Another Restaurant Tenant’s COVID-19 Impossibility Defense Bites the Dust

June 23, 2022

What Happened: February 2020 was the last month a high-end steak house restaurant tenant paid full rent. When COVID-19 hit, the restaurant had to shut down and later could open only for outdoors and indoor dining at very limited capacity. In September, the tenant moved out at the landlord’s demand. Three months later, the landlord found a replacement at a much lower rent. It then sued the tenant and guarantor for unpaid and unjust enrichment in using the space without paying rent for six months.

What Happened: February 2020 was the last month a high-end steak house restaurant tenant paid full rent. When COVID-19 hit, the restaurant had to shut down and later could open only for outdoors and indoor dining at very limited capacity. In September, the tenant moved out at the landlord’s demand. Three months later, the landlord found a replacement at a much lower rent. It then sued the tenant and guarantor for unpaid and unjust enrichment in using the space without paying rent for six months. The defendants claimed that the governor’s shutdown orders made it impossible for them to perform their lease obligations.

Ruling: The Connecticut court upheld the trial court’s rejection of the impossibility defense.

Reasoning: Although the shutdown orders made the restaurant less profitable, they didn’t make it impossible to run, especially given that takeout and curbside options were still available. The lease didn’t require the tenant to operate a profitable restaurant, only a first-class one, the court reasoned.  

  • AGW Sono Partners, LLC v. Downtown Soho, LLC, 2022 Conn. LEXIS 125

 

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