Retail Tenant Gets Temporary Force Majeure Reprieve from Eviction

What Happened: A clothing retailer cited the force majeure clause in its leases as an excuse for not paying rent during the COVID-19 shutdown months of April and May 2020. Not so fast, responded the landlord, noting that the clause:

• Defined a “force majeure event” as one resulting from causes “beyond Tenant’s reasonable control;” and
• Specifically stated that the clause doesn’t apply to “Tenant’s obligation to make payments due under the Lease.”

It’s an open-and-shut case, the clause doesn’t apply, and we should get summary judgment, the landlord argued.

Ruling: The Texas federal court found that the tenant did, in fact, have a valid case for force majeure and deserved the chance to prove it at trial.  

Reasoning: We’ve been down this road before, said the court, citing what has become one of the leading cases on whether pandemic shutdowns are a force majeure event. In In re Hitz Restaurant Group, (616 B.R. 374), the federal bankruptcy court ruled that COVID-19 shutdown orders were a force majeure that partially excused a restaurant’s failure to pay rent. The clause in this case was a lot like the one in Hitz, the court continued, specifically the phrase purporting to exclude nonpayment of rent from the clause, which was similar to language in Hitz stating that “lack of money” doesn’t count as a force majeure event. But the Hitz court brushed that language aside by reasoning that the closure orders rather than the lack of money was the force majeure event. And who’s to say that the trial court in this case wouldn’t come to the same conclusion?

• Tanger Mgmt., LLC v. Haggar Direct, Inc., 2021 U.S. Dist. LEXIS 89509