Pandemic Not Basis for Refusal to Pay Rent Under Commercial Lease

On January 27, 2021, Justice Borrok of the New York County Commercial Division issued a decision in Valentino U.S.A., Inc. v. 693 Fifth Owner LLC, 2021 NY Slip Op. 50119(U), holding that the COVID pandemic was not a basis for a refusal to pay rent under a commercial lease, explaining:

Valentino U.S.A., Inc.'s (Valentino) complaint is dismissed pursuant to CPLR §§ 3211(a)(1) and (a)(7) because pursuant to Section 21.11 of the Lease, dated as of May 3, 2013, by and between Thor 693 LLC and Valentino (the Lease) the parties expressly allocated the risk that Valentino would not be able to operate its business and that Valentino is therefore not forgiven from its performance, including its obligation to pay rent by virtue of a state law. The fact that the COVID 19 pandemic was not specifically enumerated by the parties does not change the result because the Lease is drafted broadly and encompasses the present situation by providing that nothing contained in the Section 21.11 of the Lease including restrictive governmental laws or regulations, certain cataclysmic events, or other reason of a similar or dissimilar nature beyond the reasonable control of the party delayed in performing work or doing acts required shall excuse the payment of rent. For the avoidance of doubt, to be an eviction, constructive or actual, there must be a wrongful act by the landlord which deprives the tenant of the beneficial enjoyment or actual possession of the demised premises. The Plaintiff's failure to plead that it moved out of the subject premises or that the landlord substantially interfered with its use and possession (i.e., as opposed to the temporary interference by a state law) dooms its claim for constructive eviction. On the record before the court, it appears that the Valentino store continued to operate as of July 22, 2020. To wit, a sign was placed on the store indicating that it was open for curbside retail and by appointment. Valentino's conclusory and general allegation that the landlord failed to maintain the premises, even taken as true as court must at this stage of the proceeding, lacks causation. Finally, to the extent that Valentino indicated that after filing this action, it subsequently made the decision to move out and vacate the premises also does not change the result. No wrongful act of the landlord is alleged to have caused the necessity of this decision. Thus, the complaint must be dismissed.

(Internal quotations and citations omitted).

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.