Playing the COVID card: COVID-related force majeure litigation in U.S. courts

We have reviewed all U.S. decisions as of the date of this publication addressing whether COVID-19 and/or COVID-19-related government measures constitute force majeure events justifying a suspension of contractual obligations.  This article includes brief summaries and excerpts of the relevant decisions that we have identified in various jurisdictions.  Based on our review of the case law addressing this issue, we note the following factors courts generally consider in evaluating whether failure to perform based on COVID-19 or related government measures constitutes a force majeure event that excuses performance.

1. Courts typically begin the analysis of whether a force majeure event has occurred by examining the language of the force majeure provision at issue.  Specifically, in cases where a party alleges a force majeure event based on COVID-19 or related government measures, the court will look at whether the force majeure provision in the contract explicitly includes pandemics and/or government measures as force majeure events.  See Sections I and II below.   

2. Courts may also look at whether there is a broad, catchall category in the force majeure provision, such as “any other circumstances beyond the reasonable control of the relevant party.”  Even where force majeure provisions do not specifically include “pandemics” – which is very often the case, particularly with respect to any contract entered prior to 2020 – some courts have found that COVID-19 and related government measures fall within broad, catchall categories of force majeure provisions.  See  Lampo Grp., LLC v. Marriott Hotel Servs., Inc., No. 3:20-CV-00641, 2021 WL 3490063 (M.D. Tenn. Aug. 9, 2021) (“It appears that the COVID pandemic plus the attendant restrictions on business operations could, indeed, be deemed a force majeure that would authorize termination of the Agreement.”); JN Contemp. Art LLC v. Phillips Auctioneers LLC, 507 F. Supp. 3d 490, (S.D.N.Y. 2020) (“The pandemic and the regulations that accompanied it fall squarely under the ambit of Paragraph 12(a)’s force majeure clause.”).  See Section I below. 

Other courts have found that COVID-19 and related government measures did not constitute a force majeure event under the contract.    See Vance v. Diversified Invs., No. A-1210-20, 2021 WL 4854109 (N.J. Super. Ct. App. Div. Oct. 19, 2021) (finding that the campground closed pursuant to an executive order, and that the force majeure provision did not include government acts or directives as force majeure events);  Regal Cinemas, Inc. v. Town of Culpeper, No. 3:21-CV-4, 2021 WL 2953679 (W.D. Va. July 14, 2021) (finding that the only contractual provision resembling a force majeure provision did not actually mention the term “force majeure” and only contemplated instances of physical damage).  See Section II below. 

3. Even if a force majeure event has occurred, courts may decline to find that the obligation to perform under the contract is suspended if the party seeking to avoid performance cannot establish that the force majeure event caused the failure to perform.  For example, courts have rejected force majeure arguments where the party seeking to excuse its failure to perform in fact continued to perform and/or demonstrated an ability to perform during the pandemic.  See Section III below (and specifically, the decisions in LA Simple, De La Cruz and Future Street).

4. Courts may also consider what the contract says about the impact of a force majeure event, as some contracts (like many leases) provide that force majeure events do not excuse performance where performance can be accomplished simply by making payments, or otherwise have exceptions to the force majeure provision. See Section IV below.

5. Courts may evaluate whether the party invoking the force majeure provision provided adequate notice in accordance with the contract.  See Section V below.

6. Other than cases where the contract specifically made mitigation a requirement for application of the force majeure provision, courts are not likely to find that mitigation is directly relevant to whether the force majeure provision has been triggered.  However, under common law, courts recognize that injured parties have a duty to take reasonable steps to mitigate their damages, and that the non-breaching, injured party cannot recover damages to the extent it could have avoided losses through reasonable efforts.  See Section VI below.

I. Decisions finding that COVID-19 and/or related government measures may excuse performance under a force majeure provision

Big City Dynasty Corp. v. FP Holdings, L.P., No. 219CV02078APGNJK, 2021 WL 1949384 (D. Nev. May 14, 2021)

• Plaintiffs (Ryan Raddon, a performing artist and associated corporation, Big City) entered into an Artist Residency Agreement with Defendant (FP Holdings, ultimate owner of a Las Vegas resort and casino) pursuant to which Raddon would perform as a resident performer at a nightclub in 2019 and 2020.   There was no dispute that  that FP anticipatorily breached the agreement in November 2019 by closing the nightclub and refusing to schedule any more performances in 2019 or 2020.  Both Plaintiffs and Defendant moved for summary judgment concerning the amounts owed to Plaintiffs.
• The court agreed with Defendants that issues of fact remained as to whether Defendants’ closure of the nightclub in 2019 (pre-pandemic) caused all of Plaintiffs’ damages, given that in 2020, Defendants would have been forced to close the club anyway due to government measures in response to COVID-19, and a jury could find that the government shutdown orders triggered the force majeure provision, thus excusing non-performance:
  • Viewing the facts in the light most favorable to FP on the plaintiffs' motion for summary judgment, genuine issues of fact remain regarding the plaintiffs' damages because in March 2020, the Governor closed all nightclubs in Nevada due to the Covid-19 pandemic. As a result, a reasonable jury could find that even if FP had not breached in November 2019, the parties would have been unable to perform for at least some period in 2020 due to the shutdown orders. The contract's force majeure clause provides that performance will be excused if either party's performance “is prevented, rendered impossible or materially frustrated by any act, requirement or regulation or action of any public authority or bureau ... or any other cause beyond either party's reasonable control.”  A reasonable jury could find the Governor's shutdown orders triggered this clause. I therefore deny the plaintiffs' motion for summary judgment on damages.
  • Viewing the facts in the light most favorable to the plaintiffs on FP's motion, genuine disputes remain regarding how many performances the parties could or would have scheduled in 2020 before the shutdown, and whether additional performances could have been rescheduled at a reconfigured nightclub or dayclub throughout 2020. The plaintiffs contend that after the shutdown orders, some entities reconfigured their clubs to reopen on a more limited basis, so FP could have done the same to allow the parties to perform. FP responds that the contract required Raddon to perform at the Palms' nightclub or dayclub, not a lounge, and the examples the plaintiffs point to are extremely limited venues where an internationally known DJ like Raddon would not be expected to perform. A jury will have to sort out whether and when the parties could have performed despite the shutdown orders, including whether the parties could have rescheduled as the force majeure clause required the parties to attempt to do and whether FP could have reconfigured its nightclub or dayclub to allow the parties to perform their contractual obligations. I therefore deny FP's motion for summary judgment on damages.

JN Contemp. Art LLC v. Phillips Auctioneers LLC, 507 F. Supp. 3d 490 (S.D.N.Y. 2020)

• Art seller brought action against auction house, alleging claims under New York law for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, and equitable estoppel, arising from termination of agreement to sell painting due to COVID-19 pandemic. Auction house moved to dismiss.
• Court granted motion to dismiss, including finding that the force majeure provision was triggered by COVID-19 and related government measures – as the force majeure provision included broad, catchall language as well as “natural disasters” – and precluded the breach of contract claim:
  • “Force majeure clauses are to be interpreted in accord with their purpose, which is to limit damages in a case where the reasonable expectation of the parties and the performance of the contract have been frustrated by circumstances beyond the control of the parties.” Constellation Energy Servs. of New York, Inc. v. New Water St. Corp., 146 A.D.3d 557, 46 N.Y.S.3d 25, 27 (1st Dep't 2017) (citation omitted). Therefore, “when the parties have themselves defined the contours of force majeure in their agreement, those contours dictate the application, effect, and scope of force majeure.” Id. (citation omitted). Although force majeure clauses “are not to be given expansive meaning,” they nevertheless encompass “things of the same kind or nature as the particular matters mentioned.” Kel Kim Corp. v. Cent. Markets, Inc., 70 N.Y.2d 900, 902-03, 524 N.Y.S.2d 384, 519 N.E.2d 295 (1987).
  • The COVID-19 pandemic and the attendant government-imposed restrictions on business operations permitted Phillips to invoke the Termination Provision. The pandemic and the regulations that accompanied it fall squarely under the ambit of Paragraph 12(a)’s force majeure clause. That clause is triggered when the auction “is postponed for circumstances beyond our or your reasonable control.”
  • Paragraph 12(a) also provides examples of circumstances beyond the parties’ reasonable control. Those circumstances include “without limitation” a “natural disaster.” It cannot be seriously disputed that the COVID-19 pandemic is a natural disaster. One need look no further than the common meaning of the words natural disaster. Black's Law Dictionary defines “natural” as “[b]rought about by nature as opposed to artificial means,” and “disaster” as “[a] calamity; a catastrophic emergency.” Natural, Disaster, Black's Law Dictionary (11th ed. 2019). The Oxford English Dictionary likewise defines a “natural disaster” as “[a] natural event that causes great damage or loss of life such as a flood, earthquake, or hurricane.” By any measure, the COVID-19 pandemic fits those definitions.

Nelkin v. Wedding Barn at Lakota's Farm, LLC, 72 Misc. 3d 1086, 152 N.Y.S.3d 216 (N.Y. Civ. Ct. 2020)

• A couple entered a contract with Defendant to rent a venue for a wedding.  After the Governor of the State of New York issued Executive Orders banning people from congregating because of the COVID-19 virus, Plaintiffs sought a refund based on a force majeure provision of the contract.  Defendant refused the refund, and the couple moved for summary judgment that Defendant was obligated to refund certain amounts.
• The court agreed with the couple’s force majeure argument, finding that the venue breached the contract and ordering it to pay back to the couple the “refundable deposits” that the contract specifically required to be refunded in the event of a force majeure event:
  • Here, the Contract contains a force majeure provision, which specifically includes “government regulations” and “disasters.”
  • The government regulations present in May of 2020 were sufficient for the Plaintiffs to exercise the force majeure provision of the Contract on the basis that the Defendant would not be able to perform on October 10, 2020. The Court recognizes that the Executive Orders issued during the initial months of the COVID-19 pandemic made it very difficult to predict what prohibitions would be in effect in the foreseeable future. As such, determining whether there was a sufficient basis for the Plaintiffs to exercise the force majeure provision must focus on the circumstances present at the time they chose to cancel the contract and whether those circumstances were sufficient to show that the Defendant would not be able to perform on the Contract.

Lampo Grp., LLC v. Marriott Hotel Servs., Inc., No. 3:20-CV-00641, 2021 WL 3490063 (M.D. Tenn. Aug. 9, 2021)

• Plaintiff sought a declaratory judgment that a force majeure provision gave it the unilateral right to terminate an agreement - entered in 2017 pursuant to which Plaintiff was obligated to hold an event at a resort in May 2020 – and be excused from performance, and that it is entitled to a refund of amounts paid to Defendant.  Plaintiff argued that COVID-19 itself and related government measures constituted force majeure events that allowed it to terminate the agreement.
• Defendant Marriott argued in response that this basis for terminating the agreement fails, because “the events that allegedly caused [Plaintiff’s] nonperformance are not specifically identified in the Force Majeure Clause” and “do not fall within the ‘catch-all’ provision because they are not of the type as those specifically listed.” (Doc. No. 38, at 10.)
• The court was not persuaded by Defendant’s argument that COVID-19 and related measures could not constitute a force majeure event under the contract, but denied Plaintiff’s motion for judgment on the pleadings on the grounds that there were issues of fact that needed to be decided:
  • As discussed above, the principle of ejusdem generis is a common law principle of contract construction pursuant to which, “when a general word or phrase follows a list of specifics, the general word or phrase will be interpreted to include only items of the same type as those listed.” Ergas, 114 So. 3d at 290. Under this principle, the “catch-all” phrase in the Force Majeure Clause does not broadly encompass any “circumstances beyond [a party's] control”; it only excuses performance based on such circumstances that are of the same type as those enumerated in the Force Majeure Clause. Marriott argues that, under this principal, “[t]he alleged inability to provide the services or amenities outlined in the contract [is] not specifically identified in the Force Majeure Clause and [does] not fall within the ‘catch-all’ provision because [it is] not of the type as those specifically listed (i.e., acts of God, war, acts of domestic terrorism, or strikes).” (Doc. No. 38, at 13.)
  • The court is not fully persuaded. It appears that the COVID pandemic plus the attendant restrictions on business operations could, indeed, be deemed a force majeure that would authorize termination of the Agreement.
  • There are questions of fact involving what Hotel amenities were actually curtailed, whether these amenities were part of the “Hotel facilities” as that term is used in the Force Majeure Clause, and, alternatively, whether the Hotel was otherwise contractually obligated to make these amenities available.

In re Cinemex USA Real Est. Holdings, Inc., 627 B.R. 693 (Bankr. S.D. Fla. 2021)

• Debtors (Cinemax) operated 41 movie theaters across 12 states, and filed Voluntary Chapter 11 Petitions in bankruptcy court in April 2020. At the time of filing, the Debtors, collectively, were party to 41 unexpired real property leases for where they operate upscale dine-in movie theaters.  One of those leases (the “Lakeside Lease”) is between the Debtor CB Theater as Lessee and Cobb Lakeside, LLC (“Lakeside”) as Lessor. The Lakeside Lease relates to a movie theater property (the “Lakeside Theater”) located in Lakeland, Florida.
• Lakeside argued that Article 59 of the Lakeside Lease meant that the obligation to pay rent was not excused or delayed by force majeure events, and thus the full rent from the date Debtors filed for bankruptcy is due and payable.
• The court found that the provision Lakeside relied on was not actually the force majeure provision in the lease, and that under the actual force majeure provision (Article 8), CB Theater was excused from paying rent until the Lakeside Theater was allowed to reopen because the COVID-19 pandemic and related government measures fell within the force majeure provision:
  • Article 8, titled “Beginning Construction; Delivery by Landlord” appears, notwithstanding its title, to be the force majeure clause. That provision states “[i]f the performance by Landlord or Tenant of any of its obligations under this Lease is delayed by reason of “Force Majeure”, the period for the commencement or completion thereof shall be extended for a period equal to such delay.” (emphasis added). The Lakeside Lease definition of force majeure includes “acts of God” and “governmental restrictions” and, “any other act over which the performing party has no control, excluding financial ability of the performing party.”
  • There is no question that the COVID-19 pandemic was completely unforeseeable (although a slow down in audience attendance or a dearth of new releases is not), and certainly not the fault of either contract party. But, once the Lakeside Theater was allowed to reopen, it was possible for CB Theater to reopen; CB Theater chose not to do so for what appears, based on the Marti declaration, to be primarily economic concerns. 

1600 Walnut Corp. v. Cole Haan Co. Store, 530 F. Supp. 3d 555 (E.D. Pa. 2021)

• A commercial landlord brought an action against tenant for failure to pay rent and other fees.  Tenant brought counterclaims, including for a declaratory judgment for rent abatement for frustration of purpose.
• The court recognized that “[t]he COVID-19 pandemic is an event covered in the force majeure clause” but found that performance was not excused because the force majeure provision specifically stated that force majeure events would not excuse obligation to pay rent.  This decision is discussed in more detail in Section IV.

Regal Nails, Salon & Spa, LLC v. Ha, No. 20-14388-CIV, 2021 WL 4976529 (S.D. Fla. Sept. 9, 2021)

• The Defendant entered into a franchise agreement with Plaintiff to operate a Regal Nails salon in Port St. Lucie on April 24, 2019. The Defendant also agreed to sub-lease the salon premises (inside Wal-Mart) from the Plaintiff pursuant to a sublease agreement.  In June 2020, Defendant stopped making rent and franchise fee payments and in early July abandoned the premises and stopped operating the salon. Plaintiff sued for breach of contract and ultimately moved for a default judgment.
• In denying the motion for a default judgment, the court found that Defendant had articulated enough to establish “a hint of a suggestion of a meritorious case” when he appeared at an initial hearing, and specifically noted that Defendant might have a force majeure argument:
  • I take judicial notice of the fact that Florida and St. Lucie County enacted “Safer at Home” Orders for most of April 2020.  
  • These orders allowed Wal-Mart to stay open as an “essential business,” but likely did not permit operation of a nail salon inside of Wal-Mart because that is not an “essential service” as defined by these orders. Consequently, Defendant may have contractual defenses based on force majeure clauses in the relevant agreements (if any). He may also have common law defenses based on frustration of purpose or impossibility or impracticality of performance due to illness of employees or state or local measures taken in response to COVID-19. That is not to say these defenses are likely to be meritorious – indeed, courts sanction these defenses sparingly. They are sufficient to show at least a “hint” of a viable defense, however, and that is all Defendant need do at this stage of the case.

In re Hitz Rest. Grp., 616 B.R. 374 (Bankr. N.D. Ill. 2020)

• Commercial landlord moved to enforce Chapter 11 debtor-in-possession's obligation to timely pay postpetition rent, as well as for relief from stay based on debtor's nonpayment of rent and lack of adequate protection.
• The court found that the force majeure provision in the lease applied, at least in part, to certain rental payments which became due after the governor’s COVID-19 executive orders became effective:
  • Because the March lease payment became fully due and payable on March 1, 2020, and Governor Pritzker's executive order did not become effective until two weeks thereafter, the lease's force majeure clause does not excuse payment of the past-due March rent. However, the Court concludes that the force majeure clause unambiguously applies, at least in part, to the rental payments which became due thereafter.
  • The force majeure clause in this lease was unambiguously triggered by § 1 of Governor Pritzker's executive order. First, his order unquestionably constitutes both “governmental action” and issuance of an “order” as contemplated by the language of the force majeure clause. Second, that order and its extensions unquestionably “hindered” Debtor's ability to perform by prohibiting Debtor from offering “on-premises” consumption of food and beverages. Finally, the order was unquestionably the proximate cause of Debtor's inability to pay rent, at least in part, because it prevented Debtor from operating normally and restricted its business to take-out, curbside pick-up, and delivery.
  • The Court therefore rejects Creditor's three arguments and concludes that the force majeure clause partially excuses Debtor's obligation to pay rent for April, May, and June 2020. Nevertheless, Debtor is not off the hook entirely. Governor Pritzker's executive order did not prohibit Debtor from performing carry-out, curbside pick-up, and delivery services. Instead, it encouraged Debtor and other Illinois restaurants to perform those services. It follows that, to the extent that Debtor could have continued to perform those services, its obligation to pay rent is not excused by the force majeure clause. The Court therefore holds that Debtor's obligation to pay rent is reduced in proportion to its reduced ability to generate revenue due to the executive order.

II. Decisions finding that COVID-19 and/or related government measures do not constitute force majeure events

Vance v. Diversified Invs., No. A-1210-20, 2021 WL 4854109 (N.J. Super. Ct. App. Div. Oct. 19, 2021)

• Defendant operates a campground in Cape May County. Plaintiffs signed a rental contract for the October 1, 2019 to September 30, 2020 season. Full payment was due on May 31, 2020. However, in March 2020, the campground was closed pursuant to the Governor's COVID-19 Executive Order. Plaintiffs had paid a sizeable portion of the contract price, but they had not yet paid the full amount due. The campground remained closed until May 6, 2020. Prior to the campground's re-opening, plaintiffs requested a refund of their monies and Defendant denied the request, demanding payment.
• After a bench trial, the trial judge found the campground was temporarily closed under an Executive Order, not because of an act of nature. Therefore, plaintiffs were entitled to a return of the monies covering the period of March 30 to May 5, 2020. The judge also found defendant failed to mitigate its damages after learning plaintiffs did not intend to use the campsite at all. Therefore, plaintiffs were entitled to an additional refund of monies for several months.
• Defendant took the position that the contract's language prohibits any refunds for a camper's nonuse of its property due to an act of nature or for any early departure. Specifically, defendant contends its property was closed due to an act of nature between March and May 2020 and under the force majeure clause in the contract, plaintiffs were not entitled to a refund during that period of time. 
• The court disagreed with Defendant’s force majeure argument, finding that the campground was closed due to an executive order, and the force majeure clause did not include government measures:
  • We construe a force majeure clause narrowly. Hess Corp. v. ENI Petroleum US, LLC, 435 N.J. Super. 39, 47 (App. Div. 2014). A party's performance is only excused if the force majeure clause “specifically includes the event that actually prevents a party's performance.” Ibid. (quoting Kel Kim Corp. v. Cent. Mkts., Inc., 519 N.E.2d 295, 296 (N.Y. 1987)). The campground was closed pursuant to an Executive Order. Therefore, under its contract, defendant could only avoid responsibility for a refund if an “act of nature” included executive orders. We see no support for such an interpretation. Because the force majeure clause in the contract here does not include “government acts or directives,” we are satisfied the trial court correctly refunded plaintiffs their monies paid for the weeks the campground was closed.

Regal Cinemas, Inc. v. Town of Culpeper, No. 3:21-CV-4, 2021 WL 2953679 (W.D. Va. July 14, 2021)

• Regal assumed a lease agreement between a movie theater owner and town for property in Virginia.  On October 29, 2019, Regal exercised its right to extend the Lease for five years, until April 30, 2025.   In the wake of the COVID-19 Pandemic and Governor Northam's Executive Order Number 53, Regal closed its Culpeper movie theater to the public on March 23, 2020.  The Executive Order allowed for theaters such as Regal to reopen the movie theater with limited capacity and various restrictions on July 1, 2020.  Regal did so on August 28, 2020, but it temporarily suspended its operations again on October 9, 2020, “due to low attendance, lack of film product, and safety concerns, as the Commonwealth continued to report thousands of positive COVID-19 cases each day.”
• Due to the revenue declines Regal experienced during the COVID-19 pandemic, Regal did not pay the Town its quarterly rent payments on time during 2020.  On February 10, 2021, the Town sent Regal a “letter purporting to terminate the Lease under Section 19 of the Lease ....”  Regal sued the town for unlawfully terminating the Lease.
• The court rejected Regal’s argument that – even if it defaulted under Section 19 of the lease – the default was excused by the doctrine of force majeure.  The court found that the only provision in the Lease resembling a force majeure event only contemplated instances of physical damage to property and thus COVID-19 and related government measures did not trigger the force majeure provision:
  • While the Lease does not explicitly mention the term “force majeure,” Section 13 covers “Damage by Fire or Act of God” and therefore most closely resembles a traditional force majeure clause. “In interpreting any force majeure provision, courts must construe contracts as they are written.” CMA CGM S.A., 474 F. Supp. 3d at 818 (citing Vienna Metro LLC v. Pulte Home Corp., 786 F. Supp. 2d 1076, 1086 (E.D. Va. 2011)). And as discussed above, Section 13 only contemplates instances of physical “damage or destruction” to the Property. See Compl. Ex. 1 § 13. The Complaint alleges no physical damage to the property, meaning Section 13 does not excuse Regal from performing under the Lease. The Court finds that “all facts necessary to the affirmative defense appear on the face of the complaint” and will accordingly grant the motion to dismiss as to Regal's request for declaratory judgment on this proffered excuse for performing under the Lease. Goodman, 494 F.3d at 464.

III. Decisions finding that the requirement that the force majeure event caused the breach was not satisfied or requiring further discovery on that issue

Rudolph v. United Airlines Holdings, Inc., 519 F. Supp. 3d 438 (N.D. Ill. 2021)

• Three airline ticketholders filed a class action against United, alleging breach of United’s contractual obligation to refund fares for flights cancelled during the pandemic. The three named plaintiffs alleged that they had purchased United tickets and that either: (i) the plaintiffs voluntarily cancelled nonrefundable tickets; (ii) United cancelled a leg of their journey at the last minute and offered to rebook or issue a credit; or (iii) United cancelled their flight altogether. In all three circumstances, plaintiffs alleged, United refused to issue refunds.
• United moved to dismiss the case for failure to state a claim, arguing that the cancellations were due to a “Force Majeure Event,” namely, that the U.S. government and the World Health Organization declared COVID-19 a public health emergency and global pandemic, respectively. United further relied on the U.S. government’s initial “do not travel” warning followed by the travel ban, as well as the fact that certain of the plaintiffs’ destination countries closed their borders to foreign travelers.
• The court recognized that government-ordered closures fell within the force majeure provision, but found that discovery was needed into whether the cancellations at issue occurred because of economic considerations, or were due to restrictions and warnings related to the pandemic:
  • But even assuming COVID-19 and/or the related restrictions United cites qualify as Force Majeure Events, that is not enough to excuse United from offering a refund for flights it cancels. Those events also must have directly and proximately caused the cancellations. 

STORE SPE LA Fitness v. Fitness Int'l, LLC, No. SACV20953JVSADSX, 2021 WL 3285036 (C.D. Cal. June 30, 2021)

• Plaintiffs sought summary judgment regarding alleged breach of leases due to Fitness & Sports’s failure to make payments owed under the respective leases.  Plaintiffs argued that unless excused, Fitness & Sports is obligated to pay for rent and other expenses owed under the leases.
• Defendants argued that the request for summary judgment on the breach of contract claims was defeated by the presence of express force majeure provisions in each lease that excused Fitness & Sports's obligation to pay rent during the periods of government-mandated closure of its facilities.
• The Court held that the force majeure provisions did not protect Defendants from Plaintiff’s breach of contract claim because Defendants failed to show that the government closures caused them to stop paying rent:
  • A party seeking to invoke a force majeure provision must show “(1) that an event occurred meeting the contract's definition of ‘force majeure,’ and (2) that event caused the party's failure to perform.”
  • The Court agrees with Plaintiffs that, properly read, the force majeure provisions do not support Defendants’ theory that they can forever abate rent and other amounts owed under the Leases. First, as a matter of law, Defendants have not shown that they were prevented from paying rent by the government closures or that the closures caused them to stop paying rent. Instead, Defendants only submit evidence that the fitness studios could not operate as fitness studios during that time. However, that does not amount to the pandemic causing an inability to pay rent. Second, and more importantly, the force majeure provisions do not permit complete abatement of rent and other amounts owed under the Leases. As such, even if the provisions applied, they would not support a theory that the rent obligations for the period of the closures could simply be extinguished. Accordingly, the Court finds that the force majeure provisions do not protect Defendants from Plaintiffs’ breach of contract claim.

La Simple Co, Ltd. v. SLP Enterprises, LLC, No. CV 21-10058-LTS, 2021 WL 1648762 (D. Mass. Apr. 27, 2021)

• Plaintiff was the exclusive distributor of Defendant’s products in China, but sued Defendant and others alleging breach of contract and other claims, seeking injunctive relief.  Issues arose when Plaintiff failed to meet some deadlines in the spring and fall of 2020.  Defendant then terminated its agreement with Plaintiff.
• Plaintiff’s claim that Defendant breached the contract depended on one of two theories: 1) that the Distribution Agreement was validly modified in June 2020 such that La Simple's remaining obligations for that year were suspended; or 2) that the Force Majeure clause of the contract was triggered by the COVID-19 pandemic such that La Simple's obligations were suspended and its failure to satisfy the 2020 quota on the specified schedule was excused.
• The court found that Plaintiff had not established that it is likely to succeed in proving either of these theories, and thus denied the motion for injunctive relief:
  • La Simple invokes the Distribution Agreement's Force Majeure clause as an alternative basis for asserting SLP breached the contract. It claims that the clause, which would suspend its obligation to meet the 2020 quota, was triggered by COVID-19 (an “Act[ ] of God” and, thus, a “cause ... beyond the control of” La Simple). Considering this express contract provision and the unprecedented nature of the COVID-19 pandemic, the Court views this as the far more tenable basis for La Simple's claims in this action. However, even if the Force Majeure clause is logically implicated here, the burden remains with La Simple to establish a likelihood that it will succeed in proving all of the terms of the clause are satisfied.
  • Besides a handful of general statements in affidavits by two of its representatives regarding the pandemic's impact on travel, manufacturing, and demand for sunglasses, Doc. No. 6-3 at 2-3, 12-13, La Simple has offered no evidence showing in any detail when and how its ability to satisfy the relevant quota was impacted.
  • Thus, even “assuming arguendo that the pandemic and [its] effects ... are a force majeure under the [Distribution] Agreement,” La Simple “has not shown that its failure to perform its obligations” was “caused by” the pandemic as required by the language of the Force Majeure clause, Future St. Ltd. v. Big Belly Solar, LLC, No. 20-cv-11020-DJC, 2020 WL 4431764, at *6 (D. Mass. July 31, 2020), nor has it demonstrated it “continue[d] to perform its obligations to the extent possible” throughout 2020, Doc. No. 1 at 36-37. This is especially true where the record reflects that La Simple was failing to satisfy its obligations under the Distribution Agreement even before the pandemic (i.e., in 2019), and where La Simple's own exhibits reflect that it had a team of employees based in China through which it continued to “generate[ ] lots of interest and attention” and “move plenty of” SLP's products through the summer and fall of 2020. Doc. No. 1 at 49, 54; Doc. No. 6-3 at 5.

Future St. Ltd. v. Big Belly Solar, LLC, No. 20-CV-11020-DJC, 2020 WL 4431764 (D. Mass. July 31, 2020)

• On April 9, 2018, Big Belly and Future Street entered into a licensing agreement under which Big Belly granted Future Street an exclusive and perpetual license to distribute products in certain territory.  In January 2020, Future Street expressed its intent to withhold payment for purchase orders as a result of Big Belly’s failure to address product defects.
• Future Street also sought to be excused temporarily from making orders and payments due to the worldwide impact of the COVID-19 pandemic. Big Belly alleges that Future Street has selectively paid for items since March 2020, when it deemed them “necessary to its own business as well as has made clear during negotiations with Big Belly that they are able to immediately pay “hundreds of thousands of dollars” but only if Big Belly agreed to better terms. On April 15, 2020, Big Belly terminated the Agreement with Future Street.
• Future Street filed this action against Big Belly and simultaneously moved for a preliminary injunction seeking to compel performance from Big Belly pursuant to the parties’ licensing agreement. Future Street also sought a declaratory judgment.
• The court found that Future Street had not demonstrated a reasonable likelihood to succeed on the merits of its declaratory judgment cause of action, rejecting its force majeure argument:
  • Future Street argues that it also is reasonably likely to succeed on the merits since it contends that the COVID-19 pandemic and its effects qualify as a force majeure event under the Agreement “that excuses Future Street from the minimum purchase requirements under the Agreement.”
  • Even assuming arguendo that the pandemic and effects of same are a force majeure under the Agreement, Future Street has not shown that its failure to perform its obligations under the Agreement were caused by same as required under Section 24 of the Agreement. This is particularly true where certain of its obligation to pay Big Belly preceded the pandemic and it still paid some of the software and replacement part bills during the winter 2020 even as it had previously accepted prior shipments of Big Belly’s products without required payment. Accordingly, the Court concludes that Future Street has not shown that it is reasonably likely to succeed on its declaratory judgment claim that its non-performance is excused under the force majeure clause of the Agreement. 

De La Cruz & Assocs., Inc. v. Transform SR de Puerto Rico LLC, No. CV 21-1052, 2021 WL 4006024 (D.P.R. June 14, 2021)

• Plaintiff (DLCA) claimed that Defendant (Transform) breached their Amendment to Advertising Agreement when it failed to pay Agency Fees from April 2020 through March 2021 and that it is entitled to the payment of Agency Fees totaling $699,999.96 for said months.
• The court rejected Defendant’s argument that its obligation to pay agency fees was excused under the contractual force majeure provision:
  • [R]egardless of whether the COVID-19 pandemic could in some scenarios be deemed to be a force majeure, Transform has not established a causal nexus between its failure to pay Agency Fees and the COVID-19 pandemic.
  • “[I]n order to constitute a force majeure, an event must be the proximate cause of nonperformance of the contract.” 1600 Walnut Corporation, 2021 WL 1193100, at *3; see also Future Street Limited v. Big Belly Solar, LLC, Civ. No. 11020, 2020 WL 443174. at *6 (D. Mass. July 31, 2020) (“Even assuming arguendo that the pandemic and effects of same are a force majeure under the Agreement, Future Street has not shown that its failure to perform its obligations under the Agreement were caused by [the pandemic] ...”); Hong Kong Islands Line America S.A. v. Distribution Services Ltd., 795 F. Supp. 983 (C.D. Cal. 1991) (“It is well-established that in order to constitute a force majeure, an event must be the proximate cause of nonperformance of the contract.”). Transform has not cited to any record evidence that the COVID-19 pandemic constituted the proximate cause of its failure to pay Agency Fees. Mr. Thompson and Mr. Cruz both testified that Transform continued to operate during the pandemic, albeit with some significant limitations. ECF No. 47, at 62-63; ECF No. 49, at 15. Furthermore, the record evidence reflects that DLCA continued to perform work during the pandemic with Transform's consent and as many as sixty jobs were completed between March 15, 2020 and September 15, 2020. Ex. 37.

Gibson v. Lynn Univ., Inc., 504 F. Supp. 3d 1335 (S.D. Fla. 2020)

• Student brought putative class action against private university alleging university breached its contract with students, or alternatively, was unjustly enriched when it closed its facilities and transitioned to remote learning during COVID-19 pandemic. University filed motion to dismiss.
• The University Policies referenced in the Amended Complaint state that “[t]here will be no refund of tuition, [or] fees ... in the event the operation of the University is suspended at any time as a result of an act of God, strike, riot, disruption or for any other reasons beyond the control of the University.” Plaintiff argued that this Force Majeure Provision did not apply to the facts in the case because Lynn's operations were not entirely “suspended,” but instead moved online.
• The court declined to decide on the applicability of the force majeure provision, indicating that it required determination of factual issues that could not be determined on a motion to dismiss:
  • The Court notes that even when included in an undisputed express contract between parties, force majeure provisions are “narrowly construed” and “will generally only excuse a party's nonperformance if the event that caused the party's nonperformance is specifically identified.” See ARHC NVWELFL01, LLC v. Chatsworth at Wellington Green, LLC, No. 18-80712, 2019 WL 4694146, at *3 (S.D. Fla. Feb. 5, 2019). Although “[p]recedent on the enforcement of force majeure clauses is limited in Florida,” id., this District, upon addressing the applicability of a force majeure clause in the context of COVID-19 regulations, has found it to be “a factual question that cannot be determined on a motion to dismiss.” Palm Springs Mile Assocs., Ltd. v. Kirkland's Stores, Inc., No. 20-21724, 2020 WL 5411353, at *2 (S.D. Fla. Sept. 9, 2020). Here, the Court is similarly reluctant to assess the applicability of the Force Majeure Provision without the benefit of a full factual record, particularly considering that: (i) the Force Majeure Provision is found in a policy that purports not to create an express or implied contract; and (ii) government orders and guidance concerning COVID-19 are constantly evolving.

Banco Santander (Brasil), S.A. v. Am. Airlines, Inc., No. 20CV3098RPKRER, 2021 WL 4820646  (E.D.N.Y. Oct. 15, 2021)

• Banco Santander (Brasil), S.A. (“Banco Santander”) offers a credit card co-branded with American Airlines, Inc. Cardholders earn miles in American Airlines’ frequent-flier program through their purchases. Banco Santander, in turn, pays the airline for those miles. Under the parties’ agreement, the bank must buy a minimum number of miles each year, regardless of how many miles cardholders earn through their spending.
• When the COVID-19 pandemic struck, American Airlines temporarily suspended flights between Brazil and the United States. Banco Santander then sought to terminate the parties’ agreement. After the airline disputed the bank's right to terminate, the bank filed this lawsuit. Banco Santander argues that it was entitled to terminate the parties’ contract based on a clause permitting such termination if the airline failed to perform or delayed performance under the contract for more than 90 days due to a force majeure event. In the alternative, the bank argues that it is excused from further performance based on the common-law doctrine of frustration of purpose.
• The court found that Banco Santander is not entitled to terminate the agreement under the force majeure termination provision because American Airlines has not failed to perform or delayed its performance under the contract. But Banco Santander's allegation that unforeseeable consequences of the COVID-19 pandemic rendered the contract essentially worthless to the bank states a claim for frustration of purpose that is adequate to survive the airline's motion to dismiss.
  • The first count of the complaint is dismissed because Banco Santander has failed to state a claim under the contract's force majeure termination provision. That provision applies only if American Airlines “delays performance or fails to perform due to a Force Majeure Event.” Participation Agreement § 20.4.5. The bank has not alleged that the airline delayed performance or failed to perform because contrary to the bank's arguments, maintaining flight service between the United States and Brazil is not among the airline's contractual duties.

IV. Decisions finding performance not excused based on explicit exceptions in the force majeure provision

Fitness Int'l, LLC v. DDRM Hill Top Plaza L.P., No. SACV2100142CJCADSX, 2021 WL 5456666 (C.D. Cal. Oct. 20, 2021)

• California state and local government COVID-related measures require closure of fitness center, leading tenant to cease operating its fitness facility.  Tenant stops paying rent but does not return possession of the fitness facility to landlord or terminate the lease.  Tenant had the financial ability to pay the rent due under the Lease during the time its Richmond fitness center was closed.  The parties both moved for summary judgment to resolve the issue of whether the contractual force majeure provision excused tenant of obligation to pay rent during the closure period.
• Court held that  failure to perform under contract was not excused by force majeure clause because the contract stated that delays or failures to perform that can be cured by payment of money are not force majeure events, and that even if there was a force majeure event, the tenant had not shown its failure to pay rent was proximately caused by the restrictive laws, as required under the force majeure provision and California law.
  • The force majeure provision explicitly states that “[d]elays or failures to perform ... which can be cured by the payment of money shall not be Force Majeure Events[.]” (Lease Agreement § 22.3.) Here, Tenant's “failure[ ] to perform,” i.e., its failures to pay rent, can “be cured by the payment of money” and thus cannot constitute a force majeure event. Moreover, even if the Court were to construe the restrictive laws at issue as a force majeure event, Tenant has not shown that its failure to pay rent was proximately caused by the restrictive laws, as required under the force majeure provision, (Id. [“performance of such act shall be excused for the period of delay caused by the Force Majeure Event”]), and California law, see Oosten v. Hay Haulers Dairy Emp. Helpers Union, 45 Cal.2d 784, 789 (1955). Indeed, Tenant concedes that it had the ability to pay the rent during the entirety of the closure periods. 

1600 Walnut Corp. v. Cole Haan Co. Store, 530 F. Supp. 3d 555 (E.D. Pa. 2021)

• Cole Haan entered a lease with 1600 Walnut Corp. for commercial property, but permanently vacated the storefront in March 2020 after the governor issued an executive order prohibiting Cole Haan from operating the store.  Cole Haan stopped paying rent and 1600 Walnut brought an action to recover.
• Court held that although pandemics were not explicitly referenced in the force majeure provision, COVID-19 was a force majeure event based on the catchall category in the provision.  However, the provision did not excuse non-payment of rent because the contract stated that force majeure events did not relieve Cole Haan of its obligation to pay rent.
  • Under the lease, Cole Haan remains obligated to pay rent, even in the face of a force majeure event. The parties agreed in the lease that, if “strikes, lockouts, labor troubles, the inability to procure materials, power failure, restrictive governmental laws or regulations, riots, insurrection, war or another reason not the fault of or beyond the reasonable control of the party” cause “delayed, hindered or prevented performance,” Cole Haan is not relieved of its obligation to pay rent. (Compl., Doc. No. 1, Ex. A at § 21.) “[L]ack of funds” is also not an excuse to performance of the contractual obligations under the terms of the lease. 
  • The COVID-19 pandemic is an event covered in the force majeure clause. . . . “[I]n order to constitute a force majeure, an event must be the proximate cause of nonperformance of the contract.” . . . The Governor's COVID-19 orders closing and restricting retail businesses are the most obvious proximate cause of Cole Haan's non-performance. Restrictive laws or regulations, such as the Governor's orders, however, clearly are within the meaning of the force majeure clause and cannot excuse Cole Haan's contractual obligations. 

1163 W. Peachtree St. Apartments Invs., LLC v. Einstein & Noah Corp., No. 1:21-CV-0219-TWT-WEJ, 2021 WL 2176928 (N.D. Ga. Apr. 30, 2021)

• The parties’ lease includes a “force majeure” or “Act of God” clause that states if the landlord or tenant is “delayed, hindered, or prevented from performing any act or thing required [under the lease] by reason of strikes, lock-outs, labor troubles, casualties, inability to procure labor, materials, failure or lack of utilities, governmental laws or regulations, riots, insurrection, war, acts of God, or other causes beyond the reasonable control of either, the delayed party shall not be liable and the period of performance of any such act shall be extended for a period equivalent to the period of delay.” (Pl.’s Ex. 1 [8-1], at 22.) The lease further notes that “[t]he foregoing is inapplicable to the payment of Rent and Additional Rent due to an act arising after Tenant's mailing and affecting the physical delivery of the payment.” (Id.)
• Based on this language, the parties appear to have agreed that payment of rent is an independent obligation unaffected by the “force majeure” or “Act of God” clause, of which the COVID-19 pandemic may constitute.

98-48 Queens Blvd LLC v. Parkside Mem'l Chapels, Inc., 70 Misc. 3d 1211(A), 137 N.Y.S.3d 679 (N.Y. Civ. Ct. 2021)

• Under a lease in New York, only where the force majeure clause “specifically includes the event that actually prevents a party's performance will that party be excused.” Kel Kim Corp. v. Cent. Markets, Inc., supra. Triggering force majeure as a defense requires that: a) the intervening event must be specifically stated in the provision; b) it must have been an unforeseeable event; c) the defaulting party must show it made reasonable efforts to comply with its obligations; and d) performance must be impossible, not simply difficult or financially impracticable. See Kel Kim Corp. v. Cent. Markets, Inc., supra; Reade v. Stoneybrook Realty, 63 AD3d 433, 434 882 NYS2d 8 (1st Dept 2009).
• The force majeure clause explicitly stated that it did not apply to non-payment of rent: “nothing in this section shall excuse Tenant from the prompt payment of any rental or other charge required of tenant except as may be expressly provided elsewhere in this Lease.”

Lucky U, LLC v. S&F Invs., LLC, No. 3:21CV931 (JBA), 2022 WL 105192 (D. Conn. Jan. 11, 2022)

• At the hearing, Lucky U also worked to establish the impact of the COVID-19 pandemic on the sale of gasoline, claiming the defense of force majeure. The Supply Agreement contains a Force Majeure Clause, excusing A&V for “delay or non-performance” if an event beyond its control occurs. (Supply Agreement, Ex. 4, ¶ 7.) The clause continues, that “[i]n no event shall any force majeure condition affect Dealer's obligation to pay for Product when due.” (Id.) Lucky U has neither demonstrated how it is excused from performing an EMV upgrade under the Supply Agreement nor how the COVID-19 pandemic prevented it from upgrading the pumps to the EMV system. These defenses do not defeat A&V's entitlement to injunctive relief.

In re CEC Ent., Inc., 625 B.R. 344 (Bankr. S.D. Tex. 2020)

• The force majeure clause specifically states that it does not apply to an “inability to pay any sum of money” or a failure to perform caused by a lack of money. Id. The final sentence of the force majeure clause precludes CEC's argument that the global pandemic and government regulations excuse its rent obligation. Rent is a “sum of money due” under the Greensboro lease. CEC seeks to delay its obligation to pay rent, however, the force majeure clause does not apply to an inability to pay rent.

BJC Crewboats, LLC v. Creole Operating, LLC, No. CV 21-860, 2021 WL 3602621 (E.D. La. Aug. 13, 2021)

• Defendant also argues that its payment obligations were suspended due to force majeure events, specifically: (1) the COVID-19 pandemic; (2) the government's response thereto; (3) abnormal freezing due to extreme weather conditions; and (4) pipeline holes (presumably caused by the freezing). (Rec. Doc. 13 at p. 3-4). Article 10, Section 10.1 of the MSA explicitly waives the force majeure defense in the case of failure to make payments. (Id.). Therefore, this argument must also fail.

Vota Inc. v. Urb. Edge Caguas L.P., No. CV 20-1634, 2021 WL 4507979 (D.P.R. Sept. 30, 2021)

• However, plaintiff is not entitled to such an extraordinary relief. Once again, the Lease Agreement provides in unambiguous terms that plaintiff agreed to continue with its payment obligations thereunder even in case of an event of “force majeure.”

In re NTS W. USA Corp., No. 20-CV-6692 (CS), 2021 WL 4120676 (S.D.N.Y. Sept. 9, 2021)

• Additionally, the Lease provides that force majeure events, including “acts of nature” and “other natural disaster[s],” (id. § 1.01(BB)), may excuse DUSA from certain specific obligations, such as its duty to pay “Percentage Rent” during a “Temporary Cessation[ ]” period, (id. §§ 1.01(RRR), 1.05(H)). There is nothing in the Lease releasing DUSA from paying base rent. (Compare id. § 1.05(H), with id. § 1.04(A).)

Amherst II UE LLC v. Fitness Int'l, LLC, 74 Misc. 3d 1203(A) (N.Y. Sup. Ct. 2021)

• Defendant explicitly agreed that an event of force majeure “shall not be applicable to [its] obligation to pay Rent” (Doc. 27, § 2.03). Plaintiff need not have included a reference in the force majeure clause to the then unknown Pandemic (see, e.g., Valentino U.S.A., Inc. v 693 Fifth Owner LLC, 70 Misc 3d 1218(A) [Sup Ct, NY Co 2021] [tenant's complaint dismissed, because the parties expressly allocated the risk that tenant would not be able to operate its business and explained that tenant “is therefore not forgiven from its performance, including its obligation to pay rent by virtue of a state law” notwithstanding the lease's failure to specifically reference the Pandemic]; Victoria's Secret Stores, LLC v Herald Square Owner LLC, 70 Misc 3d 1206(A), *2 [Sup Ct, NY Co 2021] [“It is of no moment that the specific cause for the government law was not enumerated by the parties because the Lease as drafted is broad and encompasses what happened here - a state law that temporarily caused a closure of the tenant's business. The parties agreed that this would not relieve the tenant's obligation to pay rent”]).

558 Seventh Ave. Corp. v. Times Square Photo Inc., 194 A.D.3d 561 (N.Y. App. Div.)

• Although the force majeure clause in the lease would excuse the parties from their obligations under the lease for the duration of certain circumstances beyond their control, the clause expressly excepts the tenant's obligation to pay rent and additional rent.

V. Decisions finding that the notice requirement was not satisfied or requiring further discovery on that issue

Lampo Grp., LLC v. Marriott Hotel Servs., Inc., No. 3:20-CV-00641, 2021 WL 3490063 (M.D. Tenn. Aug. 9, 2021)

• Marriott concedes that a global pandemic is the type of “act of God” that qualifies as a force majeure. (Doc. No. 38, at 15 (“There is no dispute that the COVID-19 pandemic constitutes a force majeure event.”).) It argues, however, that the parties clearly knew about the pandemic no later than some time in March 2020. Thus, by the time the parties executed the Amendment on April 2, 2020, the pandemic was no longer “an event or effect the parties could not have anticipated or controlled.” (Doc. No. 38, at 14 (quoting ARHC, 2019 WL 4694146, at *3). More specifically, the Force Majeure Clause itself specifically states that “[t]he ability to terminate pursuant to this clause is conditioned upon deliver[ing] written notice to the other party setting forth the basis for such termination within ten (10) days after learning of such basis.” (Doc. No 10-1, at 14.) Ramsey Solutions did not actually terminate the Agreement for another three months after executing the Amendment, on July 3, 2020. In light of this delay, assuming that the pandemic is the force majeure upon which Ramsey's termination was premised, the court finds that, at a minimum, there is a question of fact as to whether Ramsey Solutions waived its ability to terminate based on that event by not giving timely notice.

De La Cruz & Assocs., Inc. v. Transform SR de Puerto Rico LLC, No. CV 21-1052, 2021 WL 4006024 (D.P.R. June 14, 2021)

• [I]f Transform no longer wanted to be obligated to pay the Agency Fee, it could have sent a written termination notice to DLCA before March 23, 2021. Instead, after the pandemic began, Mr. Cruz was informed of DLCA's insistence on accruing Agency Fees, first in October 2020, then in December 2020, and again in February 2021. If Transform understood that it was unable to satisfy its obligations and believed that the COVID-19 pandemic constituted a force majeure event, it could have exercised its rights under the termination provisions of the Advertising Agreement or invoked the force majeure clause in a timely manner.

VI. Decisions recognizing the duty to mitigate damages

Vance v. Diversified Invs., No. A-1210-20, 2021 WL 4854109 (N.J. Super. Ct. App. Div. Oct. 19, 2021)

• [See Section II for more detailed discussion of the facts of this case]
• Under common law, injured parties have a duty to “take reasonable steps to mitigate their damages.” State v. Ernst & Young, L.L.P., 386 N.J. Super. 600, 617 (App. Div. 2006) (citing McDonald v. Mianecki, 79 N.J. 275, 299 (1979); White v. Twp. of N. Bergen, 77 N.J. 538, 546 (1978)). We have stated that, although an injured party has not breached the contract, it cannot recover damages “to the extent that the injured party could have avoided his losses through reasonable efforts ‘without undue risk, burden or humiliation.’ ” Id. at 618 (quoting Ingraham v. Trowbridge Builders, 297 N.J. Super. 72, 82-83 (App. Div. 1997)).
• Defendant had a duty to mitigate damages when it became aware that plaintiffs were not coming to the campground after it reopened in May. On April 30, 2020, plaintiffs sent an email to defendant requesting a refund of the $5445.80 that had been paid to date, and stating they were quarantining in Pennsylvania due to Ralph's health conditions and the ongoing stay-at-home order. At that point, defendant should have taken reasonable actions to mitigate its damages by renting plaintiffs’ camping site to someone else.
• Although defendant argues that plaintiffs had the duty to mitigate their damages, there is no similar duty imposed under contract law. Only the party claiming damages for a breach of contract has a duty to mitigate its damages. Sommer v. Kridel, 74 N.J. 446, 454 n. 3 (1977). Moreover, the contract prohibited the “[s]ubleasing of [plaintiffs’] [s]ite or camping unit.” The trial court did not err in finding defendant had a duty to mitigate its damages. We discern no error in the entry of judgment for plaintiff.

Westwood One Radio Networks, LLC v. Nat'l Collegiate Athletic Ass'n, 172 N.E.3d 294 (Ind. Ct. App. 2021)

• While this decision did not involve any ruling on the application of the force majeure provision or mitigation of damages, we note this case as an example of a force majeure provision containing language explicitly pre-conditioning the application of the provision on mitigation:
  • “Notwithstanding the foregoing, the occurrence of a Force Majeure Event shall not excuse the performance by a party unless that party promptly notifies the other party of the Force Majeure Event and promptly takes all reasonable steps to circumvent or mitigate the underlying cause.

Next steps

We anticipate that parties will continue to assert force majeure arguments in connection with contract disputes.  However, the longer the pandemic drags on, the more likely it is that parties will argue that the party seeking to excuse its breach of contract based on a force majeure provision at least partially performed or demonstrated an ability to perform at some point during the pandemic, and that courts may find that such continued performance even after the outset of the pandemic bars any force majeure claim.

Authored by Alan M. Mendelsohn and Dennis H. Tracey, III.