attachment; 06/30/2020 Opinion Order Denying Motion to Vacate the Process of Maritime Attachment; 09/02/2020 Plaintiff’s Consent Letter; 09/03/2020 Memo Endorsement of Plaintiff’s Consent Letter; 09/04/2020 Order of Dismissal with Prejudice)

Delta Corp Shipping Pte Ltd v. Rankers International Pvt Ltd, No. 1:20-cv-09258-PAE (S.D.N.Y. 2020) (Plaintiff and defendant had entered into a charter party agreement, whereby defendant agreed to transport bulk salt from India to China for the plaintiff; in March 2020, defendant attempted to cancel the agreement by invoking the doctrine of force majeure due to the COVID-19 pandemic and resulting challenges for defendant’s operations, but plaintiff alleges that the force majeure clause of the agreement does not cover the COVID-19 challenges that defendant suffers from) (11/04/2020 Complaint; 11/05/2020 Plaintiff’s Memorandum of Law in support of Request for Issuance of Maritime Attachment and Garnishment; 11/05/2020 Declaration in support of Plaintiff’s Request for Issuance of Maritime Attachment and Garnishment; 12/21/2020 Amended Complaint)

E2W LLC v. Kidzania Operations S.A.R.L., No. 1:20-cv-02866-ALC (S.D.N.Y. 2020) (Franchisee invokes force majeure clause in franchise agreement, alleging that government shutdown orders excuse its payment obligations and obligation to open an additional franchise location; Court, without any reasoning, grants franchisee’s application and compels the parties to maintain the status quo during the pendency of their arbitration; Parties arbitrating claims in the ICC; Matter is stayed pending arbitration.) (04/06/2020 Complaint; 05/11/2020 Order Granting Preliminary Injunction; 05/22/2020 Answer; 10/08/2020 Notice of Case Reassignment; 10/23/2020 Joint Report in Response to the Notice of Reassignment Entered October 8, 2020)

Everlast World’s Boxing Headquarters Corp. v. Transform SR LLC, No. 1:20-cv-09095-RA (S.D.N.Y. Oct. 29, 2020) (Plaintiff sues Defendants Sears and Kmart for breach of contract, alleging Defendants failed to pay Plaintiff royalties while continuing to sell Plaintiff’s products; Defendants argue that invocation of force majeure clause excused royalty payments and counterclaim against plaintiff for failure to abide by force majeure clause in the agreement; Plaintiff moves for summary judgment, arguing the force majeure clause does not excuse Defendants’ failure to remit the required royalties; Defendants filed a response letter noting Defendants were in the process of preparing a motion for judgment on the pleadings to address Defendants’ invocation of the lease’s force majeure clause and the Court’s subject matter jurisdiction over the suit should Plaintiff’s Lanham Act claims be dismissed; Parties settle the dispute and the Court so-orders stipulation of discontinuance with prejudice.) (10/29/2020 Complaint; 12/11/2020 Answer and Counterclaim; 12/30/2020 Plaintiff’s Reply to Defendants’ Counterclaims; 01/07/2021 Plaintiff’s Pre-motion Letter Seeking Leave to File Motion for Summary Judgment; 01/12/2021 Defendants’ Response Letter to Plaintiff’s Pre-motion Letter Seeking Leave to File Motion for Summary Judgment; 03/04/2021 Stipulation of Discontinuance with Prejudice)

The Gap Inc. v. Ponte Gadea New York LLC, No. 1:20-cv-04541 (S.D.N.Y. 2020) (Tenant seeks, inter alia, rescission/cancellation of lease, arguing that COVID-19 crisis and civil orders constitute a “casualty” within the meaning of the force majeure clause causing a permanent abatement of rent and the lease to terminate; Landlord counterclaims alleging breach of contract and argues that COVID-19 and civil orders are not within the scope of the force majeure clause and that the force majeure clause does not excuse contractual rent payment obligation; Tenant answers with general denials of landlord’s allegations regarding the force majeure clause and asserts affirmative defenses on other grounds; Tenant seeks stay pending decision by multidistrict litigation panel to consolidate this and 32 other substantively similar actions pending against Tenant in federal district courts; multidistrict litigation panel denied transfer; Court grants defendant/landlord’s motion for summary judgment and dismisses plaintiff’s complaint in the entirety holding that the pandemic and resulting lockdowns did not constitute a “casualty” because that term “refers to singular incidents, like fire, which have a physical impact in or to the premises.”) (06/12/2020 Complaint; 07/07/2020 Answer and Counterclaims; 07/28/2020 Answer to Counterclaim; 08/11/2020 Plaintiff’s Motion to Stay Pending Decision by Multidistrict Litigation Panel to Accept Transfer of Federal Court Actions; 09/18/2020 Defendant’s Memorandum of Law in Further Support of Motion for Summary Judgment; 09/25/2020 Reply Memorandum of Law; 03/08/2021 Memorandum and Opinion)

Hunter Commc’ns. Inc. v. Panasonic Avionics Corp., No. 7:20-cv-03434 (S.D.N.Y. 2020) (Defendant asserts force majeure defense against breach of contract claim brought by satellite communications provider, alleging that COVID-19 excused payment obligations under master service agreement for satellite bandwidth capacity services; Plaintiff argues that force majeure defense should be stricken because Defendant did not allege that payment breaches were result of COVID-19; Defendant file notice of intent to file amended answer; the Court grants Plaintiff’s motion to dismiss and then dismisses the case upon a settlement agreement.) (05/01/2020 Complaint; 06/26/2020 Answer; 07/17/2020 Plaintiff’s Letter Motion; 07/22/2020 Defendant’s Letter Reply; 08/21/2020 Amended Answer; 09/04/2020 Plaintiff’s Second Letter Motion; 09/11/2020 Defendant’s Second Letter Reply; 09/15/2020 Order Granting Second Letter Motion; 10/05/2020 Order of Dismissal)

JN Contemporary Art LLC v. Phillips Auctioneers LLC, No. 1:20-cv-04370-DLC (S.D.N.Y. 2020) (Plaintiff seeks preliminary injunction preventing Defendant from invoking clause that allowed it to terminate consignment agreement if performance were delayed due to “circumstances beyond [the parties’] reasonable control,” and argues that Defendant’s decision to terminate was not caused by the pandemic but rather was the result of a deliberate business decision; Defendant argues that the pandemic is within the scope of the force majeure clause because it is a “natural disaster” and that performance is excused because the specific auction noted in the contract was postponed; Court denies mandatory injunction; Plaintiff amends complaint on other grounds; Defendant moves to dismiss the Complaint arguing that Plaintiff did not state a claim for breach of the agreement because Defendant’s performance was excused due to the force majeure clause; Plaintiff argues that the specific auction noted in the contract was not date nor site specific so Defendant was not prevented from performing and COVID-19 and government regulations were not specifically listed in the force majeure clause; Court dismisses case in favor of Defendant, noting that “[t]he pandemic and the attendant government-imposed restrictions on business operations permitted [Defendant] to invoke the Termination Provision,” as the force majeure clause specifically stated that it was triggered when the auction “is postponed for circumstances beyond our or your reasonable control” and further finding that the force majeure clause was triggered upon the occurrence of a “natural disaster,” reasoning that “[i]t cannot be seriously disputed that the COVID-19 pandemic is a natural disaster”; Plaintiff appeals; Plaintiff argues the lower court erred in finding that the force majeure clause voided the contract because, inter alia, (i) the court did not narrowly construe the clause, (ii) whether the pandemic is a “natural disaster” is a disputed factual matter, (iii) the court did not analyze whether pandemic proximately caused non-performance, (iv) whether the pandemic was reasonably foreseeable is a disputed factual matter, (v) invocation of the force majeure clause netted the defendant a better-than-bargained-for deal, and (vi) Defendant was not prevented from performing and did not attempt to perform.) (06/09/2020 Complaint; 06/12/2020 Plaintiff’s Memorandum of Law in Support of Motion for Preliminary Injunction; 06/23/2020 Amended Complaint; 06/23/2020 Plaintiff’s Amended Memorandum of Law in Support of Motion for Preliminary Injunction; 07/02/2020 Defendant’s Memorandum in Opposition to Plaintiff’s Order to Show Cause for Preliminary Injunction and Temporary Restraining Order; 07/09/2020 Plaintiff’s Reply in Further Support of Motion for Preliminary Injunction; 07/15/2020 Order Denying Temporary Restraining Order and Preliminary Injunction; 07/31/2020 Plaintiff’s Second Amended Complaint; 08/28/2020 Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint; 09/18/2020 Plaintiff’s First Memorandum of Law in Opposition to Motion to Dismiss; 10/02/2020 Defendant’s Reply Memorandum of Law; 12/16/2020 Memorandum and Opinion; 01/06/21 Notice of Appeal; 02/26/2021 Brief for Plaintiff/Appellant)

Viamedia Inc. v. WideOpenWest Finance LLC, No. 1:20-cv-04064-VM (S.D.N.Y. 2020) (Plaintiff seeks preliminary injunction enjoining defendant from terminating television advertising management agreement, alleging that plaintiff’s late payments under agreement are excused based on “COVID-19 and the attendant economic crises prompted by government ordered lock downs and stay at home orders, which qualify as both acts of God and/or events beyond the reasonable ability of [plaintiff] to control”; Court denies preliminary injunctive relief; Parties commence arbitration and award issued under seal.) (05/27/2020 Plaintiff’s Memorandum of Law in Support of Motion for Preliminary Injunction; 06/19/2020 Amended Complaint; 06/22/2020 Order Denying Temporary Restraining Order and Preliminary Injunction; 09/18/2020 Defendant’s Letter Motion to Seal Arbitration Award; 09/22/2020 Order Granting Letter Motion to Seal; 09/24/2020 Defendant’s Motion to Confirm Arbitration Award)

Northern District of Texas (Excuse from refund obligation, Excuse from lease obligations)

W.L. Petrey Wholesale Co. Inc. v. V2 Incentives LP, No. 4:20-cv-00447-A (N.D. Tex. 2020) (Plaintiff seeks refund of amounts paid to travel broker, arguing that force majeure clause requiring refund was triggered by government lockdowns and decrees that made trip impossible; Defendant argues affirmative defenses of repudiation, material breach, and failure to mitigate.) (05/19/2020 Amended Complaint; 06/16/2020 Answer; 11/17/2020 Amended Answer)

Hibbett Sporting Goods Inc. v. Weatherford Dunhill LLC c/o Dunhill Prop. Mgmt. Services Inc., No. 4:20-cv-00607-O (N.D. Tex. 2020) (Tenant seeks declaratory judgment that rental and payment obligations and any obligation to continuously operate within mall were excused while Governor’s order mandated closure of the mall; Landlord moves for dismissal on procedural grounds; Court grants parties’ voluntary dismissal of the case with prejudice.) (06/10/2020 Complaint; 07/20/2020 Motion to Dismiss on Procedural Grounds; 08/20/2020 Plaintiff’s Response to Motion to Dismiss; 09/04/2020 Defendants’ Reply in Support of its Motion to Dismiss; 11/02/2020 Joint Stipulation of Voluntary Dismissal; 11/03/2020 Order Granting Joint Stipulation of Voluntary Dismissal)

Southern District of Texas (Excuse from transaction closing)

Khan v. Cinemex USA Real Estate Holdings Inc., No. 4:20-cv-01178 (S.D. Tex. 2020) (Plaintiff seeks, inter alia, specific performance ordering defendant to close on cinema chain purchase transaction, arguing that defendant’s reasons for refusing to close that relate to COVID-19 are invalid because the contract was negotiated after the pandemic was declared and the Material Adverse Effect clause expressly excludes pandemics; case automatically stayed because defendant filed for Chapter 11 bankruptcy.) (04/02/2020 Complaint; 06/01/2020 Order Staying the Case due to Defendant filing bankruptcy)

Bankruptcy Court for the Southern District of Texas (Excuse from contract performance; Excuse from payment obligation)

In Re: Cec Entertainment Inc., et al, No. 20-33163 (Bnk. S.D. Tex. 2020) (Plaintiff, a nationwide operator of Chuck E. Cheese venues, seeks rent abatement or reduction at six locations across three states in the wake of new pandemic safety measures and government-imposed regulations pursuant to the court’s equitable power to alter Plaintiff’s rent obligation under the Bankruptcy Code, or alternatively, under its lease agreements’ force majeure provisions; Court denies Plaintiffs’ motion for abatement, holding that the leases’ force majeure provisions do not excuse Plaintiffs’ monetary obligations, including rent payment.) (08/03/2020 Abatement Motion; 12/14/2020 Abatement Opinion)

Eastern District of Virginia (Grounds for contract termination)

Sodexo Operations LLC v. Va. Aquarium & Marine Sci. Ctr. Found. Inc., No. 2:20-cv-00309-AWA-RJK (E.D. Va. 2020) (Food services provider exercised right to terminate contract pursuant to “act of God” and “governmental policy” terms in force majeure clause and alleges defendant’s refusal to reimburse plaintiff for unamortized portion of capital investments is a breach of their contract; Parties settle and Court orders case dismissed with prejudice.) (06/19/2020 Complaint; 08/18/2020 Answer to Complaint and Affirmative Defenses; 08/28/2020 Motion to Dismiss Pursuant to Settlement Agreement; 09/03/2020 Order Dismissing Case)

STATE

Delaware (Excuse from transaction closing)

Forescout Technologies Inc. v. Ferrari Grp. Holdings L.P., No. 2020-0385 (Del. Ch. 2020) (Plaintiff/target asserts breach of contract and specific performance claims against defendant/buyer for failure to close merger deal worth $1.9 billion, on ground that COVID-19 does not constitute a Material Adverse Event permitting buyer’s termination of merger agreement; Buyer asserts declaratory judgment counterclaims that, inter alia, target’s financial troubles caused by COVID‑19 constitute a Material Adverse Event because, notwithstanding the explicit exclusion of “epidemics” and “pandemics” as Material Adverse Events, target’s financial troubles are disproportionate in comparison to other similar companies and therefore fall within the “materially disproportionate adverse effect” savings clause; Case voluntarily dismissed with prejudice on July 15, 2020.) (05/19/2020 Complaint; 06/05/2020 Counterclaim; 07/15/2020 Voluntary Dismissal with Prejudice)

Florida (Extension of closing date)

LFG Acquisitions LLC v. CSPS Hotel Inc., No. 20-CA-003842 (Fla. Cir. Ct. Hillsborough Cty. 2020) (Plaintiff seeks to delay closing of real estate sale pursuant to force majeure provision in purchase agreement; Defendant answers denying that Plaintiff was entitled to invoke force majeure provision arguing that pandemic did not prevent or reasonably interfere with Plaintiff’s ability to close sale.) (05/05/2020 Complaint; 05/29/2020 Answer; 10/03/2020 Restated Answer to Complaint)

New York (Grounds for contract termination, Excuse from default)

223 Avenue B LLC v. Subway Real Estate LLC, No. 613065/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff-landlord seeks damages for past due rent payments and anticipatory breach of lease agreement by Defendant-tenant, claiming defendant-tenant’s sublessee abandoned the premises and left it in poor condition, Plaintiff sent notices of default to Defendant and sublessee, contending that Defendant had erroneously claimed it was excused from performance by force majeure events (the pandemic and government shut down orders); Defendant answers, asserts affirmative defenses, and counterclaims that the pandemic and government orders constitute “casualties” suspending defendant’s obligations pursuant to the force majeure clause and triggering rent abatement; Plaintiff answers and admits that the force majeure clause “provides, in part, that in the event of a casualty, the defendant’s obligation to pay rent is abated” but appears to disagree when that rent abatement privilege is triggered.) (11/13/2020 Complaint; 11/17/2020 Amended Complaint; 12/28/2020 Answer; 01/27/2021 Answer, Counterclaims, and Crossclaims; 02/16/2021 Reply to Counterclaims)

850 Third Avenue Owner LLC v. Discovery Commc’ns, No. 654148/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff-landlord sues defendant-tenant for unpaid rent after defendant-tenant allegedly overstayed at the property once its lease expired, arguing that the State’s COVID-19 restrictions are not “act[s] of disorder” within the scope of the force majeure clause and that they did not cause defendant’s inability to move out at the time the lease expired because moving companies were “essential businesses” that operated throughout the pandemic; Defendant argues that the “shortages of labor” and catchall clauses of the force majeure provision extended the time available to remove its property from the premises because the pandemic and government-ordered closures prevented Defendant from removing its property and caused labor shortages among moving companies; Plaintiff moves for summary judgment, arguing that “the force-majeure clause in the lease does not apply to governmental restrictions” because the government shut-down orders were not unforeseeable when the lease was executed and the catchall phrase in the force majeure clause must be read narrowly; Plaintiff opposes motion for summary judgment arguing, inter alia, (i) that the pandemic is an “Act of God” and (ii) that consistent with the December 16, 2020 JN Contemporary opinion, application of the esjudem generis principle instructs that the pandemic is encompassed within the force majeure catch-all clause; Defendant argues that (i) the force majeure clause by its terms does not excuse rent payment obligations, (ii) the government orders proximately caused Defendant to breach, not the pandemic, and (iii) the force majeure clause in JN Contemporary is distinguishable.) (08/31/2020 Complaint; 10/23/2020 Answer and Counterclaims; 12/14/2020 Plaintiff’s Memorandum of Law ISO Motion for Summary Judgment, or Alternatively, Dismissing Defendant’s Counterclaims; 01/06/2021 Reply to Counterclaims; 02/04/2021 MOL Opposing MSJ and to Dismiss Counterclaims; 03/04/2021 Reply in Further Support of MSJ and Dismissal)

Adam Sanders, et al. v. Edison Ballroom LLC, 654992/2020 (Sup. Ct. N.Y. Cty.) (Plaintiffs seek return of deposit from Defendant-ballroom, which was supposed to host Bat Mitvzah celebration, on the basis that the Governor’s Executive Orders (the Orders) made performance illegal and/or impossible and that the Orders are force majeure events; Defendant denies that the contract should be terminated and the deposit returned, instead claiming that the contract obligations should be suspended; Plaintiffs move for summary judgment, arguing that Defendant is trying to rewrite the contract; Defendant reply, arguing that the Court has the power to rewrite the contract because of a fundamental change in circumstances.) (11/18/2020 Complaint; 12/07/2020 Answer and Counterclaim; 01/06/2021 Plaintiffs’ Motion for Summary Judgment; 01/26/2021 Defendant’s Opposition to and Cross-Motion for Summary Judgment; 02/01/2021 Plaintiffs’ Reply; 02/02/2021 Defendant’s Reply)

Alexandria Gayle Williams v. 4545 East Coast LLC, No. 713984/2020 (N.Y. Sup. Ct. Queens Cty. 2020) (Plaintiff apartment tenant seeks rescission of lease, arguing that pandemic and Governor’s Orders destroyed all personal and economic value in the lease and that the Court should excuse performance pursuant to an “Implied Force Majeure” clause; Defendant broadly denies Plaintiff’s claims as “without basis in law” and counterclaims for breach of contract; Defendant moves for summary judgment, arguing, inter alia, that allowing the Court to write in an “implied” force majeure clause would “change the face of contract law across all spectrums of law as we know it.”) (08/25/2020 Complaint; 10/09/2020 Answer with Counterclaims; 10/28/2020 Answer to Defendant’s Counterclaims; 01/21/2021 Defendant’s Motion for Summary Judgment)

Anvil Mechanical Inc. v. GCT Constructors JV, No. 654448/2020 (N.Y. Sup. Ct. N.Y.) (Plaintiff subcontractor seeks breach of contract damages against Defendant contractor, arguing that the contractor wrongfully terminated subcontract, that the subcontractor could not safely work in the absence of pandemic safety protocols, and that the pandemic is a force majeure event; Defendant contractor denies the pandemic is a force majeure event and counterclaims that the subcontractor materially breached the subcontract.) (09/15/2020 Complaint; 01/28/2021 Answer and Counterclaim)

Bath & Body Works LLC v. 304 PAS Owner LLC Successor, No. 651836/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff seeks rescission of commercial property lease and declaration the lease is unenforceable because COVID-19 and related government mandated shutdowns frustrated the purposes of the lease; Defendant argues plaintiff tenant recognized that a variety of “force majeure” events might occur, including those forming the bases of plaintiff’s claims, but specifically agreed in a lease rider that such events would only permit delayed performance, not excuse payment of any monetary sums due under the lease and its supplemental rider.) (06/08/2020 Complaint; 06/29/2020 Answer and Counterclaims; 8/19/2020 Reply to Counterclaims)

Broadway/72nd Street Assocs. II LLC v. Bloomingdale’s LLC, No. 653760/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff-landlord sues Bloomingdale’s (defendant-tenant) and Macy’s (defendant-guarantor) for Bloomingdale’s failure to pay fixed rent and additional rental payments under lease agreements, which specifically provides that “Tenant shall under no circumstances fail or refuse to pay any installments of fixed annual rent or any additional rent;” Plaintiff-landlord sues Macy’s for failure to satisfy its obligations under the guarantee agreement, which provided that Macy’s guaranteed to plaintiff-landlord “the full and timely payment” of all rent under Bloomingdale’s lease; Bloomingdale’s and Macy’s argue that their obligations under the lease and guarantee agreements were suspended under the doctrines of frustration of purpose and impossibility of performance due to COVID-19 forcing Bloomingdale’s to close their store; Plaintiff-landlord files motion for summary judgment on its claims, as well as defendants’ counterclaims, arguing that the lease is clear and unequivocal that force majeure events would not suspend Bloomingdale’s obligations to pay rent under the lease, and that financial difficulties arising out of the COVID-19 pandemic and other government shut-down orders do not excuse contractual performance under the doctrines of frustration of purpose and impossibility; Parties stipulate discontinuance of suit with prejudice) (08/12/2020 Complaint; 09/14/2020 Answer and Counterclaims; 10/20/2020 Plaintiff’s Motion for Summary Judgment; 12/28/2020 Stipulation of Discontinuance with Prejudice; 12/29/2020 Order denying Motion for Summary Judgment as moot, action discontinued with prejudice)

Buonincontro v. Edison Ballroom LLC, 654844/2020 (Sup. Ct. N.Y. Cty.) (Plaintiffs seek return of money deposit from Defendant-ballroom, arguing that performance of their indefinitely-delayed wedding celebration was made illegal, impractical, and impossible by the Governor’s Executive Orders and that the force majeure clause expressly requires the full return of the deposit; Defendant denies that contract should be terminated and deposit returned, instead claiming that contract obligations should be suspended.) (09/30/2020 Complaint; 12/29/2020 Answer and Counterclaim)

Change Your Life LLC v. 9E16 by 1771 Holdings LLC, No. 157335/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff-fitness center seeks declaration that the pandemic is a force majeure event excusing its obligation to pay rent to defendant-landlord during the pandemic; Plaintiff seeks to enjoin Defendant from terminating lease or possessing property, arguing that Governor’s Orders prohibit proceedings for nonpayment of rent; Defendant argues that Plaintiff’s injunctive relief should be denied because, inter alia, Defendant did not initiate a proceeding in violation of the Governor’s Orders; Defendant denies Plaintiff’s claim that pandemic is a force majeure event and seeks damages and other relief; Plaintiff broadly denies Defendant’s counterclaims; Court denied OTSC as moot after Plaintiff withdrew request for injunction at hearing.) (09/11/2020 Complaint; 09/11/2020 Plaintiff’s Memo in Support of Order to Show Cause; 10/02/2020 Defendant’s Memo in Opposition to Order to Show Cause; 10/06/2020 Answer and Counterclaims; 10/26/2020 Plaintiff’s Reply to Counterclaims; 11/10/2020 Order Denying OTSC as moot)

Cinema Square LLC v. Jeffries Loancore LLC, No. 650645/2021 (N.Y. Sup. Ct. N.Y. Cty. 2021) (Plaintiff-owner of premises seeks declaration and injunction stopping creditors from foreclosing property, arguing, inter alia, that “common law force majeure” excused payment obligations because the pandemic and related government orders inhibited Plaintiff’s tenant’s operation of movie theater; Defendants argue that TRO should be denied because, inter alia, the loan agreement does not contain a force majeure clause and New York does not have a “common law doctrine of force majeure” and the risk that the tenant does not pay is the borrower’s risk, not the lender’s; Court denies motion for TRO/PI holding on this basis; Plaintiff files notice of discontinuance, without prejudice.) (01/28/2021 Complaint; 01/28/2021 MOL ISO TRO and PI; 02/03/2021 Defendants’ MOL in Opposition to TRO; 02/04/2021 Plaintiffs’ Affirmation in Further Support of TRO; 02/08/2021 Defendants’ Supplemental MOL in Opposition to TRO; 02/11/2021 Plaintiffs’ Reply in Further Support of TRO; 02/11/2021 Decision and Order re TRO; 02/19/2021 Notice of Discontinuance)

D2 Mark LLC v. OREI VI Investments LLC, No. 652259/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Hotel group seeks, inter alia, to preliminarily enjoin junior creditor from foreclosing after hotel group missed one payment obligation due to COVID-19, arguing that loan agreement expressly excused defaults occurring “in connection with” a force majeure event; Court enjoins junior creditor from holding a sale before July 23 and orders junior creditor to issue new, commercially reasonable notice of sale.) (06/06/2020 Complaint; 06/23/2020 Decision and Order on Plaintiff’s Order to Show Cause; 08/03/2020 So-Ordered Stipulation Discontinuing the Action with Prejudice)

DHG Mgmt. Co. v. French Partners LLC, et al., No. 654319/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff-tenant seeks breach of contract damages against Defendant-landlord for preventing access to the property during the Government-ordered lockdown, arguing that access was expressly warranted and excepted from force majeure clause; Defendant moves to dismiss, arguing that Governor’s Orders were beyond its control, that they mandated reductions in persons allowed on premises, and that Defendant allowed access to the property; Court denies dismissal of breach of contract count and grants dismissal of conversion count; Defendant moves for summary judgment arguing Plaintiff’s access to the property remained unfettered through their tenancy, including during the pandemic, and that while the Governor’s Orders may have limited the amount of people allowed on the property at one time, Defendant never denied Plaintiff’s access; Court denies Defendant’s motion for summary judgment, stating that factual disputes remain regarding, inter alia, the access provided to Plaintiff.) (09/09/2020 Complaint; 10/05/2020 Notice of Motion to Dismiss and Affirmation in Support of Motion to Dismiss; 10/12/2020 Affirmation in Opposition to Motion to Dismiss; 10/21/2020 Order Denying in Part Motion to Dismiss; 11/18/2020 Answer with Counterclaims; 01/06/2021 Defendants’ Motion for Summary Judgment; 01/12/2021 Plaintiff’s Cross-Motion Per CPLR § 3012(d)); 01/28/2021 Order Denying Summary Judgment)

Iluka Resources Limited v. Chemours International Operations Sarl, et al., No. 653398/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Ore supplier seeks, inter alia, breach of contract damages and declaratory relief, arguing that the COVID-19 pandemic is not among the specified force majeure “events” and did not actually prevent buyer from accepting and paying for shipments of materials; Buyer moves to dismiss, arguing, inter alia, that its purchase obligation is excused pursuant to the contract’s “Excused Performance” (force majeure) clause because the pandemic diminished its customers’ need for ore; Supplier argues that Buyer failed to establish that customers’ diminished demand for ore excuses its obligation to take delivery; Buyer replies that its performance is excused pursuant to the clause because the pandemic is an “element[] of nature” that “hindered” its “ability to take or pay for Material.”) (08/06/2020 Complaint; 10/05/2020 Motion to Dismiss and Memorandum of Law in Support of Motion to Dismiss; 10/19/2020 Memorandum in Opposition to Motion to Dismiss; 11/02/2020 Reply Memorandum in Support of Motion to Dismiss)

Information Services Group Inc. v. Penton Learning Systems LLC, No. 160890/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff seeks refund of fee paid for in-person sponsorship event that was cancelled because of COVID-19, arguing that a full refund was contractually required in the event of a force majeure event and that the pandemic is within the scope of the force majeure clause; Plaintiff discontinues proceeding.) (12/15/2020 Complaint; 12/24/2021 Notice of Discontinuance)

Little Fish Corp. v. Paramount Leasehold LP, No. 150164/2021 (Sup. Ct. N.Y. Cty. 2021) (Plaintiff-tenant files Complaint and motion seeking a Yellowstone Injunction preventing defendant-landlord from terminating the parties’ commercial lease due to plaintiff’s failure to make rent payments and to “continuously operate” its business, arguing that the lease expressly excuses plaintiff’s obligations in the event of “restrictive governmental laws and regulations, riots, insurrections, or other reason of like nature”; Defendant argues that rent payment obligations are specifically carved out of the force majeure clause and that Governor’s Orders were not force majeure events; Plaintiff asserts affirmative defense that the “pandemic and associated governmental orders constitute” a casualty or force majeure event pursuant to the contract.) (01/07/2021 Complaint; 01/07/2021 Plaintiff’s Memorandum of Law in support of Motion for Yellowstone Injunction; 01/19/2021 Defendant’s MOL in Opposition and Cross-Motion; 01/28/2021 Answer and Counterclaims; 02/11/2021 Reply to Counterclaims)

N888JK Ltd. v. Equiom (Isle of Man) Ltd., No. 652122/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff seeks declaratory relief that it may keep a deposit paid pursuant to a used aircraft purchase agreement on the grounds that defendant unilaterally terminated the agreement; defendant asserts COVID-19 as a force majeure event permitting termination and demanded return of deposit.) (05/28/2020 Complaint; 07/22/2020 Answer with Counterclaims; 8/11/2020 Reply Counterclaims)

NY Veterinary Operating P.C. v. Bricks & Nails LLC, No. 701304/2021 (N.Y. Sup. Ct. Queens Cty. 2021) (Plaintiff-tenant seeks, inter alia, declaration that the lease’s force majeure provision excused its untimely option to renew the lease because “the COVID-19 pandemic, and its associated governmental restrictions” hindered its ability to exercise the renewal option; Defendant generally denies all allegations relating to force majeure.) (01/20/2021 Complaint; 02/26/2021 Answer)

Performline Inc. v. Apogee Events Inc., No. 650217/2021 (N.Y. Sup. Ct. N.Y. Cty. 2021) (Plaintiff sues for defendant for defendant’s failure to refund plaintiff’s deposit, which was paid to defendant in exchange for defendant’s agreement to host an event for plaintiff at defendant’s facility in May 2020, arguing that the parties’ contract provides that if defendant was unable to host an event due to a force majeure event, such as governmental shut down orders or an act of God, then defendant would refund plaintiff’s deposit in full within 60 days; Plaintiff moves for default judgment.) (01/12/2021 Complaint; 03/11/2021 Affirmation in Support of Motion for Default Judgment)

Roslyn Events Corp. v. Ber Dur Realty Corp., No. 607968/2020 (N.Y. Sup. Ct. Nassau Cty. 2020) (Tenant seeks declaratory relief and to enjoin landlord from holding tenant in default of commercial lease, arguing that COVID-19 pandemic and New York City regulations triggered the force majeure clause and excused rent payment obligations.) (08/05/2020 Complaint; 08/05/2020 Order to Show Cause)

Schulte Roth & Zabel LLP v. Metropolitan 919 3rd Avenue, No. 655632/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff tenant seeks breach of contract damages and a declaration that it is entitled to rent abatement because the pandemic and/or the Governor’s Orders constitute force majeure events; Defendant moves to dismiss complaint, arguing that the lease specifically provides that force majeure events will not affect tenant’s obligations to pay rent, that tenant cannot demonstrate that the alleged force majeure events “prevented or delayed” its ability to pay rent, and that the pandemic is not a force majeure event because it does not resemble the listed force majeure events (strikes, labor troubles, accidents, laws, governmental preemption in connection with a national emergency, Legal Requirements, or conditions of supply and demand which have been or are affected by war); Plaintiff argues that the rent abatement provision is triggered by force majeure events, and that the force majeure event need only have inhibited Plaintiff’s ordinary conduct of business; Defendant replies that Plaintiff’s interpretation of the rent abatement clause is grammatically strained and that the alleged force majeure events do not trigger the abatement clause.) (10/23/2020 Complaint; 01/08/2021 Defendant’s MOL ISO Motion to Dismiss; 02/12/2021 Plaintiff’s MOL in Opposition to Motion to Dismiss; 03/05/2021 Defendant’s Reply in Further Support of Motion to Dismiss)

Simpson Thacher & Bartlett LLP v. VBGO 425 Lexington LLC, No. 653415/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff/tenant seeks a declaration that it is entitled to rent abatement under Force Majeure provision of commercial lease, alleging that it was forced to vacate its premises for a period of sixty (60) days due to a government order and a “national or other public emergency”; Parties stipulate to discontinue the action, with prejudice.) (07/27/2020 Complaint; 8/19/2020 Reply to Counterclaims; 11/19/2020 Stipulation Discontinuing Action with Prejudice)

Trustees of Columbia Univ. v. Edison Ballroom LLC, No. 156789/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff seeks to recover deposit made to Defendant event space provider, arguing that the contract provides that the deposit must be refunded if a force majeure event occurs and that Governor’s Orders prohibiting non-essential gatherings were force majeure events because the Orders prevented the contracted event from occurring; Defendant argues that the contract should simply be suspended until performance is possible; Plaintiff files summary judgment motion seeking a full refund of its deposit, arguing that the pandemic and Governor Cuomo’s “PAUSE plan” fall within the scope of the force majeure clause which provides that defendant “shall promptly refund 100 percent of all payments made by [plaintiff]” in the event of a force majeure event, including circumstances beyond the parties’ reasonable control and governmental authority orders; Defendant again argues that the Court should suspend both parties’ contractual obligations “during the period of emergency” because the pandemic was so far beyond the parties’ possible contemplation.) (08/26/2020 Complaint; 9/28/2020 Answer with Counterclaims; 10/14/2020 Reply to Counterclaims; 01/07/2021 Plaintiff’s MOL ISO Motion for Summary Judgment); 01/28/2021 Defendant’s MOL in Opposition to Motion for Summary Judgment and Cross-Motion for Summary Judgment)

Valentino U.S.A. Inc. v. 693 Fifth Owner LLC, No. 652605/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff/tenant seeks a declaration that (i) the lease of its commercial property has been frustrated by the COVID-19 pandemic and related Executive Orders or (ii) in the alternative, that its performance under the lease agreement has been rendered impossible; Defendant/landlord seeks dismissal of the Complaint on the grounds that the lease contains a clause allocating to plaintiff/tenant he risk of closure due to “restrictive governmental laws or regulations … acts of God … or other reason of a similar or dissimilar nature”; Court grants motion to dismiss, ruling that the contract expressly allocated the risk to the Plaintiff because the allocation of risk clause was drafted broadly and encompasses the pandemic, notwithstanding the fact that the pandemic was not specifically enumerated; Plaintiff files notice of appeal.) (06/21/2020 Summons and Complaint; 07/27/2020 Defendant’s Memorandum of Law in Support of Motion to Dismiss; 9/14/2020 Plaintiff’s Opposition to Motion to Dismiss; 09/28/2020 Defendant’s Reply Memorandum of Law in Support of Motion to Dismiss; 01/27/2021 Order Granting Motion to Dismiss; 02/17/2021 Notice of Appeal)

Victoria’s Secret Stores v. Herald Square Owner LLC, No. 651833/2020 (N.Y. Sup. Ct. N.Y. Cty. 2020) (Plaintiff seeks to annul commercial property lease under doctrines of frustration of purpose and impossibility resulting from COVID-19 and related government mandated shutdowns; Defendant argues the lease explicitly allocated the risk of plaintiff tenant being unable to occupy the premises in the absence of a force majeure clause in the lease; Defendant seeks summary judgment of Plaintiff’s counts on the same grounds; Plaintiff opposes summary judgment, arguing that the absence of a force majeure clause does not preclude frustration of purpose and impossibility excuses; Defendant argues in further support of summary judgment that the lease allocated risk for this type of harm, and the precise cause of harm is irrelevant; Court grants Defendant’s motion for summary judgment in its entirety, finding that the parties’ lease was drafted in a broad and encompassing manner and that, while the lease did not enumerate government law as a specific cause, the lease allocated risk for this type of harm to the Plaintiff; Plaintiff appeals summary judgment; Defendant moves for partial summary judgment on its breach of contract counterclaims, arguing that Court’s ruling resolved Plaintiff’s affirmative defenses of frustration, impossibility, and unjust enrichment and that Plaintiff’s remaining boilerplate defenses fail.) (06/08/2020 Complaint; 06/29/2020 Answer and Counterclaims; 06/29/2020 Defendant’s Memorandum of Law in Support of Motion for Summary Judgment; 07/29/2020 Plaintiffs’ Memorandum of Law in Opposition to Motion for Summary Judgment; 08/13/2020 Defendant’s Reply Memorandum of Law in Further Support of Defendant’s Motion for Summary Judgment; 8/19/2020 Reply to Counterclaims; 01/07/2021 Order Granting Motion for Summary Judgment; 02/05/2021 Notice of Appeal; 02/16/2021 Defendant’s MOL ISO Motion for Partial Summary Judgment on Defendant’s Counterclaims

1 We are aware of only one exception, Khan v. Cinemex USA Real Estate Holdings Inc., No. 4:20-cv-01178 (S.D. Tex. 2020), in which the parties entered into an equity purchase agreement on March 10, 2020, over a month after the World Health Organization declared the virus a global health emergency. In its complaint, plaintiff preemptively argued that defendant’s failure to close was not excused pursuant to a material adverse effect clause because that clause expressly excluded pandemics and because, given the time of contracting, the pandemic was foreseeable. Defendant moved to dismiss on the ground, among others, that its failure to close was excused under the doctrines of impossibility and frustration. The case was later stayed when the defendant declared bankruptcy, and no decision was issued on the question of whether performance was excused.

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