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THE CASUALTY CLAUSE IN THE LEASE DID NOT APPLY TO EXCUSE DEFENDANT-TENANT’S NONPAYMENT OF RENT DURING THE COVID PANDEMIC; THE FORCE MAJEURE, FRUSTRATION OF PURPOSE AND UNCLEAN HANDS DOCTRINES ALSO DID NOT APPLY (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court, determined (1) the casualty clause in the lease did not excuse defendant’s failure to pay rent during the COVID pandemic, (2) the force majeure doctrine did not apply, (3) and the frustration-of-purpose and unclean-hands doctrines did not apply:

… [W]e conclude that plaintiff established as a matter of law that defendant was not entitled to a rent abatement under the section of the lease providing that defendant was “not required to pay [r]ent when the [r]ental [s]pace [was] unusable” as a result of “damage” caused by a “fire or other casualty.” “That [section] of the lease refers to singular incidents causing physical damage to the premises and does not contemplate loss of use due to a pandemic or resulting government lockdown” … . * * *

… [T]he lease “contain[s] no force majeure provision, much less one specifying the occurrence that defendant would now have treated as a force majeure, and, accordingly, there is no basis for a force majeure defense” … . * * *

… “[T]he doctrine of frustration of purpose does not apply as a matter of law where, as here, the tenant was not ‘completely deprived of the benefit of its bargain’ ” … .

… [T]here is no triable issue of fact on its unclean hands defense because, even if defendant had made genuine attempts to procure another tenant, plaintiff was under no contractual obligation to seek or approve a sublease with a third party for the relatively short period remaining on the commercial lease, and there is nothing immoral or unconscionable about plaintiff’s decision to seek the unpaid rent that defendant was contractually obligated to pay … . Arista Dev., LLC v Clearmind Holdings, LLC, 2022 NY Slip Op 04451, Fourth Dept 7-8-22

Practice Point: The casualty clause in the lease applied only to singular events, not to the COVID pandemic. Defendant’s nonpayment of rent during the COVID pandemic was not excused by the terms of the lease.

 

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