In what is reported in the Daily Business Review to be 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. 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. The Denison Corporation, a Miami Beach-based family business, sued in May for $291,162 in rent and other expenses owed over three months. But Guess turned around and countersued Denison. The retailer sought a refund on some payments it had made since March 17 and said it should get a break going forward, according to the suit.
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 Court Judge Peter Lopez shot down Guess’ countersuit, saying the lease is clear that rent still has to be paid during force majeure events, including government-imposed closures for the 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.”
At the time this decision was entered, it was reported to be a case of the first impression. It is likely to be relied upon by other jurists as litigation regarding force majeure provisions move through the Miami-Dade court system. The ruling is a clear win for landlords who still need that income to pay their taxes (no rebate there), expenses and to continue operations. It is hoped that parties facing these issues will attempt to work together to avoid these sorts of lawsuits, since the pandemic has caused hardships for everyone. In the meantime, lawsuits such as these 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 and where the risk of such a situation should fall.
If you are interested in receiving Judge Lopez’ decision or wish to discuss the issue of force majeure further, please feel free to reach out to me at blog@miamimaritimelaw.co or 305.377.3700.