In what attorneys say is the first ruling of its kind in Miami-Dade County, a popular retail store on Lincoln Road in Miami Beach is required to pay rent despite hardships caused by the COVID-19 pandemic.
A force majeure clause is common in leases and can sometimes allow a party to not fulfill their contract when there is a circumstance beyond their control or an “act of God.”
Guess? Retail Inc., the clothing store, alleged that the COVID-19 pandemic left it unable to pay its rent. The retailer refused to pay after it had to close its operations around March of last year — something Guess said was done to protect the health and safety of customers and employees, and comply with government safety guidelines.
“This seems to be a case of the first impression in South Florida that will likely be relied upon by other jurists as litigation regarding force majeure provisions move through the court system,” said Bruce Weil of Boies Schiller Flexner, one of the attorneys who represented the landlord, The Denison Corp.
Weil argued there wasn’t anything unique about the clause, and that its provisions are pretty standard.
The lease states that the term force majeure encompasses, “acts of God, labor disputes (whether lawful or not), material or labor shortages, restrictions by any governmental authority, civil riots, floods, or other cause beyond the control of the party asserting the existence of force majeure.”
It also said, “Notwithstanding anything to the contrary in this lease, tenant shall not be excused from payment of base rent, operating costs, or any other sum due under this lease by reason of force majeure.”
Miami-Dade Circuit Judge Peter R. Lopez found that The Denison Corp.’s lease had an unambiguous force majeure clause and ruled Guess must pay no matter what — even during a pandemic.
The ruling is a win for landlords who still need that income to pay their expenses and continue operation. Weil said he hopes that landlords and tenants will be able to sit down and work together to avoid lawsuits since the pandemic has caused hardships for everyone.
Weil and his associate Laselve Harrison worked together in the case and believe the lawsuit will change the way all contracts are written in the future to make sure that pandemics are specifically named as an example of a force majeure incident.
“Force majeure clauses are certainly going to be scrutinized going forward because of the pandemic, with both landlords and tenants seeking clarity about what circumstances excuse performance under a lease,” said Weil.
Mark Steiner of Liebler, Gonzalez & Portuondo represented Guess and did not immediately respond to a request for comment.
Source: GlobeSt.
