COVID-19

June 4, 2023

Miami Herald Real Estate Column: “Real Estate Counselor: Ruling Finds Health Club On Hook for Lease Payments During COVID Closure”

The firm’s latest Miami Herald column was authored by managing partner Oscar R. Rivera and appears in today’s edition of the newspaper. The article, which is titled “Real Estate Counselor: Ruling Finds Health Club On Hook for Lease Payments During COVID Closure,” focuses on the government-mandated COVID-19 business closures at the start of the pandemic in 2020. For LA Fitness and its parent company Fitness International, it equated to months of closed facilities that were generating no revenue but requiring monthly lease payments. Oscar’s article reads:

. . . There was a great deal of conjecture about whether the “force majeure” provisions in leases would shield businesses that were required to close due to governmentally issued mandates from their payment obligations under their leases. These clauses typically relieve parties from the performance of some or all contractual obligations, and from the consequences of failing to perform those obligations, where performance is rendered effectively impossible by circumstances beyond their control. Many thought the COVID closure fit the bill for the application of such provisions to a tee, and litigation would surely ensue.

Lawsuits were indeed filed, and one of the first cases over this exact question to reach conclusion by a state appellate court was decided recently in favor of the landlord for an LA Fitness location in Bradenton. The state’s Second District Court of Appeal affirmed the lower court’s summary judgment ruling and found the health club would not be entitled to a refund of its lease payments made during the mandated closure period.

The company made all rent payments required under the lease during the lockdown, which was from March 17 to June 12, 2020, but it eventually filed suit in August 2021 seeking a refund of those payments. It primarily based its claims on the lease’s force majeure clause, arguing that it was excused from paying rent during the closure period, and it also relied upon the common law doctrines of frustration of purpose, impossibility of performance, and impracticability of performance.

March 15, 2021

A Message from Our Managing Partner: One Year Post COVID-19 Closures

by Siegfried Rivera

Siegfried Rivera

It is hard to believe that we are officially one year into the COVID-19 pandemic. As the entire world continues to battle the virus and adjusts to the daily changes in protocol and restrictions, our firm remains fully operational, staying up-to-date with the latest news and making decisions based on those developments.

With our staff’s, clients’, and families’ health and safety remaining of utmost importance, our firm continues to operate with a majority of our attorneys and support staff working remotely. We are happy to say that we have all remained safe during this time and the initial closures never caused any interruptions or delays in service. We have also pivoted in the way we serve our clients by upgrading our network’s infrastructure and making improvements to how we conduct business, such as enhancing our data security and offering digital document signature options as well as online notaries. Though we’ve all had to overcome our own set of challenges, we have conquered them together and have only become stronger.

April 20, 2020

Article by John Catalano in Today’s Miami Herald: “Owners of Retail Properties, As Well As Tenants, Will Feel Pandemic’s Bite”

by Siegfried Rivera

Siegfried Rivera

An article authored by firm shareholder John Catalano is featured in the Business Monday section of today’s Miami Herald. The article, which is titled “Owners of Retail Properties, As Well As Tenants, Will Feel Pandemic’s Bite,” focuses on the prospects for rent deferrals and insurance claims for the owners of closed stores and the spaces they occupy. It reads:

. . . It has quickly become apparent that the outbreak of COVID-19 will take a massive toll not only on retail tenants, but also on the owners of retail properties. One of the first places that retailers will look for potential relief will be their lease agreements, which may include force majeure clauses and other provisions that are designed to cover business disruptions caused by catastrophes and acts of God.

These provisions will often list events such as floods, earthquakes, war, strikes, government regulations, civil disorder, etc., as triggers that would delay parties’ obligations under the contract. The applicability of the spread of COVID-19 as a force majeure triggering event may depend on the exact wording used in the lease. Some may generally stipulate “conditions beyond the parties’ control, including but not limited to Acts of God” as qualifying conditions, while others may specify circumstances such as “war, terrorist act, government regulation, disaster or strikes.” While leases widely differ in their form, modern leases for most major retail centers include a carve-out that the occurrence of a force majeure event does not permit late payment or nonpayment of rent by a tenant. Continue reading